Provides Detailed Operating Plan to Restore
Operational Excellence, Bolster Leadership with Experienced Tower
Professionals, Maximize Value of the Company's Fiber Business to
Position Crown Castle as Premier Pure-Play Tower Company
Believes Crown Castle Can be Worth at Least
$150 in the Next 18 Months if Board
Takes Immediate Action to Restore Leadership and Prevent Further
Erosion of Shareholder Value
HOUSTON, March 13,
2024 /PRNewswire/ -- Ted B. Miller, co-founder
of Crown Castle Inc., (NYSE: CCI) ("Crown Castle" or the "Company")
and his investment vehicle Boots Capital Management, LLC ("Boots
Capital") today issued the following open letter to the Crown
Castle Board of Directors (the "Board"), the Company's employees,
and its shareholders:
This is a crucial moment for Crown Castle, its shareholders and
employees. It's why we have recommended a slate of four directors
who we believe will make a valuable difference with their world
class experience, skills and leadership. While the Board has
undergone significant change in recent years, this turnover has
still left it lacking directors who have the depth of tower
operating and public-company CEO experience essential to drive the
Company forward. A need for comprehensive leadership change was
also put forth by Elliott Investment Management L.P. ("Elliott") in
its November 27, 2023 letter to the
Board.
At long last, Crown Castle is, after prodding from Elliott,
studying the fate of its fiber business. Bankers and lawyers have
been hired to do their typical work. That work together with a
detailed plan for a fiber sale and a rerating of Crown Castle stock
has been completed by Boots and offered to the Company without
response.
But in our view the work does not stop there. Crown Castle is in
dire need of a top-to-bottom reboot with trusted, long-term
leadership. The Company needs a concrete plan for the fiber sale,
and then an operational revival informed by people who live and
breathe towers. We have devoted seven months to a vetted and
detailed plan that we believe will create lasting value through a
commitment to operational excellence.
We shared this detailed plan with the Board during a 90-minute
meeting in January. Not surprisingly – since only one member of the
Board has any experience as an executive of a tower business –
there were a very limited number of questions raised, even then
primarily asked by advisors. Meanwhile, many shareholders have
responded to our approach and nominees with the response: "Why
wouldn't Crown Castle do this?" Our nominees provide unrivaled
tower-industry experience and expertise and offer a critical
operational complement to the academic, legal, telecom-services and
asset-management background of the current Board.
As a large shareholder, we expect the Board to have a laser
focus on building shareholder value, rather than be involved in
"clever" legal maneuvers such as the Cooperation Agreement with
Elliott, which was hastily rewritten after we challenged it in
court. That agreement is even under more scrutiny, after the
Delaware Vice Chancellor hearing our case rejected a Company effort
to delay the hearing of the case, saying last week that "there are
colorable claims" to the way the Cooperation Agreement was struck.
The court also said that the Company should give me advance notice
to object should it hire a new CEO or sell the fiber unit.
The court's order should be a sign to all involved in this
expensive and distracting litigation: That enough is enough. It's
time to stop being adversaries and work together to improve the
Company and all shareholder prospects, as we've intended all
along.
To be clear: this is not "a trade" for me. I co-founded
Crown Castle. I care deeply about the long-term success of the
Company. And I am here for the long-term. With our plan, it's time
to restore Crown Castle to its prominence as a pure-play tower
company, and reestablish it as one of the most strategically
important American companies.
Outlined below are details about what our four highly qualified
nominees intend to do and why our multi-pronged operating plan to
improve Crown Castle is value enhancing.
1) Creating Value From the Fiber Sale
Based on our analysis, since the decision was
made to invest in fiber, we believe the unit has required
$22 billion of capital and continues
to consume over a billion in capital expenditures each year – 2024
management guidance is $1.4 billion
alone. The Board has announced that it is studying the possible
sale of the fiber segment, and we also believe that the Board is
weighing whether to sell the enterprise fiber business while
retaining the small cells.
We have spent seven months modeling every
possible structure for a sale of fiber from an operational,
financial and tax perspective.
While the particulars of any transaction must be
evaluated on their own merit, our work has given us a very clear
point-of-view: there is much more value to be created by selling an
estimated 75% interest in the entire fiber/small-cell portfolio, as
it resets Crown Castle as a more capital-efficient tower
operator.
There is a role for small cells in our industry,
but our modeling revealed Crown Castle would earn an underwhelming
return on its capital on the current fiber/small cells business
through at least 2050.
A sale of the fiber business is essential for
our intended value-creating path as a pure play tower company,
with, in our view, a multiple of at least 25 times EBITDA compared
to 18 times today.
