EVERMORE is Critical of Lack of Leadership and Communication in Letter to ModusLink's Chairman
SUMMIT, N.J., Nov. 7, 2012 /PRNewswire/ -- Evermore Global Advisors, an investment manager that employs an active value investment discipline to find undervalued companies that have the potential to yield long-term value for investors, has notified the board of directors of ModusLink Global Solutions that the company's ongoing lack of leadership and communication with shareholders is unacceptable.
In a letter to Francis J. Jules, chairman of ModusLink, Evermore chief executive officer David E. Marcus wrote that the company has not properly communicated with shareholders regarding the status of the accounting irregularities that came to light in June as well as their review of strategic alternatives, which began almost one year ago.
Mr. Marcus also expressed outrage that in light of the accounting irregularities, ModusLink Chief Financial Officer Steven Crane and General Counsel Peter Gray, the two most senior corporate officers who oversaw the company's accounting and disclosure practices, are still working for ModusLink and receiving massive bonuses. In addition, Mr. Marcus noted his objection to the continued absence of a chief executive to lead the review of strategic alternatives with Goldman Sachs. The departure of ModusLink's most recent chief executive, Joseph C. Lawler, earlier this year was fully supported by Evermore.
"There is no aspect of ModusLink's current state of affairs that would indicate there is any form of serious leadership in the management ranks or at the Board level, which is totally unacceptable," Mr. Marcus wrote. "Proxy season is quickly approaching and we are not the only shareholders with little patience left for the status quo, as evidenced by the recent director nominations by affiliates of Steel Partners."
Noting that the ModusLink board barely survived a proxy contest with Peerless Systems last year, Mr. Marcus wrote, "Investors do not have the tolerance for another expensive proxy fight, especially after management has made such an impressive series of missteps over the past three years."
Mr. Marcus asked that ModusLink communicate with shareholders regarding the status of its operations, its search for a new chief executive and its strategic review, concluding, "Anything less than full disclosure to shareholders on these matters in the very near future will lead us to conclude that the current Board members and senior managers are no longer capable of fulfilling their duties to ModusLink's shareholders."
The full text of Evermore's letter to ModusLink's chairman is below:
Francis J. Jules
Chairman of the Board of Directors
ModusLink Global Solutions
1601 Trapelo Road
Waltham, MA 02451
November 5, 2012
Dear Mr. Jules:
Accounts managed by Evermore Global Advisors, LLC own approximately 1.8% of the outstanding shares of ModusLink Global Solutions ("ModusLink"). We are writing to express our outrage regarding the company's lack of substantive communication with respect to the status of (i) accounting irregularities disclosed in June and (ii) Goldman Sachs' review of strategic alternatives, which commenced nearly one year ago. Given the significant impact the outcomes of these initiatives may have on the value of the company, it is imperative that management communicate their status with shareholders. Announcing in a Form 8-K that the company expected to receive a notification letter from NASDAQ without disclosing any further information into this serious issue is appalling.
In addition to the lack of communication by company management regarding the issues outlined above, we have a number of serious concerns about the company, including:
- The absence of a CEO who should be leading the strategic review of alternatives with Goldman Sachs
- The fact that the two most senior corporate officers who had oversight over accounting and disclosure issues, CFO Steven Crane and General Counsel Peter Gray, are still working at the company and continue to receive massive bonuses
There is no aspect of ModusLink's current state of affairs that would indicate there is any form of serious leadership in the management ranks or at the Board level, which is totally unacceptable.
Proxy season is quickly approaching and we are not the only shareholders with little patience left for the status quo, as evidenced by the recent director nominations by affiliates of Steel Partners. Last year, the Board barely survived a proxy contest with Peerless Systems. Since that time, the accounting issues have come to light, Joe Lawler has been fired, and there apparently has been no progress on the strategic review. Investors do not have the tolerance for another expensive proxy fight, especially after management has made such an impressive series of missteps over the past three years.
We ask again for the company to communicate with shareholders on where it stands with regards to:
- The search for a new CEO
- The strategic review of alternatives
Anything less than full disclosure to shareholders on these matters in the very near future will lead us to conclude that the current Board members and senior managers are no longer capable of fulfilling their duties to ModusLink's shareholders.
We look forward to your response.
Chief Executive Officer
CC: Virginia G. Breen
CC: Jeffrey J. Fenton
CC: Edward E. Lucente
CC: Michael J. Mardy
CC: Joseph M. O'Donnell
CC: Jeffrey S. Wald
For more information about Evermore Global Advisors, contact Jami Schlicher of JCPR at 973-850-7309 or firstname.lastname@example.org.
About Evermore Global Advisors
Evermore Global Advisors is the creator and manager of the Evermore Global Value Fund. Founded in 2009 by Chief Executive Officer and lead portfolio manager David Marcus, and President and Chief Operating Officer Eric LeGoff, Evermore employs a distinctive active value investment discipline designed to find undervalued companies anywhere in the world that are undergoing strategic changes that have the potential to unlock long-term value for investors while mitigating risk. Evermore makes investment decisions based on its original fact-based research, traditional financial analysis, and insights gained in face-to-face meetings with its unique global network of business owners, executives, and major investors.
Headquartered in Summit, N.J., Evermore Global Advisors is an investment adviser registered under the Investment Advisers Act of 1940. For more information, visit http://evermoreglobal.com.
SOURCE Evermore Global Advisors