UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 23, 2016
NATIONAL FUEL GAS COMPANY
(Exact name of registrant as specified in its charter)
New Jersey | 1-3880 | 13-1086010 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
6363 Main Street, Williamsville, New York (Address of principal executive offices) |
14221 (Zip Code) |
Registrants telephone number, including area code: (716) 857-7000
Former name or former address, if changed since last report: Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 | Regulation FD Disclosure. |
On November 23, 2016, National Fuel Gas Company delivered a letter to GAMCO Asset Management Inc. regarding its proxy access notice. A copy of the letter is furnished as part of this Current Report as Exhibit 99.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit 99 Furnished letter to GAMCO dated November 23, 2016
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NATIONAL FUEL GAS COMPANY | ||
By: | /s/ Paula M. Ciprich | |
Paula M. Ciprich | ||
Senior Vice President, General Counsel & Secretary |
Dated: November 23, 2016
EXHIBIT INDEX
Exhibit Number |
Description | |
99 | Furnished letter to GAMCO dated November 23, 2016 |
Exhibit 99
[Company Letterhead]
November 23, 2016
VIA E-MAIL & OVERNIGHT DELIVERY
David Goldman
General Counsel
GAMCO Asset Management Inc.
One Corporate Center
Rye, NY 10580-1422
Re: | Notice of Proxy Access Director Nomination at the 2017 Annual Meeting of |
Stockholders of National Fuel Gas Company
Dear Mr. Goldman:
This letter responds to your letters of November 9 and 10, 2016 and the Schedule 14N Notice filed on November 10, 2016 by GAMCO Asset Management Inc. (GAMCO). The Board of Directors of National Fuel Gas Company (the Company) has reviewed the Proxy Access Notice (Notice) that GAMCO submitted with its November 9 letter, the revised Statement in Support of the Nominee submitted with its November 10 letter, the Schedule 14N Notice, and GAMCOs Schedule 13D filings, among other items. The Board has also given careful consideration to the comments that you and Mario Gabelli have made prior to and contemporaneously with the Notice regarding GAMCOs intentions for the Company.
The Board, consistent with its responsibilities under Article IA of the Companys By-Laws, has reviewed the Notice to determine whether it is truthful and complies with all of the terms and conditions set forth in Article IA. Based on that review, the Board has concluded that GAMCO has not complied, and is not able to comply, with the terms and conditions set forth in the By-Laws to submit a Stockholder Nominee.1 Therefore, the Company will not include GAMCOs Stockholder Nominee in the Companys proxy materials for the 2017 Annual Meeting.
A stockholder that seeks to use the Companys proxy access By-Law provision must make certain representations and warranties to the Company. If these representations are not correct, the stockholder is not eligible to use proxy access. These representations include that an Eligible Stockholder:
(i) acquired the Proxy Access Request Required Shares in the ordinary course of business
and not with the intent to change or influence control of the Corporation, and does not
presently have such intent[.]
Article IA, Section 6(E).
1 | All capitalized terms not defined herein shall have the meaning ascribed to them in the By-Laws. |
David Goldman, Esq.
November 23, 2016
Page 2
This representation is derived from the standard under which an investor is required to file a Schedule 13D versus a Schedule 13G. A shareholder may file a Schedule 13G only if it has acquired such securities in the ordinary course of his business and not with the purpose nor with the effect of changing or influencing the control of the issuer, nor in connection with or as a participant in any transaction having such purpose or effect. 17 CFR § 240.13d-1(b)(1). Similarly, a shareholder is no longer qualified to file a Schedule 13G, and must file a Schedule 13D, if it [h]as acquired or holds the securities with a purpose or effect of changing or influencing control of the issuer, or in connection with or as a participant in any transaction having that purpose or effect. Id. § 240.13d-1(e)(1). The SEC deems a shareholder to have acquired or [be] holding equity securities with the purpose or effect of changing or influencing control of the issuer if, based on relevant facts and circumstances, a shareholder engages with the issuers management on matters that specifically call for the sale of the issuer to another company, the sale of a significant amount of the issuers assets, the restructuring of the issuer, or a contested election of directors. SEC Compliance and Disclosure Interpretations, Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting at Question 103.11, available at https://www.sec.gov/divisions/corpfin/guidance/reg13d-interp.htm (last visited Nov. 15, 2016). Such a shareholder must file a Schedule 13D, which the SEC requires must state whether the shareholder has or may have any plans or proposals . . . which relate to or would result in the following events, among others:
(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation,
involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer or any of its subsidiaries; . . . .
