Lone Star Value Management, LLC (“Lone Star Value Management,” and,
together with its affiliates and director nominees, “Lone Star Value”),
a significant shareholder in Aviat Networks, Inc., a Delaware
corporation (“Aviat” or the “Company”) (NASDAQ:AVNW), with ownership of
approximately 1.25 million shares of common stock, today announced that
it had given formal notice to Aviat of its intention to nominate
director candidates for election to the board of directors of Aviat (the
“Board”) at the upcoming 2014 annual meeting of Aviat shareholders (the
“2014 Annual Meeting”).
Lone Star Value is dedicated to maximizing shareholder value, improving
corporate governance, and upgrading the Board at Aviat. Lone Star Value
notes that Aviat’s stock price has declined from $22.40 when the current
company was formed in January 2007 to a price of $1.78 today, a decline
of over 90%. Aviat’s shares have performed poorly due to very
disappointing financial and operating performance. From 2007 to 2014,
for example, Aviat generated cumulative net losses of almost $700
million. In fact, Aviat has reported negative earnings in all of the
last 8 years, dating back to its creation from the Harris-Stratex
Networks merger. We believe substantial change is needed at Aviat in
order to improve performance and this change must start by refreshing
and upgrading its Board. The incumbents of Aviat will no doubt ask for
more time to turn things around, yet it is too much to believe that the
same stale Board pursuing the same strategy will suddenly find success.
If elected by our fellow shareholders, our Board nominees will seek to
ensure all actions are taken to realign the business to its core markets
and customers in order to return Aviat to profitability. We will take
these actions with a sense of urgency that has not existed with the
current board. In addition, we will diligently evaluate all strategic
alternatives to create value for Aviat shareholders. These changes can
only occur with the addition of fresh, highly-qualified, and independent
directors to the Board.
Lone Star Value believes the current Aviat Board, of which six of the
eight total members have served together as a team since the Company’s
creation in 2007, is in dire need of new talent and a fresh perspective.
We further believe that current management and Board compensation are
excessive given the Company’s $700 million in cumulative net losses. We
particularly object to Executive Chairman Kissner’s recently-signed
compensation package, which we believe is excessive in view of years of
unaddressed poor performance. In our opinion, Kissner’s new employment
contract as Executive Chairman is forcing Aviat’s long-suffering
shareholders to pay for two CEOs. Aviat should instead create
compensation packages with a pay-for-performance structure to
help turn Aviat into a profitable organization and to better align
incentives with shareholder value creation.
Lone Star Value has expressed its views to the Board and management of
Aviat in person at company headquarters and in follow-up conference
calls. We have engaged in constructive discussions with the Company with
the goal of meaningfully improving Aviat’s Board, corporate governance
practices, and shareholder alignment. Lone Star Value believes its
suggestions would meaningfully improve shareholder rights and
representation at Aviat. Unfortunately, to date the Company has not
responded positively to the suggestions made by Lone Star Value and
offered us only one Board seat, which we believe is insufficient change
given Aviat’s extremely poor long-term track record.
Accordingly, Lone Star Value is nominating six highly-qualified director
candidates for election to the Board at the 2014 Annual Meeting whose
experience encompasses telecom, technology, financial, and turnaround
expertise. Lone Star Value’s candidates are Richard K. Coleman, Jr.;
Dilip Singh; Robert G. Pearse; Jonathan P. Foster; Alan L. Bazaar; and
Jeffrey E. Eberwein, each of whom we believe has significant and
relevant experience as well as an exceptional track record of creating
shareholder value. Lone Star Value’s director nominees possess a
well-balanced mix of skills to ensure that the Company evaluates, with
an open mind and a keen sense of urgency, all strategic alternatives to
maximize value for all shareholders. In addition to Lone Star Value’s
six nominees, we intend to vote Lone Star Value Investors, LP’s (“Lone
Star Value Investors”) shares for CEO Michael Antonio Pangia and Board
member Raghavendra Rau to leverage their knowledge and backgrounds.
Lone Star Value remains open to continuing its discussions with the
Board regarding its composition and corporate strategy and remains
amenable to reaching a mutually agreeable resolution to re-constitute
the Board in a manner that is in the best interests of all shareholders.
