Coliseum Capital Management Sends Letter to Board of Directors of Accuride
07 Ottobre 2016 - 3:00PM
Business Wire
Largest Shareholder Says Proposed Sale of
Company Not in Best Interests of Shareholders
Transaction Materially Undervalues Accuride
Believes Shareholders Should Vote Against
Transaction at Special Meeting
Coliseum Capital Management, the largest shareholder of Accuride
Corporation (NYSE:ACW) with an ownership of approximately 19% of
the outstanding stock, today announced that it has sent a letter to
the Accuride Board of Directors stating its strong opposition to
Accuride’s agreement to be acquired by funds managed by Crestview
Partners for $2.58 per share.
The full text of the letter can be found below.
October 7, 2016
Board of DirectorsAccuride Corporation7140 Office
CircleEvansville, IN 47715
Gentlemen:
As the largest holder of common stock of Accuride Corporation,
owning 19% of the outstanding shares, Coliseum Capital Management,
LLC is writing this letter in response to the proposed sale of
Accuride to affiliates of Crestview Advisors LLC for $2.58 per
share. We believe this transaction materially undervalues the
Company, is the wrong strategic choice for Accuride and is not in
the best interests of shareholders. We will
be voting against the transaction.
Coliseum is a long-term, fundamental investor with more than $1
billion in assets under management. We are a patient, collaborative
investor that focuses on working supportively with management teams
and boards. Since Coliseum’s inception more than 10 years ago, my
co-founding partner, Adam Gray, and I have sat on the boards of
thirteen public companies. We are proud of the partnerships we have
built, and appreciate opportunities to work closely with management
teams to create value for all shareholders. In Coliseum’s history,
this is the first letter we have written in opposition to a
proposed merger.
We have a long track record as a supportive shareholder of
Accuride. We have closely monitored the Company since 2007, and
have been one of Accuride’s largest shareholders since 2012. We
have developed a strong relationship with management, and credit
Rick Dauch and his team with driving significant intrinsic value
over the past five and a half years.
Our view of value and the merits of this transaction are based
on many years of industry and Accuride-specific research. We have
toured facilities, spent time with multiple layers of management
and forged relationships with customers and competitors. We have
confidence in the Company’s strategic plan, talented and committed
workforce, valuable operating assets, durable brand and
advantageous competitive position.
Now is the wrong time to sell
Accuride. The Company has made substantial investments over
the past five and a half years, spending over $150 million to
upgrade manufacturing facilities and successfully restore its
customer relationships. We believe that the truck market is at a
cyclical low, but when the cycle turns the Company will be
well-positioned to harvest the benefits of the hard work and
investment. Shareholders who patiently supported these investments
should participate in the upside.
Accuride’s prospects as an independent
company are strong. The Company’s own projections (disclosed
in the preliminary proxy) forecast 2018 Adjusted EBITDA of $98
million. Using the Company’s blended Total Enterprise Value
multiple of 5.5x (calculated from the fairness analysis of its
financial advisor) produces a conservative
valuation of $5.00 per share, which equates to a 94% return over
the next two years. Furthermore, these projections do not
incorporate any material deleveraging or additional value
contributed by acquisitions, which could further enhance returns –
benefits that would be captured by Crestview as a result of the
transaction.
Less than 18 months ago, Accuride’s common stock was trading
near $5.00 per share and the Company received third party
acquisition proposals at prices above $5.00 per share… We
understand, having sat in many boardrooms ourselves, the difficult
decisions that boards are faced with at challenging times. While we
appreciate the effort consumed by this transaction, we strongly
recommend pursuing another course. Rather than allowing Crestview
to capture the value resulting from the truck market normalizing,
this value should accrue to the benefit of the Company’s existing
shareholders.
Specifically, we believe the Company should consider a modest
public equity raise from current shareholders in order to
facilitate refinancing its senior notes, as well as pursue growth
initiatives through strategic acquisitions. We do not believe the
current debt balance is untenable (especially if supported by a
public equity raise). Additionally, we believe there are numerous
actionable, value-enhancing acquisition opportunities ranging from
Asian sourcing capacity to European footprint expansion. (We
suspect that Crestview has already identified attractive targets
and intends to aggressively take advantage of these dynamics.)
Instead of selling Accuride at a steep discount to its
fundamental value, current shareholders should have the opportunity
to support the Company in responsibly managing its debt maturities
and strategically positioning itself to create significant
shareholder value. Coliseum would be prepared to provide that
support by participating in an equity raise.
We feel compelled to take this uncharacteristic step and oppose
this transaction in view of the considerable value that
shareholders are being asked to sacrifice. We
believe our fellow shareholders should oppose this transaction as
well.
We look forward to hearing back from you and to discussing this
matter further.
Respectfully,
Chris ShackeltonColiseum Capital Management, LLC
Cc: Warren S. de Wied – Fried, Frank, Harris, Shriver &
Jacobson LLP
About Coliseum Capital Management , LLC
Coliseum Capital is an investment firm founded in 2005 by
Managing Partners Chris Shackelton and Adam Gray, which
focuses on long-term investments in both public and private
companies. Coliseum directs capital behind strong management teams,
with a willingness to work alongside companies to facilitate
further value creation.
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Coliseum Capital Management, LLC203-883-0100orMedia:Sard
Verbinnen & Co.Chris Kittredge/David Millar, 212-687-8080
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