ValueVest Discloses 8.3% Stake in Ampex (AMPX) and Proposed Asset Transaction

In a 13D filing after the close on Ampex Corporation (NASDAQ: AMPX), ValueVest High Concentration Master Fund disclosed an 8.3% stake (318K shares) in the company. The firm also disclosed a series of conversations with the company including its interest in acquiring the company or making a further equity investment.
The firm also proposed an alternate asset transaction to buy the company's Data Systems business and all of its intangible assets other than those patents which the company was currently licensing or litigating and their related patent families

According to the firm, Ampex said it would respond to their proposal at the next meeting of its board of directors. The firm said as of the date of the filing they have not received any further response from the company related to their proposals.

From the Purpose of Transaction (Item 4) section of the filing:

The Master Fund purchased the Shares for investment because the Investment Manager believes that the market price of the Shares does not fully reflect the underlying value of the Issuer and its assets and businesses. In particular, the Investment Manager believes that the Issuer can increase shareholder value through greater commercial utilization of its intellectual property assets.

On February 1, 2006, the Master Fund entered into a letter agreement with M.CAM, Inc. ("M.CAM"), an intellectual property rights and intangible asset financial services firm, pursuant to which M.CAM agreed to provide advisory services to the Master Fund in connection with developing and pursuing proposalsfor alternative transactions relating to the Issuer's proprietary intellectualproperty and/or the sale, transfer, or other disposition of all or a material portion of the business, assets or securities of the Issuer. A copy of this letter agreement is attached hereto as Exhibit 4 and is incorporated herein by reference. Under the terms of the agreement, certain fees are payable by theMaster Fund to M.CAM for its advisory services in certain circumstances. Inparticular, a Value Enhancement Fee is payable by the Master Fund to M.CAM ifone of the following events shall occur: (i) the value of the Issuer's stockincreases above certain specified market price points while the Master Fund is aminority shareholder of the Issuer; (ii) a Transaction (as defined in the letteragreement) is effectuated; or (iii) a definitive agreement or agreement in principle for a Transaction is executed or announced by the Issuer. In addition,the letter agreement provides that if the Master Fund at any time holds a controlling position in the stock of the Issuer, the Master Fund will use its best efforts to cause the Issuer to engage M.CAM to perform certain additional services, for certain additional compensation, as set forth in Exhibit 1 to theagreement.

On May 22, 2006, Messrs. Bakar and Cariani met with the chief financialofficer of the Issuer at the Issuer's offices. During that meeting, Messrs. Bakar and Cariani indicated that the Master Fund had accumulated a significantequity investment in the Issuer and was interested in acquiring additional equity pursuant to a strategic investment in the Issuer. The chief financial officer indicated that he did not believe that the Issuer was interested in raising any additional capital at this time but that the board of directors ofthe Issuer would consider any definitive proposal that the Master Fund wasprepared to make.

On July 19, 2006, Messrs. Bakar and Cariani had a telephone conversation with the chief executive officer and chief financial officer of the Issuer. In this call, Messrs. Bakar and Cariani once again expressed the Master Fund's interest in increasing its equity investment in the Issuer and also indicatedthat the Master Fund would like to explore the possible acquisition of the Issuer. The chief executive officer and chief financial officer indicated that the Issuer was not interested in raising additional equity capital at this time and that while the Master Fund was free to make an offer to acquire the Issuerto the board of directors of the Issuer such executives did not know whether theboard would be interested in pursuing such a transaction.

In a letter to the chief executive officer of the Issuer dated September13, 2006, the Investment Manager once again confirmed the Master Fund's interest in acquiring or making a further equity investment in the Issuer. In that letter, the Investment Manager also indicated that it would like to discuss an alternative transaction in which the Master Fund would acquire the Issuer's DataSystems business and all of its intangible assets other than those patents which the Issuer was currently licensing or litigating and their related patent families. The Investment Manager indicated that it believed that this alternate asset transaction, which would not be subject to any financing contingency or condition, could be implemented relatively quickly and would give the Issuer the opportunity to realize immediate value for its shareholders and to generate further shareholder value through its ongoing patent licensing and litigation efforts.

By letter dated September 15, 2006 sent by regular mail and received by the Investment Manager on September 21, 2006, the chief executive officer of the Issuer indicated that the board of directors of the Issuer would consider theI nvestment Manager's letter and proposals at its next meeting scheduled for early November.

By letter to the Issuer dated September 21, 2006, Investment Manager offered to meet with the Issuer's management before the November board meeting to explore in further detail the types of transactions and terms that might be acceptable to both parties. In that letter, the Investment Manager indicated that it believed that such a meeting would put management in a better position to fully inform the Issuer's board of directors about the available alternatives and put the Investment Manager in a better position to provide the Issuer'sboard of directors with its most compelling value propositions for the Issuer'sshareholders. The Investment Manager also offered to present its proposals inperson to the Issuer's board of directors at the November board meeting.

The Issuer responded by letter dated September 22, 2006 that it would respond to Investment Manager after the next meeting of its board of directors,or earlier if the Issuer's board of directors felt that to be desirable.

As of the date of this Statement, none of the Reporting Persons or Named Individuals has received any further response from the Issuer with respect tothe Investment Manager's proposals.

The Reporting Persons have become increasingly dissatisfied with the Issuer's financial results and operating performance and its unwillingness to consider and explore transactions which the Investment Manager believes can increase shareholder value by, among other things, increasing the commercial utilization of the Issuer's intellectual property portfolio. Accordingly, the Reporting Persons intend to continue to attempt to engage in discussions with the management of the Issuer and/or the members of the Issuer's board ofdirectors with respect to certain issues relating to, among others, the Investment Manager's prior and future proposals, the Issuer's strategic decision-making and the Issuer's recent financial and operating performance. The Reporting Persons may also approach other holders of the Issuer's securities in order to discuss similar matters of mutual interest, including, but not limited to, the possibility of nominating one or more persons to become a director ofthe Issuer. Each of the Reporting Persons intends to continuously review theMaster Fund's investment in the Issuer and reserves the right to change its plans or intentions and to take any and all actions that it may deem appropriate to maximize the value of its investment(s), including by, among other things, acquiring additional securities of the Issuer, disposing of any securities of the Issuer owned by it, or formulating other plans or proposals regarding theIssuer or securities of the Issuer to the extent deemed advisable by the Reporting Persons in light of their general investment policies, market conditions, subsequent developments affecting the Issuer (including, but not limited to, the attitude of the Issuer's board of directors and management andother shareholders of the Issuer) and the general business and future prospect sof the Issuer.