In the event an agreement is not reached, however, Lone Star Value is
fully prepared to solicit the support of its fellow shareholders to
elect all six of its director nominees at the 2014 Annual Meeting. Our
nominees, if elected, will take their fiduciary responsibility very
seriously and will represent the interests of ALL
shareholders, not just Lone Star Value.
Lone Star Value’s independent and highly-qualified candidates are:
Richard K. Coleman, Jr., age 57, who is the founder and President
of Rocky Mountain Venture Services. Since 1998, his company has helped
companies plan and launch new business ventures and restructuring
initiatives. As a private investor and advisor, Mr. Coleman helps
companies develop and execute strategic changes, often serving as an
interim executive and/or board member. Mr. Coleman is currently the
President and CEO of Crossroads Systems, Inc. (NASDAQ:CRDS) (“Crossroads
Systems”), a global provider of data archive solutions, a position he
has held since November 2013. He currently serves on the board of
Crossroads Systems; Ciber, Inc. (NYSE:CBR), a leading global information
technology company; and Hudson Global, Inc. (NASDAQ:HSON) (“Hudson
Global”), a worldwide professional-level recruitment firm. Previously,
he served as a director of Aetrium Incorporated (NASDAQ:ATRM)
(“Aetrium”), when a manufacturer of electromechanical equipment; On
Track Innovations Ltd. (NASDAQ:OTIV) (“On Track Innovations”), one of
the pioneers of cashless payment technology; and NTS, Inc. (formerly
NYSE:NTS) (“NTS”), a broadband services and telecommunications company
until the completion of its sale in June 2014. Mr. Coleman has also
served in a variety of senior operational roles including CEO of Vroom
Technologies Inc., a Customer Relationship Management (CRM) software
company; CEO of MetroNet Communications, Canada’s largest independent
facilities-based telecom services provider; and President of US West
Long Distance. In addition he has held significant officer level
positions with Frontier Communications, Centex Telemanagement and Sprint
Communications. Mr. Coleman began his career as an Air Force
Telecommunications Officer managing Department of Defense R&D projects.
He has served as an Adjunct Professor for Regis University’s Graduate
Management program and is a guest lecturer for Denver University,
focusing on leadership and ethics. Mr. Coleman holds a B.S. Degree from
the United States Air Force Academy, an M.B.A. from Golden Gate
University, and is a graduate of the United States Air Force
Communications Systems Officer School. Lone Star Value Investors
believes that Mr. Coleman’s depth of experience serving in senior
executive positions and on various public company boards coupled with
his extensive expertise in business development and operations well
qualifies him for service as a director of Aviat.
Dilip Singh, age 66, has served as the general partner of Value
Generation Capital Fund LP since December 2013. Mr. Singh also serves as
a director of ALCO Stores, Inc. (NASDAQ:ALCS), which operates as a U.S.
regional broad line retailer, since August 2014 ; a director of On Track
Innovations, since December 2012; and a director of Concurrent Computer
Corporation (NASDAQ:CCUR), a provider of software, hardware, and
services for the multi-screen video and real-time simulation markets,
since July 2012. From April 2012 to April 2013, Mr. Singh served as the
interim CEO, President and as a director of InfuSystem Holdings, Inc.
(NYSEMKT:INFU) (“InfuSystem Holdings”), a provider of ambulatory
infusion pumps and associated clinical services. Under Singh INFU was
turnaround to sustained profitability within two quarters, cash
increased, debt was reduced, and a $36.5 Million credit facility was
secured. Previously, Mr. Singh served as CEO of MRV Communications, Inc.
(NASDAQ:MRVC), a provider of optical communications network
infrastructure equipment and network management products, from July 2010
to December 2011 and as a director from October 2010 to December 2011.
Under Singh MRVC was turned around and the first return of capital was
paid to the shareholders as a special dividend. From December 2008 to
May 2009 Mr. Singh served as the CEO of Telia-Sonera NCell, a
significant mobile operator in Nepal. From October 2004 to November
2008, Mr. Singh served as the CEO of Telenity, Inc., a provider of
service delivery platforms. In addition he held significant professional
positions at Sprint Communication and Alcatel/ITT. Mr. Singh earned a
Master’s of Science in Physics from the University of Jodhpur and a
Masters of Technology in Electronics & Communications Electrical
Engineering from the Indian Institute of Technology. Lone Star Value
believes Mr. Singh is uniquely qualified to serve on the Company’s Board
given his vast experience on corporate boards of directors and
operational executive leadership positions, as well as his experience in
turning around under-performing companies.
