Pirate Capital To Media: We're Not Goldman's Global Alpha, We Only Barred Investors From Getting Their Money

Pirate Capital issued a press statement related to media reports on the status of their hedge funds. On Tuesday, Bloomberg reported the activist fund barred withdrawals from its two Jolly Roger funds as assets declined by almost 80% in the past year.

"Various media have published grossly misleading information regarding results at funds managed by Pirate Capital. Some reports have suggested that Pirate funds lost almost 80 percent of their value in the past year. In fact, while assets under management have decreased, average returns over Pirate's four funds during the last year are about plus 4 percent.

Pirate Capital remains committed to its event-driven strategy to create value for its investors."

Two Men Overboard at Pirate Capital

According to reports from Bloomberg, activist hedge fund Pirate Capital barred withdrawals from its two Jolly Roger funds as assets declined by almost 80% in the past year.

The firm designated the four stocks held by the funds as 'special investments', meaning clients won't be able to get money back until they are sold.

The withdrawal doesn't apply to the firm's two larger hedge funds, the report said, citing a hedge fund representative.

The firm didn't say which four stocks the funds are still holding, but out of the firm's 10 positions disclosed in their most recent 13G, the four largest stakes are held in Brinks Co. (NYSE: BCO) (Fund founder Hudson is on the board), Pep Boys - Manny, Moe & Jack (NYSE: PBY) (Hudson on Board), Angelica Corp. (NYSE: AGL) (nominaing two to board) and Aquila Inc. (NYSE: ILA) (Pirate opposes deal with Great Plains Energy).

Pirate Capital To Brink's (BCO) CEO: Quit Flying Around in the Corporate Jet and Split-Up The Damn Company

In a 13D filing after the close Friday on Brink's Company (NYSE: BCO), Pirate Capital disclosed a letter to Chairman and CEO Michael T. Dan, reporting the results of a survey of the 100 largest shareholders indicating they support the separation of the company into two publicly traded companies through a tax-free split-up.

In the letter Pirate Capital's Thomas R. Hudson said, "While a sale of the company, as opposed to a tax-free split-up, could be more lucrative to you under your change in control agreement with Brink's, potentially enriching you with millions of dollars, I believe the survey is conclusive as to the large shareholder preference for a split-up. Based on the survey (excluding quantitative/indexed shareholders that could not take part), DF King concluded that a majority of the shareholders surveyed supported a tax-free split-up."

Hudson also said, "I think it is reasonable to assume that if you, as Chief Executive Officer and Chairman of the Board of Brink's, do not now pursue such a strategy with the board, that other shareholders may consider voting you off the board at the 2008 annual meeting. Maybe if you spent less time driving around in company provided cars, flying around in corporate aircraft, or golfing at the corporate golf course, and instead focused on listening to the owners of the company (the shareholders), you would be able to move the company strategically in the direction apparently favored by shareholders."

Hudson is a member of Brink's Board of Directors.

A Copy of the Letter:

Dear Michael:

Pirate Capital LLC, at considerable expense, hired D.F. King & Co., Inc. ("DFKing") to conduct a survey (based on best available public information) of the100 largest shareholders of The Brink's Company ("Brink's") to determine the extent of shareholder interest in having Brink's separated into two publicly traded companies through a tax-free split-up. While a sale of the company, as opposed to a tax-free split-up, could be more lucrative to you under your change in control agreement with Brink's, potentially enriching you with millions of dollars, I believe the survey is conclusive as to the large shareholder preference for a split-up. Based on the survey (excluding quantitative/indexed shareholders that could not take part), DF King concluded that a majority of the shareholders surveyed supported a tax-free split-up. A summary of the survey provided by DF King is attached as Appendix A. I think it is reasonable to assume that if you, as Chief Executive Officer and Chairman of the Board of Brink's, do not now pursue such a strategy with the board, that other shareholders may consider voting you off the board at the 2008 annual meeting.Maybe if you spent less time driving around in company provided cars, flying around in corporate aircraft, or golfing at the corporate golf course, and instead focused on listening to the owners of the company (the shareholders),you would be able to move the company strategically in the direction apparently favored by shareholders.

Brink's latest earnings release and your public comments stating that you "live inside the house," and suggesting that you had superior knowledge as to why only the status quo was an appropriate course of action for Brink's at this time(without giving any meaningful proof of that) is insulting to all shareholders.The shareholders of Brink's deserve to know why you (and/or the board) do not support a split-up of the company at this time given the shareholder analyses provided to you showing that such a split could significantly increase Brink's' share price.

