Posts Tagged ‘JEC Capital Partners’

Former KIT Digital CEO Blasts Company for “Attempt to Scapegoat Previous Management” and “Recent Record of Deficient Management and Poor Business Execution”

Broadcast technology vendor financials, Broadcast Vendor M&A, SEC Filings | Posted by Joe Zaller
Nov 26 2012

In a letter to the Board of Directors of KIT Digital, former chairman & CEO, Kaleil Isaza Tuzman, strongly criticized the company for “effectively blam[ing] prior management for the Company’s delayed filing of third quarter results and the Company’s intent to restate its financial statements for the 2009-2011 period, among other issues.”

Tuzman, who oversaw an aggressive M&A program at KIT Digital stepped down from the position of CEO as part of a management shake-up, which also involved the resignation of four directors from the company’s board.

Tuzman resigned from the position of chairman in April 2012 after clashing with the board over strategic issues.  In his resignation letter to KIT Digital’s board of directors, Tuzman said: “I have separately discussed my concerns with some of you regarding the manner in which the Company has been viewed by the public market over the years. Based in part on my concerns, I have made a wholly personal decision to step back from a formal role with the Company. As you know, I have not always agreed with other members of the Board of Directors (the “Board”) or, specifically, with all of the decisions or processes followed by the Strategic Transaction Committee of the Board with reference to the current strategic sale process. Although I will no longer be a member of the Board, I intend to stay involved as a shareholder of the Company, and I will also have greater flexibility to independently consider other strategic alternatives for the Company. I also think my departure from a formal role with the Company will give the Company greater flexibility to evolve in its next, post-consolidation stage of development independent of my personality and role as a founder.”

Tuzman was replaced as CEO on an interim basis by Barak Bar-Cohen, but Bar-Cohen’s tenure was short-lived. Bar-Cohen resigned from KIT Digital in August 2012 and was replaced as CEO by  activist investor Peter Heiland of JEC Capital Partners.

In his letter to KIT Digital’s board, Tuzman cites a litany of instances where he says the company’s “current management has shown disregard for the underlying business,” and goes on to provide a list of action items that company management must do immediately in order to “right its ship.”

Tuzman also says he is “prepared to lead a bidding group to buy the Company at a reasonable and substantial cash premium to the current traded price of the Company’s common stock.”

 

The full text of Tuzman’s letter follows:

 

Board of Directors
KIT digital, Inc.
26 West 17th Street, 2nd Floor
New York, NY
10011

Attention: Bill Russell, Chairman

Dear KIT digital Board of Directors,

KIT digital, Inc.’s (“KITD” or the “Company”) November 21, 2012 8-K (the “8-K”) effectively blamed prior management for the Company’s delayed filing of third quarter results and the Company’s intent to restate its financial statements for the 2009-2011 period, among other issues.  The Company’s attempt to attribute its current problems to prior management is spurious.

As one of KITD’s largest shareholders and the Company’s former chairman and CEO, I have kept my opinions on the Company’s trajectory confidential since my departure in April 2012, in deference to the efforts being expended by current management and to avoid unnecessary discord.  However, I can no longer silently abide the Company’s attempt to scapegoat previous management or tolerate the recent record of deficient management and poor business execution.  KITD shareholders deserve to be leveled with on what has occurred at the Company to date, and shown a path forward to success and enhancement of share value, as we have set forth below.

First, some clarifications concerning some implications contained in the Company’s recent 8-K.  During my tenure at the Company, all revenue recognition decisions were made in consultation with and approved by the Company’s independent accounting firm, and approved by your audit committee. We have no reason to believe any of those decisions were improper.  Since my departure, it is possible that your new audit committee members have elected, in consultation with the firm’s outside auditors, to apply different revenue recognition policies. That is not prior management’s responsibility, and a change in revenue recognition policies and application may reflect your recently insinuated decision to further separate the “software” and “services” lines of the Company’s business.  As shareholders, we cannot yet opine on the merit of your decision, since your 8-K lacked details on the matter.

Similarly, the 8K’s vague reference to a lack of disclosure concerning certain undisclosed “related party transactions” is misleading and inappropriate.  During my tenure with KITD, all related party transactions were vetted by KITD’s outside counsel and relevant disclosures in KITD financial statements were reviewed and approved by the Company’s independent accounting firm.  For instance, as you know, my affiliate investment companies, KIT Media and KIT Capital, supported the Company by investing on four different occasions between 2008 and 2011 in public share issuances alongside other public shareholders.  These transactions were “related party transactions” in nature and were disclosed in great detail in press releases and Company financial statements at the time.  The transactions were very positive for the Company (and included two successfully completed financings during the depth of the 2008-2009 financial crisis) and were broadly lauded by KITD’s shareholder base at the time as demonstrating management’s “skin in the game.”  In addition, stock options and restricted stock grants over time to me or KIT Capital for services rendered were also described in detail in the Company’s public filings.  Accordingly, these transactions were all appropriately disclosed and benefited the Company and its shareholders—and, in fact, neither myself nor KIT Capital has ever exercised or sold any of these stock grants or options, nor have I received a single dollar or share in severance.

