0000921895-15-001667.txt : 20150624 0000921895-15-001667.hdr.sgml : 20150624 20150624162403 ACCESSION NUMBER: 0000921895-15-001667 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20150624 DATE AS OF CHANGE: 20150624 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DAKOTA PLAINS HOLDINGS, INC. CENTRAL INDEX KEY: 0001367311 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM BULK STATIONS & TERMINALS [5171] IRS NUMBER: 202543857 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-86167 FILM NUMBER: 15949420 BUSINESS ADDRESS: STREET 1: 294 GROVE LANE EAST CITY: WAYZATA STATE: MN ZIP: 55391 BUSINESS PHONE: 952-473-9950 MAIL ADDRESS: STREET 1: 294 GROVE LANE EAST CITY: WAYZATA STATE: MN ZIP: 55391 FORMER COMPANY: FORMER CONFORMED NAME: MCT HOLDING CORP DATE OF NAME CHANGE: 20060623 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Lone Star Value Management LLC CENTRAL INDEX KEY: 0001589350 IRS NUMBER: 462567817 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 53 FOREST AVENUE, 1ST FLOOR CITY: OLD GREENWICH STATE: CT ZIP: 06870 BUSINESS PHONE: (203) 542-0235 MAIL ADDRESS: STREET 1: 53 FOREST AVENUE, 1ST FLOOR CITY: OLD GREENWICH STATE: CT ZIP: 06870 SC 13D/A 1 sc13da609482011_06242015.htm AMENDMENT NO. 6 TO THE SCHEDULE 13D sc13da609482011_06242015.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)

(Amendment No. 6)1

Dakota Plains Holdings, Inc.
(Name of Issuer)

Common Stock, par value $0.001 per share
(Title of Class of Securities)

234255107
(CUSIP Number)
 
JEFFREY E. EBERWEIN
LONE STAR VALUE MANAGEMENT, LLC
53 Forest Avenue, 1st Floor
Old Greenwich, Connecticut 06870
(203) 489-9500

STEVE WOLOSKY
OLSHAN FROME WOLOSKY LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

June 24, 2015
(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.


_______________
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
 
 
 
CUSIP NO. 234255107
 
1
NAME OF REPORTING PERSON
 
LONE STAR VALUE INVESTORS, LP
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) x
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
4,089,882
8
SHARED VOTING POWER
 
- 0 -
9
SOLE DISPOSITIVE POWER
 
4,089,882
10
SHARED DISPOSITIVE POWER
 
- 0 -
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,089,882
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
7.4%
14
TYPE OF REPORTING PERSON
 
PN

 
2
 
CUSIP NO. 234255107
 
1
NAME OF REPORTING PERSON
 
LONE STAR VALUE INVESTORS GP, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) x
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
4,089,882
8
SHARED VOTING POWER
 
- 0 -
9
SOLE DISPOSITIVE POWER
 
4,089,882
10
SHARED DISPOSITIVE POWER
 
- 0 -
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,089,882
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
7.4%
14
TYPE OF REPORTING PERSON
 
OO

 
3
 
CUSIP NO. 234255107
 
1
NAME OF REPORTING PERSON
 
LONE STAR VALUE MANAGEMENT, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) x
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF, OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
CONNECTICUT
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
4,357,599
8
SHARED VOTING POWER
 
- 0 -
9
SOLE DISPOSITIVE POWER
 
4,357,599
10
SHARED DISPOSITIVE POWER
 
- 0 -
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,357,599
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
7.9%
14
TYPE OF REPORTING PERSON
 
OO

 
4
 
CUSIP NO. 234255107
 
1
NAME OF REPORTING PERSON
 
JEFFREY E. EBERWEIN
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) x
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
4,357,599
8
SHARED VOTING POWER
 
-0-
9
SOLE DISPOSITIVE POWER
 
4,357,599
10
SHARED DISPOSITIVE POWER
 
-0-
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,357,599
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
7.9%
14
TYPE OF REPORTING PERSON
 
IN

 
5
 
CUSIP NO. 234255107
 
The following constitutes Amendment No. 6 to the Schedule 13D filed by the undersigned (“Amendment No. 6”).  This Amendment No. 6 amends the Schedule 13D as specifically set forth herein.
 
Item 3.
Source and Amount of Funds or Other Consideration.
 