Moreover, if the Company can conclude a fiber
sale in 2024, we believe more than $1
billion can be saved in tax efficiencies. The Board
nonetheless has ignored our hundreds of pages of thorough analysis,
which could be leveraged by its advisors instead of recreating the
wheel, and elected not to work with us to evaluate the details of
the $1 billion in potential value
that could be saved in tax efficiencies. When it comes to executing
the fiber sale, time is literally money. And this Board is burning
both.
We believe our carefully vetted approach
creates the most value and best preserves a healthy, sustainable
dividend.
2) Maintaining a Healthy, Sustainable
Dividend
The financials show that Crown Castle cannot
support its current dividend trajectory while maintaining the
small-cell buildout pace. In the last three years, Crown Castle has
funded the dividend by incurring debt – an approach that we do not
believe is sustainable.
We have a long-term plan – not a short-term
trading strategy – to generate sustainable performance for all
shareholders. Our approach will drive meaningful operational
improvements to enhance margins, as outlined in our unredacted
board presentation, which we released yesterday.
Our plan protects the underlying health of the
dividend and the absolute dividend amount itself. Specifically, our
plan offers the Company optionality to pay a $4.62 dividend solely out of cash flow (as
outlined in our presentation) or incur an estimated $1.3b of debt in total between now and 2029 and
sustain the dividend at its current $6.26 level. This creates soundness and
flexibility around the dividend, about which we will continue to
take soundings from the shareholder base. Either way, we believe
our plan would materially improve Crown Castle's cash flow
dynamics.
Our approach creates the most value and best
preserves a healthy, sustainable dividend. With the fiber sale, we
estimate this extra value to be an additional $40+ per share for
Crown Castle shareholders.
3) Restoring Operational Excellence
We have heard the question asked: Why do
the shareholders need our slate if the Board has been recently
reconstituted?
Start with a simple number. Crown Castle has a
12-person Board, yet only one of its members includes a tower
business in their resume. The Board's sum of towers-operating
experience from one board member is just seven years. And
only one current director has been a public company CEO – of a
bank. This is a $75 billion
enterprise with virtually no senior leadership experience running
either public or tower companies.
Our director candidates have over 50 combined
years of direct and unrivaled leadership in the towers space and
have created billions of dollars of value for investors. Three of
us were at the founding of the industry itself, and have remained
involved for the 30 years since. That sounds like exactly what
Elliott had in mind in its December letter to the Board: "How much
more value destruction will this Board permit before finally taking
action and changing the leadership of Crown Castle?"
Yet, over the past several years, much of Crown
Castle's executive management team has stepped down, including its
former CEO, CFO, and EVP/COO of towers. This Company must urgently
attract and retain leaders with the experience, vision and
confidence to execute the operational changes and tower-focused
innovation necessary for a better future. This need is all the more
acute because of a brain drain that has persisted at towers since
the fiber investments began. We believe this pattern of departures,
coupled with the fact that the Board had no succession plan – a
primary obligation of any board – and is still in the process of
conducting its CEO search, reflects a lack of leadership and
operational capability at the management level as well as the
failure of the Board's overall strategic initiatives.
Not all of Crown Castle's needed changes will be
easy. Transformation must start from the top – from Board
leadership. And that Board requires leaders with credibility,
operational expertise, and a strong vision for the future at a
difficult moment like this. Crown Castle employees want to feel
like they're understood, and customers want to know they're being
listened to. As founder and a substantial shareholder, I have a
special perch from which to drive a cultural and operational
reawakening, yet the Board continues to refuse to meaningfully
engage with us or our value enhancing proposal.
We will keep fighting for our shareholders, employees,
suppliers, customers and lenders, and for the future Crown Castle
deserves.
INVESTOR AND MEDIA CONTACTS
Investors:
Morrow Sodali LLC
Paul Schulman/William Dooley/Jonathan
Eyl
By Phone: 1-800-662-5200 or 208-658-9400
By Email: Boots@info.morrowsodali.com
Media:
Jonathan Gasthalter/Nathaniel Garnick/Grace
Cartwright
Gasthalter & Co.
By Phone: 212-257-4170
By Email: bootscapital@gasthalter.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
The information herein contains "forward-looking statements."
Specific forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts and
include, without limitation, words such as "may," "will,"
"expects," "believes," "anticipates," "plans," "estimates,"
"projects," "potential," "targets," "forecasts," "seeks," "could,"
"should" or the negative of such terms or other variations on such
terms or comparable terminology. Similarly, statements that
describe the Participants' (as defined below) objectives, plans or
goals are forward-looking. Forward-looking statements are subject
to various risks and uncertainties and assumptions. There can be no
assurance that any idea or assumption herein is, or will be proven,
correct. If one or more of the risks or uncertainties materialize,
or if the underlying assumptions of Boots Capital (as defined
below) or any of the other Participants in the proxy solicitation
described herein prove to be incorrect, the actual results may vary
materially from outcomes indicated by these statements.
