Glenhill Advisors Dumps 2.8M Shares of TLC Vision (TLCV)

In an SEC Form 4 filing this morning on TLC Vision Corp. (Nasdaq: TLCV), large holder Glenhill Advisors disclosed they sold 2,835,614 shares at prices from $5.83-$5.87, bringing their stake to 6,778,486 shares.

Glenhill has been a activist in the stock, recently disclosing discussions with certain senior executives and members of the Board. Glenhill had voiced concerns regarding the performance of the Company.

This morning, TLC Vision announced preliminary results of its tender offer, saying they expect to purchase for cancellation 20 million common shares at a price of US$5.75 per share.

Nudge From Glenhill Advisors Prompts Action from TLC Vision (TLCV)

Glenhill Advisors activist target, TLC Vision (Nasdaq: TLCV), is 8.5% higher this morning after the company announced a modified "Dutch auction" tender offer to repurchase up to $125 million of its common stock at a price per share not less than $5.75 and not greater than $6.25 (up to 30% of outstanding stock). The repurchase will be financed through a combination of cash-on-hand and borrowing.

In March, Glenhill Advisors filled its original 13D and disclosed a letter sent to the Chairman expressing its concern about the company's underperformace. In April, an amended 13D from Glenhill Advisors noted they engaged in "consensual" discussions with certain senior executives and members of the Board of Directors of the Company.

Although Glenhill Advisors didn't get into great detail about the nature of the discussion, one would have to assume that today's announcement from TLC Vision is related the talks.

Glenhill paid on average in the high $4 per share range for its 13.9% stake in TLC Vision. Currently the stock is trading at $5.85.

Large TLC Vision (TLCV) Holder Glenhill Advisors Discloses Discussions With Senior Executives

In an amended 13D filing after the close on TLC Vision Corporation (Nasdaq: TLCV), 13.9% holder Glenhill Advisors noted they recently engaged in consensual discussions with certain senior executives and members of the Board of Directors of the Company. Glenhill said these discussions related generally to the Company's current operating strategy, historical financial performance and management composition.

In the original March 13D filing, Glenhill disclosed a letter to the Chairman of the Board of Directors of the Company expressing, among other things, concern regarding the performance of the Company.

In the March letter the firm said, "We are concerned that TLC Vision is currently underperforming in a variety of respects and that if it continues on its current course, TLC Vision’s business and financial prospects may be significantly negatively impacted, and the availability of any viable strategic alternatives may be significantly limited, as a result."

Large TLC Vision (TLCV) Holder Glenhill Advisors Concerned About Underperformance

In a 13D filing on TLC Vision Corporation (Nasdaq: TLCV), Glenhill Advisors discloses a 13.9% stake (9.6 million shares) and disclosed a letter to the Chairman of the Board of Directors of the Company expressing, among other things, concern regarding the performance of the Company. The firm changed their filing status from 13G to 13D, indicating their more "active" stance with the investment.

In the letter the firm said, "We are concerned that TLC Vision is currently underperforming in a variety of respects and that if it continues on its current course, TLC Vision’s business and financial prospects may be significantly negatively impacted, and the availability of any viable strategic alternatives may be significantly limited, as a result."

Glenhill said, "Although we have no intention at this time to take any particular action ... we are exploring all of our options."

A Copy of the Letter:

Dear Mr. Vamvakas:

As you are aware, Glenhill Advisors, LLC and certain of its affiliates beneficially own, in the aggregate, approximately 13.9% of the outstanding common stock of TLC Vision Corporation.

As we do with each of our portfolio companies, we are carefully monitoring the business, operations and financial performance of TLC Vision. We are concerned that TLC Vision is currently underperforming in a variety of respects and that if it continues on its current course, TLC Vision’s business and financial prospects may be significantly negatively impacted, and the availability of any viable strategic alternatives may be significantly limited, as a result.

Therefore, we intend to continue to review carefully our investment in TLC Vision and in the near term may seek to engage in discussions with TLC Vision’s management and Board of Directors with respect to TLC Vision’s business, operations, financial condition and prospects, and the potential to increase shareholder value through improved operations and strategies, which may include potential strategic alternatives. Although we have no intention at this time to take any particular action, in the course of monitoring our investment we are exploring all of our options, including with respect to corporate governance and management and Board composition. In connection with the foregoing, we may also seek to engage in discussions with other stockholders of TLC Vision and other relevant parties concerning the business, operations, strategy and future plans of TLC Vision.

Sincerely,
Glenn J. Krevlin

Glenhill Advisors Wants Tekelec (TKLC) To Embark on an Aggressive Share Repurchase Program

In an amended 13D filing on Tekelec (Nasdaq: TKLC), 12.9% Glenhill Advisors disclosed a letter to the President and Chief Executive Officer of the Company expressing, among other things, the suggestion that the Company consider embarking on an aggressive share repurchase program.

The firm said, "At an enterprise value of $550 million, $425 million of cash, and having core operations (pre overhead) that produced $145 million and $112 million of EBIT in 2006 and 2005, respectively, valuation is exceptionally attractive. It appears clear that the marketplace fails to understand and appropriately value the magnitude of operating performance improvement in 2008 versus 2007 as a result of the pending resolution to the switching business. Additionally, we believe that the company has the ability to grow revenue double digits in 2008 (and beyond) and achieve operating margins near 20% longer term. In fact, if one were to make two reasonable assumptions: 1) that switching losses disappear entirely in 2008, and 2) that 2008 segment ebit will be equal to or greater than 2006, the company would generate $1.10 per share in free cash flow and roughly $0.95 per share in pre stock comp earnings. We estimate using $200 million to repurchase shares would increase both earnings per share and free cash flow per share by approximately $0.20, making the decision highly accretive and would create shareholder value."

A Copy of the Letter:

Dear Frank:

First and foremost we would like to congratulate you and your team on the excellent job you have done over the past year rationalizing the company’s operations, restating financials, and now resolving all major outstanding litigation. With the Bouygues lawsuit behind us, we believe now is the time to call a special board meeting and get authorization to begin an aggressive share repurchase program.

At an enterprise value of $550 million, $425 million of cash, and having core operations (pre overhead) that produced $145 million and $112 million of EBIT in 2006 and 2005, respectively, valuation is exceptionally attractive. It appears clear that the marketplace fails to understand and appropriately value the magnitude of operating performance improvement in 2008 versus 2007 as a result of the pending resolution to the switching business. Additionally, we believe that the company has the ability to grow revenue double digits in 2008 (and beyond) and achieve operating margins near 20% longer term. In fact, if one were to make two reasonable assumptions: 1) that switching losses disappear entirely in 2008, and 2) that 2008 segment ebit will be equal to or greater than 2006, the company would generate $1.10 per share in free cash flow and roughly $0.95 per share in pre stock comp earnings. We estimate using $200 million to repurchase shares would increase both earnings per share and free cash flow per share by approximately $0.20, making the decision highly accretive and would create shareholder value.

As the single largest shareholder in the company we are optimistic that management will request, and the board will approve, a substantial share buyback.

Yours truly,

Glenn J. Krevlin