Signature Group Holdings Meets with Institutional Shareholder Services

Jul 02, 2012, 08:30 ET from Signature Group Holdings, Inc.

SHERMAN OAKS, Calif., July 2, 2012 /PRNewswire/ -- On June 28, 2012, Signature Group Holdings, Inc. (OTCQX: SGGH) met with Institutional Shareholder Services ("ISS"), one of the nation's leading proxy advisory firms, to discuss the Company's director nominees and other proposals on the WHITE proxy card to be voted on at the Company's upcoming annual meeting to be held on July 24, 2012. The Company's presentation to ISS was filed with the Securities and Exchange Commission on June 28, 2012 and is available on its website.

http://edg1.vcall.com/irwebsites/signaturegroup/June%202012%20Investor%20Presentation%20to%20ISS.pdf

"Our highly credible and capable director nominees support – and can contribute to -- a business plan that will enhance value for all stockholders," said Craig Noell, Chief Executive Officer of Signature.  In addressing the limited business strategy proposed by James McIntyre, the former Chairman and CEO of the Company when it operated prior to bankruptcy as Fremont General Corporation, Mr. Noell stated, "Mr. McIntyre's simplistic and limited approach for the Company's business strategy, underscores why it is so important that stockholders vote FOR our nominees on the WHITE proxy card. Mr. McIntyre's latest letter to stockholders fails to present a comprehensive and coordinated plan.  This letter demonstrates a fundamental misunderstanding of the challenges the Company continues to face, a significant number of which are associated with his prior tenure when Fremont recorded net losses of $202.3 million and $1.0 billion in 2006 and 2007, respectively." Stockholders should ask:  Should the person, whose past performance as Chairman of the Company led it to bankruptcy, accumulating approximately $900 million in Net Operating Losses (NOLs), now be entrusted to maximize the value of these NOLs?

Mr. McIntyre's letter fails to disclose pertinent facts: 

  • Mr. McIntyre's approach calls for outsourcing deal identification to an investment banker.  This is an effective admission that there are insufficient deal-sourcing capabilities among his nominees and would place the future of your Company in the hands of a financial agent whose interests are not necessarily aligned with yours.  Additionally, this strategy would subject the Company to paying huge investment banking fees and competing in auction processes where purchase price multiples can lead to overpaying for a target company.  In contrast, our approach is opportunistic, yet disciplined, giving the Company the latitude to pursue transactions that serve the best interests of all stockholders.  Mr. McIntyre's approach could take years to execute and prove very costly.  We are aware of other companies with large NOLs that have business plans in place looking for that single, well-priced acquisition target and these companies have waited years for "the big one" to materialize. Our approach gives the Company flexibility to not only pursue larger acquisitions, but middle-market acquisitions that would be accretive to earnings, growth and positive cash flow.  Why should we wait?
     
  • Our executive compensation is directly aligned with our stockholders' interests.  The majority of our management team's compensation is in stock options that only pay out if the stock price rises.  Contrary to Mr. McIntyre's claims, we are clearly incentivized to deliver value for our stockholders. This is in direct contrast to Mr. McIntyre's compensation when he was Chairman and CEO of Fremont, where he received tens of millions of dollars in cash and common stock compensation while Fremont's stockholders saw the value of their investment plunge.  Mr. McIntyre incorrectly overstates the level of annual compensation for our executives and appears to add equity grants that encompass the next several years into one annual number.

  • We have made significant progress in repairing the Company, addressing many of the problems created during Mr. McIntyre's regime, including reducing the net loss by 89% since emerging from bankruptcy. We resolved over 200 legal proceedings associated with the McIntyre-led Fremont operations.  We rebuilt an experienced accounting and finance team and made significant progress in remediating the Company's "Material Weakness," stemming from the McIntyre regime, in internal control surrounding financial reporting.

Mr. Noell further added, "Our accomplishments have put the Company in a position to take full advantage of our comprehensive business strategy.  In order to have full access to the capital markets and be able to execute on our plan, the Company needed to be compliant with its SEC reporting requirements and able to disclose its financial position.  In a focused effort, we cleared a backlog of over five years of delinquent reporting and accounting practices in an 18 month period.  We now have flexibility and the availability of resources that did not exist while we were clearing up the mess created in the McIntyre era."

"We urge stockholders to examine the facts.  We believe that when stockholders look at the progress under the current Board and its plans to enhance shareholder value, and then consider  the value-destroying record of McIntyre and his lack of a credible business plan,  they will recognize that they cannot entrust the future of the Company to Mr. McIntyre and his hand-picked nominees,"  Mr.  Noell concluded.   

About Signature Group Holdings, Inc.

Signature is a diversified business and financial services enterprise with principal activities in industrial distribution and special situations financings. Signature has significant capital resources and is actively seeking acquisitions as well as growth opportunities for its existing businesses. The Company was formerly an industrial bank and financial services business with over $9 billion in assets that was reorganized during a two year bankruptcy period. The reorganization provided for Signature to maintain federal net operating loss tax carryforwards in excess of $890 million. For more information about Signature, visit its corporate website at www.signaturegroupholdings.com.

Cautionary Statements

This news release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current expectations and beliefs of the Company. The Company does not undertake to update or revise forward-looking statements in this news release to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made, except as required under applicable securities laws. No stock exchange or regulatory authority has approved or disapproved of the information contained herein.

Contact
Signature Group Holdings, Inc. Investor Relations
(805) 435-1255
invrel@signaturegroupholdings.com

SOURCE Signature Group Holdings, Inc.



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