World Air Holdings (WLDA) Holder Clinton Group Wants Company Sold
In a 13D filing on World Air Holdings, Inc. (OTC: WLDA) this morning, Clinton Group, Inc. disclosed a 5.1% stake in the company. The firm also disclosed a letter expressing its disappointment with various aspects of the Company's performance and operations, and urging the board of directors and advisors to maximize shareholder value by immediately embarking on a sale of the company to a strategic or financial buyer.
The firm said, in the event of such a sale, they would be willing to evaluate taking a co-investment role as an equity investor alongside a financial sponsor or as a mezzanine debt holder.
The firm said if the board fails to expeditiously pursue a sale process, they would consider, among other things, seeking board representation at the Company's next annual meeting through the election of directors who are dedicated to maximizing shareholder value through a sale process.
A Copy of the Letter
General Ronald R. Fogleman
Chairman of the Board of Directors
World Air Holdings, Inc.
The HLH Building
101 World Drive
Peachtree City, Georgia 30269
Dear Sir:
Funds and accounts managed by Clinton Group Inc. ("Clinton") currently
beneficially own approximately 5% of the outstanding shares of World Air
Holdings, Inc. ("World Air" or the "Company"). As one of the Company's largest
investors, we have a substantial interest in seeing its leadership commit to a
clear, determined path to delivering maximum value for all shareholders. We have
therefore spent a significant amount of time analyzing the business prospects of
the Company and the various options available to the Company, and we endeavor to
work constructively with management and the board of directors in discussing our
analysis.
I am sure that you and your board share similar sentiments with us regarding the
recently announced disappointing Q3 results. Following a poor Q2 2006, we were
expecting a significant turnaround in terms of financial results in Q3 2006 to
restore our confidence in this management team's ability to execute their
business plan. While revenue was relatively in line with our expectations, we
were disappointed by the significantly higher expense figures for the quarter.
Also, it appears that the operating synergies from the North American
acquisition neither have been timely achieved nor at the level of the Company's
expectations or our expectations for the magnitude of the revenue base.
Management has displayed an inability to secure investor credibility, and, as a
result, the current stock price fails to reflect a business with over $840
million in annual revenues and operating margin potential of 5 to 10%.
Frankly speaking, there are a few things that puzzle us regarding the overall
situation. First, the Company has struggled to complete its filings in a timely
fashion, which has further delayed a listing on NASDAQ or NYSE. Secondly, the
Company has a relatively small float and limited trading volume. Thirdly, the
Company has no meaningful equity research coverage, and it appears that
management has had difficulty communicating its story and guidance to the
street. Fourthly, the cumbersome Sarbanes-Oxley expenses and other public
company expenses seem onerous for a Company of this size. Finally, as one of the
largest shareholders of the Company we are frustrated that we have been unable
to schedule a timely meeting with management. Taking all of these factors into
consideration, we wonder to ourselves why World Air exists as a public entity
today?
We applaud the board's proactive posture in terms of seeking to maximize value
for all shareholders, and we view the Dutch Tender, though the current stock
price is not a successful reflection, as a step in the right direction.
Unfortunately, since the formation of a special committee and the engagement of
Legacy Partners Group in September 2006, there has been limited communication to
the shareholders regarding the scope and progress of this undertaking. We
believe that a course of action that the board should focus on (and direct its
advisors to do) is to maximize value to shareholders by immediately embarking on
a sale of the Company to a strategic or financial sponsor. Having spoken to
industry experts and potential acquirers, we believe that such a process would
attract interested parties at a substantial premium to the current stock price.
Given the diversity of our fund strategies at Clinton Group Inc., and our belief
in the long-term prospects of the Company, we would welcome an opportunity to
evaluate taking a co-investment role as an equity investor alongside a financial
sponsor partner or as a mezzanine debt holder.
In addition, the board should compel management to focus on significantly
reducing expenses, enhancing timely reporting procedures and improving the
forecasting and communication of future results. Simply put, recent results,
delayed reporting and poor guidance are unacceptable.
Our first approach is always to attempt to work constructively with management
to share ideas regarding how to deliver value for shareholders, and we have
stated that we would possibly participate in certain types of transactions.
However, if the board fails to expeditiously pursue our stated course of action,
we would consider, among other things, seeking board representation at next
year's annual meeting through the election of directors who, subject to their
fiduciary duties, are dedicated to maximizing shareholder value through a sale
process.
Please feel free to contact Conrad Bringsjord, Managing Director, at
212-377-4224 or Joseph De Perio, Vice President, at 212-739-1833 at Clinton to
discuss any and all issues further at your convenience.