You have publicly stated the board utilized the services of multiple advisors to reach the conclusion not to split the company at this time. Given that this outcome is inconsistent with the calls from the shareholder base to split the company, I believe that you should immediately release the advisor analyses to your shareholders (via a public filing) along with any presentations that may have been made to the board by these advisors. If there is any information that is truly sensitive to Brink's from a competitive standpoint, that information could easily be redacted. If the board, as you have publicly stated, truly analyzed multiple options for Brink's (which certainly would have included a split of the company), then publicly release the range of values (both trading and acquisition values if applicable) these advisors concluded would be possible for Brink's to achieve as two publicly traded entities. What are you afraid of Michael? If you and/or the board have decided the company should maintain the status quo then I believe you have an obligation to the shareholders (owners) of Brink's to tell them why (in detail, with supporting presentations) you wish to continue operating Brink's as a single entity and not pursue a simple split-up of the company to eliminate the conglomerate discount the company now suffers from.

These are not rhetorical questions Michael. I and the rest of the shareholder base deserve answers.

Respectfully,
Thomas R. Hudson Jr.
Manager

Pirate Capital Again Urges Angelica (AGL) To Sell

In an amended 13D filing on Angelica Corp. (NYSE: AGL), 9.8% holder Pirate Capital disclosed a new letter to the board of directors reiterating their demand that the company retain the services of a nationally recognized investment banking firm.

In the letter Pirate Capital's Manager, Thomas R. Hudson Jr., said, "To clarify our position and to further highlight our intent to continue to champion the interests of shareholders of Angelica Corporation, we feel that we must further reiterate our demand that the board promptly retain the services of a nationally recognized investment banking firm for the purpose of effecting a sale of the Company, through sales of assets, an extraordinary transaction or otherwise, and to publicly identify the investment banking firm and its mandate. If this demand is not promptly met, we intend to nominate one or more persons to the Company's board at the upcoming annual shareholders' meeting."

A Copy of the Letter:

Dear Members of the Board:

To clarify our position and to further highlight our intent to continue to champion the interests of shareholders of Angelica Corporation ("Angelica" orthe "Company"), we feel that we must further reiterate our demand that the board promptly retain the services of a nationally recognized investment banking firm for the purpose of effecting a sale of the Company, through sales of assets, an extraordinary transaction or otherwise, and to publicly identify the investment banking firm and its mandate. If this demand is not promptly met, we intend to nominate one or more persons to the Company's board at the upcoming annual shareholders' meeting.

Management undertook a series of acquisitions between 2003 and 2006, which we understand cost in excess of $125 million, or approximately 1x sales, while the Company's shares are currently trading at approximately only 0.5x sales. As such, we believe there remains a serious disconnect. In our opinion, either there was considerable value dissolution in rolling up the previous acquisitions, or Angelica greatly overpaid for the acquisitions. If a 1x sales metric is applied to Angelica's current gross sales level, even after adjusting for net debt and other factors, the implied valuation for Angelica based on that metric approaches $35 per share. If we account for the valuation of Angelica based on the multiple of sales metric and an Enterprise Value-to-EBITDA metric,we arrive at an average valuation of approximately $31 per share. At $22.24 per share, last night's closing price of Angelica, the stock continues to trade well below what we estimate as the intrinsic value of the Company.

Over the past three years, Angelica's management team has been afforded ample time and opportunity to deliver growth and rejuvenate the Company as an on-going concern, but has demonstrated little success in this respect. We believe that the investigation of the sale of Angelica, led by a nationally recognized investment bank, will confer the most sensible strategy for delivering optimal shareholder value. We hope that you as the board, elected to uphold the interests of shareholders, will join us in pursuing our proposed strategies for the Company.

Sincerely,

Thomas R. Hudson Jr.

Manager

In an amended 13D filing on Angelica Corp. (NYSE: AGL), 9.8% holder Pirate Capital, which in the past has urged the company to hire a banker for a sale, disclosed a new letter sent to the Board of Directors.

In the letter the firm reiterated their disappointment with the weak operating results of Angelica, blaming management, and urged management to be more accommodative and open to utilizing all strategic alternatives. The firm said it will closely monitor the company.

NOTE: Nothing new here, but I need to ask - Is Tom Hudson at Pirate getting his mojo back after a terrible last 9-12 months. We are seeing more and more from him.

