Steel Partners II, L.P.
(“SP II”), together with the other participants named herein, is filing
materials contained in this Schedule 14A with the Securities and Exchange
Commission (“SEC”) in connection with the solicitation of consents from
stockholders of Adaptec, Inc., a Delaware corporation (“Adaptec”), for the
removal of two directors, Sundi Sundaresh and Robert Loarie, from the Board of
Directors of Adaptec (the “Consent Solicitation”). SP II has filed a
definitive consent statement with the SEC with regard to the Consent
Solicitation.
Steel
Partners Comments on Glass Lewis Report
Independent
Proxy Advisor Believes Adaptec’s Ever-Worsening Financial Results
and
Underperformance Warrant a Change to the Board and/or
Management
NEW
YORK--(BUSINESS WIRE)--Steel Partners II, L.P. (“Steel Partners”) announced
today that Glass Lewis & Co. has issued a proxy report in which it states
that Steel Partners has “correctly identified a pattern of underperformance” at
Adaptec, Inc. (“Adaptec” or the “Company”) (NASDAQ:ADPT) and that “the Company’s
deteriorating financial performance and poor handling of the recent Aristos
Logic acquisition call into question whether the Company’s Board has provided
sufficient oversight in recent years.”
Steel
Partners today issued the following statement:
“We are
pleased that Glass Lewis agrees with us that the Company’s poor financial
results and underperformance warrant a change to the Adaptec Board and/or
management team. Importantly, Glass Lewis acknowledges certain failures of the
Company under the control of the Legacy Directors and Mr. Sundaresh that have
led to steadily declining revenue, large and continuing operating losses and a
continued decline in the market value of the Company’s stock. Glass Lewis also
says it is ‘troubled by the Company’s execution of the acquisition of Aristos
Logic’ and is concerned that ‘this acquisition has contributed to the Company’s
recent losses.’
“We
believe, however, that Glass Lewis missed the mark with respect to a few
critical issues in its recommendation. First, it appears that Glass Lewis failed
to take into account that the full Board approved the hiring of a
nationally-recognized investment bank to evaluate all options to maximize
stockholder value. After a thorough process, the Company’s financial advisor
recommended that Adaptec explore the sale of the Company’s operating business,
intellectual property and real estate, and then look to redeploy the capital in
a way to maximize the value of the net operating loss carry forwards (NOLs). A
majority of the full Board approved going forward with this recommendation while
certain Legacy Directors, Messrs. Sundaresh, Kennedy and Loarie, voted against
it.
“Unfortunately,
Glass Lewis failed to appreciate that this consent solicitation is not about
Steel Partners substituting its judgment regarding the timing of strategic
transactions for that of the Board. It is about our commitment to follow the
Board-approved recommendation of the Company’s independent financial advisor,
which Mr. Sundaresh and certain Legacy Directors now oppose in favor of
continuing to run the Company’s failing operating business while pursuing a
risky, large-scale acquisition. In saying that “it would be premature to push
through a sale of the Company without first taking steps to rectify the
Company’s performance problems,” Glass Lewis is essentially substituting its own
judgment for that of the Company’s financial advisor, who conducted a
comprehensive strategic review process, and the Board of Directors.
“It also
appears that Glass Lewis did not give appropriate consideration or weight to the
massive corporate governance failures at Adaptec under the control of the Legacy
Directors. Specifically, the proxy report fails to take into account that the
Legacy Directors:
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Took
hostile actions against our director representatives, Jack Howard and John
Quicke, to diminish our influence on the Board and preserve Mr.
Sundaresh’s position as CEO;
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Refused
to waive the nomination deadline to avoid the consent solicitation and
allow stockholders to have a choice and level playing field at the Annual
Meeting;
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Permitted
Mr. Sundaresh to personally recruit three new director nominees who
collectively lack experience and qualifications to serve on the Board;
and
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Own
less than 1% of the Company’s outstanding shares and have little “skin in
the game.”
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“Unfortunately,
rather than hold accountable the Legacy Directors, who have effectively
controlled the Board for the past several years, Glass Lewis instead notes that
the Company’s operational performance has not improved since our director
representatives joined the Board. We are disappointed that Glass Lewis failed to
recognize the positive impact our director representatives have had on the Board
since December 2007 despite the oppressive control of the Legacy Directors.
Among other things, Messrs. Howard and Quicke have:
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Pushed
management to come up with a business plan that would generate growing
revenues and eliminate operating losses in order for the Company to become
profitable;
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Recommended
on several occasions the return of capital to Adaptec stockholders through
stock buybacks at less than cash value;
and
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Moved
the Company toward pay for performance for senior management, using
restricted stock awards that vest based on meeting performance based
criteria, versus the previously granted time-based restricted
stock.
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Steel Partners recommends that all Adaptec
stockholders sign, date and return the WHITE consent card today! We urge
you not to revoke your consent by signing any gold consent revocation card sent
to you by Adaptec or otherwise, and to revoke any consent revocation you may
have already submitted to Adaptec. Follow the simple voting instructions
contained on the WHITE consent card or contact MacKenzie Partners, Inc. at
800-322-2885 or 212-929-5500.
About
Steel Partners
Steel
Partners Holdings L.P. (“SPH”) is a global diversified holding company that owns
majority-owned subsidiaries, controlled companies and other interests in a
variety of operating assets and businesses. SPH seeks to work with the
management of these companies to increase corporate value over the long term for
all stakeholders and shareholders through growth initiatives, Steel Partners
Operational Excellence programs, the Steel Partners Purchasing Council, balance
sheet improvements and capital allocation policies.
Steel
Partners II LP is a wholly-owned subsidiary of SPH.
Contact:
Steel
Partners
Jason
Booth, 310-941-3616