DC Capital Partners, LLC ("DC Capital"), a private investment firm
headquartered in Washington, D.C., today sent a letter to the Board of
Directors of Michael Baker Corporation (“Michael Baker”) BKR, an
engineering, design, planning and construction services company, and amended
its 13D in Michael Baker accordingly.
The full text of the letter is below:
Members of the Board of Directors
c/o Richard L. Shaw, Chairman
Michael Baker Corporation
Airside Business Park
100 Airside Drive
Moon Township, PA 15108
Dear Mr. Shaw and Members of the Board of Directors:
Thank you for your leadership to date.
As a significant individual shareholder of Michael Baker Corporation ("Michael
Baker" or the "Company"), I appreciate your attempts to enhance value through
the recent short term actions to repurchase the Company's stock and institute
a dividend; however, I believe they are insufficient. The Company's long term
growth strategy has resulted, and I believe will continue to result, in a
significant undervaluation of the stock. Specifically, over the past five
years, the Company has engaged in an acquisition strategy, including over $100
million in invested capital since 2010, which has not provided any significant
value creation to shareholders. Over the same period, Michael Baker's stock
price declined over 40%.
I did appreciate your facilitating our recent meeting with management,
although I was surprised and somewhat alarmed by the abrupt departure of the
President and Chief Executive Officer, Mr. Mallory, as he led our discussions.
As you know, DC Capital Partners, LLC has a controlling interest in Gladiator
HoldCo, LLC and its subsidiary, KS International, LLC ("KSI"), a provider of
mission critical operational support to government agencies. I have been
reviewing growth strategies for KSI, and given Michael Baker's current
position, it is my belief that a combination of KSI and Michael Baker is the
best course of action.
We propose to have KSI purchase the Company in an all cash transaction at
$24.25 per share outstanding. That price represents a 26% premium over the
stock's thirty day trailing average closing price on December 18, 2012. We are
in discussions with investment banks and other financial institutions and
expect to have fully executed, underwritten financing commitments in the near
future.
We are prepared to proceed immediately to negotiate and execute definitive
documents. We envision signing a confidentiality agreement, but we do not
believe it would be in any party's interest, particularly your shareholders,
to sign a standstill agreement.
We believe our proposal is compelling and in the best interest of all
constituents, including your shareholders, employees, and customers.
I am available to discuss this offer at your convenience. In advance, thank
you for your consideration.
Respectfully,
/s/
Thomas J. Campbell
About DC Capital Partners, LLC
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