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Feb. 13, 2013 /PRNewswire/ -- Potomac Capital Management II, LLC (together with its affiliates, "Potomac"), today announced that it delivered a second letter to the Board of Directors (the "Board") of PLX Technology, Inc. ("PLX" or the "Company") (NASDAQ: PLXT). In the letter Potomac expressed its grave disappointment with the Board's failure to provide a meaningful response to the issues raised in Potomac's first public letter. Potomac was troubled that despite the significance of its concerns, management had offered to meet with Potomac as part of its meetings with investors on routine communications and members of the Board were not available for an immediate meeting. Meanwhile, the Board had adopted certain shareholder unfriendly defensive provisions to entrench themselves only four days after Potomac made a public filing with its open letter. Potomac reiterated its strong belief that value can best be created by capitalizing on the historic interest in PLX and exploring all strategic alternatives, including the sale of the Company. However, Potomac stressed that they had no faith that the current Board will translate strategic interest in PLX into a value-maximizing transaction and concluded that change is urgently needed in the composition of the Board.
The full text of the letter follows:
February 13, 2013VIA ELECTRONIC DELIVERY & OVERNIGHT MAIL
The Board of DirectorsPLX Technology, Inc.870 W. Maude Avenue
Sunnyvale, California 94085
Dear Members of the Board,
As you know, Potomac Capital Management II, LLC, together with its affiliates ("Potomac"), is a significant shareholder of PLX Technology, Inc. ("PLX" or the "Company"), with ownership of approximately 5.1% of the outstanding shares of common stock of the Company. We are writing to express our grave disappointment over the Company's failure to provide a meaningful response to the serious concerns outlined in our letter of
January 25, 2013. We have stated very clearly our belief that, in the current context, in order to maximize value for shareholders the Board of Directors (the "Board") must immediately commence a process of thorough review of all strategic alternatives available to PLX.
Action must be taken decisively and urgently. The response we received from
David Raun, the recently appointed President and CEO of the Company, stating that he and
Arthur Whipple, the Company's CFO, will try to schedule time to meet with us as part of the senior management's periodic meetings with investors regarding routine communications is disturbing. The issues we have raised are far too serious to be dismissively treated as routine communications and deserve the immediate attention of the Board. Coupled with the curt and uninformative statement during the 2012 fourth quarter earnings call that the "…Board is in the process of considering the Potomac letter [and they] do not intend to take questions or make further comment on this matter," the reaction of the Company appears clearly designed to obstruct constructive dialogue and ignore the substance of the matter.
We further find the excuse that the Board does not have time to meet with a concerned significant shareholder rather disingenuous when taken in the context of the recent amendment to the Company's organizational documents to implement a number of shareholder unfriendly defensive provisions. The Company's announcement only four days after we filed a Schedule 13D with the SEC and made our views public is clearly reactive to our filing. In short, while the Board could not find the time to meet with us and hear the concerns of a significant shareholder, it found the time to take defensive actions to help entrench the position of the incumbent directors and isolate themselves from the constructive input of PLX's shareholders. It is very hard to justify this Board's actions and not view them for what they are --a troubling disregard for shareholder concern.