STUDIO CITY, Calif.,
June 30, 2011 /PRNewswire/ -- Tix
Corporation ("Tix") (OTCQX: TIXC) (PINKSHEETS: TIXC), a leading
entertainment company providing discount ticketing services and
branded event merchandising, today mailed the following letter to
its stockholders.
IMPORTANT INFORMATION FROM YOUR BOARD OF DIRECTORS
June 30, 2011
To our Stockholders:
You may have recently seen Baker Street Capital's "Open Letter
to Tix Corporation Stockholders," which was disseminated on
June 27. In that letter, Baker
Street, an activist hedge fund that has been a holder of Tix stock
for approximately eight months, has made a host of self-serving and
misleading statements criticizing your Board of Directors and has
threatened to nominate director candidates that, if elected, would
give Baker Street control of your Company. We believe it is
important to set the record straight and we urge you to read this
letter in its entirety as it contains important information about
the future of your Company.
The Company's exceptional recent success, as described below,
has been and continues to be highly dependent on carefully
cultivated close personal relationships between members of current
management and the Company's significant business partners,
including Las Vegas hotels, show
producers, restaurants and landlords. While Tix has had
outstanding growth over the past several years, during the same
period several other companies have attempted and failed to compete
in this market. Tix believes that one of the principal
reasons that it has succeeded where others have failed is as a
direct result of these close personal relationships. Baker
Street's threat to take control of your Company poses a substantial
risk to your entire investment as it threatens to tear apart these
close personal relationships that have provided the foundation for
the Company's success and are crucial for the Company's future
growth.
WHO IS BAKER STREET?
- Baker Street is a neophyte activist hedge fund that has only
been operating for approximately two years, with a Chief Investment
Officer and Founding Partner, Vadim
Perelman, who is only seven years out of school with limited
business experience.
- In the short time that Baker Street has been a stockholder of
the Company, Baker Street has gone from being Tix management's
biggest fan to their harshest critic. Just a few months
ago, Perelman wrote nine times to Tix heaping praise on your
management team. Following are a few samples:
"Management has built a wonderful business that requires
little capital and has significant pricing power."
"You would be surprised how hard it is to find a
management team that thinks like owners and is really good at both
operating the business and allocating the capital to highest return
uses."
"Despite strong performance and astute management actions
(delisting, non-core dispositions, share buybacks and Vegas.com
settlement) the market fails to fully appreciate the intrinsic
value of Tix Corp."
- Baker Street's sudden flip flops and contradictory statements
of support call into question its motives and demonstrate a lack of
understanding regarding the Company and a coherent plan for its
future.
- More recently, after several attempts to extract value for
Baker Street at the expense of all other Tix stockholders, Perelman
has taken to reckless, juvenile actions, including publicly
criticizing your Board and management in a several page rant in his
June 27 letter. Despite the
length of this tantrum, Perelman did not articulate a vision for
Tix regarding how he would improve on Tix's outstanding results and
did not provide any clarity on the critical issue of leading Tix
into the future. Baker Street has not articulated a vision as
to how it would improve on the results your Board has
achieved.
We believe that if Baker Street were to move forward with a
slate of hand-picked nominees as part of an ongoing effort to seize
control of Tix, as Perelman has threatened, they would be incapable
of continuing Tix's recent success and, if elected, could impair
the value of your investment in Tix by deviating from your Board's
proven strategy to build value for all Tix stockholders that has
Tix poised for continued future success. Rather, Baker Street's
slate, if elected, will work solely to advance Baker Street's
interests and not the interests of all Tix stockholders.
YOUR BOARD IS COMMITTED TO DELIVERING VALUE TO ALL TIX
STOCKHOLDERS
Led by your current Board and management team, Tix has achieved
record earnings and revenues, and has become the ONLY company
operating dedicated booths offering discount show tickets and
discount dining reservations in Las
Vegas. In just seven years, your current management
team has presided over a period of dynamic growth, in which the
Company's gross annual ticket sales have increased from just
$6 million in 2004 to nearly
$95 million in 2010, representing
1,575% growth in seven years. We are seeing evidence that
this extraordinary growth rate is continuing for 2011.
