Shamrock Activist Value Fund Discloses 5.66% Stake in NuCo2 (NUCO); Requests Special $7/Sh Dividend

In a 13D filing on NuCo2 Inc. (Nasdaq: NUCO), Shamrock Activist Value Fund disclosed a 5.66% stake (868,790) in the company and a letter suggesting the company pay a special dividend of $7.00 per share and institute an ongoing regular annual dividend of $0.25 per share.

From the filing: "We believe that the Company’s capital structure is sub-optimal and could support a substantial increase in long-term debt without compromising the Company’s ability to execute its business plan. Specifically, after considering a range of alternatives including, but not limited to, a further share repurchase, special dividend, and regular dividend, we recommend that the Company utilize the strength of its balance sheet and strong cash flows to pay a special dividend of $7.00 per share and institute an ongoing regular annual dividend of $0.25 per share. Achieving a debt financing package at attractive rates and terms should be achievable over the next 60 days."

A Copy of the Letter:

Dear Mike: (CEO)

The Shamrock Activist Value Fund (“Shamrock”) is a large shareholder of NuCo2, Inc. (“NUCO” or the “Company”). We beneficially own 662,836 shares or approximately 4.3% of the outstanding shares of the Company’s common stock.

We have invested in the Company because we believe that it holds a strong market share and defensible position in the bulk CO2 industry and appears poised to deliver increasing financial returns to shareholders. In January 2007, the Company announced a new strategic growth plan focused on optimizing customer profitability. We believe that this strategic shift should improve operating margins, return on invested capital and free cash flow.

We believe that the Company’s capital structure is sub-optimal and could support a substantial increase in long-term debt without compromising the Company’s ability to execute its business plan. Specifically, after considering a range of alternatives including, but not limited to, a further share repurchase, special dividend, and regular dividend, we recommend that the Company utilize the strength of its balance sheet and strong cash flows to pay a special dividend of $7.00 per share and institute an ongoing regular annual dividend of $0.25 per share. Achieving a debt financing package at attractive rates and terms should be achievable over the next 60 days.

We believe that the proposed special dividend would be well received and provides immediate liquidity for all shareholders. In addition to optimizing the Company’s capital structure, after this proposed recapitalization the Company would still retain a strong and flexible balance sheet to support its working capital requirements, organic growth and appropriate opportunistic acquisitions. Importantly, under our proposal, return on equity increases by 70% to approximately 16%.

Enclosed for your review is a brief summary of the proposed transaction. A copy of this presentation can be found at our website at (http://www.shamrock.com/pages/activist/NUCO_Dividend_Recap.pdf).

It is clear that if management believes it will achieve its business plan, we believe that shareholders will be significantly better off if the Company adopts our recapitalization proposal.

We would like the opportunity to discuss further with you and the other members of the Board ways to enhance shareholder value, including our proposal outlined above.

Respectfully,
Chris Kiper