By comparison, you granted former CEO Barak Bar-Cohen a $250,000 “success bonus” for an extremely dilutive, death-spiral financing concluded after my departure and JEC Capital (the New York hedge fund which currently controls the Company and for which current KITD CEO Peter Heiland serves as Managing Director) recently lent $2.5 million to the Company without a concomitant press release—and the mention of this related party transaction received only cursory mention in an indirectly related SEC filing.

Given the 8-K’s emphasis on the dire current liquidity situation of the Company, it appears to us that you, in conjunction with the Company’s senior creditors, may be conspiring to artificially decrease the Company’s stock price so as to acquire the Company at a fire sale price that is unfair to shareholders.  Indeed, the 8-K’s disclosure regarding covenant breaches of current lender agreements could be interpreted as a lead-in to a pre-arranged, sweetheart deal with the Company’s  lenders.

Previous management presided over a period between December 2007 and March 2012 during which monthly revenues expanded over 20x, operating results went from huge losses to small gains, and the Company’s shares appreciated from $2.90 to over $9.00. Despite your attempt to blame past management for your current results, those close to the Company report that current management has shown disregard for the underlying business—including key clients, employees and vendors. Most startlingly, you seem to have presided over the Company burning more cash from operations in the seven months since I left than the Company had burned from operations in the prior two fiscal years.

Adding to KITD’s problems, the Company’s current management has:

  • failed to visit many, if not most key clients
  • failed to visit more than a handful of Company field locations
  • lost many, if not most, of the Company’s key salespeople
  • disassembled the Company’s core engineering team
  • demonstrated a lack of sufficient understanding of the Company’s core technology, products and capabilities, and failed to make material progress in product development
  • moved the Company headquarters from its low-cost European center of Prague to a high-cost NYC office—despite over 50% of the Company’s revenues being European in origin
  • incurred ballooning operating losses
  • poorly executed on an ill-conceived idea of stripping down and selling individual pieces of the Company—without sufficient comprehension of how software and services units complement each other in serving clients
  • failed to attract significant new talent to the business
  • failed to add material new client contracts
  • failed to communicate a coherent vision for the future to staff, clients and industry observers
  • left an impression with staff, clients, vendors and competitors alike that KITD is under “temporary”, “hedge fund”, “Wall Street-focused” management.

 

Ignoring these poor managerial decisions, the Company instead seeks to scapegoat prior management in describing its current condition.  It is time to redress this situation.

I originally resigned from my post as CEO of KITD in March 2012 (and subsequently resigned from his role as Chairman in April, 2012) because I had come to irreconcilable differences with the Board at the time concerning strategic decisions and the future of the Company.  As a major shareholder, I ultimately felt I could make a greater positive impact on the Company’s development from the outside than from within, especially considering that the Board formed a Special Strategic Committee (the “Special Committee”) in January 2012 which had effectively taken control of all CEO-level decisions.

By way of background, in December 2011, my core management team had recommended to the Board that the Company complete a major restructuring and consolidation of operations (a plan that you finally began to implement about two months ago).  We also recommended to the Board at such time that the Company pursue two competing strategic transactions, each with the potential to be a homerun for shareholders (one a private equity buy-out and the other a merger-of-equals).  Instead, the Board rejected management’s suggested approach and formed the Special Committee with a broad mandate to oversee “any and all strategic decisions” at the Company.  The Special Committee was comprised of two board members—Wayne R. Walker and Santo Politi—and immediately shut down or irreparably delayed the discussions with the strategic transaction counterparties.  KITD’s management-by-special-committee was predictably dysfunctional.  After months of wrestling with the Special Committee to no avail, myself and several members of the core management team eventually resigned.

In connection with my resignation I issued a letter—which was publicly filed by the Company as an 8-K at the time—stating that I intended to independently consider strategic alternatives for the Company.  After my resignation, a bidding group (led by a large private equity firm which I had introduced to the Company), endeavored to obtain approval from the Special Committee to share information with me so that I could participate in connection with a potential offer for KITD.  Unfortunately, the Special Committee refused this request, to the detriment of all shareholders.

