LOS ANGELES, April 4, 2011 /PRNewswire/ -- Baker Street
Capital, L.P. ("Baker Street"), announced today that it delivered a
letter to the independent members of the Board of Directors of Tix
Corporation (OTCQX: TIXC). Baker Street is the largest shareholder
of Tix Corporation, with current ownership of approximately 21.9%
of the shares outstanding. In the letter, Baker Street
outlined its view that the Board has a fiduciary responsibility to
shareholders to evaluate Baker Street's offer. We feel very
strongly that such exploration should be conducted by a special
committee of independent directors in a robust and full process to
ensure that shareholders receive fair value.
The full text of the letter follows:
Dear Independent Board Members,
As you know, Baker Street Capital, L.P., together with its
affiliates (collectively, "Baker Street"), is the largest
shareholder of Tix Corporation ("TIX" or the "Company"), owning
5,451,259 shares or approximately 21.9% of the Company's 24,856,893
outstanding shares of common stock.
Five days ago we submitted to you a letter (the "March 30 Letter"), a copy of which is attached,
which expressed our deep concern that senior management might be in
the process of exploring an acquisition of the Company at less than
full value. To protect our significant investment in the
Company and based upon our belief in the Company's long-term
prospects our letter also included a non-binding offer, subject to
certain conditions, to acquire all of the shares of common stock of
TIX not currently owned by Baker Street for a minimum of
$2.10 per share (the "Purchase
Price") in cash. The Purchase Price represented a premium of
approximately 56.7% over TIX's closing price of $1.34 on March 30,
2011.
The March 30 Letter invited the
Company to conduct a robust, full and fair sales process. We
believe it is incumbent upon the Board to immediately create a
special committee of independent directors to explore all strategic
alternatives. This step would also reduce concerns arising
from the inherent conflict of interest in Mitchell Francis, the Company's Chairman and
CEO, exploring a management-led buyout. We are adamant that any
action which the Board endorses must allow for the realization by
shareholders of the Company's substantial intrinsic value.
We were very disappointed that the Company's response to our
non-binding proposal was to adopt a shareholder rights plan (or
poison pill) without offering any explanation to shareholders and
without disclosing either our offer or any actions the Company may
have taken to assist Mr. Francis in exploring a potential
acquisition of the Company. The adoption of the shareholder
rights plan appears to be but the latest in a series of events
undertaken by this Board of Directors (the "Board") to insulate
itself from accountability to the Company's shareholders.
It was our strong preference to continue to communicate
privately with the Company to agree on a course of action in the
best interest of all shareholders, but we feel compelled that all
shareholders should understand the context of our proposal.
Accordingly, we are issuing a press release regarding this
letter and the March 30 Letter.
We remind you that, as Board Members of a publicly traded
Delaware corporation, it is your
fiduciary responsibility to represent the best interests of all
shareholders and we urge shareholders not to stand idly by if the
Board, either through inaction, cronyism or neglect, fails to act
in their best interest. As Warren Buffett said in his 2003
Annual Letter to Shareholders, "fiduciaries must now decide
whether their job is to work for owners or for managers." We
stand ready to meet with an independent committee of the Board to
discuss our proposal and the other matters outlined herein.
Very truly yours,
Vadim Perelman
The March 30 Letter:
Dear Independent Board Members,
Baker Street Capital Management, LLC, together with its
affiliates (collectively, "Baker Street"), is the largest
shareholder of Tix Corporation ("TIX" or the "Company"), owning
5,451,259 shares or approximately 21.9% of the Company's 24,856,893
outstanding shares of common stock. We believe that the Company is
substantially undervalued and that the current market price does
not reflect the Company's true value. We believe the Company should
immediately commence a tender offer to repurchase shares, providing
those shareholders interested with liquidity in cash for their
equity in the Company and for those shareholders who wish to stay
for the long term an increased ownership stake in the Company.