Item 3 is hereby amended and restated to read as follows:
 
The Shares purchased by Lone Star Value Investors and held in a certain account managed by Lone Star Value Management (“Separately Managed Account I”) were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated by reference herein.  The aggregate purchase price of the 4,089,882 Shares beneficially owned by Lone Star Value Investors is approximately $8,892,403, including brokerage commissions.  The aggregate purchase price of the 267,717 Shares held in Separately Managed Account I is approximately $339,104, including brokerage commissions.
 
Item 4.
Purpose of Transaction.
 
Item 4 is hereby amended to add the following:

On June 24, 2015, Lone Star Value Management (together with its affiliates, “Lone Star Value”) issued a press release criticizing the Issuer’s violation of shareholder rights, the lack of independence of the Issuer’s Board of Directors (the “Board”) and the impaired credibility of CEO Craig McKenzie. Lone Star Value condemned the Board’s unilateral decision to extend the suspension of shareholders’ ability to (i) act by written consent and (ii) call special meetings through the 2016 Annual Meeting of Stockholders. Lone Star Value also openly disapproved of the Board’s lack of independence as demonstrated by CEO McKenzie “stepping down” as the Chairman of the Board only to see his longtime friend and business connection take his place, and the fact that CEO McKenzie has been paid almost $5 million over the past two years despite an almost 70% decline in the Issuer’s stock price over this time. Lone Star Value also called into question CEO McKenzie’s credibility following his issuance of 2015 guidance and the removal of that guidance a mere five months later, causing Lone Star Value to wonder whether (i) CEO McKenzie is not competent to be CEO because he does not understand the Issuer’s business or (ii) he was intentionally misleading shareholders out of fear of a potential proxy contest. Lone Star Value expressed its belief that there is a growing sense of frustration with the CEO and Board amongst shareholders and Lone Star Value made known that it will take any actions it believes necessary to protect the best interests of all shareholders. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 5.
Interest in Securities of the Issuer.
 
Items 5(a)-(c) are hereby amended and restated to read as follows:
 
The aggregate percentage of Shares reported owned by each person named herein is based upon 54,926,227 Shares outstanding as of May 8, 2015, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 8, 2015.
 
 
6
 
CUSIP NO. 234255107
 
A.
Lone Star Value Investors
 
 
(a)
As of the close of business on June 23, 2015, Lone Star Value Investors beneficially owned 4,089,882 Shares.
 
Percentage: Approximately 7.4%
 
 
(b)
1. Sole power to vote or direct vote: 4,089,882
 
2. Shared power to vote or direct vote: 0
 
3. Sole power to dispose or direct the disposition: 4,089,882
 
4. Shared power to dispose or direct the disposition: 0

 
(c)
The transactions in the Shares by Lone Star Value Investors during the past sixty days are set forth in Schedule A and are incorporated herein by reference.
 
B.
Lone Star Value GP
 
 
(a)
Lone Star Value GP, as the general partner of Lone Star Value Investors, may be deemed the beneficial owner of the 4,089,882 Shares owned by Lone Star Value Investors.
 
Percentage: Approximately 7.4%
 
 
(b)
1. Sole power to vote or direct vote: 4,089,882
 
2. Shared power to vote or direct vote: 0
 
3. Sole power to dispose or direct the disposition: 4,089,882
 
4. Shared power to dispose or direct the disposition: 0

 
(c)
Lone Star Value GP has not entered into any transactions in the Shares during the past sixty days. The transactions in the Shares on behalf of Lone Star Value Investors during the past sixty days are set forth in Schedule A and are incorporated herein by reference.
 
C.
Lone Star Value Management
 
 
(a)
As of the close of business on June 23, 2015, 267,717 Shares were held in Separately Managed Account I. Lone Star Value Management, as the investment manager of Lone Star Value Investors and Separately Managed Account I, may be deemed the beneficial owner of the (i) 4,089,882 Shares owned by Lone Star Value Investors and (ii) 267,717 Shares held in Separately Managed Account I.
 
Percentage: Approximately 7.9%
 
 
(b)
1. Sole power to vote or direct vote: 4,357,599
 
2. Shared power to vote or direct vote: 0
 
3. Sole power to dispose or direct the disposition: 4,357,599
 
4. Shared power to dispose or direct the disposition: 0

 
(c)
The transactions in the Shares by Lone Star Value Management through Separately Managed Account I and on behalf of Lone Star Value Investors during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

 
7
 
CUSIP NO. 234255107
 
D.
Mr. Eberwein
 
 
(a)
Mr. Eberwein, as the manager of Lone Star Value GP and sole member of Lone Star Value Management, may be deemed the beneficial owner of the (i) 4,089,882 Shares owned by Lone Star Value Investors and (ii) 267,717 Shares held in Separately Managed Account I.
 
