Battle Escalates as Burton Continues Takeover Attempt of Cenveo
Press release from the issuing company
May 27, 2005 -- (WhatTheyThink.com Exclusive) -- Robert G. Burton, CEO of Burton Capital Management, wants to hold a shareholder vote to replace the board of directors. This and other information was revealed in letters released yesterday. Burton Capital Management and other members of its group control 5.4 million of 49 million outstanding shares.
Below are highlights from two letters written by Robert Burton to Cenveo. The full text of the letters follow:
- Cenveo had not accepted Burton’s proposal, which would have resulted in his appointment as Chairman and CEO of Cenveo
- Burton Capital Management believes it is imperative for Cenveo to become the low cost producer in the printing industry.
- Burton emphasized that his group is Cenveo’s largest shareholder.
- Burton’s group was called by an investor group that Cenveo had solicited during their evaluation of "strategic alternatives". The investor group called to see if Burton would be interested in managing Cenveo after they had purchased it.
- If Cenveo sells the Company without approval from Burton’s group, he promises a “large number of lawsuits”.
- Burton plans to request a special meeting of shareholders to remove the existing directors and nominate a new slate of directors.
- Burton has no interest in being part of any basic interview process for the CEO position at Cenveo. “It is almost an insult to ask me to be part of your interview process given my successful career in the printing/media industry and my significant experience helping to turn around companies facing similar challenges to Cenveo. I find it hard to believe that there is any other person with my qualifications in the printing/media industry who would have an interest in running Cenveo. My track record is impeccable and I always deliver what I commit to deliver.”
May 25, 2005
Ms. Susan O. Rheney
8310 S. Valley Highway, #400
Englewood, CO 80112
This past Friday, we were advised by Roger Kimmel of Rothschild, Inc. ("Rothschild") that you had not accepted our proposal, which would have resulted in my appointment as Chairman and CEO of Cenveo, Inc. ("Cenveo" or the "Company"), the election of two of our other designees to the Cenveo board and the implementation of our plan for Cenveo, and that you were moving ahead with your review of "strategic alternatives".
For the record, on May 6, 2005, Burton Capital Management, LLC ("Burton Capital" or "BCM") met with you and fellow Cenveo board member Jerry Pickholz, along with two partners from your newly-hired law firm, Wachtell, Lipton, Rosen & Katz, and your newly-hired financial advisors from Rothschild. The purpose of our meeting was to present our plans for Cenveo that we believe would create significant shareholder value. We would accomplish this by implementing a new business plan, which has been successful at all of my other printing company assignments. We believe that it is imperative for the Company to become the low cost producer in the printing industry. We have enclosed a copy of the discussion items from our meeting. We were very disappointed in being
turned down again by your board. We felt that the business plan we outlined would create value for all Cenveo shareholders. As you know, Burton Capital, together with the other members of its group, own an aggregate of 5,396,234 shares of the Company's common stock. We are CENVEO'S LARGEST SHAREHOLDERS.
We should have realized that the meeting on May 6th would be unproductive when no member of the Cenveo board asked a single question during my 60 minute presentation. Not one question. We believe that you met with us solely in an attempt to preclude a future claim that you refused to meet with us. We now feel that our meeting was a sham and that you will do anything to keep the Burton Capital team from running the Company. Your illusory offer for us to "participate" in a process that is undefined as to its timing and potential outcome, and to require us to sign a confidentiality agreement that we believe would prevent us from fully communicating with Cenveo's shareholders, is completely unacceptable.
We strongly believe your plan to seek "strategic alternatives" including an attempt to sell the Company, is seriously flawed. Last week, we were even called by an investor group that you had solicited during your evaluation of "strategic alternatives". They called us to see if we would be interested in managing the Company after they had purchased it. We expect to receive other such calls as you solicit interest from financial buyers and others with no printing industry experience. We continue to believe that you are wasting shareholder dollars on outside lawyers and M&A advisors in furtherance of a plan that simply cannot work. These dollars should be spent on new capital and financial incentives for key employees in Cenveo's plants. As the Company's largest shareholder, we want to remind you that you should not try to sell Cenveo for a low-ball price. You should compare any offer to the value we believe we could provide after right-sizing Cenveo and executing our proven business plan for the Company. If you do try to sell the Company for an unacceptable price, then you will need even more new lawyers to handle the large number of lawsuits that will inevitably arise.
