| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| SCHEDULE 13D/A | |
| Under the Securities Exchange Act of 1934 | |
| (Amendment No. 6)* | |
|
SunOpta Inc. | |
| (Name of Issuer) | |
|
Common Shares, no par value | |
| (Title of Class of Securities) | |
|
8676EP108 | |
| (CUSIP Number) | |
|
Tourbillon Capital Partners, L.P. 888 Seventh Avenue, 32nd Floor New York, NY 10019 Attention: Naama Rosen (212) 554-2528
with a copy to:
Eleazer Klein, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 | |
| (Name, Address and Telephone Number of Person | |
| Authorized to Receive Notices and Communications) | |
|
May 27, 2016 | |
| (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 Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box. ☐
(Page 1 of 9 Pages)
______________________________
* 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. 8676EP108 | SCHEDULE 13D/A | Page 2 of 9 Pages |
| 1 |
NAME OF REPORTING PERSON Tourbillon Capital Partners, L.P. | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS AF | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 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 -0- | ||
| 8 |
SHARED VOTING POWER 8,450,000 | |||
| 9 |
SOLE DISPOSITIVE POWER -0- | |||
| 10 |
SHARED DISPOSITIVE POWER 8,450,000 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 8,450,000 | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% | |||
| 14 |
TYPE OF REPORTING PERSON PN, IA | |||
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 3 of 9 Pages |
| 1 |
NAME OF REPORTING PERSON Tourbillon Global Long Alpha Fund, LLC | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS WC | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 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 -0- | ||
| 8 |
SHARED VOTING POWER 160,795 | |||
| 9 |
SOLE DISPOSITIVE POWER -0- | |||
| 10 |
SHARED DISPOSITIVE POWER 160,795 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 160,795 | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1% | |||
| 14 |
TYPE OF REPORTING PERSON OO | |||
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 4 of 9 Pages |
| 1 |
NAME OF REPORTING PERSON Tourbillon Global Long Alpha Fund, Ltd | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS WC | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |
¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7 |
SOLE VOTING POWER -0- | ||
| 8 |
SHARED VOTING POWER 587,779 | |||
| 9 |
SOLE DISPOSITIVE POWER -0- | |||
| 10 |
SHARED DISPOSITIVE POWER 587,779 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 587,779 | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1% | |||
| 14 |
TYPE OF REPORTING PERSON CO | |||
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 5 of 9 Pages |
| 1 |
NAME OF REPORTING PERSON Tourbillon Global Master Fund, Ltd | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS WC | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |
¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7 |
SOLE VOTING POWER -0- | ||
| 8 |
SHARED VOTING POWER 7,701,426 | |||
| 9 |
SOLE DISPOSITIVE POWER -0- | |||
| 10 |
SHARED DISPOSITIVE POWER 7,701,426 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,701,426 | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.0% | |||
| 14 |
TYPE OF REPORTING PERSON CO | |||
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 6 of 9 Pages |
| 1 |
NAME OF REPORTING PERSON Jason H. Karp | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS WC | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |
¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION United States | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7 |
SOLE VOTING POWER -0- | ||
| 8 |
SHARED VOTING POWER 8,450,000 | |||
| 9 |
SOLE DISPOSITIVE POWER -0- | |||
| 10 |
SHARED DISPOSITIVE POWER 8,450,000 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 8,450,000 | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% | |||
| 14 |
TYPE OF REPORTING PERSON IN | |||
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 7 of 9 Pages |
| 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 4. | PURPOSE OF TRANSACTION |
| Item 4 of the Schedule 13D is hereby amended and supplemented by the addition of the following: | |
| On May 27, 2016, Tourbillon sent a letter (the “Board Letter”)
to the Board of Directors (the “Board”) of the Issuer, highlighting the Issuer’s poor share price performance
over the last two years. In the Board Letter, Tourbillon noted its belief that there is strategic interest in the Issuer and has
recommended that the Issuer engage an independent investment bank to advise on a value maximization process that includes consideration
of a sale, which Tourbillon believes has the potential to yield a substantial premium to the Issuer’s recent share price
as well as to the long-term, risk-adjusted standalone trading value. The foregoing description of the Board Letter is qualified
in its entirety by reference to the Board Letter, which is filed herewith as Exhibit 2.
|
| Item 5. | INTEREST IN SECURITIES OF THE ISSUER |
| Item 5(a) of the Schedule 13D is hereby amended and restated to read as follows: |
| (a) |
The aggregate percentage of Shares reported owned by each person named herein is based upon 85,509,835 Shares outstanding, which is the total number of Shares outstanding as of May 6, 2016, as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2016.