Robert G. Pearse, age 54, currently serves as a Managing Partner
at Yucatan Rock Ventures, a firm he co-founded in 2004, where he
specializes in technology investments and consulting. Mr. Pearse serves
as a director of Crossroads. Mr. Pearse previously served as vice
president of Strategy and Market Development at NetApp, Inc.
(NASDAQ:NTAP) (“NetApp”), a computer storage and data management
company. At NetApp, Mr. Pearse played an influential role in leading
corporate growth and business development which drove NetApp to become a
Fortune 500 company. Mr. Pearse has held professional and leadership
positions at Hewlett-Packard, PricewaterhouseCoopers LLP, Eastman
Chemical Company (NYSE:EMN), and General Motors Company (NYSE:GM). Mr.
Pearse earned a Master of Business Administration degree from the
Stanford Graduate School of Business in 1986, and a Bachelor of Science
degree in Mechanical Engineering from the Georgia Institute of
Technology in 1982. Lone Star Value believes Mr. Pearse’s extensive
leadership experience and deep understanding of the technology industry
will make him a valuable addition to the Board.
Jonathan P. Foster, age 50, has more than 29 years of experience,
which began with a Big 4 Accounting foundation, in senior financial
roles with small private to large corporate, public, domestic, and
international companies focused in various industries and encompasses
contributions to five turnarounds, seven successful M&A initiatives, and
two Greenfield start-ups. Currently he serves as CFO of InfuSystem
Holdings. Mr. Foster previously served as Interim Director of Finance &
Accounting for LSG Sky Chefs USA, Inc., a subsidiary of LSG Lufthansa
Service Holding AG; as President of United Credit, Inc.; and as CEO and
founder of Advance Today, LLC, and Furobos Reinsurance Ltd., two
companies focused on consumer finance. Mr. Foster also served: as CFO of
Syntronix, LLC, for the purpose of rolling-up three manufacturers; as
CFO and Executive Vice President of Drypers Corporation, a global
consumer products company operating in four continents; as CFO of
Dickson Weatherproof Nail Company, a private hardware manufacturing
company, and as controller and treasurer with two divisions of
Schlumberger Ltd.– one of which was in telecommunications. Mr. Foster
spent six years with Deloitte & Touche LLP with clients in many
different industries – textiles, manufacturing, electronic transactions,
insurance, professional firms, wholesale, agri-business, and others. Mr.
Foster is a CPA and from 2006 to 2012 served on the Board of Financial
Institutions for the State of South Carolina which regulates the State’s
$40 billion lending industry. Mr. Foster also served six years on the
board of the Baptist Easley Hospital Foundation. Mr. Foster earned his
B.S. in Accounting from Clemson University. Lone Star Value believes
that Mr. Foster’s over twenty years of Wall Street experience and
valuable public company and financial expertise, gained from his
employment history, will enable him to provide effective oversight of
the Company as a member of the Board.
Alan L. Bazaar, age 44, is currently the CEO of Hollow Brook
Wealth Management LLC (“Hollow Brook”), a position he has held since
November 2013, where he is responsible for firm-wide operations,
investment research, and portfolio management. Mr. Bazaar is currently
Chairman of the board of directors of Wireless Telecom Group, Inc.
(NYSEMKT:WTT) (“WTT”), which designs and manufactures radio frequency
and microwave-based products for wireless and advanced communications
industries. Mr. Bazaar was formerly a director of NTS, and served from
December 2012 until the completion of its sale in June 2014. From 2004
until April 2008, Mr. Bazaar served as a director of Media Sciences
International, Inc. (OTC: MSII) (“Media Sciences”), which manufactured
and distributed business color printer supplies and industrial ink
applications in the United States. From July 1999 until December 2009,
Mr. Bazaar was a Managing Director and Portfolio Manager at Richard L.
Scott Investments, LLC where he co-managed the public equity portfolio
and was responsible for all elements of due diligence. Previously, Mr.
