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April 19, 2013 /PRNewswire/ -- Red Oak Partners and the Red Oak Fund L.P. (collectively "
Red Oak") release the following letter to Shareholders of Digirad Corporation (Nasdaq: DRAD) from
Red Oak's Founder and Managing Member,
Dear Fellow Digirad Shareholders,
Red Oak has been one of Digirad's large shareholders for the better part of the past 4 ½ years. We are in the midst of an important proxy contest against Digirad's current Directors, whom we believe have not been fully honest with you about their qualifications, and have instead dodged discussion about core issues while making un-substantiated representations about their skills and experience.
Additionally, Digirad has stated in its latest fight letter that "
Red Oak just wants to seize control without paying a premium". This is blatantly misleading.
Red Oak is
NOT seeking control of Digirad's business. Our only objective it to ensure that Digirad has a Board of independent directors that have a vested interest in protecting shareholder value (and are not affiliated with one another like Messrs. Eberwein, Gillman and Climaco).
Red Oak publicly commits to running an open independent process to review all strategic alternatives. Moreover, shareholders have the right to know how it was possible for Messrs. Gillman, Eberwein and Climaco, who we believe are very close associates, to get control of Digirad's board without having to spend any money of their own to buy Digirad shares. Who should shareholders trust: the current Board, who not only lacks relevant experience and received board control without investing a penny of their own funds, or
Red Oak, a long term shareholder that has invested over
$2.5 million of our own capital in buying Digirad shares?
A Brief History:
In late 2011 Red Oak, owning more shares than Digirad's collective Board (both then and now), challenged Digirad's Board to effect overdue change given material share price erosion while Directors enriched themselves and owned little stock. After Digirad received
Red Oak's nomination letter, Digirad offered
Red Oak three Board seats,
provided incumbents retained control.
Red Oak rejected this offer. At the same time,
Charles Gillman – an individual claiming to work at a Tulsa family office – cold-called and solicited
Red Oak, asking to lead a contest against Digirad's Board using
Red Oak's shares because he owned none himself.
Red Oak rejected Mr. Gillman's solicitation.
Shortly after this solicitation, Digirad's Board appointed four new Directors -
John Climaco, and
Jim Hawkins. It is important to note that none of the new Directors had any history of challenging the then-incumbent Board nor sought
any improvements in Digirad's corporate governance as a condition to serving.
At the time of their appointment, not
one of these four Directors:
a) Owned a single share of stock in Digirad – they were each new to the Company, and we don't believe any of them had owned any Digirad stock at any point in the past, either, through which they might have followed and learned about the Company