LA PORTE, Ind., Feb. 19, 2019 (GLOBE NEWSWIRE) -- One of PHI, Inc.'s [Nasdaq: PHIIK, PHII] largest shareholders, Timothy
Stabosz, who owns roughly 11% of the company's non-voting (PHIIK) shares, today released an "open letter to management," calling on
the company to address, and refute, a story published by Debtwire on February 11th. Such letter is provided below in its
entirety. Separately, Stabosz announces the publishing of an article analyzing PHI on the Seeking Alpha website on February
1st. The article can be accessed through Stabosz's profile page on Seeking Alpha at the following link: Timothy Stabosz's Articles
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An Open Letter to PHI Management
February 19, 2019
Dear Al, Trudy, Lance, and Board of Directors:
I am left feeling completely heartsick at the stories emanating from Debtwire the last 4 weeks. It started on
January 18th, and has only escalated. The most recent story, dated February 11th, which I was able to obtain a copy of,
lurid and phantasmagoric as it is, uses anonymous sourcing (i.e, "sources familiar with the matter"), unattributed innuendo, and
even direct statements alleged to have been made by supposed PHI executives, to suggest that you met "face-to-face" with
bondholders, and "acknowledged at the meeting that the existing equity would likely be wiped out." While the Debtwire
reporter, when contacted, asserted that you have not "agreed" with the bondholders (and that their proposal had not even been
formally made yet), these kind of reports, which represent unidentified 3rd party characterizations of YOUR intentions, that assail
YOUR integrity as a management team.....need, deserve, and REQUIRE a public response. In fact, the volatility in PHI stock
caused by these reports seems suspiciously timed to suit the needs of short-sellers, in order to generate a “supply of stock" for
them to cover their short positions, at precisely a time when there is an extraordinary tightness in supply of available shares for
shorting, with reported borrowing rates as high as 575%. This can only make one wonder if Debtwire is being used as a
handmaiden for those looking to manipulate PHI stock!
The fact that you have chosen not to respond, despite requests from a number of your largest shareholders urging you to do so,
is completely unacceptable, and deeply troubling. Does this mean we are supposed to believe that the Debtwire stories are in
fact true? Has CEO Al Gonsoulin now "flipped" on us (as the story suggests), decided that it is time to ride off into
the sunset (as long as he gets "his share"), and turn the company over to the bondholders, so that they can sell the pieces to
private equity firms, who will, in turn, carve up the company, destroying the widely respected, and renowned, culture of PHI?
In such a scenario, bases will be closed, employees will be out of jobs, communities around the country will suffer...and it won't
only be shareholders who are left in the gutter, gnashing their teeth.
I remind you that you made a clear, incontestable, and incontrovertible affirmation, declaration, and PROMISE to your
shareholders, when you stated in the most recent Form 10-Q, dated November 9, 2018, that you were aware of "several possible
transactions," that you believed would be able to "help us discharge our short term indebtedness." You also stated that
these "transactions" would not only "improve our liquidity," but also "ENHANCE shareholder value." [emphasis mine] I want to
formally put you on notice that if you decide to suddenly turn about, lay in bed with the Devil, and sell out employees,
shareholders, and other stakeholders, while simultaneously going back on these public pronouncements, disingenuously PRETENDING
that there is NO net asset value remaining for shareholders, it will stand as a colossal betrayal of shareholders (both employee
and outsider alike), and a monstrous abdication of your fiduciary duties. lt will also be seen as an opportunistic attempt by
Mr. Gonsoulin to take advantage of a stock price plunge, from $9.50 to $1.69, this past fall, in order to illegally and immorally
squeeze out the shareholders, and cast aside his loyal family of employees, to his own selfish benefit.
It is hard to know for certain whether the faith that I, and so many others, have placed in you, and the reliance that you
INDUCED, based upon your statements in the 10-Q, are still valid, because it is utterly confounding, and deeply distressing, that
you have not, as of yet, DISCLAIMED and REPUDIATED the series of Debtwire stories. I will again remind you that should you
choose to suddenly change your tune and assert a false pretense that there is no equity value, and attempt to engage in a sham
process that seeks to seize all the value for Mr. Gonsoulin and the bondholders, on the backs of shareholders and employees, in
direct contravention of previous representations you made, you will have violated not only your fiduciary duty, but you will have
also nakedly violated the SEC's prohibition on false and misleading statements. And you WILL be held accountable.
If you have suddenly decided to jettison your most ferociously loyal stakeholders, despite your public assurances
matter-of-factly stating your intent to generate liquidity by engaging in one or more transactions that "enhance shareholder
value," I will personally utilize all my resources (and I am aware of up to 50% of the shareholder base that would similarly join
me) to ensure that an equity committee is formed, should the board decide in sanctioning Mr. Gonsoulin's seeking to use a Chapter
11 process to seize the company for himself and the bondholders. In this, you will be subject to a process of court-based
discovery, investigating the offers received for the different company divisions, that were (and are) available to you, in an
orderly corporate breakup, as well as potential legal claims for acts of gross negligence, bad faith, betrayal of duty of care and
duties of loyalty, fraud, and breach of fiduciary duty, in why you failed to take action to maximize the company's value for its
shareholders, and why you deliberately misled shareholders as to your intent in the 10-Q. Such actions, if they rise to a
level of indecency that shocks the court, could very well subject you to punitive damages.
Importantly, it is widely known that there is at least one buyer for the company, who currently possess the financial
wherewithal to readily REFINANCE the debt, and would be willing to pay a handsome PREMIUM to stockholders, as well. I remind
you that your fiduciary duty REQUIRES you to pursue such options...even if it is not what Mr. Gonsoulin should want. I will
also say that I have received indications from at least half a dozen former and current executives in the space you operate in and,
without exception, each and every one asserts that your Air Medical division is worth at least $400 million. With all of this
in mind, I call on you, at this time, to directly and immediately REFUTE the Debtwire story, as the story not only puts words in
YOUR mouth that mock your integrity, but it directly negates statements and assurances you made in the 3rd Quarter 10-Q. Such
refutation needs to be made in a public press release.
In closing, consider yourself put on notice that your actions are being scrutinized very carefully. Should you use a
collapsed stock price as a pretext to wheel about and assert the false claim that there is "no equity value," in order to engage in
a sordid bargain with PHI's bondholders, while seeking to hinder "price discovery" for the value of PHI's assets, or for the
company as a whole, in a bonafide value maximizing process, such act will be exposed for the fiduciary betrayal that it is.
Finally, it is both atrocious and tragic that you continue to fail to see the importance of adequately and appropriately
communicating with your shareholder base through public media, which is, in my humble opinion, a large part of the reason, in the
first place, that your stock price collapsed this past fall. (I remain available, at any time, to assist you in crafting an
appropriate communications strategy, which should include investor conference calls, and management commentary in earnings press
releases, about the current results and future outlook [as a bare minimum]).
Very truly yours,
Timothy J. Stabosz
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CONTACT: Timothy Stabosz at (219) 363-7485, or tstabosz@csinet.net.