Bazaar served as a director of Airco Industries, Inc., a privately held
manufacturer of aerospace products, and was employed by Arthur Andersen
LLP in the Assurance and Financial Buyer's Practices group and in the
Business Fraud and Investigation Services Unit. Mr. Bazaar is a CPA, and
received a Bachelor of Arts degree from Bucknell University and a Master
of Science and Master of Business Administration from the Stern School
of Business at New York University. Lone Star Value believes Mr.
Bazaar’s successful track record as an accomplished business leader with
significant experience as CEO and member of public boards will make him
a valuable addition to the Board.
Jeffrey E. Eberwein, age 44, has 23 years of Wall Street
experience and is the Founder and CEO of Lone Star Value Management, an
investment firm. Prior to founding Lone Star Value Management in 2013,
Mr. Eberwein was a Portfolio Manager at Soros Fund Management from
January 2009 to December 2011 and Viking Global Investors from March
2005 to September 2008. Mr. Eberwein is Chairman of the Board of three
public companies: Digirad Corporation (NASDAQ:DRAD), a medical imaging
company; Aetrium; and Crossroads Systems. Mr. Eberwein also serves on
the board of Hudson Global. Previously, Mr. Eberwein served on the board
of The Goldfield Corporation (NYSEMKT:GV) from May 2012 until May 2013;
On Track Innovations, from December 2012 until March 2014; and NTS from
December 2012 until its completed sale in June 2014. Mr. Eberwein served
on the Board of Hope for New York, a 501(c)3 organization dedicated to
serving the poor in New York City from 2011 until 2014 where he was
Treasurer and on the Executive Committee. Mr. Eberwein earned a MBA from
The Wharton School, University of Pennsylvania and a BBA with High
Honors from The University of Texas at Austin. Lone Star Value believes
that Mr. Eberwein’s over twenty years of Wall Street experience and
valuable public company and financial expertise, gained from both his
employment history and directorships, will enable him to provide
effective oversight of the Company as a member of the Board.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Lone Star Value, together with the participants named herein, intends to
file a preliminary proxy statement and accompanying proxy card with the
Securities and Exchange Commission (“SEC”) to be used to solicit votes
for the election of their slate of six highly-qualified director
nominees at the 2014 annual meeting of stockholders of Aviat Networks
Inc.
LONE STAR VALUE MANAGEMENT STRONGLY ADVISES ALL STOCKHOLDERS OF THE
COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH
PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://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.
The participants in the proxy solicitation are Lone Star Value
Investors, LP, Lone Star Value Investors GP, LLC (“Lone Star Value GP”),
Lone Star Value Management, Richard K. Coleman, Jr, Dilip Singh, Robert
G. Pearse, Jonathan P. Foster, Alan L. Bazaar, and Jeffrey E. Eberwein
(collectively, the “Participants”).
As of the date hereof, Lone Star Value Investors beneficially directly
owns 1,250,000 shares of common stock, par value $.01 per share (the
“Common Stock”), of the Company (1,000 shares of which are held in
record name). Lone Star Value GP, as the general partner of Lone Star
Value Investors, may be deemed the beneficial owner of the 1,250,000
shares of Common Stock beneficially directly owned by Lone Star Value
Investors. Lone Star Value Management, as the investment manager of Lone
Star Value Investors, also may be deemed the beneficial owner of the
1,250,000 shares of Common Stock beneficially directly owned by Lone
Star Value Investors. Mr. Eberwein, as the manager of Lone Star Value GP
and sole member of Lone Star Value Management, also may be deemed the
beneficial owner of the 1,250,000 shares of Common Stock owned by Lone
Star Value Investors. As of the date hereof, Value Generation Capital
Fund, LP (“VCGF”) directly beneficially owns 701,239 shares of Common
Stock. Dilip Singh, as manager of Value Generation Capital, LLC the
general partner of VCGF may be deemed to be the beneficial owner of any
shares of Common Stock directly owned by VCGF. In addition, as of the
date hereof, Richard K. Coleman, Jr. directly beneficially owns 10,000
shares of Common Stock, Jonathan A. Foster directly beneficially owns
5,000 shares of Common Stock and Robert G. Pearse directly beneficially
owns 10,000 shares of Common Stock.
About Lone Star Value Management:
Lone Star Value Management is an investment firm which invests in
undervalued securities and engages with its portfolio companies in a
constructive way to help maximize value for all shareholders.
Copyright Business Wire 2014