Copy of Letter:

Dear Members of the Board:

We feel compelled to reiterate in the strongest terms our disappointment with the weak operating results of Angelica Corporation (the "Company") and the anemic performance of the Company's stock during the past few years. As we made clear in our July 2, 2007 letter to the Board, we believe it is in both the shareholders' and the Company's interest for management to keenly focus on following the most optimal strategy to unlock value for shareholders. We want to make clear that we view Angelica's management team to be solely responsible for the Company's substandard operating results over recent years (2003 - present),which we believe to have been a direct contributor to Angelica's stock price underperformance. Contextually, we want to impress upon the Board that Pirate remains a beneficial owner of Angelica stock, with approximately 935,000 shares, or almost 10% of Angelica's outstanding shares. On the other hand, executive officers and directors beneficially own just over 260,000 shares (including restricted stock units), in the aggregate, and have been granted, without purchase, options on just over 440,000 shares, based on the Company's latest proxy statement. Clearly, based on our ownership, we believe that we are more closely aligned with shareholder interests than Angelica's management.

Given the difficulties management has experienced in fostering growth, we strongly believe management should be more accommodative and open to utilizing all strategic alternatives. The greatest area of consternation to us, as the second largest shareholder in Angelica, is the disconnect, or the meaningful valuation gap, between the aggregate price that Angelica paid for the 11 bolt-on acquisitions made between 2003 and 2006, which we understand to be in excess of$125 million, or approximately 1x sales, and the current market valuation for Angelica, which closed last night at $22.36 per share, or just over 0.5x fiscal2006 total gross sales for Angelica. Separately, given the proximity of Angelica's laundry facilities relative to each other, we would also ask the Board to consider sales of assets across regions.

Going forward, we will closely follow the Company's operating results and look forward with anticipation to management's pronouncement of strategies that will further shareholder value. Finally, as a significant holder of Angelica stock,make no mistake about it, we will continue to be vigilant in support of shareholder interests.

We look forward to your full cooperation in effecting the best outcome for shareholders.

Thomas R. Hudson Jr.

Large Angelica (AGL) Holder Pirate Capital Urges Co Hire Banker For a Sale

In an amended 13D filing on Angelica Corp. (NYSE: AGL), 9.8% holder Pirate Capital disclosed a letter to the board of directors, among other things, encouraging the board to take immediate steps to unlock long-term shareholder value by retaining an investment banking firm to explore all strategic alternatives (outside the ordinary course of business), including the sale of the Issuer, sales of assets or another extraordinary transaction.

Pirate Capital also indicated that it may have no recourse but to nominate a slate of directors at the upcoming annual shareholders’ meeting.

Pirate Capital also demanded the opportunity to examine and copy certain books, records and documents of the Issuer pursuant to Missouri law.

A Copy of the Letter:

Dear Members of the Board:

Pirate Capital LLC, as the investment advisor to Jolly Roger Fund LP and Jolly Roger Offshore Fund LTD, is the beneficial owner of 935,147 shares of the common stock of Angelica Corporation (“Angelica” or the “Company”). For the past several years, Angelica’s management has failed to improve its operating results, and in fact its net income has declined precipitously, from $11.029 million and $10.743 million in fiscal 2003 and 2004, respectively, to $2.319 million and $3.272 million, respectively in fiscal 2005 and 2006. We believe this failure has significantly hampered value generation for shareholders. This fact is reflected by what we believe to be the significant underperformance of Angelica’s stock price. Since June 27, 2003, Angelica shares have had a cumulative annual growth rate of 5.1% versus a cumulative annual growth rate of 11.4% for the S&P 500, and since the beginning of the year, Angelica shares have fallen by 19.5%, while the S&P 500 has risen over 6.2% - A PERFORMANCE GAP OF OVER 2,500 bps.1

Management has tried to paint a picture to investors that the Company has been building traction in turning around its business and that Angelica is on track to reach management’s goals for organic growth. In April of 2006, management said it anticipated the Company’s organic growth rate to increase to 7% to 10% over the next few quarters, while actual organic growth rates for the 3rd and 4th quarters of 2006 and 1st quarter of 2007 were 0.2%, 0.6% and 0.7%, respectively. More importantly, we don’t believe management has laid out for shareholders a cogent roadmap of how to achieve its targets. As the second largest shareholder of Angelica shares, with almost 10% of the outstanding stock, we can flatly state that our patience has been exhausted with management’s seeming inability to execute and deliver adequate shareholder value.