Since that time, KIT Capital and other prospective bidders have been repeatedly delayed or stonewalled in our continued efforts to create shareholder value, while the indecision and delay of new management and board continues to result in value destruction.  For example, although KITD’s current management and board finally adopted the staff reduction and office consolidation plan prior management first put forward almost a year ago, the delay has caused KITD to effectively run out of money and may put the Company into the pockets of its lenders.

KITD must right its ship. From an operational perspective, KITD management must immediately:

  • Articulate a vision of the “new” KIT digital, with the focus being on clients, employees and vendors—and away from capital markets
  • Halve executive management costs
  • Tour the top 30 clients globally to ensure contract compliance and renewal
  • Implement a program to re-invigorate the core team of top 50-performing employees globally
  • Complete our original cost reduction and office consolidation plan—including keeping headquarters in Prague, consolidating engineering team into two locations, consolidating New York and Atlanta office into one location and shutting down six other locations globally (including Dubai), while expanding sales and business development staff by one-third
  • Cease the “divide-and-sell” approach to assets
  • Clearly articulate a balance sheet-fortification strategy, centered on a significant private equity minority investment and concomitant restructuring of existing debt, while conducting an open and transparent auction of the Company (engaging both private equity and strategic buyer prospects), with a publicly announced minimum price of $3.75 per share.

 

We do not believe that current management is capable of the actions listed in this letter.  As a result, we are prepared to lead a bidding group to buy the Company at a reasonable and substantial cash premium to the current traded price of the Company’s common stock.  Since May 2012, we have repeatedly requested that the board engage with us and certain other private equity firms regarding a strategic transaction for the Company.  In light of KITD’s mismanagement and the Company’s current circumstances, the Board can no longer afford to ignore these overtures.

Based on our analysis of publicly available information, and subject to due diligence and the execution of a mutually acceptable definitive agreement, we are prepared to lead a bidding group to buy the Company at $3.75 per share in cash, which represents an 81% premium to the closing price of KITD common stock on Wednesday, November 21, 2012 (and an approximately 750% premium to the reported after-market trading price of KITD common stock on that date).  We have reviewed this transaction with two large private equity groups who are interested in participating with us, and believe we have the backing of the Company’s prior and current executives, salespeople and senior engineers who would be key to execute on our plan to right the KITD ship.   We believe we can finalize financing and business terms with respect to this acquisition very quickly if the Board responds forthwith.

For the benefit of all the shareholders, we ask that you to cease and desist from defamatory and inaccurate descriptions of KITD’s prior management and immediately engage in an open dialogue with us on this offer.

Regards,

Kaleil Isaza Tuzman

On behalf of:
KIT Capital, LLC

 

 

Related Content:

Press Release: Former Chairman and CEO Kaleil Isaza Tuzman Sends Letter to KIT digital Board of Directors

KIT Digital to Restate Historical Financial Statements Due to “Errors and Irregularities”

Reuters: TIMELINE-Management woes roil Kit Digital    http://dcft.co/10BEkdZ

KIT Digital To Cut 300 Jobs in Effort to Right Size Operations

Former KIT Digital CEO Bar-Cohen Resigns After Activist Investor Takes Control

KIT Digital SEC Filing: Heiland Takes Over CEO Role from Barak Bar-Cohen

KIT Digital Posts $102.6 Million GAAP Loss in Q2 2012, Sells Sezmi and Content Solutions Businesses at Steep Loss

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Streaming Media.Com Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

.

© Devoncroft Partners. All Rights Reserved.

.

KIT Digital To Cut 300 Jobs in Effort to Right Size Operations

Broadcast technology vendor financials | Posted by Joe Zaller
Sep 18 2012

KIT Digital has implemented a “significant workforce reduction,” which will result in job losses for approximately 300 employees, or 22% of its current headcount, by the time it is completed.

KIT says these actions will save it approximately $40m on an annualized basis, enabling it to “right size its operation and streamline general corporate functions” while maintaining a high standard of customer service.

The majority of the expense reductions will arise from “non-core areas and general and administrative redundancies.”

This announcement is one of the first public moves by KIT Digital activist investor turned interim CEO Peter Heliand, who took control of the company at the beginning of September, leading to the departure of former CEO Barak Bar-Cohen. Heiland, who was also an activist shareholder in Miranda Technology prior to its sale to Belden, owns approximately 8% of the outstanding shares of KIT digital, primarily through JEC Capital Partners, where he is Managing Director.

“By accelerating the integration of the company, we will be able to enhance our product offerings, improve time-to-market efficiency, and bring the business to a place of financial strength,” said Heiland. “While we have completed some non-core divestures and reduced the non essential support infrastructure, we are preserving all of the strategic initiatives surrounding our core competencies as we believe they will drive significant growth.”

