Montauk Renewables, the Nasdaq-listed renewable natural gas producer that promised a bright future from its unbundling out of Hosken Consolidated Investments, presents a compelling investment case in the burgeoning green energy sector.
Yet this thesis is being overshadowed by a high-stakes disagreement with shareholders over the company’s valuation, transparency and corporate governance practices. The dispute, documented in a series of letters, highlights fundamental questions for investors weighing Montauk’s prospects.
At its core, it is a growth business. The company has an attractive position in the green energy sector. It owns and operates a portfolio of facilities that convert landfill methane into renewable natural gas (RNG) and other renewable energy products. This positions it to capitalise on global decarbonisation efforts and government incentives. However, despite this promising business model, the company’s share price has been decimated since peaking at R337 in mid-September 2022.
A concerned investor group — spearheaded by Aktiv Investment Management, which has a substantial stake in the company — attributes this steep decline to a “trust deficit” in the market, arguing that Montauk’s lack of transparency prevents investors from accurately valuing the business and its growth pipeline. This is a central theme in the activists’ correspondence with Montauk’s board; they call for better disclosure and greater accountability from management.
A review of Montauk’s recent financial performance shows a company struggling to meet market expectations, which may also be contributing to the erosion of its share price. In its 2025 second-quarter earnings, Montauk reported a net loss of $5.5m and a 27.7% decrease in adjusted earnings before interest, tax, depreciation and amortisation. Furthermore, core operational metrics, such as RNG production volumes, have been flat year on year.
CEO Sean McClain says management remains optimistic about the company’s trajectory. “This is not unique to Montauk. Our sector is down, and many companies, particularly in the US, are facing challenges in the performance of their green assets.”
A key point of contention for the activists is the company’s approach to disclosure on major capital projects. Montauk has invested millions of dollars in new growth initiatives, including a flagship project related to an agreement with European Energy’s subsidiary EE North America. This is a 15-year contract (with the option to extend) for the delivery of 140,000t of biogenic CO2 annually. Yet it has not provided investors with public forecasts for expected returns or project economics.
In a letter responding to shareholder activists, Montauk chair Johnny Copelyn said providing such disclosures would be “inappropriate” for a listed company, arguing they could be construed as “speculative” or “premature”. He added that the company provides clear disclosures on material matters, such as the number of renewable energy certificates expected from its North Carolina project.
However, the activist shareholders have pushed back. One concerned shareholder says: “From an investor’s standpoint, a company should conduct extensive financial modelling and have clear projections on future returns before committing tens of millions of dollars to a project.” The absence of this information forces investors to either trust management blindly or apply a significant discount to the company’s valuation, as they cannot model the future cash flows themselves. “The market is effectively being asked to invest based on faith, not facts, a position that savvy investors are unwilling to take.”
This is not unique to Montauk. Our sector is down, and many companies, particularly in the US, are facing challenges in the performance of their green assets
— Sean McClain
McClain counters that Montauk cannot provide projections for projects where outcomes are still “uncertain or speculative”, as premature disclosure would risk unjustifiably inflating the stock price. He adds that the company makes disclosures in accordance with US securities laws and that he is confident that its stock price will rebound.
John Ciroli, the company’s chief legal officer, also says that providing projections or other material information privately to shareholders on a selective basis would violate US securities laws.
The disagreement between Montauk and the concerned investors has escalated over a financial transaction that has brought the company’s governance into sharp focus. Public records confirm a $10.7m loan made by Montauk Renewables to its former South African parent company, Montauk Holdings. The loan carries a remarkably low 0.4% annual interest rate and has a maturity date of December 31 2033.
In March 2025, Montauk Renewables advanced an additional $650,000 to Montauk Holdings. This funding was then used to settle an outstanding unsecured loan that Montauk Holdings owed to Rivetprops 47, a South African private company where Copelyn is the sole director. The existence of the Rivetprops loan was not disclosed in any US Securities & Exchange Commission (SEC) filings before the 2024 Form 10-K (an annual report summarising a company’s financial performance that is required by the SEC). This was filed on March 14 2025, and was the first official mention of the Rivetprops loan and Montauk Renewables’ obligation to settle it.
From the investors’ standpoint, this transaction raises questions about fiduciary duty, the legal and ethical obligation of directors to act in the best interests of their shareholders. Related-party transactions, while not illegal, are subject to intense scrutiny. This specific loan’s terms, especially the low interest rate, raise questions about the board’s fiduciary duty to Montauk Renewables shareholders, particularly as the company’s own borrowing costs are significantly higher.
McClain says the loan was a contractual obligation from the time of the US IPO to help South African shareholders with their tax liabilities stemming from the reorganisation. He adds that if the loan was not repaid, it would have resulted in the foreclosure on pledged shares, which would have harmed the South African shareholders at the current lower share price. Ciroli says the arrangement was fully disclosed in the US IPO prospectus in 2021.
Shareholder activists question why the company didn’t consider liquidating the entity when its obligation to Rivetprops 47 came due on December 31 2024, as the company was “technically insolvent”, which would have resulted in Montauk Renewables taking ownership of the pledged shares, “rather than continuing to fund a struggling entity”.
In his letter, Copelyn challenged the activists’ methods, arguing that a public dispute was counterproductive and that the issues could be better resolved through private conversation. The activists declined, saying his proposal for additional private discussions with himself or members of the executive team does not align with their goal of fostering market transparency.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.