LOS ANGELES, April 4, 2011 /PRNewswire/ -- Baker Street Capital, L.P. ("Baker Street"), announced today that it delivered a letter to the independent members of the Board of Directors of Tix Corporation (OTCQX: TIXC). Baker Street is the largest shareholder of Tix Corporation, with current ownership of approximately 21.9% of the shares outstanding. In the letter, Baker Street outlined its view that the Board has a fiduciary responsibility to shareholders to evaluate Baker Street's offer. We feel very strongly that such exploration should be conducted by a special committee of independent directors in a robust and full process to ensure that shareholders receive fair value.
The full text of the letter follows:
Dear Independent Board Members,
As you know, Baker Street Capital, L.P., together with its affiliates (collectively, "Baker Street"), is the largest shareholder of Tix Corporation ("TIX" or the "Company"), owning 5,451,259 shares or approximately 21.9% of the Company's 24,856,893 outstanding shares of common stock.
Five days ago we submitted to you a letter (the "March 30 Letter"), a copy of which is attached, which expressed our deep concern that senior management might be in the process of exploring an acquisition of the Company at less than full value. To protect our significant investment in the Company and based upon our belief in the Company's long-term prospects our letter also included a non-binding offer, subject to certain conditions, to acquire all of the shares of common stock of TIX not currently owned by Baker Street for a minimum of $2.10 per share (the "Purchase Price") in cash. The Purchase Price represented a premium of approximately 56.7% over TIX's closing price of $1.34 on March 30, 2011.
The March 30 Letter invited the Company to conduct a robust, full and fair sales process. We believe it is incumbent upon the Board to immediately create a special committee of independent directors to explore all strategic alternatives. This step would also reduce concerns arising from the inherent conflict of interest in Mitchell Francis, the Company's Chairman and CEO, exploring a management-led buyout. We are adamant that any action which the Board endorses must allow for the realization by shareholders of the Company's substantial intrinsic value.
We were very disappointed that the Company's response to our non-binding proposal was to adopt a shareholder rights plan (or poison pill) without offering any explanation to shareholders and without disclosing either our offer or any actions the Company may have taken to assist Mr. Francis in exploring a potential acquisition of the Company. The adoption of the shareholder rights plan appears to be but the latest in a series of events undertaken by this Board of Directors (the "Board") to insulate itself from accountability to the Company's shareholders.
It was our strong preference to continue to communicate privately with the Company to agree on a course of action in the best interest of all shareholders, but we feel compelled that all shareholders should understand the context of our proposal. Accordingly, we are issuing a press release regarding this letter and the March 30 Letter. We remind you that, as Board Members of a publicly traded Delaware corporation, it is your fiduciary responsibility to represent the best interests of all shareholders and we urge shareholders not to stand idly by if the Board, either through inaction, cronyism or neglect, fails to act in their best interest. As Warren Buffett said in his 2003 Annual Letter to Shareholders, "fiduciaries must now decide whether their job is to work for owners or for managers." We stand ready to meet with an independent committee of the Board to discuss our proposal and the other matters outlined herein.
Very truly yours,
The March 30 Letter:
Dear Independent Board Members,
Baker Street Capital Management, LLC, together with its affiliates (collectively, "Baker Street"), is the largest shareholder of Tix Corporation ("TIX" or the "Company"), owning 5,451,259 shares or approximately 21.9% of the Company's 24,856,893 outstanding shares of common stock. We believe that the Company is substantially undervalued and that the current market price does not reflect the Company's true value. We believe the Company should immediately commence a tender offer to repurchase shares, providing those shareholders interested with liquidity in cash for their equity in the Company and for those shareholders who wish to stay for the long term an increased ownership stake in the Company.
We are deeply troubled by indications we have that it may be management's intention to take the Company private at a small premium to the current depressed value, thereby purchasing the Company for less than full value and short-changing its shareholders. Any proposed transaction to take the Company private by management without the Company pursuing a robust and full sales process to all potential purchasers would prevent shareholders from participating in the realization of the Company's intrinsic value, strong market position, and growth prospects. Therefore, we hereby set forth our desire to participate in any sales process and enter into formal discussions with the Company's Board of Directors (the "Board") or an independent committee. Further, since we have concerns that management may currently be seeking to take the Company private, we hereby set forth our non-binding proposal to acquire all of the shares of common stock of TIX not currently owned by Baker Street (the "Transaction") for a minimum of $2.10 per share (the "Purchase Price") in cash. The Purchase Price represents a premium of approximately 56.7% over TIX's closing price of $1.34 on March 30, 2011. We are highly confident that with the combination of our existing ownership in TIX and the financing available to us, the Transaction will be fully financed upon execution of a definitive agreement. We would be pleased to meet with you as soon as possible to negotiate the terms of a definitive agreement.
It is our intention to work with management and, following the Transaction, we expect the Company's senior management team would remain in place and to maintain the Company's valuable employee base. We also anticipate that we will continue to run the business substantially in accordance with the Company's current practice, with such changes as may be necessary to meet the long-term competitive environment and to realize our business objectives.
We are prepared to immediately commence our due diligence and believe it can be completed promptly with the Company's cooperation. In connection with commencing our due diligence we would be willing to enter into a confidentiality agreement with the Company. Additionally, to the extent our due diligence reveals a higher value for the Company we are willing to increase the Purchase Price. However, we do have concerns based on previous conversations with management that a confidentiality agreement would require us to enter into an unreasonable standstill to commence due diligence. We hope the independent directors would acknowledge that any such provision would be an obstruction designed to favor management and allow a sale of the Company to management at a discount.
Our proposal is conditioned upon satisfactory completion of limited and confirmatory due diligence, the waiver of any Company anti-takeover provisions, obtaining all necessary consents and approvals and the execution of a mutually acceptable definitive agreement, which would include customary conditions for a transaction of this type and size.
This letter should not be construed as a binding obligation on us unless and until a definitive agreement is entered into in a form acceptable to us and we reserve the right to withdraw, modify or otherwise change our proposal set forth herein at any time.
We expect that the Board has, or will, form a special committee of independent directors with respect to management's active and ongoing efforts to take the Company private. We look forward to working with the special committee as soon as possible to complete a mutually acceptable transaction that we believe will benefit everyone involved. As the largest shareholder of TIX we are committed to ensuring that all shareholders receive full and fair value.
We expect to promptly hear back from you in the next few days to discuss how we can proceed constructively. We are providing this letter on a private basis and we hope that discussions regarding the Transaction can be accomplished on a private basis. If, however, the Board chooses to disregard its fiduciary obligations and refuses to engage in discussions, pursues a transaction with management without a full and fair sales process (including all potentially interested financial and strategic parties), or otherwise attempts to seek refuge behind defensive corporate roadblocks or machinations, we are willing to take our proposal directly to the Company's shareholders and reserve our right to take any and all legal action necessary to preserve shareholder value.
Very truly yours,
ABOUT BAKER STREET CAPITAL, L.P.
Baker Street Capital, L.P., is a value-focused investment fund modeled after the partnerships managed by Warren Buffett from 1956 to 1969. Baker Street Capital, L.P., is headquartered in Los Angeles, California.
Vadim Perelman, 310-246-0345, [email protected]
SOURCE Baker Street Capital, L.P.