Shareholder of On Track Innovations (OTI) Responds to Board of Directors Letter
NEW YORK, Oct. 29, 2012 (GLOBE NEWSWIRE) -- Jerry Ivy, the second largest shareholder of On Track Innovations Ltd. (Nasdaq: OTIV), who has called on shareholders to vote AGAINST management's proposed nominees as directors, responded to claims made by the OTI board of directors.
"I was very disappointed to see that the board of OTIV is trying to obfuscate the key issues - i.e. the board's failure to generate profit for 22 years and the over 80% decline in share price in last five years in its October 17th letter", Ivy said.
OTIV Letter states: "It is also important to recognize the advantages of being an Israeli-based company."
Ivy agrees, noting: "My nominees do not intend to change OTIV's status as an Israeli-based company or terminate its operations in Israel. OTIV's stock is traded only in the US and 96% of OTIV's shares are held by US based shareholders. As a shareholder, I believe that the board of directors and management of OTIV should be accountable to ALL investors regardless of where they live, including the U.S. based investors."
OTIV Letter also notes: "Our new director nominees contribute relevant experience, business connections and the ability to help position the company for future growth."
While Ivy recognizes that adding new directors is a step in the right direction, the new nominees represent only two of 9 directors. Without a change in the other 7 directors, shareholders can expect simply more of the same failed policies of the existing board of directors. Moreover, given the poor corporate governance structure (i.e. a classified board, so that directors are elected for 3 year terms), shareholders do not have the ability to opine on director performance each year. As a result, if the new nominees underperform, shareholders cannot hold them accountable for another three years.
Ivy explained that his campaign to vote AGAINST the directors is not aimed at any specific director but intended to send a strong message to the incumbent board that shareholders are not satisfied with the status quo. Voting AGAINST is the only way for shareholders to prevent the incumbent board's hand-picked nominees from getting elected. It will also provide an opportunity for the alternative slate of highly qualified independent directors that I have put forth to get a fair hearing.
Additionally, OTIV contends: "Customers question if the current management team will be around to support any contracts signed, as they are concerned about who would replace it if dissident shareholders took over the business; and (2) Customers question doing business with a company that is struggling with its shareholder base."
Ivy believes that customers are more likely to be concerned with the financial viability of OTIV given its history of losses (22 years without a profit and cumulative operating loss of $90.4 million in the last 6 fiscal years). Customers likely recognize that changes at the board of directors are needed. Ivy asked, "Could incumbent board members of the customers' own companies survive with that history of losses?"
Ivy noted, "As the largest shareholder of OTIV, it is in my interest to ensure that not only OTIV retains its current customers but becomes a successful and profitable company. That is the only way ALL shareholders, including myself, will regain the value of our investment lost during all the years that the company has been controlled by the incumbent board. Once again, the incumbent board of OTIV is deliberately trying to create confusion among shareholders."
As for Mr. Bashan's announcement that he would not extend his dual role as CEO and Chairman of the board, Ivy stated: "I believe this is a step in the right direction. But I question the timing of this decision - it is too little, too late."
Mr. Ivy asked, "Is it reasonable to expect the incumbent board, an incumbent board that has failed to generate a profit for 22 years, to now work for shareholder interests just because the CEO decided not to be Chairman of the board? As shareholders, who would you rather trust – a new board selected by shareholders, or an incumbent board with a 22 year track record of failure??"
Not surprisingly, the OTIV Letter paints a rosy picture - "We [OTIV] are on track to achieve lower operating expenses as a result of our cost cutting program and streamlining our operations, and we [OTIV] are doing the right things to take OTI to the next level."
Ivy asked "How many times shareholders have heard this story? Promises and more promises. Fool me once, shame on you. Fool me twice, shame on me. As shareholders, how many times will we allow this incumbent board to make promises that profits are just ahead?"
Ivy's vision is to help keep OTI as a strong, exciting, and growing company. To realize this vision, shareholders need to vote against the incumbent directors, so that shareholders have the opportunity to elect a slate of more qualified directors.
In order to bring about change, Ivy urges SHAREHOLDERS TO VOTE "AGAINST" the three director nominees. Ivy noted that he had submitted notice to OTI requesting a shareholder meeting to consider the election of his slate of directors. Voting "AGAINST" will permit shareholders to consider that slate at a future date.
Every vote is very important, regardless of how many shares are owned. To read more about this issue go to WWW.OTIVINFO.COM.