Activist succeeds in removing Hill International's founder from its board
The US construction consultancy Hill International has acceded to demands from the activist shareholder Bulldog Investors by removing three directors, including the founder Irvin Richter.
The company, which earned 48 per cent of its US$631 million in consulting fees from the Middle East last year, stated that it had settled a legal case filed by Bulldog Investors after the company postponed its annual general meeting last month.
Bulldog had been calling for the removal of three Hill board members, including Irvin Richter, who is also the chairman, with three of its own candidates. Chief executive David Richter, who is Irvin’s son, had stated in July that a vote to retain the three directors was “absolutely critical to the continued success” of the company.
In a statement issued on Monday, Hill said that as a result of the settlement, “the annual meeting is deemed to have been held on its originally scheduled date of August 11 and that Bulldog’s director nominees, Paul Evans, Charles Gillman and David Sgro, are deemed to have been elected to Hill’s board, replacing Steven Kramer, Gary Mazzucco and Irvin Richter”.
Moreover, the resignation of another board director, Adam Eiseman, reduced the size of the company’s board to 10 directors.
Hill had postponed the company’s annual general meeting from August 11 to October 21 and announced that it was increasing the size of its board from nine to 11 directors. Bulldog had accused the company of postponing merely to avoid defeat and filed a lawsuit, which was due to be heard in court next week. David Richter argued that there was “a significant business reason” for the delay.
In the settlement agreed, Hill has stated that its board will “endeavour to reduce its size to seven members over time”. Other terms agreed involved the appointment of a new chairman, the payment of about $800,000 in legal fees and expenses to Bulldog, and an agreement not to acquire any business or asset worth more than $5m over the next two years without the approval of eight out of its 10 directors.
“We believe that resolution of this dispute now will be in the best interests of our company and its stockholders,” said David Richter.
“Our board is looking forward to working together cooperatively to drive stockholder value creation.”
Phillip Goldstein, a principal of Bulldog Investors, said: “Hill is a great company and we hope that this settlement will set the stage for the creation of long-term shareholder value.”
The dispute between the pair initially broke out following Hill International’s rejection of two previous offers for the company of $5.50 per share in May 2015 and of $4.75 per share in December 2015 from private equity company DC Capital Partners.
It had planned to merge Hill’s operations with its portfolio company, Michael Baker International, and to reduce its exposure to the Middle East. However, Hill’s management rejected both approaches. The company’s shares closed 0.2 per cent higher in New York on Monday at $4.41, giving it a market capitalisation of $229.7m.
Hill International is currently involved in project management contracts on some of the region’s biggest construction sites, including both the Doha and Riyadh metro projects, the expansion of Muscat and Salalah airports and the Dubai Parks and Resorts project.
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