(e) Any material change in the present capitalization or dividend policy of the issuer;
(f) Any other material change in the issuers business or corporate structure . . . ; . . . . or
(j) Any action similar to any of those enumerated above.
17 CFR § 240.13d-101. Such activities fall well within the definition of control applicable to Section 13 under Rule 12b-2, which defines control as the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. 17 CFR § 240.12b-2.
David Goldman, Esq.
November 23, 2016
Page 3
Based on GAMCOs past conduct and current actions, the Board has determined that (1) GAMCO possessed an intent to change or influence control of the Company when acquiring some if not all of the Proxy Access Request Required Shares; and (2) GAMCO continues to have the intent to change or influence control of the Company. As a result, GAMCOs Notice does not comply with the proxy access provision of the Companys By-Laws, and the Company will not include GAMCOs proposal in the Companys proxy materials.
First, GAMCO and its Constituent Holders2 acquired the Proxy Access Request Required Shares with the intent to change or influence control of the Company. GAMCOs filings under Section 13(d) throughout its investment have reflected that intent.
GAMCO continues to communicate its disappointment in the Companys decision not to pursue a spin-off despite GAMCOs urgings. GAMCOs original Statement in Support of the Nominee submitted with its November 9, 2016 letter discussed GAMCOs failed spin-off shareholder proposal and its disappointment in the Boards response. This included specific statements conveying, in the present tense, GAMCOs view of the spin-off and desire to split up the Company. GAMCO has long advocated this position,3 and its view has not changed.
2 | Including, as stated in your November 9 letter, GAMCO, Gabelli Funds, LLC, The Gabelli Dividend And Income Trust, The Gabelli Asset Fund, The Gabelli Value 25 Fund Inc., The Gabelli Utility Trust, The Gabelli Equity Trust Inc., The Gabelli Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli Global Rising Income & Dividend Fund, The Gabelli ABC Fund, The Gabelli Capital Asset Fund, The Gabelli Utilities Fund, and The Gabelli Global Utility & Income Trust (referred to collectively herein with GAMCO as GAMCO). |
3 | This statement is consistent with positions GAMCO has long advocated: |
| In April 2014, GAMCO announced its intention to submit a proposal to be included in the Issuers 2015 proxy statement to have shareholders vote on a proposal that the Issuers Board either spin off the Issuers regulated natural gas utility business or its non-regulated operations. GAMCO, General Statement of Acquisition of Beneficial Ownership (Sched. 13D/A) (Apr. 21, 2014). |
| In May 2014, GAMCO stated that it believes the [Company] should examine the strategic option of spinning off its LDC operation into a stand-alone publicly traded utility, thus creating multiple C-corporations. The LDC C-corporation would then be in a better position to participate in the industry consolidation that is occurring, including New York State. GAMCO, General Statement of Acquisition of Beneficial Ownership (Sched. 13D/A) (May 9, 2014). |
| On September 12, 2014, GAMCO presented a proposal for inclusion in the proxy materials for the 2015 Annual Meeting of Stockholders requesting that the Issuers Board of Directors and management act expeditiously, consistent with effective tax considerations, to engage an investment banking firm to effectuate a spin-off of the Issuers utility segment, which represents the operations of National Fuel Gas Distribution Corporation, into a separate publicly traded C-corporation. GAMCO, General Statement of Acquisition of Beneficial Ownership (Sched. 13D/A) (Sept. 12, 2014). The Company included GAMCOs proposal in the proxy materials, and the shareholders overwhelmingly voted it down at the Annual Meeting on March 12, 2015. |
David Goldman, Esq.