Sincerely,
/s/ Conrad Bringsjord
-------------------------
Conrad Bringsjord
Managing Director
Portfolio Manager Event Driven and Activist Investments
The firm said, in the event of such a sale, they would be willing to evaluate taking a co-investment role as an equity investor alongside a financial sponsor or as a mezzanine debt holder.
The firm said if the board fails to expeditiously pursue a sale process, they would consider, among other things, seeking board representation at the Company's next annual meeting through the election of directors who are dedicated to maximizing shareholder value through a sale process.
A Copy of the Letter
General Ronald R. Fogleman
Chairman of the Board of Directors
World Air Holdings, Inc.
The HLH Building
101 World Drive
Peachtree City, Georgia 30269
Dear Sir:
Funds and accounts managed by Clinton Group Inc. ("Clinton") currently
beneficially own approximately 5% of the outstanding shares of World Air
Holdings, Inc. ("World Air" or the "Company"). As one of the Company's largest
investors, we have a substantial interest in seeing its leadership commit to a
clear, determined path to delivering maximum value for all shareholders. We have
therefore spent a significant amount of time analyzing the business prospects of
the Company and the various options available to the Company, and we endeavor to
work constructively with management and the board of directors in discussing our
analysis.
I am sure that you and your board share similar sentiments with us regarding the
recently announced disappointing Q3 results. Following a poor Q2 2006, we were
expecting a significant turnaround in terms of financial results in Q3 2006 to
restore our confidence in this management team's ability to execute their
business plan. While revenue was relatively in line with our expectations, we
were disappointed by the significantly higher expense figures for the quarter.
Also, it appears that the operating synergies from the North American
acquisition neither have been timely achieved nor at the level of the Company's
expectations or our expectations for the magnitude of the revenue base.
Management has displayed an inability to secure investor credibility, and, as a
result, the current stock price fails to reflect a business with over $840
million in annual revenues and operating margin potential of 5 to 10%.
Frankly speaking, there are a few things that puzzle us regarding the overall
situation. First, the Company has struggled to complete its filings in a timely
fashion, which has further delayed a listing on NASDAQ or NYSE. Secondly, the
Company has a relatively small float and limited trading volume. Thirdly, the
Company has no meaningful equity research coverage, and it appears that
management has had difficulty communicating its story and guidance to the
street. Fourthly, the cumbersome Sarbanes-Oxley expenses and other public
company expenses seem onerous for a Company of this size. Finally, as one of the
largest shareholders of the Company we are frustrated that we have been unable
to schedule a timely meeting with management. Taking all of these factors into
consideration, we wonder to ourselves why World Air exists as a public entity
today?
We applaud the board's proactive posture in terms of seeking to maximize value
for all shareholders, and we view the Dutch Tender, though the current stock
price is not a successful reflection, as a step in the right direction.
Unfortunately, since the formation of a special committee and the engagement of
Legacy Partners Group in September 2006, there has been limited communication to
the shareholders regarding the scope and progress of this undertaking. We
believe that a course of action that the board should focus on (and direct its
advisors to do) is to maximize value to shareholders by immediately embarking on
a sale of the Company to a strategic or financial sponsor. Having spoken to
industry experts and potential acquirers, we believe that such a process would
attract interested parties at a substantial premium to the current stock price.
Given the diversity of our fund strategies at Clinton Group Inc., and our belief
in the long-term prospects of the Company, we would welcome an opportunity to
evaluate taking a co-investment role as an equity investor alongside a financial
sponsor partner or as a mezzanine debt holder.
In addition, the board should compel management to focus on significantly
reducing expenses, enhancing timely reporting procedures and improving the
forecasting and communication of future results. Simply put, recent results,
delayed reporting and poor guidance are unacceptable.
Our first approach is always to attempt to work constructively with management
to share ideas regarding how to deliver value for shareholders, and we have
stated that we would possibly participate in certain types of transactions.
However, if the board fails to expeditiously pursue our stated course of action,
we would consider, among other things, seeking board representation at next
year's annual meeting through the election of directors who, subject to their
fiduciary duties, are dedicated to maximizing shareholder value through a sale
process.
Please feel free to contact Conrad Bringsjord, Managing Director, at
212-377-4224 or Joseph De Perio, Vice President, at 212-739-1833 at Clinton to
discuss any and all issues further at your convenience.
Sincerely,
/s/ Conrad Bringsjord
-------------------------
Conrad Bringsjord
Managing Director
Portfolio Manager Event Driven and Activist Investments
Labels: Clinton Group, WLDA
posted by Lon at 11:25 AM
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