The company said the restructuring plan will take place primarily during the third quarter of 2012 and will be completed by the end of calendar year 2012. The company currently estimates that it will record a restructuring expense in the third quarter of 2012 of approximately $4m consisting primarily of one-time termination benefits of which the majority will be paid prior to the end of calendar year 2012.

.

.

Related Content:

Press Release: KIT digital Restructuring Aligns Expenses With Operations

Former KIT Digital CEO Bar-Cohen Resigns After Activist Investor Takes Control

KIT Digital SEC Filing: Heiland Takes Over CEO Role from Barak Bar-Cohen

KIT Digital Posts $102.6 Million GAAP Loss in Q2 2012, Sells Sezmi and Content Solutions Businesses at Steep Loss

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Streaming Media.Com Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

.

© Devoncroft Partners. All Rights Reserved.

.

Former KIT Digital CEO Bar-Cohen Resigns After Activist Investor Takes Control

SEC Filings | Posted by Joe Zaller
Sep 07 2012

KIT Digital said in an SEC filing that former interim CEO Barak Bar-Cohen left the company on August 29, 2012.

KIT said that after it appointed activist investor, Peter Heiland of JEC Capital Partners, as interim CEO, the company discussed with Bar-Cohen possible continuing roles in the company but were unable to come to a mutually acceptable agreement.

Following the failure to come to an agreement, Bar-Cohen sent a letter notifying the company of the termination of his employment with the Company, as of August 29, 2012.

.

.

 

Related Content:

Kit Digital SEC Filing: Bar-Cohen Departs KIT Digital

KIT Digital SEC Filing: Heiland Takes Over CEO Role from Barak Bar-Cohen

KIT Digital Posts $102.6 Million GAAP Loss in Q2 2012, Sells Sezmi and Content Solutions Businesses at Steep Loss

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Streaming Media.Com Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

.

© Devoncroft Partners. All Rights Reserved.

.

Activist Investor Heiland Become CEO at KIT Digital

SEC Filings | Posted by Joe Zaller
Aug 30 2012

 

KIT Digital said in a filing with the SEC that activist investor Peter Heiland has been appointed CEO of the company. 

Heiland, the managing director of JEC Capital Partners, replaces interim CEO Barak Bar-Cohen, who became CEO of KIT Digital in April 2012 following the departure of Kaleil Isaza Tuzman, who in his resignation letter cited difference with the company’s board of directors over strategic issues.

This is the second time in recent months that Heiland’s JEC Capital Partners has become involved with a broadcast technology company.  Earlier this year, JEC created activist shareholder drama at Miranda Technologies, which was ultimately sold to Belden – resulting in a tidy profit for JEC.

JEC Capital Partners, which owns 8 percent of KIT Digital, recently signed a “standstill agreement” with KIT.   Under the terms of the standstill agreement, Heiland and another activist investor were given KIT Digital board seats in exchange for supporting KIT digital’s Board, and refraining from taking “certain adverse actions” against KIT digital’s Board.

.

.

KIT Digital SEC Filing: Heiland Takes Over CEO Role from Barak Bar-Cohen

KIT Digital Posts $102.6 Million GAAP Loss in Q2 2012, Sells Sezmi and Content Solutions Businesses at Steep Loss          

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Streaming Media.Com Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

Activist Shareholder Drama Continues at Miranda Technologies

.

© Devoncroft Partners. All Rights Reserved.

.

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Aug 07 2012

KIT Digital announced that it entered into a standstill agreement with Seth Hamot,  Managing Member of Roark, Rearden & Hamot, LLC, the General Partner of Costa Brava Partnership III L.P., and K. Peter Heiland, Managing Director of JEC Capital Partners, LLC.

As part of the deal, both Hamot and Heiland will join KIT digital’s Board as new directors. KIT also said that Joseph E. Mullin III has resigned from the company’s board.

Hamot owns approximately 7% of the outstanding shares of KIT digital.  Heiland who was also an activist shareholder in Miranda Technology prior to its sale to Belden, owns approximately 8% of the outstanding shares of KIT digital.

In connection with Hamot and Heiland joining the KIT digital Board, KIT digital, Mr. Hamot, Costa Brava, Mr. Heiland, JEC, and their related parties have entered into a standstill agreement. Under the agreement, the Costa Brava parties and JEC parties will support KIT digital’s Board nominees for the 2012 annual meeting of shareholders and they will refrain from taking “certain adverse actions” against KIT digital’s Board.

