DGAP-News: Castle Private Equity Holding: Information for shareholders from Abrams Capital und Ironsides Partners
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Castle Private Equity Holding: Information for shareholders from
Abrams Capital und Ironsides Partners
02.03.2012 / 15:01
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PRESS RELEASE
Abrams Capital and Ironsides Partners launch information website
and respond to the Castle Private Equity board's proposed change in
strategy
Boston/MA, 2 March 2012 - Abrams Capital and Ironsides Partners (the
'Shareholder Group') today issued a presentation and launched a website
(www.castle-egm.com) relating to their proposal to replace the current
Board of Directors of Castle Private Equity AG ('Castle'). The Shareholder
Group urges Castle shareholders to review the presentation and website and
contact us with any questions.
By press release dated February 27, 2012, the Board of Directors of Castle
(the 'Castle Board') announced that it has abandoned its strategy to
convert Castle to an open-ended structure and adopted our approach of
ceasing investment commitments and repurchasing shares or paying
distributions. We believe that the Castle Board has arrived to the right
conclusion, but for the wrong reasons. While we welcome the Castle Board's
belated embrace of a strategy for which we have long advocated, we believe
this was done not to enhance shareholder value but to derail our proposal
and preserve the self-interest of the current board and investment manager
in maintaining the status quo.
The Castle Board views as 'alarming' the 'apparent haste' of the
Shareholder Group's rejection of the Castle Board's proposal within six
weeks of its announcement - the same proposal the Castle Board itself has
abandoned. Without basis the Castle Board then states that 'significant
shareholder value may be unrealized should they gain control.' As the
Castle Board knows, the Shareholder Group's decision to propose a slate of
directors was the culmination of more than ten months of e-mails, phone
calls, and in-person meetings. Far from being hasty, the Shareholder
Group's position has been well-informed, long-held, and consistent. And it
is illogical to suggest the company's largest shareholders would allow
shareholder value to go unrealized. The Shareholder Group has every
incentive, economic and otherwise, to maximize the realization of
shareholder value regardless of the time period required.
The Castle Board accuses the Shareholder Group of being 'focused on
exploiting the current discount of Castle's share price to NAV per share to
realize a short term gain.' This betrays a fundamental misunderstanding of
our goal. Castle should repurchase its shares in order to enhance long-term
value for remaining shareholders as NAV per share grows via share
repurchase.
The Castle Board insinuates that the Shareholder Group seeks a new Board
because of its supposed 'preoccupation with the illiquidity of its own over
25 per cent stake'. This is misleading. We are long-term value investors
who own a large stake in Castle because we believe value can be harvested
over time to justify such a large investment, but only if Castle's strategy
is changed and Castle is run for the benefit of shareholders. While the
current Castle Board has suddenly embraced our strategy, we do not know
whether this will endure and cannot be confident in the quality of its
execution.
The ShareholderGroup is encouraged by the fact that LGT Group supports an
orderly harvesting strategy and will use its voting rights in Castle's
subsidiaries to that end. The proposed board will expect the same support
for so long as LGT controls the subsidiaries' voting rights. If elected the
proposed board will work to assume LGT's voting control over Castle's
subsidiaries as those votes are more appropriately held by a
shareholder-elected board of directors than by the investment manager.
The Castle Board states that Castle's investment management fee level needs
to be reviewed and that it is better placed for these negotiations than the
proposed board. Given that the majority of the current Castle Board
consists of current or former employees of affiliates of the investment
manager and that the Castle Board has paid the investment manager the
industry's highest fees for more than a decade, the Shareholder Group is
not confident in the current board's ability to negotiate the best possible
deal for shareholders. The Shareholder Group has committed not to seek any
fees or other compensation from Castle and its director nominees have
agreed to voluntarily forgo any director renumeration they would otherwise
be owed. The proposed directors therefore have no ulterior motive other
than striking the best deal for shareholders.
Finally the current Castle Board questions the contributions a new board
may make. As the authors of the strategy recently adopted by the existing
board, the proposed directors appear to have already made a significant
contribution. Further contributions will take the form of renegotiating the
company's fee structure and maximizing the value of the company's portfolio
for the benefit of its shareholders.
Further information on the Shareholder Group's proposals and director
nominees may be found at http://www.castle-egm.com. Shareholders and other
interested parties may contact the Shareholder Group via Dynamics Group:
Dynamics Group AG, Utoquai 43, CH 8024-Zürich
Edwin van der Geest, vdg(at)dynamicsgroup.ch, +41 43 268 32 30
Philippe Blangey, prb(at)dynamicsgroup.ch, +41 43 268 32 35
Alexandre Müller, amu(at)dynamicsgroup.ch, +41 43 268 32 31
End of Corporate News
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Datum: 02.03.2012 - 15:01 Uhr
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News-ID 121099
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