LOS ANGELES, Dec. 17, 2013 /PRNewswire/ -- Concerned Miller Shareholders ("CMS"), a group of independent shareholders of Miller Energy Resources, Inc. (NYSE: MILL) ("Miller" or the "Company") led by Bristol Capital Advisors, LLC and Lone Star Value Management, LLC, representing approximately 4.7% of Miller's outstanding shares, announced today that they have formed CMS for the purpose of seeking to unlock value at Miller by reconstituting its Board of Directors (the "Board") and replacing its senior management.
CMS detailed its concerns with the Company in an open letter to Miller's shareholders delivered today. In the letter, CMS stated its view that while the Company has valuable assets and a strong operational team on the ground in Alaska, Miller's shares are significantly undervalued due largely to Miller's senior management team's lack of experience and industry knowledge together with their excessive compensation and unacceptable self-dealing. CMS believes any rise in the stock price to date has been in spite of senior management, not because of it, and the stock is still significantly undervalued, based upon the proven reserves and the Company's revenue-generating capability.
In the letter, CMS also highlighted its views on management's incompetence, noting that Miller's CEO, Scott Boruff, has repeatedly demonstrated he is unqualified to lead the Company at a time when its focus and strategy should be on operations. Further, Miller's CFO, David Voyticky, has no prior experience in a top financial role at a substantial company and lacks the qualifications to serve in this position. CMS expressed outrage that despite their widespread mismanagement, the Board boosted Messrs. Boruff and Voyticky's salaries in July by an astronomical 59% and 58%, respectively. The Board also awarded Messrs. Boruff and Voyticky $500,000 and $475,000 in bonuses, respectively, and restricted stock grant of 100,000 shares of common stock for each, despite failure to achieve the performance targets upon which such rewards were conditioned.
Even as Miller's revenue increased to $34.8 million in 2013 from $830,000 in 2008, operating losses plummeted to $32.35 million from $2.2 million during that period. Net losses increased to $20.42 million in 2013 from $2.44 million in 2008, the result of a bloated expense structure with much of the shareholders' capital squandered on compensating and supporting the excessive lifestyles of underperforming executives.
CMS firmly believes change is imperative to create value for shareholders. Accordingly, today CMS delivered a letter to the Company nominating ten independent, extremely qualified candidates for election to the Board at the Company's annual meeting of stockholders for the fiscal year ended April 30, 2013 expected to be held on or about March 28, 2014, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the "Annual Meeting"). CMS's director candidates possess the right mix of relevant financial and strategic experience and leadership in the energy sector and include: Governor Bill Richardson, the former Governor of New Mexico and Secretary of Energy in the Clinton administration; Matthew Regis Bob, who has 20+ years of experience as an executive in the energy sector; David Heikkinen, who has 15+ years of experience both as an executive in the oil and gas exploration business and director of companies in the energy industry; Michael Donahue, former Branch Chief in the SEC Division of Enforcement; Jeffrey Eberwein, well-respected investment and financial expert with significant public board experience; Alan Bazaar and Alfred John Knapp, Jr., both of whom are accomplished business leaders with significant experience as chief executive officers and members of public boards; Ryan Gilbertson, who has extensive experience as senior executive and director in the oil and natural gas industry; William Wells who has significant senior executive and public board experience; and Christopher Floyd who is a widely recognized investor in the energy sector with deep knowledge of its workings.
CMS's letter outlined numerous serious issues facing the Company that should be of concern to all Miller shareholders, including:
- Excessive executive compensation that is not aligned with the executives' or the Company's performance;
- Burden to shareholders of effectively paying for two Co-CEOs due to management's lack of sophistication and leadership;
- Mismanagement and an entrenched and ineffective senior executive team;
- Senior management's lack of operational experience and institutional credentials;
- Self-dealing and personal use of corporate assets;
- Poor Board oversight, lack of Board independence and questionable corporate governance practices;
- Weak accounting expertise and poor internal controls;
- Poor investor communications and lack of transparency; and
- Massive shareholder dilution.
In the days and weeks ahead, CMS will be providing all Miller shareholders with additional information detailing its concerns along with steps that can be taken to unlock value at Miller for the benefit of all shareholders. Shareholders are urged to bookmark the Web site (www.MILLProxy.com ) that has been created to provide continuing news and updates about the campaign.
The complete text of CMS' letter to shareholders is available at www.MILLProxy.com.
John Glenn Grau
(203) 972-9300 ext. 11
Jeff S. Lloyd
Sitrick And Company
SOURCE Concerned Miller Shareholders