Synalloy Commits to Review of Strategic Alternatives After Market and Global Health Pandemic Stabilization
Privet and UPG Continue to Ignore Company Overtures, Including the Board’s Fair & Reasonable Proposal to Avoid Costly and Distracting Proxy Fight
Warns Shareholders that Privet’s and UPG’s Hostile Effort to Seize Control Over the Board and Business of Synalloy Offers - at Best - a Speculative Plan and No Premium
The Board believes that ensuring a stable business and management continuity during this period of extreme market volatility, and then commencing a comprehensive review of strategic alternatives in a more secure market environment, offers the most prudent and deliberate path forward to create liquidity and to maximize value for all shareholders. The review of strategic alternatives will consider all options, including a sale of all or parts of the Company, as well as continued governance and Board composition enhancements, balance sheet and business optimization and management succession in the event that a liquidity event does not take place.
“The Board and management team have a long tradition of listening to shareholders and actively considering all shareholder feedback. We have historically and consistently demonstrated a willingness to explore all options that might maximize value and provide liquidity to shareholders. Our interests as approximately 9% owners of the Company are, and always have been, aligned with our shareholders’ interests,” stated
The COVID-19 pandemic has presented global macro-economic headwinds that impact virtually every single public company in
In addition to committing to a review of strategic alternatives, the Board has continued to engage with all shareholders. This includes efforts to engage with Privet and UPG, recently offering to them what the Board believes was a fair proposal, in a good-faith effort to resolve a costly and distracting proxy fight. The key terms of the Board’s recent settlement proposal include:
- Forming a strategic review committee for the purpose of reviewing the Company’s strategy and capital allocation;
- Offering Privet and UPG the right to designate two out of eight directors on the Board (the “Privet/UPG Designees”), with two incumbent directors resigning;
- Agreeing to nominate the Privet/UPG Designees at the Company’s 2020 and 2021 Annual Meetings of Shareholders;
- Offering committee designations to the Privet/UPG Designees, and guaranteeing that the Privet/UPG Designees will constitute no less than 25% of every Board committee;
- Fixing the Board at 8 directors; and
- Expense Reimbursement.
In exchange, the Board requested that Privet and UPG commit to customary standstill provisions through the 2021 Annual Meeting of Shareholders. The Board believes that this proposal presented a reasonable compromise that would have provided a basis for collaboration between the Board and representatives of its largest shareholders, who would be afforded input on Board composition and governance commensurate to their stake in the Company.
The Board has not heard back from Privet or UPG on this offer. This pattern of behavior is consistent for Privet, as the Board never received a counter-proposal to its settlement offer in
However, the Board remains willing to discuss collaborative solutions with Privet and UPG, and is committed to considering all options - including a formal review of strategic alternatives once the markets have settled down - that enhance the Company’s value and deliver liquidity to shareholders. The Board is confident that the management team that assembled the Company’s assets is best equipped to support the process of exploring a sale of those assets and to maximize value for all shareholders. In the interim, the Board and management team will continue to welcome feedback from all shareholders as we operate and steer Synalloy’s businesses through these challenging times.
This press release may include “forward-looking statements” within the meaning of the federal securities laws. All statements that are not historical facts are “forward-looking statements.” The words “estimate,” “project,” “intend,” “expect,” “believe,” “should,” “anticipate,” “hope,” “optimistic,” “plan,” “outlook,” “should,” “could,” “may” and similar expressions identify forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw materials availability; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; customer delays or difficulties in the production of products; new fracking regulations; a prolonged decrease in oil and nickel prices; unforeseen delays in completing the integrations of acquisitions; risks associated with mergers, acquisitions, dispositions and other expansion activities; financial stability of our customers; environmental issues; unavailability of debt financing on acceptable terms and exposure to increased market interest rate risk; inability to comply with covenants and ratios required by our debt financing arrangements; ability to weather an economic downturn; loss of consumer or investor confidence and other risks detailed from time-to-time in the Company’s
Important Other Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s shareholders in connection with the Company’s 2020 Annual Meeting of Shareholders. The Company intends to file a definitive proxy statement and proxy card with the