We are deeply troubled by indications we have that it may be
management's intention to take the Company private at a small
premium to the current depressed value, thereby purchasing the
Company for less than full value and short-changing its
shareholders. Any proposed transaction to take the Company private
by management without the Company pursuing a robust and full sales
process to all potential purchasers would prevent shareholders from
participating in the realization of the Company's intrinsic value,
strong market position, and growth prospects. Therefore, we
hereby set forth our desire to participate in any sales process and
enter into formal discussions with the Company's Board of Directors
(the "Board") or an independent committee. Further, since we
have concerns that management may currently be seeking to take the
Company private, we hereby set forth our non-binding proposal to
acquire all of the shares of common stock of TIX not currently
owned by Baker Street (the "Transaction") for a minimum of
$2.10 per share (the "Purchase
Price") in cash. The Purchase Price represents a premium of
approximately 56.7% over TIX's closing price of $1.34 on March 30,
2011. We are highly confident that with the combination of
our existing ownership in TIX and the financing available to us,
the Transaction will be fully financed upon execution of a
definitive agreement. We would be pleased to meet with you as soon
as possible to negotiate the terms of a definitive agreement.
It is our intention to work with management and, following the
Transaction, we expect the Company's senior management team would
remain in place and to maintain the Company's valuable employee
base. We also anticipate that we will continue to run the business
substantially in accordance with the Company's current practice,
with such changes as may be necessary to meet the long-term
competitive environment and to realize our business objectives.
We are prepared to immediately commence our due diligence and
believe it can be completed promptly with the Company's
cooperation. In connection with commencing our due diligence
we would be willing to enter into a confidentiality agreement with
the Company. Additionally, to the extent our due diligence
reveals a higher value for the Company we are willing to increase
the Purchase Price. However, we do have concerns based on previous
conversations with management that a confidentiality agreement
would require us to enter into an unreasonable standstill to
commence due diligence. We hope the independent directors would
acknowledge that any such provision would be an obstruction
designed to favor management and allow a sale of the Company to
management at a discount.
Our proposal is conditioned upon satisfactory completion of
limited and confirmatory due diligence, the waiver of any Company
anti-takeover provisions, obtaining all necessary consents and
approvals and the execution of a mutually acceptable definitive
agreement, which would include customary conditions for a
transaction of this type and size.
This letter should not be construed as a binding obligation on
us unless and until a definitive agreement is entered into in a
form acceptable to us and we reserve the right to withdraw, modify
or otherwise change our proposal set forth herein at any time.
We expect that the Board has, or will, form a special committee
of independent directors with respect to management's active and
ongoing efforts to take the Company private. We look forward
to working with the special committee as soon as possible to
complete a mutually acceptable transaction that we believe will
benefit everyone involved. As the largest shareholder of TIX
we are committed to ensuring that all shareholders receive full and
fair value.
We expect to promptly hear back from you in the next few days to
discuss how we can proceed constructively. We are providing
this letter on a private basis and we hope that discussions
regarding the Transaction can be accomplished on a private basis.
If, however, the Board chooses to disregard its fiduciary
obligations and refuses to engage in discussions, pursues a
transaction with management without a full and fair sales process
(including all potentially interested financial and strategic
parties), or otherwise attempts to seek refuge behind defensive
corporate roadblocks or machinations, we are willing to take our
proposal directly to the Company's shareholders and reserve our
right to take any and all legal action necessary to preserve
shareholder value.
Very truly yours,
Vadim Perelman
ABOUT BAKER STREET CAPITAL, L.P.
Baker Street Capital, L.P., is a value-focused investment fund
modeled after the partnerships managed by Warren Buffett from 1956 to 1969. Baker Street
Capital, L.P., is headquartered in Los
Angeles, California.
CONTACT:
Vadim Perelman, 310-246-0345,
vadim@bakerstreetcapital.com
SOURCE Baker Street Capital, L.P.