Because of the paucity of success in generating results and what we believe to be a lack of a clearly articulated vision by management for delivery of the necessary organic growth, we ask that you, the board of directors, immediately implement appropriate strategic initiatives. Specifically, we, as a substantial holder of Angelica stock, demand that the Company engage a nationally recognized investment banking firm to explore all strategic alternatives to increase shareholder value, including, but not limited to, the sale of the Company, sales of assets, or another extraordinary transaction, and that the board of directors publicly identify the investment banking firm and its mandate. Please also be on notice that we may have no recourse but to nominate a slate of directors for election at the upcoming annual shareholders’ meeting.

We look forward to your full cooperation in effecting the best outcome for shareholders.

Sincerely,

Thomas R. Hudson Jr.

Manager

Pirate Capital Lowers Their Stake in GenCorp (GY) to 6.8%

In an amended 13D filing after the close on GenCorp Inc. (NYSE: GY), Pirate Capital disclosed they lowered their stake in the company to 3,827,600 shares (6.8%). The firm held 5,061,000 GenCorp shares at the quarter ended March 31, 2007.

Pirate Capital's Activist Website BadAquilaDeal.com Offers a Free T-Shirt

Yesterday afternoon, Pirate Capital LLC announced a website www.badaquiladeal.com that discusses its view that the transaction between Great Plains (NYSE: GXP) and Aquila (NYSE: ILA) substantially undervalues Aquila.

On the website there is a presentation from Pirate Capital illustrating the shortcomings of the deal. There is also links for comments, the e-mail of Aquila's CEO, and strangely a link for a Free T-Shirt (First 1,000 people, Large Sizes Only).

In its presentation, Pirate Capital makes the case that Aquila is worth $4.50-$5.00 per share currently and said with certain alternative actions the stock could be worth $5.00-$5.50 per share, on a present value basis. The firm said the current Great Plains transaction values Aquila at $4.10-$4.24 per share, on a present value basis.

Pirate Capital disclosed a 17.55 million share stake in Aquila, which is just below the 5% threshold for a 13D.

Pirate Capital Liquidates Entire Stake in Cornell Companies (CRN)

In an amended 13D filing after the close on Cornell Companies, Inc. (NYSE: CRN), Pirate Capital disclosed they liquidated their entire stake in the company. A 03/29 13D/A filing showed an 8.9% stake, which was down from 16.5%.

On March 5, 2007, Thomas R. Hudson Jr., the Manager of Pirate Capital, resigned as a member of the Board of Directors of the company.

CKE Restaurants (CKR) Repurchases Pirate Capital's Remaining 6.1% Stake

CKE Restaurants, Inc. (NYSE: CKR) entered into a Stock Purchase Agreement with Pirate Capital, LLC, to repurchase 4,073,239 shares of the Company's common stock, or approximately 6.1% of its total shares outstanding as of April 3, 2007.

Pirate Capital has represented to the Company that it will not own any shares of the Company's common stock following the transaction.

Pirate has been liquidating its position in CKR since Fall 2006.

Large Brinks (BCO) Holder MMI Investments Now Recomends Spin-Off

In an amended 13D filing after the close Friday on Brinks Co. (NYSE: BCO), 8.3% holder MMI Investments submitted a presentation recommending that the company consider a tax-free spin-off of one of its two business segments.

The firm said, "We believe a spin-off would achieve a number of significant corporate business purposes. As a result of achieving such business purposes, we believe the aggregate value of the two companies would be more than $79 per share, a 25% premium to yesterday’s closing price. This translates into more than $700 million of total market value."

NOTE: Brinks is also an activist target of Pirate Capital. Pirates' managing member Thomas R. Hudson was recently added to Brinks' Board of Directors.

A Copy of the Cover Letter:

Dear Members of the Board,

We remain frustrated with The Brink’s Company’s (“BCO”) longstanding, significant undervaluation relative to its peers. In December we presented an analysis illustrating four different strategic alternatives to attempt to address this chronic undervaluation. Since then BCO has announced no effort to address the situation and the stock has continued to languish, while two competitors have announced acquisitions and two others have proceeded down the path of separating security operations into independent, publicly-traded vehicles.

Accordingly, we have refined our thinking and are providing you our analysis calling for a tax free spin-off of one of BCO’s two business segments to shareholders on a pro rata basis as soon as possible. We have also enclosed herein a memorandum from our counsel regarding many of the pertinent issues and legal considerations arising in the spin-off process. We believe you will find, as we have, that these are eminently addressable with regard to a spin-off. We take at face value the company’s statements that they are always considering the best course to increase value. However, it is time to move from contemplation to action. We believe a spin-off would achieve a number of significant corporate business purposes. As a result of achieving such business purposes, we believe the aggregate value of the two companies would be more than $79 per share, a 25% premium to yesterday’s closing price. This translates into more than $700 million of total market value.

