CSK Auto (CAO) Holder Karsch Capital Wants Proposal For Hiring Investment Bank at Annual Meeting
In an amended 13D filing this morning on CSK Auto Corp. (NYSE: CAO), 9.3% holder Karsch Capital Management disclosed that they sent a second letter to the Board requesting that the company include in its proxy materials for the next annual meeting a proposal that the company immediately hire an investment banking firm to pursue a sale.
Karsch said, "We hope that the Board has already decided to take the steps to solicit offers for the sale of the Company upon the availability of its restated financial statements, but if not, we urge the Board to include our proposal in the Company's proxy materials for the next meeting of stockholders."
A Copy of the Letter:
To The Board of Directors of CSK Auto Corporation ("CSK Auto" or the "Company"):
Karsch Capital Management, LP(1), as a holder of 9.3% of the outstanding commonstock of CSK Auto's common stock, has attached a formal proposal that webelieve, subject to the bolded text below, should be considered by stockholdersat the Company's next stockholders meeting and included in the proxy materialsto be disseminated by the Company. Essentially, we propose that the Company putitself up for sale immediately after the Company completes the restatement ofits financial statements and becomes current with SEC reporting obligations.For confirmation of ownership, we enclose a copy of our Schedule 13D filed withthe Securities and Exchange Commission on October 10, 2006, as amended.
We want to emphasize that this letter is not being written to antagonize theBoard. Our October 9, 2006 letter states our views and they have not changed. Webelieve that the views of the Company's most important constituency - itsstockholders - be obtained concerning the Company's future and alternatives tomaximizing stockholder value. Moreover, given the provisions of CSK Auto'sbylaws regarding advanced notice of stockholder proposals, we wanted to give theCompany early notification of our proposal.
Since we have not spoken to any members of management or the Board of Directorsafter sending our letter of October 9, 2006, we do not know the Board's currentviews. HOWEVER, IF THE BOARD HAS ALREADY DECIDED, OR DECIDES, TO PUT THE COMPANYUP FOR SALE, THERE WOULD BE NO NEED TO HAVE THIS PROPOSAL INCLUDED IN THE NEXTPROXY.
We hope that the Board has already decided to take the steps to solicit offersfor the sale of the Company upon the availability of its restated financialstatements, but if not, we urge the Board to include our proposal in theCompany's proxy materials for the next meeting of stockholders.
We have not held our shares of CSK Auto common stock for at least one year asrequired by Rule 14a-8 under the Securities Exchange Act of 1934 to qualify to have our proposal included in the Company's proxy materials. Our intent isto continue ownership of the shares through the date of the Company's nextannual or special meeting of stockholders. However, since the Company has notheld an annual meeting for nearly 16 months, we reserve the right to change ourintent or position if the Company fails to restate its financial statements andhold its annual meeting within reasonable time.
We are also aware of the provisions of the Company's bylaws that requirestockholder proposals to be submitted to the Company "no later than the close ofbusiness on the 120th day prior to the upcoming annual meeting." This advancednotice provision may not be an issue depending on the date you plan to schedulethe Company's next annual meeting of stockholders. However, because the Companyhas not held an annual meeting of stockholders since June 16, 2005, we believethat pursuant to Rule 14a-8(e)(2), stockholders have reasonable time to submitproposals and that submitting this proposal at this time provides the Companywith reasonable notice. In any event, we request that the Board overlook anyprocedural issues and elicit the views of the Company's stockholders withrespect to the future of the Company by including our proposal in the Company's proxy materials for its next annual meeting of stockholders. Given the magnitudeof our financial stake in the Company and the reasonableness of our request, weexpect that the Board would make this decision.
If the Board feels that it cannot overlook the requirements of Rule 14a-8 andchooses not to include our proposal, we urge the Board to include any similarproposal(s) if submitted by stockholder(s) who meet the requirements of Rule14a-8.