Chatham Asset Management Sends Letter to R.R. Donnelley Board of Directors
Strongly Urges Board Not to Renew Value Destructive Poison Pill
Chatham Recommends Strategic Review of the Company's Assets
Jul 28, 2021, 09:40 ET
CHATHAM, N.J., July 28, 2021 /PRNewswire/ -- Chatham Asset Management, LLC ("Chatham"), a private investment firm which manages funds that beneficially own approximately 14.9% of the outstanding common stock and which is the largest bondholder of R.R. Donnelley & Sons Company ("RRD" or the "Company") (NYSE: RRD), today sent a letter to the Company's Board of Directors (the "Board").
As a significant, long-term shareholder of RRD, Chatham strongly urges the Board not to renew its value destructive and insulating stockholder rights plan (the "Poison Pill") upon its expiration on August 28, 2021. Moreover, Chatham recommends the Board engage an external advisor to undertake a strategic review of the Company's assets to unlock the intrinsic value of RRD and improve its share price.
The full text of the letter follows:
July 28, 2021
The Board of Directors
R.R. Donnelley & Sons Company
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John C. Pope, Chairman
Dear Members of the Board:
As owners of approximately 14.9% of the common stock of R.R. Donnelley & Sons Company (the "Company"), Chatham Asset Management (together with its affiliated funds, "Chatham") believes that our sizeable position reflects our conviction in the value opportunity at the Company. We write today, however, out of concern that the Board of Directors' stance on certain critical matters imperils that value.
Although Chatham has been publicly and privately supportive of the management team, we are disappointed that the Board has publicly indicated that "the Board expects that under current circumstances it would approve an extension of the Rights Plan [on August 28, 2021] and submit the Rights Plan to stockholders for ratification at the Company's 2022 annual meeting of stockholders." Moreover, we note that the Company has not committed to redeeming the pill in the unfortunate event the Rights Plan is extended and voted down by the shareholders at the upcoming Annual Meeting: "[[a]s currently contemplated by the Board (emphasis added), if such stockholder ratification were obtained, the Rights Plan as so extended would expire on August 28, 2022; otherwise, the Rights Plan would expire at the close of business on the first business day following the certification of the voting results for the Company's 2022 annual meeting of stockholders."
We wish to make it crystal clear to the Board that the Board should not renew its stockholder rights plan upon its expiry on August 28, 2021. Renewing the pill would further erode any remaining confidence we have in the Board's stewardship. Instead, we believe the Board should concentrate its efforts on undertaking a strategic review of assets with an external advisor with a view to unlocking the intrinsic value of the Company that, despite positive operating performance and outlook, the Company's share price persistently fails to reflect.
We remain eager to continue to engage in open dialogue with the Company.
Anthony R. Melchiorre
SOURCE Chatham Asset Management, LLC
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