ITPOF Intertape Polymer Group Inc (PK)

Two U.S. hedge funds are seeking a number of changes at packaging-products maker Intertape Polymer Group Inc. to boost shareholder value, but they said they don't currently plan a proxy fight for board representation.

FrontFour Capital Group LLC and Zelman Capital LLC, which said they own a combined 6.5% stake in the Montreal company, made their recommendations in a letter to Intertape Chief Executive Gregory Yull, which they released publicly.

"We strongly believe that IPG is a highly sought after strategic asset that would garner a significant premium from either a strategic buyer or private equity sponsor with a pre-existing portfolio company within the packaging space," they said in the letter.

The hedge funds estimated the company's shares are worth about 23 Canadian dollars (US$17) each.

Intertape shares closed Monday at C$15.17 on the Toronto Stock Exchange and are down more than 18% so far this year. The shares jumped on Tuesday after the funds issued their statement and were recently up 7%.

Among the changes the hedge funds are suggesting are a U.S.-exchange listing, clearer guidance on capital-spending plans and a refresh of the board with independent industry experts. Intertape previously traded on the New York Stock Exchange, but the company voluntarily delisted its shares in late 2009. Its shares now trade over the counter in the U.S.

A representative for Intertape didn't immediately respond to a request for comment on the letter.

FrontFour, which has agitated for change at a number of companies, is managed by Zachary George, son of Rick George, former chief executive at Suncor Energy Inc. Earlier this year, FrontFour pushed for a board shake-up at Canada's Legacy Oil + Gas Inc. shortly before it was acquired by Crescent Point Energy Corp.

FrontFour and Zelman say they don't plan to seek board representation at Intertape.

"While we have considerable experience effecting shareholder-friendly strategic actions by directly seeking board representation through the solicitation of proxies, we do not believe that such action is necessary at this time," they said in the letter.

Intertape in August announced an 8% increase in its dividend, citing its positive outlook and strong position. The company acquired a U.S.-based maker of filament and pressure sensitive tapes this month for $11 million.

The hedge funds said that, while the company has improved its operations and financial position over the past five years, "immediate actions" are needed to improve valuation.

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(END) Dow Jones Newswires

November 10, 2015 12:15 ET (17:15 GMT)

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