NEW
YORK, Dec. 19, 2023 /PRNewswire/ -- Wynnefield
Capital and its affiliates, collectively the largest institutional
stockholder of TechPrecision Corporation (NASDAQ: TPCS) with a 4.5%
beneficial ownership interest, today issued the following public
letter to the Company's Board of Directors.
***
Wynnefield Capital Concerned TechPrecision is Ignoring its
Duty to Stockholders by Failing to Explain Proposed Acquisition of
Votaw Precision Technologies.
Dear Board of Directors,
Wynnefield Capital and its affiliates (collectively,
"Wynnefield") own 393,857 shares of common stock, or 4.5%, of
TechPrecision Corporation (NASDAQ: TPCS) ("TechPrecision" or the
"Company") as of September 30, 2023.
Wynnefield is TechPrecision's largest institutional stockholder,
according to Bloomberg.
Wynnefield acknowledges the Board of Directors recent issuance
of Votaw Precision Technologies' ("Votaw") select, unaudited
quarterly financials for the fiscal year ending October 31, 2023. However, that data alone will
not placate existing TechPrecision stockholder interests in
divulging critical information about the Votaw transaction. The
Board of Directors' unwillingness to disclose funding structure for
its proposed Votaw transaction continues to amplify a serious lack
of transparency. Wynnefield is alarmed by this Board of
Directors' disregard for its duties to ALL stockholders and its
contribution to stockholder value destruction.
Since the proposed acquisition on November 29, 2023, TPCS shares declined by 20.8%
to $5.15 (a new 52-wk low) and
declined by 37.8% for the year-to-date period ending December 18, 2023. The Board of
Directors' "Ivory Tower" mentality
is simply out-of-touch with TechPrecision OWNERS and flies in the
face of accepted corporate governance practices.
The Board of Directors also took the unusual step stating in the
Stock Purchase Agreement terms that the "Buyer's obligation to
consummate the Contemplated Transactions is not in any way
contingent upon or otherwise subject to Buyer's consummation of any
financing arrangements." Further analysis indicates significant
dilution for existing stockholders, including a potential
Change-in-Control. A highly leveraged balance sheet with little
margin of safety to pay its financial obligations is also a
concern. A lower share price increases the risk of even more
potential dilution.
Wynnefield hopes the Board of Directors is not attempting to
paper-over its failed STADCO turnaround or side-stepping existing
stockholders by accepting highly dilutive financing terms that is
harmful to stockholders. Wynnefield would see this as
unfathomable stockholder retribution for an unfavored Board of
Directors (see the Company's Current Report on Form 8k with the
Securities and Exchange Commission on September 13, 2023).
We also question the Earnout Payment terms that reward the
Seller an incremental $15.8 million
for a meager EBITDA increase of $1.85
million to $14.1 million from
12.25 million. Given Votaw's FY2H23 EBITDA of approximately
$6.0 million, a large earnout payment
is more "in the bag" than an aspirational target that protects
stockholders.
Lastly, on December 11, 2023,
Occidental Petroleum Corp. ("Occidental") announced its intention
to acquire CrownRock. While it is a large company, Occidental's
Board of Directors followed two highly relevant corporate
governance best practices by: 1) scheduling a conference call (with
Q&A) for the same morning as the announcement and 2) explaining
how the transaction would be funded. We applaud their stockholder
friendly philosophy and embrace of best corporate governance
practices unlike the Company's Board of Directors.
The Board of Directors' decision to remain silent has created
tremendous uncertainty for existing stockholders, resulting in the
continuing destruction of stockholder value. Wynnefield is
concerned that the Board of Directors is purposely keeping
stockholders in the dark because of what they already know.
Wynnefield encourages the Board of Directors to address the Votaw
transaction in more detail with the following considerations:
- EXPLAIN the strategic direction and reasoning behind
this transaction.
- DETAIL claimed synergies amounting to "annual savings of
several million dollars in overhead and millions of dollars in
CAPEX over the coming years".
- DISCUSS current financing details for this
transaction.
- COMMIT to allow existing TechPrecision stockholders to
vote on the Votaw acquisition.
Respectfully yours,
Nelson J. Obus,
Founder
Robert D. Straus, Portfolio
Manager
***
Media:
Daniel
Yunger
Kekst CNC
daniel.yunger@kekstcnc.com
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SOURCE Wynnefield Capital