According to the agreement, these “adverse actions” include the following:

(i)                nominate or propose any candidates for the Board or seek to change or alter the composition or size or membership of the Board or the removal or replacement of any director or call or seek the call of any meeting of stockholders;

 

(ii)              submit a shareholder proposal under Rule 14a-8 of the Securities Exchange Act of 1934, directly or indirectly, to the Company or seek any referendum or the like by the shareholders of the Company;

 

 (iii)             file a proxy or consent statement in opposition to the Company or otherwise obtain or solicit proxies or consents from any shareholders of the Company or be a participant in or make any solicitation for a matter relating to the Board;

 

(iv)             enter into any contract, arrangement or understanding with any person (other than an Affiliate or Associate, subject to the percentage ownership limitation below, for which K. Peter Heiland (in the event of an Affiliate or Associate of a JEC member), or for which Seth Hamot (in the event of an Affiliate or Associate of a Costa Brava member), has and maintains all voting and investment and other applicable authority or which Affiliate or Associate signs a joinder to this Agreement agreeing to be bound by all the terms and conditions hereof as a JEC member or a Costa Brava member as applicable) with respect to any securities of KIT, including but not limited to any acquisition of any securities (or beneficial ownership thereof), joint venture, loan or option agreement, put or call, guarantee of loans, guarantee of profits or division of losses or profits, it being understood that Costa Brava members’ and JEC members’ aggregate holdings in KIT’s securities shall not exceed 9.9% and 9.9% beneficial ownership under Section 13(d) of the Exchange Act, respectively, of the common stock of the Company;

 

(v)              commence or enter into any tender offer or exchange offer, merger, acquisition or other business combination or extraordinary transaction involving the Company or any of its subsidiaries;

(vi)             form, join or in any way participate in a “group” (as defined under the Exchange Act) with respect to the Company or its securities;

 

(vii)            otherwise act, alone or in concert with others, to seek to influence the management, Board or policies of KIT or take any action to seek the removal of any member of the Board, change the size of the Board, obtain additional representation on the Board, or take any other action related to the management or the Board;

 

(viii)          disclose any intention, plan, proposal or arrangement or other matter inconsistent with its obligations under this Section 8(a) (provided that this clause (viii) shall not prohibit a confidential, non-public disclosure with respect to the matters for which a waiver may be sought under clause (xi) below);

 

(ix)             effect or seek (including, without limitation, entering into any discussions, negotiations, agreements or understandings with any third person), offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way, advise, assist or encourage any other person or entity in connection with any action which it is prohibited from taking under this Section 8(a) or which is inconsistent with its obligations under this Section 8(a) (including via any supporting public statement with respect thereto or any adverse public statement regarding the Company or the Board or any of its members);

 

(x)              knowingly take any action which would, or would reasonably be expected to, force the Company to make a public announcement (or result in the Company making a public announcement) regarding any of the types of the foregoing matters; or

 

(xi)             request, directly or indirectly, any amendment or waiver or modification of, or deviation from, any provision of this Section 8 (including this sentence) or any other provision of this Agreement by the Company or any of its agents or representatives (provided that this clause (xi) shall not prohibit a JEC member or a Costa Brava member from confidentially requesting from the Board of the Company an amendment, waiver or modification, or deviation, from this Section 8 to permit the JEC members or the Costa Brava members (respectively) to engage in a transaction subject to clause (v) above or for them to exceed the ownership limitation set forth in clause (iv) above).

 

KIT digital also said its Board will nominate and support each of Mr. Hamot and Mr. Heiland for the 2012 annual meeting of shareholders. The restrictions and nomination provisions will run at least through KIT digital’s 2012 annual meeting of shareholders and will potentially apply through the 2013 annual meeting. The standstill agreement itself will terminate following the 2013 annual meeting of shareholders and is subject to various other terms and conditions.

.

.

Related Content:

Press Release: KIT digital Adds Shareholder Representation to Board of Directors

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

Activist Shareholder Drama Continues at Miranda Technologies

.

© Devoncroft Partners. All Rights Reserved.

.

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Jun 13 2012

KIT Digital said that the company has hired Deutsche Bank to help it explore strategic alternatives, including a potential sale, consolidation or merger.  The news cheered beleaguered investors who sent the company’s shares up by more than 18 percent on the day.

The company announced in February 2012 that it had formed a strategic transaction committee to entertain such offers. Now KIT says that this process has been “ongoing” and the full Board is committed to moving it forward as quickly as possible.

KIT said that Deutsche Bank and representatives of the company have met with and are currently meeting with “a number of entities which have expressed interest in a potential transaction with the company.”

KIT also said it had failed to reach an agreement about a change in the Board of Directors with a group of activist investors, including JEC Capital, who was at the center of the investor drama at Miranda Technologies earlier this year.

