Third Point files court action in bid to replace half of TXCO's board

By Lisa Kerner

Charlotte, N.C., Jan. 24 - TXCO Resources, Inc. investor Third Point LLC filed suit in the Delaware Chancery Court to nullify the appointment of James L. Hewitt to TXCO's board of directors on Jan. 14.

According to TXCO, Hewitt was appointed to fill a vacancy due to the retirement of Stephen M. Gose Jr. some 13 months ago.

However, Third Point said TXCO disclosed that the board had been reduced to six directors following Gose's retirement and in connection with its 2007 annual meeting. Hewitt would be the seventh director.

The suit also seeks a declaration that the board consists of six directors as well as an injunction preventing TXCO from amending its bylaws or altering the size of the board so as to interfere with Third Point's attempt to replace half the board at the 2008 annual meeting.

The addition of Hewitt to the board "followed a clear warning given to the board" by Third Point "not to take any steps to eliminate the shareholders' opportunity to elect half of the board at the 2008 annual meeting." Third Point said if such steps were taken, it would "seek to hold the board to account," according to a schedule 13D filing with the Securities and Exchange Commission.

In November, Third Point said it planned to nominate up to three candidates for election to TXCO's six-member board at the 2008 annual meeting, which is expected to be held in May.

It was previously reported that Third Point spent more than $34.53 million to acquire 2.75 million shares, or 8%, of the San Antonio-based oil and gas company.

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