Marlton LLC Seeks Immediate $1.5 million Return of Capital to Stockholders and Commencement of Strategic Alternatives Process
Marlton Questions whether Board is indifferent to valid stockholder concerns
Jan 14, 2019, 11:24 ET
CHICAGO, Jan. 14, 2019 /PRNewswire/ -- Today Marlton LLC ("Marlton") released an open letter to the Board of Directors of Parks! America, Inc. (OTC: PRKA). Link to the full letter below.
In summary of our letter, link below:
Approximately one month has passed since the PRKA Board of Directors received our letter raising our concerns that the Board was not maximizing value for stockholders. Our letter highlighted the importance of enhanced capital returns, an optimized financial structure, and transparent governance structure. While we are grateful to have heard from many stockholders who share our concerns, we are disappointed that, to our knowledge, this Board has not addressed, in any way, these fundamental matters that continue to burden PRKA and its equity value, publicly or privately.
We reiterate our previously stated concern that taking the following steps to dramatically improve PRKA's current capital allocation strategy and corporate governance would in turn improve stockholder returns:
- Return of capital of $1,500,000 through either a Special Dividend of $0.0201 per share representing 12.4% of PRKA's market capitalization based on a share price of $0.162 or a Modified Dutch Auction Tender.
- Announce the formation of a Special Committee of Independent Board Members to explore all strategic alternatives to maximize stockholder value, including the disbursement of a Special Dividend, Modified Dutch Auction Tender and/or the sale of the Company.
Stockholders expect transparency. In our experience it is standard practice for a public company to issue a response to stockholder communications of this nature, acknowledging its agreement that the Company is undervalued and its commitment to closing the obvious valuation gap. Instead, the Company has been silent, leaving all stockholders to question whether the PRKA Board is indifferent to the valid concerns raised in our December letter, or incapable of formulating a response. Again, as discussed in detail in our December 17, 2018 letter to the Board, we believe the equity market is penalizing PRKA equity shares over concerns of poor capital efficiency, sub-optimal use of cash, and lack of potential leadership succession plans for Dale Van Voorhis, our aging Chairman & CEO.
At this current equity price PRKA is trading for just 5.1x trailing twelve-month EBITDA, an 8.8% trailing free cash flow yield to equity ex-cash. Assuming PRKA recaptures lost visits from the FY 2018 inclement weather and reverts back to FY 2017 EBITDA with no further growth, PRKA trades at 4.3x FY 2017 EBITDA. Consider that if PRKA delivers zero growth over the next two years – i.e. management never again achieves FY 2017 EBITDA – the company would still generate and add to the balance sheet roughly $2.02 million in free cash flow or 17% of its current market capitalization. With such earnings power and cash build, clearly the equity market is discounting this Board's ability to allocate the accumulating cash flow. The Board's current "strategy" of aimlessly stockpiling cash on the balance sheet is not a capital allocation strategy and hence the market is not rewarding PRKA with a more appropriate multiple.
A Special Divided and formation of a Special Committee, led by current Directors Charles A. Kohnen & Jeffrey Lococo, reviewing all strategic alternatives would significantly help eliminate the equity market concerns currently plaguing our share price.
We intend to monitor developments at the Company very closely and will not hesitate to take any action that we believe is necessary to protect the best interests of the Company's stockholders.
Please click the following link to access the full letter: MARLTON LETTER TO PRKA BOARD
SOURCE Marlton LLC