As of the close of business on February 3, 2016, Long Alpha LLC owned directly 160,795 Shares, constituting less than 1% of the Shares outstanding, Long Alpha Ltd owned directly 587,779 Shares, constituting less than 1% of the Shares outstanding and Global Master Fund owned directly 7,701,426 Shares, constituting approximately 9.0% of the Shares outstanding. By virtue of their respective relationships with the Funds discussed in further detail in Item 2, each of Tourbillon and Mr. Karp may be deemed to beneficially own the Shares owned directly by the Funds. |
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 8 of 9 Pages |
| Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein. | |
| Item 6. | CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER |
| The first two of Item 6 of the Schedule 13D are hereby amended and restated to read as follows: | |
|
Each of Long Alpha LLC, Long Alpha Ltd and Global Master Fund have entered into notional principal amount derivative agreements (the “Derivative Agreements”) in the form of cash settled swaps with respect to 903,672, 4,691,328 and 7,065,515 Shares, respectively (representing economic exposure comparable to approximately 1.1%, 5.5% and 8.3% of the Shares, respectively). Collectively, the Derivative Agreements held by the Reporting Persons represent economic exposure comparable to an interest in approximately 14.8% of the Shares outstanding. The Derivative Agreements provide each of Long Alpha LLC, Long Alpha Ltd and Global Master Fund with economic results that are comparable to the economic results of ownership. The Derivative Agreements do not provide the Reporting Persons with the power to vote or direct the voting or dispose of or direct the disposition of the shares that are referenced in the Derivative Agreements (such shares, the “Subject Shares”). The Reporting Persons disclaim beneficial ownership in the Subject Shares. The counterparties to the Derivative Agreements are unaffiliated third party financial institutions.
Global Master Fund has purchased from counterparties 16,083 cash-settled call options representing 1,608,300 Shares each with a strike price ranging from $5.00 to $7.50 and with an expiration date of June 17, 2016 (collectively, the “Cash Settled Call Options”). The Cash Settled Call Options do not provide the Reporting Persons with the power to vote or direct the voting or dispose of or direct the disposition of the shares that are referenced in the Cash Settled Call Options (such shares, the “Cash Settled Call Option Subject Shares”). The Reporting Persons disclaim beneficial ownership in the Cash Settled Call Option Subject Shares. The counterparties to the Cash Settled Call Options are unaffiliated third party financial institutions. | |
| Item 7. | EXHIBITS |
| Item 7 of the Schedule 13D is hereby amended and supplemented by the addition of the following: | |
| Exhibit | Description |
| 2 | Board Letter, dated May 27, 2016. |
| CUSIP No. 8676EP108 | SCHEDULE 13D/A | Page 9 of 9 Pages |
SIGNATURES
After reasonable inquiry and to the best of his or its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Date: May 27, 2016
| TOURBILLON GLOBAL LONG ALPHA FUND, LLC | |||
| By: |
Tourbillon Capital Partners, L.P., Investment Manager | ||
| By: | /s/ Brian A. Kessler | ||
| Name: | Brian A. Kessler | ||
| Title: | Chief Financial Officer | ||
| TOURBILLON GLOBAL LONG ALPHA FUND, LTD | |||
| By: |
Tourbillon Capital Partners, L.P., Investment Manager | ||
| By: | /s/ Brian A. Kessler | ||
| Name: | Brian A. Kessler | ||
| Title: | Chief Financial Officer | ||
| TOURBILLON GLOBAL MASTER FUND, LTD | |||
| By: |
Tourbillon Capital Partners, L.P., Investment Manager | ||
| By: | /s/ Brian A. Kessler | ||
| Name: | Brian A. Kessler | ||
| Title: | Chief Financial Officer | ||
| Tourbillon Capital Partners, L.P. | |||
| By: | /s/ Brian A. Kessler | ||
| Name: | Brian A. Kessler | ||
| Title: | Chief Financial Officer | ||
| /s/ Jason H. Karp | |
| JASON H. KARP |
EXHIBIT 2
Board Letter
May 27, 2016
The Board of Directors
SunOpta, Inc.
2233 Argentia Road
Mississauga, Ontario L5N 2X7, Canada
Attn: Alan Murray, Chairman of the Board
Attn: Rik Jacobs, Chief Executive Officer
Dear Alan, Rik and Members of the Board:
I am writing to you on behalf of Tourbillon Capital Partners, L.P. (together with its affiliates, “Tourbillon” or “we”). Tourbillon currently beneficially owns 9.9% of the outstanding shares of SunOpta, Inc. (NASDAQ: STKL, TSE: SOY) (the “Company” or “SunOpta”), making us the Company’s largest shareholder.