This impressive growth has been a result of a carefully executed
strategy involving extremely close personal relationships between
members of current management and the Company's business partners
(including Las Vegas hotels, show
producers, restaurants and landlords), a fully engaged management
team and 140 hard-working employees that work in extreme
Las Vegas conditions to provide
our customers with superb customer service. This is what your Board
and management team work diligently on every day and we look
forward to continuing to execute on this growth strategy into the
future, which includes additional product lines (such as building
our discount dinner reservations business line, for which we now
sell approximately 43,000 reservations per month), expansion into
new cities and online platforms to market discount show tickets and
dinner reservations.
Your Board and management team strongly believe that Tix's
results over the past year underscore the success of its strategy
to deliver value to stockholders by achieving strong and consistent
growth:
- Tix achieved record EBITDA and revenues in fiscal 2010
from continuing operations
- Revenues grew from $1.55 million
in fiscal 2004 to approximately $30.9
million in fiscal 2010, representing nearly 2,000% growth
in seven years. We are seeing evidence that this
extraordinary growth rate is continuing for 2011.
- Tix generated $6.2 million in
cash flows from continuing operations
- Tix sold an unprofitable production division (to which
Perelman's e-mail reaction to the Company was, "This is an
absolute home run of a deal for the Company.
Congratulations!")
- Tix has aggressively cut operating expenses, resulting in
savings of more than 35% year over year. Tix delisted from the
NASDAQ and deregistered with the SEC, which alone will result in
savings in excess of $1 million
annually (to which Perelman's e-mail reaction to the Company was,
"Yes, I was very pleased to see that. Given the size of
the company I thought that Echo
Lake's, [Ephraim Fields],
requires to burn $1mil a year with
ZERO return was misguided.")
- Tix created its own proprietary ticketing software that
resulted and continues to result in significant cost savings.
Tix's momentum is evident throughout all of the Company's
businesses and we continue to build on this momentum in fiscal 2011
by:
- Tracking to achieve record revenues, earnings and cash flow
from operations
- Expanding our core discount ticketing business by opening our
tenth and eleventh Las Vegas
ticketing booths, nearly doubling the number of booths in less than
two years
- Considering strategic acquisitions and expansion opportunities
for new product lines and new geographic markets
- Expanding complimentary product lines, including our discount
dinner reservation business line, which sold 413,000 discount
dinner reservations in 2010
- Settling litigation with Vegas.com and acquiring their discount
ticketing division (to which Perelman's e-mail reaction to the
Company was, "Congrats on the settlement. Really a wonderful
accomplishment! I think you're doing a great job and have
significantly increased value for everyone with the recent actions.
Thank you.")
We, and apparently, Perelman, believe that these
accomplishments demonstrate that our strategic operating plan is
working and will deliver exceptional value to all of our
stockholders. We have built the Company piece by piece over the
past 10 years through a patient, consistent and disciplined
approach to both internal growth and external acquisitions.
Some of our businesses have suffered from the downturn in the
economy, but we have QUICKLY moved to solve such problems including
the sale of the production division. Your Board and
management are committed to continuing to take all appropriate and
necessary actions to build value for all Tix stockholders.
On the other hand, Baker Street has not articulated a vision,
much less a strategy, for Tix regarding how it would continue, let
alone improve on these results and it has provided no clarity on
the critical issue of leading Tix into the future. Instead, Baker
Street's self-serving agenda, which only puts him in control of
your Company without any plans or operational expertise, stands to
take away from the value of your investment. Your Board and
management team are confident that we can better serve our
stockholders by continuing to execute our strategic business plan,
and the acquisition of effective control by Baker Street would
eviscerate that plan. To protect and to realize the value of
your Tix investment, Baker Street's self-serving agenda must be
stopped. Don't gamble your investment on an inexperienced
hedge fund manager.
BAKER STREET'S RECKLESS BEHAVIOR AND DESTRUCTION OF
STOCKHOLDER VALUE
- On March 10, 2011, Perelman
suggested that Tix repurchase some of its owns shares, which
evolved into a discussion that Baker Street and management jointly
make a bid for all of Tix's outstanding shares. When management
decided that they were unwilling to pursue such a partnership with
Perelman, he said to the Chief Executive Officer and Chief
Financial Officer that Tix can purchase all of his shares at
$3.00 per share. The
Company rejected this demand. Only 2 days later, on March 30, 2011, Baker Street publicly announced a
highly speculative, non-binding offer to purchase the entire
Company for $2.10 per share. This
absurd "offer" contained unspecified contingencies, no adequate
source of financing and was entirely illusory.