November 23, 2016
Page 4
Just this month, GAMCOs head analyst for the utility segment confirmed to the Companys Director of Investor Relations that Mr. Gabelli continues to hold the view that the Company should be split up with the pieces spun off and continues to ask why a spin-off is not being considered by the Companys board of directors. Since the day GAMCO sent its Notice, your statements and Mr. Gabellis statements continue to reflect GAMCOs desire to influence management on matters of control and do not disavow earlier support for splitting up the Companys business:
| As reported in Activist Insight on November 10, 2016, you yourself commented on the GAMCO proxy access notice, noting that reducing the costs of activism was appealing; you can piggyback on someone elses proxy. VW Staff, GAMCO Investors First Proxy Access Nomination To The Board of National Fuel Gas, Activist Insight (Nov. 11, 2016). |
| SNL reported that Mr. Gabelli wants the Company to explore more creative financing options, directly quoting him from a phone interview on November 10: Theres some financial engineering that can happen there that can lower the cost of capital. Bill Holland, Investor Gunning For Board Seat Wants More Creative Financing At National Fuel, S&P Global Market Intelligence (Nov. 14, 2016). Notably, although discussing other parts of the business, Mr. Gabelli did not disavow his long-standing desire to split up the Company by spinning off the utility segment. |
| A November 14, 2016 Agenda article reported, regarding the Notice, Mr. Gabellis unhappiness and frustration with managements failure to implement his proposal two years earlier to spin off the utility and buy other gas companies.4 The article reports Mr. Gabellis belief that his nominee is skilled in financial engineering and can bring a new approach, since the board still needs an infusion of fresh thinking. Amanda Gerut, How Mario Gabelli Became the First to Use Proxy Access, Agenda (Nov. 14, 2016). |
4 | The Supporting Statement submitted by GAMCO Asset Management, for its 2015 stockholder proposal to spin off the Companys utility, stated: We believe that a spin-off of NFGs local distribution utility segment into a separately traded public company, . . . would help to enhance the underlying value of the Company. [ ] As a stand-alone publicly traded C-corporation, NFGs utility business can participate in the consolidation activity occurring in the utility space. National Fuel Gas Company, Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Sched. 14A) (Jan. 23, 2015) (for Annual Stockholders Meeting to be held on March 12, 2015). |
David Goldman, Esq.
November 23, 2016
Page 5
| On November 14, 2016 Mr. Gabelli re-tweeted the Agenda reporters tweet of his comment that proxy access was a friendlier approach than a proxy contest at National Fuel Gas. |
These statements, which are consistent with positions long held and advocated by GAMCO,5 reflect a current intent to change or influence control of the Corporation in violation of Section 6(E)(i), Article IA of the By-Laws. That GAMCOs replacement Statement in Support provided on November 10 is scrubbed of certain explicit statements with respect to a spin-off does not change the conclusion.
The Board and the Company value greatly the close relationships we have with shareholders, which is one reason that the Company chose to adopt proxy access as part of its review of the Companys governance. The Board believes that a shareholder or group of shareholders that complies with the terms and conditions of Article IA of our By-Laws should have the ability to nominate a candidate for election as a director of the Company. But, as described in this letter, GAMCOs Proxy Access Notice does not comply with the terms and conditions of Article IA, and the Company will not include GAMCOs Stockholder Nominee in the proxy materials for the 2017 Annual Meeting.
This letter is being sent without waiver of, or prejudice to, any legal or equitable rights, remedies or defenses of National Fuel Gas Company or any of its affiliates, all of which are hereby expressly reserved in full.
Very truly yours, |
NATIONAL FUEL GAS COMPANY |
/s/ Paula M. Ciprich |
Paula M. Ciprich Senior Vice President, General Counsel and Secretary |
cc: | George Maldonado |
5 | For example, at the time GAMCO bought 800,000 shares in May 2010, Mr. Gabelli stated, We [GAMCO] think they [National Fuel] could take their exploration and production business, Seneca, and offer a piece of it to the public in order to raise capital. . . . Entities are paying significant dollars to get in the shale, which validates our premise. Mina Kimes, Mario Gabelli bets big on natural gas, Fortune (May 18, 2010). |