Please consider this promptly, and if you agree, put BCO on a path to realizing this opportunity as soon as possible. The window to capitalize on this option is open at this juncture and, as we stressed when we asked the company to sell BAX in 2005, such windows do not remain open forever. We believe the result would be two strong, viable public companies, each with market capitalizations of approximately $1.5 billion or greater. This corporate transaction is within the control of the Board to initiate and execute, but we believe you would have significant shareholder support behind you. As owners of 8.3% of the outstanding stock, we have been long been admirers of BCO’s management, operations, brands and market positions, and believe that this endeavor would ultimately result in those qualities being more fairly valued in the marketplace.

As always, we are amenable to discussing any of our points in the enclosed analysis.

Clay Lifflander

Pirate Capital Cuts Stake in Cornell Companies (CRN) to 8.9%

In an amended 13D filing on Cornell Companies (NYSE: CRN), Pirate Capital disclosed an 8.9% stake (1.25 million shares) in the company. This is down from the 16.5% stake (2.32 million shares) the firm disclosed in a past filing.

On March 5, 2007, Thomas R. Hudson Jr., the Manager of Pirate Capital, resigned as a member of the Board of Directors of the company.

Pirate's Tom Hudson Leaves Cornell (CRN) Board To Focus on Brink's (BCO)

Yesterday, Pirate Capital's Thomas Hudson announced he has resigned from the Board of Directors of Cornell Companies Inc. (NYSE: CRN). Hudson said he is resigning so he can pursue efforts at The Brink's Company (NYSE: BCO), where he was recently added to the board and has been pushing the company to review strategic alternatives.

Hudson's firm owns a 16.5% stake in Cornell.

Hudson said, "I am pleased to say that Cornell is a very different company than when I joined the board almost two years ago. In my tenure on the board, I have worked to see the stock appreciate from $13.60 to $20.50 per share. The company is now well-positioned to take advantage of the tremendous growth opportunities in the corrections industry, and has a new management team and a strong board in place leading it forward."

Image from www.hedgefundsworld.com

Does Pirate Capital Like it HOT?

In analyzing Pirate Capital's recent 13F for the quarter ended Dec. 31, 2006 we found an interesting new holding for the shaken-up activist hedge fund. It appears, Pirate initiated a new 595,600 share stake in Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT).

The stake is small at just 0.281%, but with Tom Hudson's recent commitment to stream-line the fund we find it interesting that he is putting on a new trade. As we have been reporting for some time, Pirate has mainly been liquidating all but a few positions and Bloomberg recently reported that the fund's assets fell from $1.8 billion in August 2006 to $1.1 billion. The hedge fund disclosed 35 positions for the quarter ended June 30, 2006, that is now down to 19 positions.

Pirate Capital's Hudson Joins Brink's (BCO) Board of Directors

After the close Thursday, The Brink's Company (NYSE: BCO) and Pirate Capital LLC announced they have reached an agreement. As part of the agreement, Thomas R. Hudson Jr., managing member of Pirate Capital, will join the Brink's board of directors at its upcoming February meeting.

Hudson will serve on the board's strategy, pension and finance, and executive committees.

Pirate Capital owns approximately 8.5% of the outstanding common stock of Brink's.
Pirate Capital had been pushing for two seat on the board and requested that the company retain an investment bank to examine strategic alternatives.

Link to past reports on the developments leading up to today's news

Tom Hudson, Ye Scalawag

On Friday, Bloomberg had a pretty scathing report on the founder of activist hedge fund Pirate Capital, Tom Hudson, after a terrible year for the fund. Link to Article

From the article. "Pirate is leaking money. Its assets fell to $1.56 billion as of Oct. 31 from a peak of $1.8 billion in August, according to figures Pirate has sent to investors. That figure has since fallen to $1.1 billion. Hudson's Jolly Roger Fund returned 9.5 percent in 2006, trailing a 15.8 percent return for the Standard & Poor's 500 Index. It was Pirate's worst year ever.

As if that weren't enough, a former client and partner, Nassau, Bahamas-based Magnum Global Investments Ltd., has sued Pirate in New York State Supreme Court, saying Hudson reneged on a promise to pay the investment firm in return for steering investor dollars Pirate's way. Hudson has asked the judge to dismiss the case.

It's a remarkable turnabout for Hudson, whose fund posted an average annual return of 31.3 percent from July 2002 to December 2005, according to Pirate marketing documents. "

Link to some of our past reports on Pirate Capital