According to the filing, KIT Digital management met last week with JEC Capital and other investors who have jointly proposed four candidates for addition to the Company board of directors. KIT says it “indicated a willingness to consider their proposed candidates, along with other potential candidates, but was unable to reach agreement on either the number of potential candidates to be appointed or the timing of such appointments,” because the activist investors “insisted that all four of their proposed directors be appointed to the board.”

Regardless of activist shareholders, KIT says it is already in the process of reconfiguring its Board of Directors, and has engaged CT Partners, a leading global executive search firm, to assist it in this search.

These announcements, which were made in a filing with the SEC, follows on from a series of issues that have roiled the company recently. 

KIT most recent financial results were substantially lower than the company’s previously issued guidance, prompting an avalanche of investor selling that caused the company’s share price to plummet. At that time the company outlined a series of actions aimed at placating investors, but the selling continued.

Earlier this year former KIT Digital CEO Kaleil Isaza Tuzman resigned from his position as the company’s non-executive chairman, citing differences with the company’s board of directors regarding KIT’s strategic sales process. Tuzman, who oversaw an aggressive M&A program at KIT Digital, recently stepped down as down as the company’s CEO as part of a management shake-up, which also involved the resignation of four directors from the company’s board.

.

.

Related Content:

KIT Digital Posts GAAP Loss of $24.9 Million in Q1 2012, Issues Updated Guidance

KIT Digital 8-K Filing – details new capital raised

Activist Shareholder Drama Continues at Miranda Technologies

WSJ Article: Investors Need First Aid KIT

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Resignation Letter to KIT Digital Board from Kaleil Isaza Tuzman

Streaming Media Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

.

© Devoncroft Partners. All Rights Reserved.

.

Thorsteinson Appointed to Miranda’s Board of Directors in Otherwise Uneventful AGM

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Apr 25 2012

Miranda said that broadcast industry veteran Tim Thorsteinson was elected to its Board of Directors at the company’s Annual General Meeting (AGM). 

Thorsteinson, who was nominated for the position by Miranda’s management, ran unopposed for the board position vacated by Thomas Cantwell who announced his retirement earlier this year.

Miranda said that all other items put forth at the AGM were approved, including the re-appointment of its auditors and the adoption of an amended and restated shareholder rights plan

The low-key nature of Miranda’s AGM is in contrast to several months of activist shareholder drama at the company which began in December 2011 when two investment firms – JEC Capital Partners and JMB Capital Partners – who respectively own approximately 7.1% and 3.1% of Miranda’s outstanding shares — requisitioned a meeting of the shareholders of Miranda to replace four of the seven existing directors of Miranda with four new independent directors.

Last month Miranda effectively put itself up for sale when the company announced that it will “hold discussions with potential strategic partners as part of the company’s review of ways in which to continue to enhance value and to build on the positive momentum that it has generated over the past two years.”

Miranda’s announcement about a potential sale and the timing of its AGM, which was at the same time as last week’s the NAB show and caused several key Miranda executives to miss part of the show, created intense speculation about the company’s future ownership during NAB. 

Perhaps in recognition of this, Miranda president & CEO Strath Goodship said in a statement “We would like to thank our shareholders for their continued support. The Company remains committed to driving sustainable and profitable growth through the development of innovative solutions and go to market strategies.”

.

.

Related Content:

Press Release: Confidence in Miranda’s Board Confirmed at AGM

More Broadcast Vendor M&A: Miranda Exploring Strategic Options Through Structured Process

Activist Shareholder Drama Continues at Miranda Technologies

JEC Press Release: Miranda Technologies: Business As Usual – Share Price Declines, Immediate Board Change Needed

Miranda Reports 27% Revenue Increase in 2011

JEC Press Release: JEC Capital Names Proposed Directors of Miranda Technologies Inc.

Miranda Rejects Activist Shareholder Request as Invalid

JEC Press Release: Miranda Technologies Calls Early Shareholders Meeting After Pressure From JEC and Other Concerned Shareholders

Activist Shareholder Remains Convinced That Miranda Technologies is Undervalued

Miranda Responds to Activist Shareholders

Activist Shareholders Seek To Replace Four Board Seats at Miranda Technologies

.

© Devoncroft Partners. All Rights Reserved.

.

More Broadcast Vendor M&A: Miranda Exploring Strategic Options Through Structured Process

Broadcast Vendor M&A | Posted by Joe Zaller
Mar 21 2012

Miranda Technologies said that it has decided to “hold discussions with potential strategic partners as part of the company’s review of ways in which to continue to enhance value and to build on the positive momentum that it has generated over the past two years.”

Separately, Miranda has also announced that it has nominated industry veteran and former Harris Broadcast CEO Tim Thorsteinson as a candidate for the company’s board of directors.

