Sandell Asset Management Seeks Sale of Rubicon & Tenon, Expansion of Board
09 Oktober 2011 - 9:03AM
PR Newswire (Canada)
Sandell Expresses Concern Over Poor Stock Performance NEW YORK,
Oct. 10, 2011 /CNW/ -- In response to Rubicon's poor stock
performance, Sandell Asset Management's Chief Executive Officer
Thomas E. Sandell sent today the following letter to Rubicon's
Board of Directors: Board of DirectorsRubicon LimitedLevel 37 - 9
Fanshawe StreetAucklandNew ZealandAttn: Steve Kasnet, Chairman Luke
Moriarty, Chief Executive Officer Dear Gentlemen: As you are aware,
funds managed by Sandell Asset Management Corp. ("Sandell") own
approximately 41.1 million shares in Rubicon Limited (RBC NZ)
("Rubicon"), which represent approximately 14.4% of Rubicon's total
outstanding shares. As a long-term investor in Rubicon, Sandell has
financially and strategically supported Rubicon and its management
over the past ten years. However, as we previously indicated to
you, following the failure to launch the ArborGen IPO earlier this
year, we have lost faith in the ability, or willingness, of
Rubicon's current management to take the steps we believe are
necessary to enhance shareholder value in the near term. The
company remains significantly undervalued in the public market, and
we believe there are several opportunities the company should
pursue to maximize shareholder value. As we have previously
indicated to you, we believe that Rubicon should pursue one of the
following strategic alternatives to maximize its value: (1) sell
Rubicon in its entirety; or (2) sell Rubicon's controlling interest
in Tenon pursuant to an auction process, followed by ArborGen
listing its shares for trading on the NASDAQ. When we spoke earlier
this year, you indicated that Rubicon could not focus on
value-enhancing alternatives until it had addressed several
refinancings that were in process at the time. Those refinancings
have been completed, and there should be no other excuse for your
failing to promptly consider the strategic alternatives we have
proposed. In addition, we believe that Rubicon should expand its
Board of Directors to include an additional three directors who are
representatives of Rubicon's shareholders. We believe it is
critical for the shareholders to have a voice at the board level,
to insure that the board is focused on acting in the shareholders'
best interest. Rubicon's stock, after sustaining a loss of nearly
66% this past year, is currently trading at approximately NZD 0.40
per share. We believe that it is potentially worth upwards of NZD
1.20 per share, or three times its current market value, and that
pursuit of the strategies we suggest could achieve a realization of
that value. Furthermore, we believe Rubicon could be worth as much
as NZD 1.65 per share based on the values of ArborGen and Tenon as
separate strategic targets. On a standalone basis, each of ArborGen
and Tenon is a very attractive investment opportunity. ArborGen is
one of the only global biotech companies focused on the genetically
modified tree seedling market. This early-mover status has provided
ArborGen with a competitive advantage that, with the help of
additional equity investments obtained from listing on an exchange,
could lead to a tremendous growth opportunity for ArborGen. On the
other hand, Tenon is one of the largest vertically-integrated
distributors of building products in the U.S. Although Tenon has
sustained difficulties in recent years as a result of low levels of
large discretionary remodeling activity in the U.S. and the rising
NZD:U.S. exchange rate, we believe that there is a large amount of
untapped growth that remains available to Tenon, especially in
light of macro fundamental indicators that the U.S. housing market
is at 40-year lows. A strategic buyer could fund growth and
acquisition plans for the business, which should include
restructuring Tenon's current operations, launching new
do-it-yourself products, reducing costs and expanding into new
geographic markets (e.g. China, Europe and Australia). Enclosed is
a white paper presentation containing a more detailed explanation
of the strategies that we are recommending Rubicon undertake and a
financial analysis of their potential effects. Please do not
hesitate to contact us with any questions you may have. We look
forward to continuing our discussions with you and working with
Rubicon in pursuing a direction that will maximize the value of the
company for all of its shareholders. Sincerely, Thomas E. Sandell
Chief Executive Officer The white paper presentation referenced is
available at http://www.sandellmgmt.com/News/Rubicon.pdf or by
request. Sandell Asset Management CONTACT: Mr. Tom Sandell, Chief
Executive Officer, Sandell AssetManagement Corp., +1-212-603-5700
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