Fir Tree Partners Issues Open Letter to the SandRidge Board


Fir Tree Partners, manager of certain funds that together beneficially own, through common stock and warrants, approximately 8.2% of the common stock of SandRidge Energy, Inc., today issued an open letter to the Board of Directors of SandRidge reiterating its strong opposition to SandRidge's proposed acquisition of Bonanza Creek Energy, Inc. ("Bonanza") and voicing its support for the position of Icahn Capital LP laid out in its Proxy Statement that the Company should NOT issue more shares of common stock in connection with such a transaction. The full text of the letter follows:

Dear Members of the Board of Directors:

As one of SandRidge's largest shareholders, we are writing to reiterate our strong disapproval over the decision of the Company's Board of Directors (the "Board") to acquire Bonanza Creek Energy, Inc. by issuing a considerable amount of undervalued Company common stock (the "Stock Issuance").

As you are no doubt aware, a fund managed by Icahn Capital LP ("Icahn Capital") has filed a preliminary proxy statement urging shareholders to vote "AGAINST" the Stock Issuance (the "Proxy").

Fir Tree has Independently Reached the Same Conclusion as Icahn Capital and Strongly Supports the Position Laid Out in Icahn Capital's Proxy: The Proposed Share Issuance to Finance the Bonanza Acquisition is Dilutive, Non-Strategic and Significantly Over-values Bonanza.

As we have noted previously, the Bonanza acquisition represents a complete about face by management of its disciplined post bankruptcy strategy and would be extremely destructive to shareholder value:

  • The acquisition's proposed purchase price implies an unjustified premium to SandRidge's current valuation;
  • The acquisition presents no obvious synergies between SandRidge and Bonanza's assets;
  • The proposed purchase price constitutes more than a 75% premium to the $421 millionvaluation established when Bonanza creditors invested new capital just six months ago; and
  • The acquisition represents nonsensical empire building that echoes back to SandRidge's descent into bankruptcy when this same management team acquired disparate assets and added leverage and costs with reckless abandon.

Strategically, one of the Board's basic obligations to shareholders is to make decisions that optimize long-term shareholder value. With zero net debt and approximately 200,000 acres and decades of remaining inventory to exploit, we believe SandRidge would better position itself by returning capital to its shareholders and growing production in a disciplined manner, not through pursuing this reckless transaction.

Fir Tree Intends to Vote AGAINST the Stock Issuance

Accordingly, we intend to vote AGAINST the Stock Issuance in order to stop what we believe is a nonsensical and overpriced acquisition being pursued by a reckless, grossly over-compensated management team and what is unfortunately proving to be a rubber stamp Board.

Evan Lederman & David Proman
Fir Tree Partners

About Fir Tree Partners

Fir Tree Partners, founded in 1994 and located in New York City (HQ) and Miami, is a value-oriented investment manager that manages private investment funds for endowments, charitable and philanthropic foundations, pension funds and other institutional and private investors.

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