Percentage: Approximately 7.9%
 
 
(b)
1. Sole power to vote or direct vote: 4,357,599
 
2. Shared power to vote or direct vote: 0
 
3. Sole power to dispose or direct the disposition: 4,357,599
 
4. Shared power to dispose or direct the disposition: 0

 
(c)
Mr. Eberwein has not entered into any transactions in the Shares during the past sixty days.  The transactions in the Shares on behalf of Lone Star Value Investors and through Separately Managed Account I during the past sixty days are set forth in Schedule A and are incorporated herein by reference.
 
The Reporting Persons, as members of a “group” for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Person.  Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.
 

Item 7.
Material to be Filed as Exhibits.
 
Item 7 is hereby amended to add the following exhibit:
 
 
99.1
Press Release, dated June 24, 2015.
 
 
8
 
CUSIP NO. 234255107
 
SIGNATURES
 
After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
 
Dated:  June 24, 2015
 
 
Lone Star Value Investors, LP
   
 
By:
Lone Star Value Investors GP, LLC
General Partner
     
     
 
By:
/s/ Jeffrey E. Eberwein
   
Name:
Jeffrey E. Eberwein
   
Title:
Manager


 
Lone Star Value Investors GP, LLC
   
   
 
By:
/s/ Jeffrey E. Eberwein
   
Name:
Jeffrey E. Eberwein
   
Title:
Manager


 
Lone Star Value Management, LLC
   
   
 
By:
/s/ Jeffrey E. Eberwein
   
Name:
Jeffrey E. Eberwein
   
Title:
Sole Member


 
/s/ Jeffrey E. Eberwein
 
JEFFREY E. EBERWEIN
 
 
9
 
CUSIP NO. 234255107
 
SCHEDULE A
 
Transactions in the Shares During the Past Sixty Days
 
Shares of Common Stock
Purchased/(Sold)
Price Per
Share($)
Date of
Purchase/Sale

LONE STAR VALUE INVESTORS, LP
 
5,000
 *
1.7828
04/24/2015
5,000
 *
1.7471
04/27/2015
5,000
 *
1.7180
04/28/2015
5,000
 *
1.6973
04/29/2015
5,000
 *
1.6935
04/30/2015
5,000
 *
1.6924
05/01/2015
5,000
 *
1.6566
05/04/2015
5,000
 *
1.6487
05/05/2015
5,000
 *
1.6091
05/06/2015
5,000
 *
1.4963
05/07/2015
5,000
 *
1.4876
05/08/2015
10,000
 *
1.3716
05/11/2015
10,000
 *
1.3105
05/12/2015
(600,000)
  
1.2600
05/12/2015
10,000
 *
1.3270
05/13/2015
10,000
 *
1.3001
05/14/2015
10,000
 *
1.2972
05/15/2015
10,000
 *
1.3260
05/18/2015
10,000
 *
1.2700
05/19/2015
10,000
 *
1.2641
05/20/2015
10,000
 *
1.2916
05/21/2015
10,000
 *
1.2739
05/22/2015
10,000
 *
1.2329
05/26/2015
25,000
  
1.2020
05/26/2015
4,820
 *
1.1835
05/27/2015
65,455
  
1.2323
05/28/2015
10,545
  
1.2333
05/29/2015
50,000
  
1.2574
06/03/2015
11,328
  
1.2435
06/05/2015
400
  
1.3025
06/08/2015
1,211
  
1.2505
06/09/2015
3,268
  
1.2595
06/10/2015
3,691
  
1.2543
06/11/2015
1,210
  
1.2580
06/12/2015
3,037
  
1.2600
06/15/2015
122
  
1.2500
06/16/2015
122
  
1.2600
06/18/2015
6,898
  
1.2588
06/19/2015
7,595
  
1.2576
06/22/2015
 

*Purchase effected in the open market pursuant to a 10b5-1 Purchase Trading Plan adopted by Lone Star Value Investors, LP.
 