The move comes after several months of activist shareholder drama at the company which began in December 2011 when two investment firms – JEC Capital Partners and JMB Capital Partners – who respectively own approximately 7.1% and 3.1% of Miranda’s outstanding shares — requisitioned a meeting of the shareholders of Miranda to replace four of the seven existing directors of Miranda with four new independent directors.

Against this backdrop, it turns out that Miranda has been exploring its “strategic options” for the better part of a year, and has now decided to move ahead in a more structured way.

Miranda disclosed that it has “received a number of unsolicited expressions of interest regarding potential transactions and partnerships,” over the past year, and had, in May 2011, put in place a committee of its independent directors to review each expression of interest that was received. When this committee believed that an approach might lead to a (M&A) transaction, a non-disclosure agreement was entered into and discussions with the interested party ensued.

To date these discussions have not resulted in deal, because the committee “concluded that the transactions proposed would not reflect full and fair value for the Corporation’s business.”

Now however, the company says there is “growing interest” in Miranda, so the company has decided “that a more structured process should be put in place in order to enable the Corporation to review further expressions of interest and to hold discussions with potential strategic partners.”

The timing of this initiative – a month before the NAB show, and Miranda’s AGM – will certainly make things interesting to watch over the next month as it plays out.

.

.

 

Related Content:

Activist Shareholder Drama Continues at Miranda Technologies http://bit.ly/yfoMWE

JEC Press Release: Miranda Technologies: Business As Usual – Share Price Declines, Immediate Board Change Needed

Miranda Reports 27% Revenue Increase in 2011

JEC Press Release: JEC Capital Names Proposed Directors of Miranda Technologies Inc.

Miranda Rejects Activist Shareholder Request as Invalid

JEC Press Release: Miranda Technologies Calls Early Shareholders Meeting After Pressure From JEC and Other Concerned Shareholders

Activist Shareholder Remains Convinced That Miranda Technologies is Undervalued

Miranda Responds to Activist Shareholders

Activist Shareholders Seek To Replace Four Board Seats at Miranda Technologies

.

© Devoncroft Partners. All Rights Reserved.

.

Activist Shareholder Drama Continues at Miranda Technologies

Broadcast technology vendor financials | Posted by Joe Zaller
Mar 06 2012

Following on from the announcement by Miranda Technologies that its revenue jumped 27 percent in 2011, JEC Capital (JEC) a large shareholder in the company, issued a press release saying that JEC was “extremely disappointed” by Miranda’s earnings release and conference call concerning its full year and fourth quarter results.

This is the latest salvo in a war of press releases which began in December of 2011 when JEC and JMB Capital Partners – who respectively own approximately 7.1% and 3.1% of Miranda’s outstanding shares —  requisitioned a meeting of the shareholders of Miranda to replace four of the seven existing directors of Miranda with four new independent directors.

Miranda quickly rejected JEC’s request as invalid under the Business Corporations Act (Québec), which says a requisition must be signed by a registered shareholder of the Corporation, and that neither JEC nor JMB is registered in the Corporation’s securities register.

Undeterred, JEC went ahead and published a slate of proposed Director nominees its says have a wide range of industry, merger and acquisition, and corporate finance experience, including former Harris Broadcast CEO Tim Thorsteinson.

In JEC’s most recent pejoratively-titled press release, Michael Torok, a managing director at the company said “JEC shares the market’s disappointment in Miranda’s recent earnings release and conference call, and in the lack of any assertive action by the Board. The recent broad sell-off in Miranda shares following the earnings release shows that shareholders were expecting something more than business as usual. While operating results remain positive, the market sees no evidence that the Board is making the meaningful changes that shareholders are seeking and the market is expecting.

“From December 13, 2011, the date JEC and JMB Capital requisitioned a shareholder meeting for the purpose of adding new directors to the Company’s Board of Directors, through February 28, 2012, Miranda’s share price increased 26%. This increase indicates that shareholders and the broader market view positively the prospect of both change on the Board and a full review by the Board with its financial adviser, BMO Capital Markets, of all strategic alternatives available to the Company to maximize shareholder value.  Absent concrete steps to maximize value creation, beginning with a revitalization of Miranda’s Board in the near future, further erosion of shareholder value is inevitable.”

.

.

Related Content:

JEC Press Release: Miranda Technologies: Business As Usual – Share Price Declines, Immediate Board Change Needed

Miranda Reports 27% Revenue Increase in 2011

JEC Press Release: JEC Capital Names Proposed Directors of Miranda Technologies Inc.

