Engine Capital Issues Letter to Dye & Durham Shareholders Regarding Its Efforts to Improve Performance and Oversight
25 4월 2024 - 9:00PM
Business Wire
Highlights the Company’s Long-Term
Underperformance and Board's Pattern of Misguided Decisions
Engine Capital LP, which owns approximately 6.6% of Dye &
Durham Limited’s (TSX: DND) outstanding shares, today issued the
following letter to shareholders:
***
April 25, 2024
Fellow Shareholder:
Engine Capital LP (together with its affiliates, “Engine” or
“we”) is a meaningful shareholder of Dye & Durham Limited (TSX:
DND) (“Dye & Durham” or the “Company”), holding approximately
6.6% of the Company’s outstanding shares. Over the past few months,
we have privately and repeatedly engaged with the Board of
Directors (the “Board”) on its current strategy, capital allocation
approach and composition. We are now compelled to publicly raise
our concerns regarding Dye & Durham’s underperformance and
strategic missteps after our private attempts to work
constructively with the Board fizzled out. Our sole focus is to
address and rectify the Company’s most pressing issues:
- Long-Term Underperformance: Dye & Durham’s total
shareholder returns have been disappointing over every relevant
period, as seen below.1
Total shareholder returns over time Total
ShareholderReturn (1-Year) Total ShareholderReturn
(3-Year) Total ShareholderReturn (since IPO) TSX
Composite Index
9.8%
26.0%
52.7%
NASDAQ Composite Index
35.4%
27.6%
67.8%
Dye & Durham Limited
0.2%
(62.1%)
4.4%
DND vs. TSX
(9.7%)
(88.0%)
(48.3%)
DND vs. NASDAQ
(35.3%)
(89.7%)
(63.4%)
- All-Time Low EBITDA Multiple: The Company’s EBITDA
multiple is nearing an all-time low and lingers at a significant
discount to peers, reflecting investors’ significant concerns about
the Board’s misguided decisions.
- Poor Capital Allocation:
- Paying elevated multiples for acquisitions: The Board has paid
an aggregate multiple around 16.0x EBITDA vs. the Company’s current
multiple of around 7.5x 2025 EBITDA. Even when synergies and
pricing increases are taken into account, the multiples paid for
acquisitions are still well above Dye & Durham’s current
multiple.
- Dilutive share issuance: The Board authorized repurchasing 14.7
million shares for an average price of C$15.22 per share in fiscal year 2023 (including
through two Substantial Issuer Bids). It then turned around just a
few months later and completed a highly dilutive equity issuance of
11.96 million shares at C$12.10 per
share in February 2024.
- Mismanaging refinancing the Company’s C$345 million
convertible: Despite the Company’s best efforts, this debenture is
still outstanding and is now trading close to par.
- Incurring unnecessary costs: A combined C$134 million in
“acquisition, restructuring and other costs”2 was incurred in
fiscal 2021, 2022 and 2023 – representing almost 15% of the
Company’s market capitalization. This is an exorbitant number that
reflects the frenetic pace of capital market activity under the
current Board.
- Misaligned Incentives:
- Establishing the wrong long-term operational target for the
Company: A framework targeting C$1 billion EBITDA incentivizes
acquisitions – even if they don’t create shareholder value. There
should be no pressure on management or the Board to reach an
arbitrary EBITDA target.
To maximize the value of Dye &
Durham, the Board needs to incentivize management to optimize its
return on invested capital, focus on organic growth and consider
acquisitions in a measured and disciplined way – instead of trying
to hit an arbitrary EBITDA target.
While we still hope to reach a constructive resolution with the
Board, we are increasingly concerned the Board may resort to
scorched-earth tactics, including pursuing frivolous legal actions
against Engine and other shareholders. We believe the Board is
aware that many independent shareholders are aligned with our view
that change is essential but is nonetheless focused on protecting
incumbents’ board seats by all means necessary, including by
spending a significant amount of shareholders’ money on hiring
multiple law firms and defense advisors.
The Board should proceed with caution, as it would be a grave
mistake if the Company took steps to disenfranchise its
shareholders. Boards that pursue frivolous legal actions against
their own shareholders do so at their own peril. Such actions would
only further underscore how the current directors are unfit to
oversee Dye & Durham on behalf of shareholders.
Sincerely,
Arnaud Ajdler
Managing Partner
***
No Solicitation
This press release does not constitute a solicitation of a proxy
within the meaning of applicable laws, and accordingly, DND
shareholders are not being asked to give, withhold or revoke a
proxy.
About Engine Capital
Engine Capital LP is a value-oriented special situations fund
that invests both actively and passively in companies undergoing
change.
1 Total shareholder returns calculated as of the close of April
24, 2024. 2 Acquisition, restructuring and other costs related to
professional fees and integration costs incurred in connection with
acquisition, divesture, listing and reorganization-related
expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425727898/en/
For Investors: Engine Capital LP 212-321-0048
info@enginecap.com
For Media: Longacre Square Partners Charlotte Kiaie /
Bela Kirpalani, 646-386-0091 ckiaie@longacresquare.com /
bkirpalani@longacresquare.com
Dye and Durham (TSX:DND)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Dye and Durham (TSX:DND)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024