10
 
CUSIP NO. 234255107
 
LONE STAR VALUE MANAGEMENT, LLC
(Through Separately Managed Account I)

84,368
  
1.2312
05/28/2015
15,632
  
1.2333
05/29/2015
50,000
  
1.2595
06/03/2015
50,000
  
1.2929
06/04/2015
25,000
  
1.2878
06/04/2015
25,000
  
1.2471
06/05/2015
789
  
1.2505
06/09/2015
2,132
  
1.2595
06/10/2015
2,409
  
1.2543
06/11/2015
790
  
1.2580
06/12/2015
1,982
  
1.2600
06/15/2015
78
  
1.2500
06/16/2015
78
  
1.2600
06/18/2015
4,502
  
1.2588
06/19/2015
4,957
  
1.2576
06/22/2015

EX-99.1 2 ex991to13da609482011_062415.htm PRESS RELEASE, DATED JUNE 24, 2015 ex991to13da609482011_062415.htm
Exhibit 99.1
 
LONE STAR VALUE CRITICIZES THE VIOLATION OF SHAREHOLDER RIGHTS AND LACK OF BOARD INDEPENDENCE AT DAKOTA PLAINS
 
Questions Motives Given No Progress on Strategic Alternatives Review Process
 
“New” Board Is More of the Same
 
NEW YORK, June 24, 2015 – Lone Star Value Management, LLC (together with its affiliates, “Lone Star Value”, “we”, or “us”) is a significant, long-term shareholder of Dakota Plains Holdings, Inc. (“Dakota Plains” or the “Company”) (NYSE MKT: DAKP) with ownership of over 4.3 million shares of common stock, representing almost 8% ownership of the Company and making us the Company’s largest shareholder.  Lone Star Value invests in undervalued, small-cap companies and seeks to engage with its portfolio companies to maximize value for all shareholders.
 
Harm to Shareholder Rights
 
As recounted in our April 14, 2015 press release regarding Dakota Plains, we made every effort earlier this year to constructively engage with the Company’s Board of Directors (the “Board”) with a goal of maximizing shareholder value, rights, and representation for the benefit of all DAKP shareholders.  Unfortunately, in the middle of these discussions, the Board abruptly adopted self-serving and shareholder-unfriendly entrenchment devices, including prohibiting shareholders from acting by written consent and calling special meetings prior to the 2015 Annual Meeting of Stockholders (the “2015 Annual Meeting”).   The Board’s actions not only completely undermined their claims that they support good corporate governance, but also showed that while we were working hard to reach a settlement agreement for the benefit of all shareholders, the CEO and Board were focused on protecting their positions and were negotiating in bad faith.
 
Given this behavior, we were quite skeptical that the Board’s unilateral changes due to our involvement were done with the best interests of shareholders in mind.  The reactionary changes made by the Board included the addition of two new directors, the formation of a strategy committee, the hiring of an investment bank, and the commencement of a formal strategic alternatives review process.  Unfortunately, our skepticism has proven warranted.  On June 17th, the Board announced it unilaterally extended the suspension of shareholders’ ability to act by written consent and call special meetings for another year, through the 2016 Annual Meeting of Stockholders.
 
Board’s Lack of Independence
 
The “new” Board appears to be more of the same given it and the CEO are continuing to place their personal interests above those of the shareholders.  As we feared and cautioned in our April 2015 press release, the two new directors added to the Board appear to be nothing more than lackeys following the lead of CEO Craig McKenzie by supporting a culture of curbing shareholder rights to further the interests of an entrenched CEO and Board.  While CEO McKenzie “stepped down” as Chairman at the end of February 2015, for example, the appointment of his longtime friend and business connection, Adam Kroloff, as Chairman all but ensured that it would be business as usual at Dakota Plains.  Due to CEO McKenzie and Mr. Kroloff’s service together at BP Amoco and Toreador Resources Corporation (“Toreador”), and the fact that Toreador’s stock price declined by more than 60% while Mr. Kroloff served as a director, we openly questioned whether Mr. Kroloff was hired for his ability to deliver value for shareholders or, more likely, for his loyalty to CEO McKenzie.  The Board’s recent decision to once again violate shareholder rights demonstrates that the Board and CEO remain preoccupied with protecting their positions and reinforces our belief that Mr. Kroloff was appointed for his loyalty to CEO McKenzie and his shareholder-unfriendly agenda.
 
 
 
 
 
Further evidence of the Board’s lack of independence can be found in the alarming amount of CEO compensation and the pattern of unnecessarily increasing the CEO’s base salary.  CEO McKenzie was hired on February 8, 2013 for a three-year term at a base salary of $350,000.  On March 12, 2014, after barely over a year of service on a three year contract, CEO McKenzie received a 21% raise to $425,000 on a new three-year contract.  Most alarming, CEO McKenzie has been paid almost $5 million over the past two years despite an almost 70% decline in DAKP’s stock price over this time.  In addition, the Board compensation is $150,000 per director per year which is excessive given DAKP’s stock price performance and its size at approximately $70 million in market capitalization.  Excessive Board and CEO compensation combined with a large salary increase one year into a three year contract strongly suggest a Board captive to the CEO and makes us question the independence of the Dakota Plains Board.  We note that the Chairman of the Dakota Plains compensation committee under the “new” Board remains the same as before and we question this committee’s independence from the CEO.  We continue to believe the Board and CEO are using Dakota Plains as a personal compensation vehicle and they care more about maintaining this compensation structure than they do maximizing value for shareholders.
 