Miranda Rejects Activist Shareholder Request as Invalid

JEC Press Release: Miranda Technologies Calls Early Shareholders Meeting After Pressure From JEC and Other Concerned Shareholders

Activist Shareholder Remains Convinced That Miranda Technologies is Undervalued

Miranda Responds to Activist Shareholders

Activist Shareholders Seek To Replace Four Board Seats at Miranda Technologies

 

.

© Devoncroft Partners. All Rights Reserved.

.

Activist Shareholder Names New Proposed Directors for Miranda Technologies

broadcast technology market research | Posted by Joe Zaller
Jan 11 2012

JEC Capital Partners (JEC), which in December 2011 requisitioned a meeting of the shareholders of Miranda to replace four of the seven existing directors of Miranda with four new independent directors, has announced the names of the director nominees it intends to put forward at Miranda’s upcoming annual meeting of shareholders.

Miranda has previously rejected JEC’s request as invalid under the Business Corporations Act (Québec), which says a requisition must be signed by a registered shareholder of the Corporation, and that neither JEC nor JMB is registered in the Corporation’s securities register.

Nevertheless, JEC is pushing ahead with a slate of nominees its says have a wide range of industry, merger and acquisition, and corporate finance experience: Claude Fontaine, Clifford Press, Tim Thorsteinson and K. Peter Heiland. Short biographies of each of these proposed directors can be found below.

 

Biographies of the proposed directors

Claude Fontaine is a corporate director and a retired attorney, having been a partner and then senior partner in a major Canadian law firm for over 40 years where he specialized in corporate and securities law, including financing, mergers and acquisitions, business dispositions and corporate governance. With respect to corporate governance, Mr. Fontaine has often been called upon to review the governance systems of major Canadian corporations and has regularly advised public companies and Crown corporations on various aspects of their governance. Mr. Fontaine became a Certified Director of the Institute of Corporate Directors (ICD) in 2006, and has since acted as an ICD certification examiner and in 2009 was named a Fellow of the ICD. Mr. Fontaine is a member of the Boards of Directors or of the Advisory Committees of a number of Canadian companies, including CEPSA Chimie Montréal, CEPSA Chimie Bécancour, Optimum West Insurance Company and ProSep inc. (TSX:PRP). In the past, Mr. Fontaine has served as a director of Petro-Canada, Canadair Inc., Domtar Inc., and Optimum General Inc.

Tim Thorsteinson is the Chief Executive Officer of Enablence Technologies (TSX:ENA), where he was appointed to the Board of Directors in November 2009 and joined the management team as President and Chief Operating Officer and subsequently CEO in April 2010. Mr. Thorsteinson has successfully transformed several challenging businesses to growing, profitable, high-margin market companies delivering high rates of shareholder return. He recently served as President of the Broadcast Division at Harris Corporation with $650 million in revenue, and also served as a Harris Corporate Officer and was a member of the Harris Executive Committee. Prior to joining Harris Corporation, Mr. Thorsteinson was President and CEO at Leitch Technology where he oversaw the execution of a two-year turnaround plan that rebuilt value and positioned the company for a profitable sale.

Clifford Press is a managing member, partner and cofounder of Oliver Press Partners, an investment firm that invest in companies that are believed to be undervalued and which offer significant opportunity for appreciation through corporate transactions. Mr. Press began his professional career at Morgan Stanley in the firm’s mergers and acquisitions department and left in 1986 to form Hyde Park Holdings, a company which engaged in a number of investment and acquisition activities including the acquisition of High Voltage Engineering Corporation and the Detroit & Canada Tunnel Corporation, and is currently a director of GoldMoney Network, Ltd. and SeaBright Holdings Inc. (NYSE:SBX).

K. Peter Heiland is a Managing Director of JEC Capital Partners, LLC, a technology focused investment fund. Mr. Heiland also currently serves on the board of directors of SAM Technologies GmbH and the GSI Group, Inc. (NASDAQ:GSIG). Prior to founding JEC Capital Partners, Mr. Heiland was the founder, owner, and CEO of Integrated Dynamics Engineering, a technology leader that serves a number of large customers, including Nikon, CANON, ASML, Applied Materials, KLA Tencor, and Hitachi. In January of 2008, IDE was acquired by Aalberts Industries.

.

.

Related Content:

JEC Press Release: JEC Capital Names Proposed Directors of Miranda Technologies Inc.

Miranda Rejects Activist Shareholder Request as Invalid

JEC Press Release: Miranda Technologies Calls Early Shareholders Meeting After Pressure From JEC and Other Concerned Shareholders

Activist Shareholder Remains Convinced That Miranda Technologies is Undervalued

Miranda Responds to Activist Shareholders

Activist Shareholders Seek To Replace Four Board Seats at Miranda Technologies

 

.

© Devoncroft Partners. All Rights Reserved.

.

 

%d bloggers like this: