Pier Antonio Costamagna, a co-founder of Fuel Systems Solutions, Inc. ("FSS") (NASDAQ:FSYS) today commented on his continued significant concerns regarding the clear lack of value in a combination of FSS and Westport Innovations, Inc. ("Westport") (TSX:WPT / NASDAQ:WPRT). Mr. Costamagna has sole voting power over 1,576,043 shares of FSS common stock, representing approximately 8.7% of outstanding shares and he intends to vote AGAINST the merger at the FSS stockholder meeting scheduled for Tuesday, May 31, 2016. He noted a summary of critical points informing his decision.

NO PREMIUM, UNCERTAIN FUTURE WITH WPRT, HIGH RISK OF INSOLVENCY
 
  • No merger-related premium - the offer represents a 21% discount to FSS' unaffected share price. WPRT's share price has declined 39% since merger announcement
  • WPRT has significant debt load maturing and recently raised funds from Cartesian at an effective interest rate of 23%
  • Cartesian will have significant influence and control over combined company
  • WPRT subject to ongoing revenue decline and questionable outlook
  • FSS receiving inadequate stake for its revenue and EBITDA contribution to the combined company
  • Combined company expected to generate negative adjusted EBITDA in FY16 and FY17 and require $150mm of additional financing
  • Real risk of insolvency for the combined company. CEO did not vote for the merger and one director resigned in protest
 

LIMITED DOWNSIDE TO REJECTION
 
  • Standalone value substantially higher than current implied offer price
    • Mean average Discounted Cash Flow (DCF) - $14.85
    • Mean average equity research Estimates - $8
  • Almost no debt and $49.5 million in cash and short term investments as of March 31, 2016
  • DCF analysis shows a mean average discount of 65% based on the current offer
  • Expected to generate positive adjusted EBITDA in both FY16 and FY17
  • Third Party's offer of $4.5 per share in cash, provides effective floor to the share price if the merger is rejected
  • Proxy reflects pressure applied to directors to approve amended merger agreement

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