Star Equity Fund Issues Statement on Inaction of Servotronics Board
Star Equity Fund, LP (“Star Equity Fund”, “we”, “our”), a 5.2%
shareholder of Servotronics, Inc. (NYSE American: SVT)
(“Servotronics” or “the Company”), seeks to unlock shareholder
value and improve corporate governance at its portfolio companies.
On October 20th, we privately presented
Servotronics’ CEO and board of directors (the “Board”) with a
preliminary, non-binding indication of interest (the “Proposal”) to
explore a potential combination of Star Equity Holdings, Inc.
(Nasdaq: STRR) (“Star Equity”) and Servotronics, subject to
executing an NDA and further due diligence.
Star Equity’s Proposal Would Benefit SVT
ShareholdersWe believe Star Equity would be an excellent
merger partner for Servotronics because the combination of the two
companies would create significant value for both SVT and STRR
- the reduction of public company and
corporate overhead costs,
- increased operational focus and
- ample opportunities for
collaboration with Star Equity’s experienced business leaders.
We also indicated we would be willing to pay a
premium to SVT’s October 19th closing stock price, subject to
further due diligence.
Entrenched SVT Board Dismisses Star
Equity’s Proposal in Neglect of its Fiduciary DutyAlthough
the Board acknowledged receipt of the Proposal, they did not
respond for over ten days and would not return multiple phone calls
placed to the Company. Then, on November 1st, Servotronics’ CEO,
William Farrell, issued a public letter to stakeholders vaguely
describing his optimism for the future of Servotronics under his
leadership. On November 2nd, the Board finally responded to our
proposal after declining to engage in conversations with
us, citing “significant risks” and the need to “safeguard
shareholders’ best interests” – code for “we’re not even going to
talk with you to learn more about your proposal.”
We strongly believe William Farrell’s November
1st letter to stakeholders was in direct response to our Proposal
and an attempt by him and the incumbent Board to garner support for
themselves while denying SVT shareholders a potential value
creating opportunity. We are appalled at the Board’s rejection of
our Proposal without genuinely engaging or even having a phone call
with us, and we strongly question the incumbent directors’
commitment to their fiduciary duty to shareholders.
Although we are pleased the Board made some
changes earlier this year, we believe those changes were only made
because of our activist campaign and resulting pressure, and it is
now obvious that further change needs to occur to the Board’s
composition. It is clear to us the incumbent Board is still not
properly aligned with shareholders and remains entrenched, placing
their own self-interest above that of shareholders. We strongly
urge the Board to reconsider their response to our Proposal – a
proposal we believe would create significant value for SVT
shareholders – and we remain ready to act in the best interest of
all SVT shareholders in the future.
About Star Equity Fund, LPStar
Equity Fund, LP is an investment fund managed by Star Equity
Holdings, Inc. Star Equity Fund seeks to unlock shareholder value
and improve corporate governance at its portfolio companies.
About Star Equity Holdings,
Inc.Star Equity Holdings, Inc. (Nasdaq: STRR) is a
diversified holding company with three divisions: Healthcare,
Construction, and Investments.
For more information contact:
Star Equity Fund, LP
Jeffrey E. Eberwein
||Senior Vice President
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