Harbinger Capital Gets Active with Ryerson (RYI), Citing Board/Management Failures
In a 13D filing after the close on Ryerson Inc. (NYSE: RYI), Harbinger Capital disclosed a 9.7% stake (2.55 million shares) in the company and noted they changed their filing status from 13G to 13D, taking a more active approach with the investment. This is up from the 6.7% stake (1.765 million shares) the firm disclosed in a November 27th 13G filing.
The firm said they have grown increasingly concerned that the board of directors and senior management have not been appropriately vigilant in their management of the company, particularly with respect to its lack of focus on profitability and the management of inventory. The firm said peer companies have been consistently successful in turning inventory.
The firm said it is considering a range of options to encourage better performance, including potential changes in the operations, management, or capital structure as a means of enhancing shareholder value. The firm is also considering nominating one or more persons to the board.
From the "PURPOSE OF TRANSACTION' section of the filing:
The Reporting Person initially reported their investment on a Schedule 13G onNovember 27, 2006. Since that time, the Reporting Persons have examined the financial and operating performance of the Issuer and have grown increasingly concerned that the board of directors and senior management of the Issuer have not been appropriately vigilant in their management of the Issuer, particularly with respect to its lack of focus on profitability and the management of inventory.
The Reporting Persons observe that the Issuer's peer companies have been consistently successful in turning inventory more rapidly than the Issuer and have also consistently earned higher gross, operating and net margins throughout the business cycle. Given this persistent under performance by the Issuer since it was established as a stand-alone enterprise in 1999, the Reporting Persons have concluded that the board of directors has provided insufficient oversight of management's ability to deliver acceptable performance in the key factors that are critical to maximizing the value of the Issuer's existing asset base, geographic presence and product portfolio. The Reporting Persons believe that the current board of directors, while talented and undoubtedly qualified in general business matters, lacks the specific qualifications necessary for understanding the value drivers within the metals processing and distribution business which drive acceptable shareholder returns.
As a result, the Reporting Persons are considering a range of actions by which they may be able to encourage the Issuer to improve its performance. Such activities may include taking a position (including by contacting management and other shareholders of the Issuer) with respect to potential changes in the operations, management, or capital structure of the Issuer as a means of enhancing shareholder value. Such suggestions or positions may include one or more plans or proposals that relate to or would result in any of the actions required to be reported herein. In addition, the Reporting Persons are also considering nominating one or more persons for election to the Issuer's board of directors at the Issuer's next annual meeting of shareholders.
The firm said they have grown increasingly concerned that the board of directors and senior management have not been appropriately vigilant in their management of the company, particularly with respect to its lack of focus on profitability and the management of inventory. The firm said peer companies have been consistently successful in turning inventory.
The firm said it is considering a range of options to encourage better performance, including potential changes in the operations, management, or capital structure as a means of enhancing shareholder value. The firm is also considering nominating one or more persons to the board.
From the "PURPOSE OF TRANSACTION' section of the filing:
The Reporting Person initially reported their investment on a Schedule 13G onNovember 27, 2006. Since that time, the Reporting Persons have examined the financial and operating performance of the Issuer and have grown increasingly concerned that the board of directors and senior management of the Issuer have not been appropriately vigilant in their management of the Issuer, particularly with respect to its lack of focus on profitability and the management of inventory.
The Reporting Persons observe that the Issuer's peer companies have been consistently successful in turning inventory more rapidly than the Issuer and have also consistently earned higher gross, operating and net margins throughout the business cycle. Given this persistent under performance by the Issuer since it was established as a stand-alone enterprise in 1999, the Reporting Persons have concluded that the board of directors has provided insufficient oversight of management's ability to deliver acceptable performance in the key factors that are critical to maximizing the value of the Issuer's existing asset base, geographic presence and product portfolio. The Reporting Persons believe that the current board of directors, while talented and undoubtedly qualified in general business matters, lacks the specific qualifications necessary for understanding the value drivers within the metals processing and distribution business which drive acceptable shareholder returns.
As a result, the Reporting Persons are considering a range of actions by which they may be able to encourage the Issuer to improve its performance. Such activities may include taking a position (including by contacting management and other shareholders of the Issuer) with respect to potential changes in the operations, management, or capital structure of the Issuer as a means of enhancing shareholder value. Such suggestions or positions may include one or more plans or proposals that relate to or would result in any of the actions required to be reported herein. In addition, the Reporting Persons are also considering nominating one or more persons for election to the Issuer's board of directors at the Issuer's next annual meeting of shareholders.
Labels: Harbinger Capital, Ryerson, RYI
posted by Lon at 12:31 PM
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