Meson Capital Partners, LLC, Boston Avenue Capital, LLC, and The Global Undervalued Securities Master Fund, LP (the “Concerned InfuSystem Stockholders”) today announced the filing of definitive solicitation materials with the Securities and Exchange Commission calling for written designations from the stockholders of InfuSystem Holdings, Inc. (NYSE Amex:INFU) (“InfuSystem” or the “Company”) to call a special meeting for the removal of the Company’s board and the election of new directors. Stockholders are encouraged to provide designations upon receipt of the solicitation materials. The Concerned InfuSystem Stockholders hold approximately 2.4 million shares or 11.4% of the total outstanding shares of the Company. The Global Undervalued Securities Master Fund, LP has been one of the largest InfuSystem stockholders for the past 4 years. In connection with the solicitation of designations, the Concerned InfuSystem Stockholders are mailing the following letter to stockholders.
Dear Fellow InfuSystem Stockholder:
As stockholders of InfuSystem for as long as the past 4 years, we have been disappointed with the performance of the Company as the stock has lost almost half its value. This culminated with the write down of the entire goodwill balance in 2011. At the same time as the Company’s value has eroded, we believe the board of directors and current executive management have enriched themselves with excessive stock and cash grants. In summary, we believe that the current direction of the Company and the current board of directors are not in the best interests of stockholders.
We are seeking designations from the majority of outstanding shares of InfuSystem to call a special meeting. We urge you to provide us with your designation today. The value of your investment is at stake.The Company’s “business as usual” approach is not acceptable. On December 13, 2011, we met with Sean McDevitt, CEO and Chairman, and Pat LaVecchia, Vice Chairman of InfuSystem. We explained our dissatisfaction with the performance of the Company and had hoped to achieve something of a mutual understanding on this point. Instead, Mr. McDevitt and Mr. LaVecchia both indicated they were optimistic that they were near to closing new acquisitions that would generate value going forward. When we indicated that this “business as usual” approach had led to disappointing results over the past several years, Mr. McDevitt responded that in fact there had been quite a lot of growth and value creation. We respectfully disagree with this position and believe that a continuation of the historical playbook is a recipe for additional destruction of stockholder value. During our December meeting with Messrs. McDevitt and LaVecchia, we had asked that the Board consider adding three directors selected by ourselves as concerned stockholders. Our goal was, and continues to be, to install directors who would add value to the Board through industry expertise, corporate governance experience and stockholder accountability. Immediately after our January 18 th press release announcing our filing of preliminary solicitation materials, the Company engaged a nationally-known public relations firm--paid for with shareholders’ funds. You should know that, contrary to whatever the Company and its PR firm may claim about our motives, our goal is to increase the value of ALL shares equally, including the roughly 2.4 million shares that we have purchased on the open market. Further, we believe the existing Board of Directors has lost the confidence of stockholders--and justifiably so. According to the Company’s 2011 Proxy Statement, in 2010, the Board approved the grant of an aggregate $7.9mm in stock awards to Mr. McDevitt and the current members of the Board, of which $6.1mm was granted to Mr. McDevitt. On top of that, the Board compensated Mr. McDevitt and itself with $1.9mm in cash to cover taxes on the associated stock grants. We believe the reaction of stockholders is evident by the voting results reported in the Company’s May 27, 2011 Current Report on Form 8-K:
- The current Directors received roughly 5.4mm withhold votes (which did not include any shares held by our group), or 40% of the total shares voted.
- The Company’s proposed increase to shares for issuance under the 2007 Stock Incentive Plan was opposed by 48% of the shares voted on the proposal.
- Additionally, Institutional Shareholder Services, the nation’s leading independent voting advisory service, recommended its clients Withhold on ALL directors and Against approval of the increase to the compensation plan. Glass Lewis & Co., another influential advisory service, also recommended Against approval of the compensation plan increase, stating “The Company’s equity-based compensation practices are among the most expensive and liberal we have reviewed.”
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