Impaired Credibility
 
We believe that the CEO’s issuance of 2015 guidance and the removal of that guidance a mere five months later have been incredibly damaging to shareholder value and the Company’s credibility.  On December 12, 2014, DAKP issued adjusted EBITDA guidance for 2015 of $23.4 million with the CEO saying on a conference call that day “while the volumes we are providing in our 2015 guidance represent significant growth over 2014, I believe they will prove conservative.” CEO McKenzie was insistent on this very precise guidance forecast by emphasizing that Dakota Plains “has take-or-pay contracts underpinning volumes and we’re hardly seeing any impact based on the lower oil prices, so we’re seeing a very strong business that is proving to be very defensive in this environment.”  In addition, on a March 16, 2015 conference call with investors regarding Q4 2014 earnings, CEO McKenzie reiterated the 2015 guidance saying “we are right in line with our 2015 plan…and we have no reason to believe that we’re not going to be meeting our guidance, so therefore today it is reiterated.”  In May 2015, a mere two months later, DAKP’s CEO removed the 2015 guidance saying “the conditions and assumptions underpinning that guidance have changed considerably over the last five months” and “it is no longer prudent to provide annual guidance.”
 
We see only two possible explanations for this pattern: either CEO McKenzie is not competent to be CEO because he doesn’t understand DAKP’s business or he was intentionally misleading shareholders in December 2014 and again in March 2015 because he feared a proxy battle and was willing to say anything to get past the nomination deadline.  On December 12, 2014 when CEO McKenzie first issued guidance for 2015, oil prices were $57.81 per barrel and on May 8th, 2015 when guidance was removed, oil prices had risen to $59.39 per barrel.  CEO McKenzie, however, cited “the decline in oil prices” as a reason behind the change in industry conditions, but on December 12, 2014 when 2015 guidance was first provided, oil prices had already declined almost 50% from their June 2014 highs.  Any knowledgeable oil industry executive could have foreseen a period of declining rig count and “uncertainty in industry conditions” following a 50% decline in oil prices.  Thus, we believe CEO McKenzie does not fully understand Dakota Plains’ business or he had ulterior motives or both.
 
 
 
 
 
Conclusion
 
Under the perceived threat of a proxy contest, the Board of Dakota Plains made commitments to its shareholders.  The Board and CEO, for example, committed to complete a robust strategic alternatives review process and maximize value for shareholders, with the most logical outcome being a sale of the Company to a MLP.  Under the guise of this commitment, the Board has once again deprived shareholders of the ability to act by written consent and call special meetings in violation of a promise made to us that the bylaw change made in February 2015 would be temporary and would expire at the conclusion of the 2015 Annual Meeting.  Meanwhile, there is no evidence of a robust strategic alternatives process being under way and in fact CEO McKenzie has backtracked on his previous promise to shareholders to complete such a process and maximize value for the shareholders of Dakota Plains.  We further note that DAKP shares have declined almost 70% during his tenure as CEO which, unfortunately, continues the pattern from McKenzie’s previous two CEO tenures, both of which he left abruptly.
 
We are confident that shareholders see through the Board’s thinly-veiled attempts to stay in power, and share our growing sense of frustration with the Board and CEO.  We will continue to monitor developments at Dakota Plains closely and reserve all of our rights to take any actions that we believe are necessary to protect the best interests of all shareholders.
 
About Lone Star Value Management:
 
Lone Star Value Management, LLC (“Lone Star Value”) is an investment firm that invests in undervalued securities and engages with its portfolio companies in a constructive way to help maximize value for all shareholders.  Lone Star Value was founded by Jeff Eberwein who was formerly a Portfolio Manager at Soros Fund Management and Viking Global Investors.  Lone Star Value is based in Old Greenwich, CT.
 
Jeffrey E. Eberwein, Managing Member
Lone Star Value Management, LLC
 
Investor Contact:
John Glenn Grau
InvestorCom, Inc.
(203) 972-9300 ext. 11