Commerce Energy Group (EGR) Holder Zeff Suggests Board Nominee, Resignation of Perkins, Sale of Co

In a 13D filing on Commerce Energy Group Inc. (AMEX: EGR), 10.7% holder Daniel Zeff / Zeff Capital disclosed a letter to Chairman Robert Perkins, identifying certain discussions he has had with the Company and third parties, and suggested certain actions, including submitting a nominee to serve as a director on the Board, calling for the resignation of Robert Perkins from the Board and urging careful consideration of a sale of the Company.

In the letter Zeff said, "Steve Boss, the company's CEO, Charles Bayless, a director, and Lawrence Clayton, the company's former CFO, have made it clear to me in personal conversations that Universal Energy's recent expression of interest to acquire the company in a cash buyout for $2.50-$2.75 was reasonable and should be explored. It is also clear that there are other potential acquirers of our company and that all reasonable offers should be explored."

A Copy of the Letter:

Dear Mr. Perkins,

Why have you not responded to my letter regarding the cash takeover offer for our company?

Steve Boss, the company's CEO, Charles Bayless, a director, and Lawrence Clayton, the company's former CFO, have made it clear to me in personal conversations that Universal Energy's recent expression of interest to acquire the company in a cash buyout for $2.50-$2.75 was reasonable and should be explored. It is also clear that there are other potential acquirers of our company and that all reasonable offers should be explored.

Without explanation of the company's rejection or consideration of Universal's offer and other potential offers, I must assume that you are shirking your fiduciary responsibilities. The Board has an obligation to carefully investigate, evaluate and respond to the expression of interest in light of the company's other alternatives. Before your former CFO left the company, I am told that Mr. Clayton wrote to the Board that he believes you are acting against shareholder interests by not exploring a sale at this time.

Commerce Energy's Board appears to be split on the issue of exploring a sale, and with an even six members, the Board is ineffectual. It has become apparent to me that you, and Directors Gary Hessenauer and Mark Juergensen are improperly delaying and obstructing the process of exploring reasonable offers for the company that could create shareholder value.

You continue to hide behind your legal counsel and your "processes and strategies in place" to avoid thorough consideration of a sale of the company and, more egregiously, to advance your own interests. Those interests appear to include a potential replacement of the CEO with Mr. Hessenauer. Mr. Hessenauer was apparently involved in the last CEO search (that resulted in Mr. Boss' hiring) and was outside of the top ten candidates considered.

The Board must take action now to break this deadlock and to move forward with a sale of the company, by removing yourself and other directors acting against shareholders, and by adding a new member to the Board. I here by re-submit Mr. Andrew Dailey as a nominee for the Board. I previously submitted his name for nomination to CEO, Steve Boss.

Commerce Energy's shareholders do not have the luxury of time and must consider takeover offers now, before the planned August 17 Board meeting and before any potentially damaging new management changes take place. Mr.Hessenauer offered to hold a special meeting for me with the independent Board members (which includes all members except Steve Boss) at the end of August. I demand that you respond publicly now and with your current CEO involved.

Bob, your actions appear to be personally motivated or simply irrational, particularly in light of your minor personal holdings in Commerce Energy and the Board's meager 2% position in the stock. Why are you not acting on behalf of the real owners of this company? Zeff Capital Partners owns 10.7%of the stock and yet you refuse to respond to our inquiries or act in our best interests. It has also become clear that you do not fully understand how customer attrition will be affected by operational changes (i.e. firings) that you may seek at the company. So, not only will your actions damage EGR'ss hareholders, but our employees and our customers as well. Bob, this is not the right job for you and I ask again that you remove yourself from the Board of Directors of Commerce Energy Group.

Whether you are removed from the Board or an additional seat is added,Commerce Energy's directors must act in the shareholders' best interests and move forward with a sale of the company.

Sincerely,
Daniel Zeff