As we stated in our letter of April 21st, "we have received a tremendous positive unsolicited response from several of your large long-time shareholders, as well as current employees, former employees and former directors, to our ... strategy to save the Company. In addition, we have received unsolicited indications of support from people who invested with us at World Color and Moore and who have recently become shareholders of the Company. All of them have told us that major changes are needed to save the Company, and all of them have told us that they support our plans." Based upon the above support and our outstanding business track record we feel the Company needs leadership now along with a change of direction.
Since you have repeatedly not been willing to accept our proposals to lead the Company, we feel the only way to resolve these shareholder issues is the American way - with a vote. In the very near future you will receive a request from our group for a special meeting of shareholders to remove the existing directors and nominate a slate of directors who will affirmatively act in the best interests of Cenveo's shareholders.
In light of our significant ownership and the recent acquisitions by like-minded public shareholders (as evidenced by the extraordinary trading volume over the past few months), we have every expectation that our efforts will succeed. At the completion of our proxy contest, we expect that, consistent with your fiduciary duties, you will approve the election of our nominees in order to avoid potentially triggering certain change of control provisions tied to a change in the composition of the Board that is not approved by the "continuing directors". If you do not take all actions required to avoid such provisions, we will consider all of our alternatives, including legal claims against you for breach of your duties to Cenveo's shareholders.
Robert G. Burton
Chairman, Chief Executive Officer
and Managing Member
Response to Rheney Fax
April 21, 2005
Thank you for your fax of April 18th. You should be aware that, even though your letter made reference to an attached press release, there was no attachment to your fax. I assume you were referring to the press release announcing the Company's recently announced poison pill and other anti-takeover devices.
Please be advised that I stand by the letter that we sent to the Cenveo Board of Directors on April 7th. I have no interest in being part of any basic interview process for the CEO position at Cenveo. It is almost an insult to ask me to be part of your interview process given my successful career in the printing/media industry and my significant experience helping to turn around companies facing similar challenges to Cenveo. I find it hard to believe that there is any other person with my qualifications in the printing/media industry who would have an interest in running Cenveo. My track record is impeccable and I always deliver what I commit to deliver.
Further, I find your publicly-stated desire to separate the roles of CEO and chairman "as a matter of good corporate governance" to be inconsistent (at best) with the corporate governance principles embodied in your poison pill, bylaw amendments and severance arrangements. My reason for requesting both of these positions (CEO/Chairman) is that when you do these types of turnarounds, you do not have the time or energy to get approval to make hourly decisions on
headcount and cost reductions. After doing this at World Color and Moore, I fully realize why you must have these positions together along with a very strong President (which I have in place). Our letter of April 7th provides an overview of our vision of how the Company can move forward and become the low cost producer in the printing industry.
We believe that you must get the Company's cost structure in line with the industry to survive.
You should also be aware that we have received a tremendous positive unsolicited response from several of your large long-time shareholders, as well as current employees, former employees and former directors, to our letter of April 7th and our strategy to save the Company. In addition, we have received unsolicited indications of support from people who invested with us at World Color and Moore and who have recently become shareholders of the Company. All of them have told us that major changes are needed to save the Company, and all of them have told us that they support our plans.
We continue to believe that our plan will make Cenveo more competitive and put the Company on a solid foundation for future growth. Instead of spending time and money on outside lawyers and M&A firms to protect a losing game plan that is flawed, we should work together to help the Company spend these dollars on new capital investments for the business to compete in a very difficult industry. If you would like to talk, please give me a call. Thanks again for your fax.
Robert G. Burton
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