- Consistent with the fiduciary duties owed to all Tix
stockholders, your Board of Directors established a special
committee of independent directors, which in turn engaged
independent legal counsel and an independent financial advisor to
analyze Baker Street's non-binding, conditional "expression of
interest." The special committee unanimously determined,
based on the advice of its independent financial and legal
advisors, that pursuing further discussions with Baker Street at
this time was not in the best interests of Tix stockholders and
would only result in further waste of company funds and employee
time.
- Baker Street's aggressive and reckless behavior has and
continues to cost stockholders a significant amount of money in
legal and other expenses. Baker Street's attempt to force
the Company to buy its shares for $3.00 per share and subsequent hostile 1 1/2 page
non-binding highly conditional expression of interest prompted the
Company to incur significant expenses in excess of $250,000. Subsequent actions by Baker
Street, including commencing unnecessary and costly legal
proceedings in Delaware against
your Company, have forced Tix to continue to incur additional
significant expenses. In a particular instance of petulant
behavior, Perelman resorted to litigation against your Company to
procure a stockholder list even though Perelman had already been
told that the Company would provide such a list on the same day of
his filing of the lawsuit. These wasteful expenditures,
necessitated by Baker Street's reckless actions, have not only been
a significant drain on Tix's financial resources but have been a
severe distraction to management's ability to operate the business,
all at the expense of the Tix stockholders and your investment.
This lawsuit and proxy fight initiated by Baker Street will likely
cost Tix at least another $1 million
dollars. Perelman's efforts to establish himself as being
interested in enhancing stockholder value for all stockholders is a
transparent sham!
- Not only has Baker Street been abusive of your Company's
resources, but it has also risked damaging Tix's relationships and
reputation within its marketplace. Certain of your
Company's trade partners and even competitors have reported to Tix
management that Baker Street or its representatives have contacted
them on "fishing expeditions" to elicit information to use against
Tix management. This juvenile behavior is dangerous and
reprehensible and exhibits a total disregard for stockholder
value.
Baker Street's self-serving agenda represents a clear and
present threat to your investment in Tix and must be rejected.
Tix's core discount ticketing business is almost entirely
based on long-standing relationships in the Las Vegas community between current members of
management and the Company's business partners (including
Las Vegas hotels, show producers,
restaurants and landlords). Your current Board and
management team have cultivated these relationships for over a
decade, resulting in dynamic growth for the Company to your benefit
as stockholders. If these relationships are severed by Baker
Street's hostile takeover of your Company, there is a significant
risk that your entire investment will be lost. Moreover,
Baker Street lacks the relevant industry expertise and yet seeks
to interfere in Tix's strategy and management, which risks
derailing the Company's proven growth strategy to build value for
all Tix stockholders.
WE URGE YOU TO DISCARD ANY MATERIALS YOU MAY RECEIVE FROM
BAKER STREET AND TO NOT RESPOND TO ANY OF BAKER STREET'S
SOLICITATION CONTACTS OR MATERIALS.
We thank you for your careful attention to these issues and your
continued support of the Company. If you would like to
contact your management to discuss these issues or any other
matters concerning your investment, please feel free to contact
Mitch Francis, the Tix Chief
Executive Officer at: mitch@tixcorp.com or Steve Handy, the Tix Chief Financial Officer at:
steveh@tixcorp.com, or call (818) 761-1002.
Sincerely,
The Board of Directors of Tix Corporation
About Tix Corporation
Tix Corporation is an entertainment company providing discount
ticketing services and branded event merchandising. It currently
operates eleven discount ticket stores in Las Vegas under the Tix4Tonight marquee, which
offer up to a 50 percent discount for same-day shows, concerts,
attractions and sporting events, as well as discount reservations
for dining. The Company is also engaged in branded merchandise
development and sales activities related to museum exhibitions and
other events, including the King Tutankhamun, Cleopatra and Real
Pirates tours as well as selling themed souvenir memorabilia and
collectors items in specialty stores in conjunction with the
specific events and venues.
Safe Harbor Statement
Except for the historical information contained herein, certain
matters discussed in this press release are forward-looking
statements which involve risks and uncertainties. These
forward-looking statements are based on expectations and
assumptions as of the date of this press release and are subject to
numerous risks and uncertainties which could cause actual results
to differ materially from those described in the forward-looking
statements. Certain of these risks and uncertainties are discussed
in the Company's various filings with the OTCQX. The Company
assumes no obligation to update these forward-looking
statements.
Contact: Mitch Francis,
Steve Handy, PH: 818-761-1002
SOURCE Tix Corporation