Accordingly, forward-looking statements should not be regarded as a
representation by Boots Capital or the other Participants that the
future plans, estimates or expectations contemplated will ever be
achieved. You should not rely upon forward-looking statements as a
prediction of actual results and actual results may vary materially
from what is expressed in or indicated by the forward-looking
statements. Except to the extent required by applicable law,
neither Boots Capital nor any Participant will undertake and
specifically declines any obligation to disclose the results of any
revisions that may be made to any projected results or
forward-looking statements herein to reflect events or
circumstances after the date of such projected results or
statements or to reflect the occurrence of anticipated or
unanticipated events.
Certain statements and information included herein have been
sourced from third parties. Boots Capital and the other
Participants do not make any representations regarding the
accuracy, completeness or timeliness of such third party statements
or information. Except as may be expressly set forth herein,
permission to cite such statements or information has neither been
sought nor obtained from such third parties. Any such statements or
information should not be viewed as an indication of support from
such third parties for the views expressed herein.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Boots Capital and the other Participants (as defined below)
intend to file a preliminary proxy statement and accompanying GOLD
universal proxy card (the "Proxy Statement") with the Securities
and Exchange Commission (the "SEC") to be used to solicit proxies
for, among other matters, the election of its slate of director
nominees at the 2024 annual meeting of shareholders (the "2024
Annual Meeting") of Crown Castle Inc., a Delaware corporation ("Crown Castle" or the
"Corporation").
The participants in the proxy solicitation are currently
anticipated to be Boots Parallel 1, LP, Boots, LP (and together
with Boots Parallel 1, LP, the "Boots Funds"), Boots Capital
Management, LLC ("Boots Capital"), Boots GP, LLC ("Boots GP"),
4M Management Partners, LLC
("4M Management Partners"),
4M Investments, LLC ("4M Investments"), WRCB, L.P. ("WRCB"),
Theodore B. Miller, Jr. and
Tripp H. Rice (collectively, the
"Boots Parties"); and Charles Campbell
Green III and David P.
Wheeler (together with Mr. Miller and Mr. Rice, the "Boots
Nominees," and together with the Boots Parties, the
"Participants").
Boots GP, as the general partner of each of the Boots Funds, and
4M Management Partners, as the
investment advisor of each of the Boots Funds, may each be deemed
to beneficially own interests in an aggregate of 784,009 shares of
the Corporation's common stock, $0.01
par value (the "Common Stock") held in the Boots Funds (including
interests in 182,997 shares of Common Stock underlying
over-the-counter forward purchase contracts and interests in
601,012 shares of Common Stock underlying over-the-counter share
option contracts). WRCB beneficially owns interests in 135
shares of Common Stock underlying a call option. Mr. Miller
has direct ownership of 200 shares of Common Stock, which includes
100 shares of Common Stock held of record and 100 shares of Common
Stock held of record as tenant in common with his wife. In
addition, Mr. Miller may be deemed to beneficially own interests in
an aggregate of 784,716.958 shares of Common Stock (which includes
interests in 784,009 shares of Common Stock held by the Boots
Funds, which Mr. Miller may be deemed to beneficially own as the
President and managing member of 4M
Management Partners and a Manager and the President of Boots GP,
interests in 400 shares of Common Stock underlying call options
owned beneficially and as a tenant in common with his wife,
interests in 135 shares of Common Stock underlying a call option
owned beneficially by WRCB, which Mr. Miller may be deemed to
beneficially own as sole member of one of the general partners of
WRCB, and 172.958 shares of Common Stock held through the
Corporation's 401(k) Plan in the Crown Castle Stock Fund. Mr.
Rice is the record holder of 100 shares of Common Stock and, as the
Vice President of 4M Management
Partners and a Manager and the Vice President of Boots GP, Mr. Rice
may be deemed to beneficially own interests in 784,009 shares of
Common Stock held by the Boots Funds. Mr. Green beneficially
owns 1,736 shares of Common Stock in joint tenancy with his
wife. All of the foregoing information is as of the date
hereof unless otherwise disclosed.
IMPORTANT INFORMATION AND WHERE TO FIND IT
BOOTS CAPITAL STRONGLY ADVISES ALL SHAREHOLDERS OF CROWN CASTLE
TO READ THE PRELIMINARY PROXY STATEMENT, ANY AMENDMENTS OR
SUPPLEMENTS TO SUCH PROXY STATEMENT, THE DEFINITIVE PROXY
STATEMENT, AS WELL AS PROXY MATERIALS FILED BY CROWN CASTLE AS THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S
WEBSITE AT WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY
SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
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SOURCE Boots Capital Management, LLC
