Sempra Energy to meet activist investors to discuss a truce

Bloomberg

Sempra Energy met with activist investors Elliott Management Corp. and Bluescape Resources to try and reach a truce ahead of its analyst conference set for Thursday, according to people familiar with the matter.
The two sides met in Washington to discuss whether Sempra would give the activists board seats and consider setting up a committee to weigh options to create shareholder value, said the people, who asked not to be identified because the details are private. The meeting concluded without reaching a settlement but talks are ongoing, the people said.
A representative for the Elliott and Bluescape group declined to comment.
A spokesman for Sempra said the company is committed to engaging with shareholders and looking forward to the analyst conference on Thursday, but had no comment on specific discussions.

ACTIVIST DEMANDS
Talks between the two parties may show Sempra is open to considering at least some of the activists’ demands. Elliott and Bluescape, which together hold a 4.9 percent interest in Sempra, have called for sweeping changes, including selling the company’s Latin American utilities and spinning off its US liquefied natural gas business. The demands come just as growth-hungry utilities like Sempra are increasingly branching out and borrowing heavily to expand their business beyond power distribution.
In a letter to Sempra’s board dated June 11, Elliott and Bluescape also recommended six new directors be elected to the board. The investors said their proposals could unlock up to $16 billion in value for shareholders. Separately, Moody’s Investors Service placed Sempra on review for downgrade, citing both the increased leverage the company has taken on to fund its acquisition of Oncor Electric Delivery Co., and the “recent overture from an activist investor” that “heightens the execution risk associated with any initiatives that Sempra may undertake in order to improve its credit quality.”
The meeting comes weeks after Sempra Chief Executive Officer Jeff Martin took the helm and more than a year after Elliott and Bluescape pressured US power generator NRG Energy Inc. to cut costs, prompting the company to agree in February to divest $2.8 billion in assets.
The meeting was attended by Sempra’s Martin, its chief operating officer Joseph Householder, two independent directors and its financial and legal advisers, the people said. Elliott portfolio manager Jeff Rosenbaum and John Wilder, founder of Bluescape, were among representatives of the activist investors. Several of Sempra’s shareholders have urged the company to avoid a messy public fight, the people said, and suggested postponing the analyst day if the two sides can’t reach an agreement.