FRANKFURT, July 7 (Reuters) – Activist investor ENKRAFT has stepped up its criticism of solar and wind park developer Energiekontor, accusing management of failing to address what it described as “great strategic weaknesses”, a letter seen by Reuters showed.
ENKRAFT, which unveiled a stake of less than 3% in Energiekontor in May, previously demanded a reshuffle of the group’s supervisory board as well as a review of its strategy, citing deficits in those and other areas.
One major target of ENKRAFT’s criticism has been Energiekontor’s three-member supervisory board, which includes the group’s two co-founders who together hold more than 51% of the company, effectively giving them full control over it.
This is going against the interests of minority shareholders, ENKRAFT has alleged. It has also pointed to what it sees as a misallocation of funds, including share buybacks, adding this was eating into investments needed for growth.
In a letter dated July 6, ENKRAFT said that Energiekontor so far failed to properly address interests of minority shareholders as long as they were not aligned with those of the group’s two co-founders.
“We will make these weaknesses transparent regularly in the future and take any measures to ensure rights of minority shareholders are being protected, including legal steps where necessary,” Benedikt Kormaier, managing director at ENKRAFT, said in the letter.
Energiekontor said that while it welcomes the intensive dialogue with investors and also believes the firm is significantly undervalued, its corporate strategy is backed by the vast majority of its shareholders.
ENKRAFT has previously said that if no new strategy can be agreed, the group should consider selling itself to create the greatest value.
Kormaier said that Energiekontor’s share price, which has gained nearly a quarter since ENKRAFT disclosed its stake, has underperformed most of its peers. The group has a market value of 333 million euros ($376 million).
($1 = 0.8846 euros) (Reporting by Christoph Steitz; Editing by Emelia Sithole-Matarise)