RANDOLPH, Mass. and
AMSTERDAM, Oct. 2, 2014 /PRNewswire/ -- JEC Capital
Partners and Ratio Capital Partners, who together own approximately
10% of the common stock of Synacor, Inc. (the "Company" or
"Synacor") (Nasdaq: SYNC) issued an open letter to the Board of
Directors. The full text of the letter is as follows:
Dear Board of Directors:
Through several public letters, we have called attention to this
Board's mismanagement of Synacor. The mismanagement is evident from
the consistently poor operating results, recent key customer loss,
and continual destruction of shareholder value.
Most recently, we provided Synacor with a cost reduction plan to
improve the Company's operating results and financial position.
Though few details have been provided to investors, we recognize
that the Company's management has seemingly taken our advice. While
the cost reduction could be an encouraging sign, the two
announcements made by Synacor this week provide yet another
demonstration of incompetence and entrenchment by this failing
Board.
First, when announcing a 20% layoff, the CEO stated that the
Company is now poised to 'return to growth.' With no further
explanation, investors are left to wonder how a 20% reduction in
the workforce will result in growth.
Second, several of the statements in the Board's press release
dated October 1, 2014 are inaccurate,
incomplete, and deliberately misleading. The following summary will
correct the record:
- In a telephone conversation on September
22, 2014, Chairman Jordan
Levy offered to create one new Board seat with certain
conditions. In that conversation, Mr. Levy indicated that (a) he
takes responsibility for Synacor's poor performance, but (b) being
Synacor's Chairman is not his full time job, and (c) he is a
"venture guy" from Softbank and not a "public company guy."
- In a telephone conversation on September
24, 2014, we responded to Mr. Levy's offer by proposing to
sign a non-disclosure agreement that would allow us to review the
Company's strategic plan. We further proposed that provided the
strategic plan was supportable, we would then recommend two
directors for addition to the Board who bring industry experience
and customer relationships that would benefit Synacor. Mr.
Levy then asked us to confirm that our nominees would not be
employees or directors of JEC Capital or Ratio Capital. We
confirmed that our nominees would be independent from JEC Capital
and Ratio Capital.
- In a telephone call on September 29,
2014, Chairman Levy stated that the Board had met,
considered our proposal, and felt that two Board seats was not
reasonable. In that conversation, Mr. Levy did not respond to our
request to sign a non-disclosure agreement to review Synacor's
strategic plan. We next heard from the Board in the
Company's press release today.
- Finally, we have demanded that Synacor run a formal sale
process. We believe such a process could lead to a value maximizing
transaction for all shareholders. Like other shareholders, we do
not expect "value maximization" to come from the
yet-to-be-developed and announced strategic plan. In its
press release, the Board has tried to twist our suggestion that a
sale process be run into an accusation that JEC Capital has an
ulterior motive. This makes no sense and is designed to divert
attention from the real issue: this Board and its mismanagement of
the Company. JEC Capital cannot dictate whether Synacor is
sold, to whom it is sold, and at what price it is sold. JEC Capital
does not control any party that is or could be interested in
Synacor, and JEC Capital does not control the Synacor shareholder
vote that would be required to approve a sale transaction.
JEC Capital and Ratio Capital are shareholders of Synacor.
Our sole objective is to improve the Company and recover
shareholder value. This will benefit the "full population of
Synacor shareholders."
We are offering to pay for a Shareholder Meeting where the "full
population of shareholders" can vote and determine what is in their
best interests. Why is the Board denying shareholders that right
when it comes at no expense to Synacor? As a Board, you have
overseen a 70% decline in shareholder value in the last 24 months.
The stock currently trades at an all-time low. Your continued
mismanagement has cost 70 employees their jobs this week.
Further, at Synacor's most recent annual meeting, the
two directors 'elected' each received an astonishingly low 45%
'Votes For'. In light of these indisputable facts, the Board
already knows that shareholders and employees have lost confidence
in its ability to lead the Company, much less turn it around.
You seem to have forgotten that shareholders own Synacor. Let
that sink in for a minute. Now, let the shareholders have a voice
and promptly call a Special Meeting of Shareholders.
Sincerely,
Michael
Torok
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Bart Kool
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JEC Capital
Partners
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Ratio Capital
Management
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SOURCE JEC Capital Partners