Canadian Superior Energy shareholder seeks to replace board, oust executive chairman

By Lisa Kerner

Charlotte, N.C., April 1 - Palo Alto Investors, LLC once again demanded that the board of directors of Canadian Superior Energy Inc. be reconstituted to include "truly independent directors with relevant international and gas expertise," according to a schedule 13D/A filed with the Securities and Exchange Commission on Wednesday.

In a lengthy open letter to Canadian Superior's board and its shareholders included in the filing, Palo Alto said it wants to reconstitute the board in order to remove executive chairman Greg Noval, "who has insurmountable conflicts of interest."

Palo Alto said it believes Canadian Superior's current board has failed the company's shareholders for the following reasons:

• The management of the company's key growth asset, Block 5(c) in Trinidad, has been placed in the hands of a court-appointed receiver;

• The company has sought and obtained protection from its creditors under the Companies Creditors' Arrangement Act; and

• Challenger Energy Corp., of which Noval is the largest shareholder, was inappropriately loaned $14 million by Canadian Superior in September 2008.

According to Palo Alto, Challenger, a vehicle formed to secure financing for the Block 5(c) project, has also obtained creditor protection under the CCAA.

In February, Palo Alto requisitioned a special meeting of Canadian Superior's shareholders for the purpose of removing the incumbent board of directors and replacing it with Palo Alto's slate of nominees.

Previously, Palo Alto asked Canadian Superior to hold a public conference call to update shareholders on the financial position and status of the proposed monetization of part of the company's Block 5(c) assets in Trinidad and Tobago. Palo Alto wanted any potential deal to be postponed, according to an earlier schedule 13D/A filed with the SEC.

Palo Alto owns 15,752,500 shares, or 9.3%, of the company's common shares outstanding, the SEC filing said.

Based in Calgary, Alta., Canadian Superior is a crude oil and natural gas exploration and production company with an emphasis on exploring for and producing crude oil and natural gas in western Canada, Nova Scotia and Trinidad and Tobago.

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