Baines Creek Comments on Legacy Reserves Annual Shareholder Meeting Results

AUSTIN, Texas, June 10, 2019 /PRNewswire/ -- Baines Creek Capital, LLC, an Austin-based investment firm, and its affiliated investment funds (collectively "Baines Creek" or "we"), commented today on the voting results from the 2019 Annual Meeting of Stockholders of Legacy Reserves, Inc. ("Legacy Reserves" or the "Company") (Nasdaq: LGCY) held on June 6, 2019 (the "Annual Meeting").

"On Thursday, June 6, 2019 the Company's stockholders sent a resounding message of discontent with the status quo at Legacy Reserves.  The results of the Annual Meeting clearly reflect the widespread dissatisfaction of stockholders with the disastrous performance under the watch of the current Board of Directors, as well as the recent actions taken by the Board of Directors to frustrate stockholder democracy.  As previously announced on May 31, 2019, Baines Creek delivered an open letter to stockholders announcing its intent to refrain from voting its shares to prevent the Company from reaching a quorum at the Company's 2019 Annual Meeting of Stockholders.  The results indicate that a large number of stockholders decided to take similar actions in order to let their voices be heard.

The decision by stockholders to either boycott the meeting by withholding their votes entirely, or by voting against directors, stands as a clear, undeniable referendum of discontent with the current Board of Directors, specifically for poor performance, actions to prevent stockholder democracy and unacceptable corporate governance practices.  Although the Company narrowly obtained a quorum to hold the Annual Meeting, the 55.7% of shares represented was dramatically low by historical standards, and the vast majority of those shares were Broker Non-Votes.  Less than 12% of the shares outstanding were voted on the election of directors.  Of those that were voted, nearly half were withheld from the current director candidates, and three of the six director candidates received more votes against their election than for it.   

If we had cast our votes against each director candidate rather than refrain from voting altogether, then the entire board would have had more than 80% of the votes cast voted against their election as directors.  If other stockholders who also protested by not showing up to vote at the Annual Meeting had instead voted against Board members, this number would have been even higher.  The voting results unequivocally demonstrate stockholders' utter lack of support for the current Board: it is remarkable that each director candidate received affirmative votes from less than 7% of the shares outstanding.  This outcome is the least support we or our advisors can ever remember seeing for any public company board of directors.

In light of this very clear message delivered by stockholders at the Annual Meeting, we expect the Board to take immediate steps to address our collective concerns.  From the beginning, Baines Creek has attempted to be a friend to the Company and took every action possible to communicate this to the Board and to management.  We are not an activist investor.  We were not looking for a contentious engagement.  For reasons beyond our understanding, the Board has chosen to make an enemy out of a friend.  The Board has flatly refused to engage with us in any constructive way at every turn.  More recently, the Company has demanded that we relinquish every stockholder right (as well as the right to speak with other capital providers in an attempt to help improve the balance sheet) as a pre-requisite for beginning any discussions.  This is entirely unreasonable and shows that the Board is more concerned about protecting its own positions than the best interests of its stockholders.

We invite the Board to engage with stockholders, not to wage war on them.  We do not wish to be adversaries, but simply request the Board address the balance sheet, operational execution and be accountable to stockholders.  We believe the Company is truly at an inflection point.  With the Company's low-decline production profile combined with its world class development opportunities it can drive tremendous growth within cash flow if the balance sheet were to be fixed.  Add in its current strong management team and you have a combination that can create significant value for stockholders once it is placed on the right path.  We eagerly anticipate the results of the strategic review process that we believe to be announced shortly and hope that the outcome will allow the Company's management to get back to work creating value for its stockholders.  We invite the Board to engage with all stockholders and to act quickly to meaningfully address their concerns.

About Baines Creek Capital
Baines Creek Capital, LLC is an Austin-based investment firm that follows an opportunistic investment strategy using a fundamental, value-oriented approach.

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SOURCE Baines Creek Capital, LLC