(Bloomberg) — A Tellurian Inc. investor is urging the would-be U.S. energy exporter to put itself up for sale, saying poor governance, nepotism and “misleading communications” have doomed the company’s $12.8 billion aspiration to ship shale gas overseas.
Entami Corp., which specializes in event-driven and distressed-debt investing, called for a sale of the company founded six years ago by liquefied natural gas entrepreneur Charif Souki. In a letter to Souki and his management team, Entami Chief Investment Officer Achur Iskounen said Tellurian lacks the expertise, financial heft and “institutional credibility” to build and operate its proposed LNG-export complex.
Although Entami’s self-declared stake in Tellurian amounts to just 1.5% of outstanding common stock, the pushback by a small investor highlights the challenges Souki’s team is facing in finding backers for the Driftwood LNG project in Louisiana. The company recently sweetened the terms of a risky debt deal that would kickstart financing, promising an eye-popping 12.5% yield and offering shale fields as collateral.
Souki has “deluded and diluted shareholders,” established “unattainable” milestones and engaged in “misleading communications over the last year” while raising capital through debt and equity sales, Iskounen wrote. “A timely sale of Tellurian has become the only logical path to protect Shareholder value.”
Iskounen cited “very serious questions of nepotism” and governance lapses. He singled out the chairman’s son, Tarek Souki, who as executive vice president of marketing and trading “draws a Salary larger than our CFO,” according to the letter.
Tellurian didn’t respond to multiple requests for a response or make either of the Soukis available for comment.
Iskounen, reached by email, declined to comment beyond the contents of his letter. In a 2013 Barron’s article, he was leading a startup called Iskounen & Co. that had $5 million under management and was shorting Apple Inc.
“Tellurian is falling behind peers who are expanding capacity at their fastest pace ever,” he wrote in the letter to Tellurian. The company ought to sell itself to a major energy company with “the balance sheet and institutional credibility necessary to commission this geopolitically critical LNG project.”
Tellurian fell 1.3% to $3.81 at 9:39 a.m. in New York, capping the year-to-date advance at 24%.
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