We have participated in a long-term, ongoing private dialogue with the Company, principally with CEO Rik Jacobs and former CEO Steve Bromley. We have also had the chance to meet with Chairman Alan Murray and Director Margaret Shan Atkins. Through these interactions, we are optimistic that the Board of Directors (the “Board”) and management share our view that SunOpta possesses a uniquely attractive business in a rapidly growing field – sourcing hard-to-find organic, non-GMO ingredients and providing bespoke, organic and non-GMO private label food products to an underserved market. We also believe the Board and management share some of the frustration of shareholders over the Company’s poor absolute share price performance and share price underperformance relative to the market and industry peers over the last year, two years, and since the Company’s all-time high share price, respectively.
| Share Price Performance |
Since 10/31/2014 (All-Time High) | ||
| 1 Year | 2 Year | ||
| SunOpta | (62.3%) | (71.7%) | (73.0%) |
| Russell 2000 | (8.6%) | 0.0% | (2.9%) |
| Industry Peer Group | 6.6% | 17.6% | 11.1% |
We have become increasingly concerned that the Company may be pursuing an uncertain business plan without a thorough evaluation of all value-maximizing alternatives. For the reasons set forth below, we urge the Company to immediately engage an independent investment bank to advise on a value maximization process – including the execution of a sales process – and to evaluate the results against other options including the risk-adjusted value of continuing to operate on a standalone basis.
Despite its strengths, the Company has been unable to translate its quality products and services into a thriving business with an attractive public market valuation. Our public and private diligence has confirmed that
SunOpta’s operations remain vastly under-optimized, which is affecting both business performance as well as valuation. Additionally, the Company has been unable to capture industry tailwinds – growing at ~7% yearly since 2011 (with acquisitions) while the industry has grown at ~13% yearly. In an attempt to address these gaps, SunOpta presented a thoughtful plan at its April 2016 Analyst Day. The plan called for enhancing the Company’s EBITDA margin profile to ~10% in 24-36 months from its current ~6% margin as well as targeting high single/low double digit consolidated revenue growth. We believe the market is giving the Company’s current strategy a vote of no confidence as the share price proceeded to fall 23% with the Russell 2000 up 3% over the same period.
The problems are not limited to operational inefficiencies and missteps; effective capital allocation appears to be elusive. Case-in-point, the acquisition of Sunrise Growers in July 2015, which was the most significant recent strategic decision made by the Board, has been followed by disappointing performance for shareholders, repeatedly missed expectations, and operating performance challenges. Continuing the trend and representative of shareholders’ lack of confidence in the Board and management, following announcement of the Sunrise acquisition, SunOpta’s share price proceeded to fall 64% with the Russell 2000 down 8% over the same period.
It remains our firm belief that if the Company were to fix its operational missteps, refocus and reprioritize its sales efforts, and effectively deploy capital, the Company would be worth several times what it is worth today. According to the plan that management laid out in April 2016, the Company should earn close to $0.80 of EPS in 24-36 months. Furthermore, based on our due diligence, if the Company is able to correct the operational issues entirely under its control – underutilization, cost of nonperformance, low yields, etc. – we believe that SunOpta can earn over $1.60 of EPS over the same time period. At the current price, SunOpta shares would be trading at 4.8x and 2.4x earnings, respectively, while peers trade around 20x earnings.
Unfortunately, we do not believe that the Board shares our urgency to correct these deficiencies. Therefore, the Company should immediately explore the potential value to shareholders that could be realized in a sale transaction to a strategic partner or a management buyout, and to evaluate the results of a fulsome sales process against other options including the risk-adjusted value of continuing to operate on a standalone basis. To the extent the Company is interested in pursuing a management buyout, we would be happy to have discussions about methods for us to participate in that. As we have seen many times in the market, tough changes may be best addressed in a private setting. While we are not pre-judging the outcome, we believe there is significant strategic interest in the Company at a substantial premium to the Company’s recent share price, as well as to the long-term, risk-adjusted standalone trading value, from multiple potential strategic and financial buyers. Simply put, we believe SunOpta can become a more valuable business as a part of a larger enterprise.
As such, we believe the Board would be doing a clear disservice to shareholders by spending significant additional capital on non-core growth initiatives without first obtaining an accurate measure of SunOpta’s value to an acquirer. Due to our growing concern that management and the Board no longer appear willing to consider all paths to maximize shareholder value nor inspire the necessary confidence from shareholders to deliver on the potential value, we feel compelled to share our views publicly.
We urge the Company to immediately engage an independent investment bank to advise on a value maximization process including a thorough sales process. Indications of Board commitment to this pathway are urgently needed, as shareholders are looking for leadership from both the Board and Rik as the new CEO. For our part as large and engaged shareholders, we are committed to seeing this change through, by considering all options including potentially seeking changes to the Board and management of the Company.
We look forward to a shareholder discussion on these issues in the coming weeks and we welcome your feedback.
Best regards,
Jason H. Karp
Chief Executive Officer and Chief Investment Officer
Tourbillon Capital Partners, L.P.