NEW YORK, Dec. 8, 2015 /PRNewswire/ -- Adam Wyden of ADW Capital Partners, L.P. ("ADW
Capital"), a New York City based
hedge fund that beneficially owns approximately 8% of IDW Media
Holdings, Inc. (the "Company") (OTCBB: IDWM), transmitted today a
letter to the board of directors (the "Board") and management,
urging the Board to initiate a competitive sales process to sell
the Company to a strategic buyer. As one of the
Company's largest shareholders, ADW Capital does not believe the
Company should remain an independent public company due to the
concentration and illiquidity of the Company's stock and the
Company's lack of scale in an increasingly competitive
market. ADW Capital believes a sale of the Company to the
right strategic buyer would not only maximize the return of value
to shareholders, but also provide the Company access to capital and
resources that would allow the Company to grow.
Found below is the full text of Mr. Wyden's letter to the
Company:
December 8, 2015
IDW Media Holdings, Inc.
c/o Howard Jonas, Chairman
11 Largo
Drive South
Stamford, CT 06907
Dear Board and Management of IDW Media Holdings, Inc.,
I commend the Board of Directors (the "Board") and management on
IDW Media Holdings, Inc.'s ("IDW" or the "Company") successful
separation from parent company, IDT Corporation (NYSE: IDT), and
the steps it has taken over the last six years to drive growth and
profitability. As you know, ADW Capital Partners, L.P. and its
affiliates (collectively, "ADW Capital") have been long term
shareholders of the Company since its spin-off and have almost
unilaterally approved with the capital markets and operational
decisions the Company has made to date, including its self-tender
offer in late 2009 and its decision to open the IDW Entertainment
division in 2013.
Notwithstanding these accomplishments, the Company is at a
crossroads today and, as a substantial shareholder, I believe I
have identified the most advantageous path for the Company going
forward. Bluntly, it does not make sense for IDW to continue as an
independent, publicly "traded" company and the Board should
immediately hire a financial advisor to pursue a sale of the
Company.
I have arrived at this conclusion for the following reasons:
- While the Company has averaged trading volume of ~ $40,000 over the last 30 days, the Company has
gone days in the not-too- distant past without trading a single
share.
- This lack of trading activity is due in large part to the very
closely held nature of the shares today. I estimate between
insiders, the Board, and a few institutions, over 80 percent of the
Company's shares are in firm hands and are not "for sale".
- I think it is fair to assume that these shares are not "for
sale" because the Company's concentrated investor base (many of
whom have owned its shares since the original spin-off from IDT)
have followed its progress closely and recognize the intrinsic
value of the shares.
- In addition to the sparse liquidity barring new investors from
taking a meaningful stake in the Company, Management has been
unwilling to share certain segment/unit information in its
disclosures and generally engage in open dialog with its
shareholders via conference calls and regular distribution of news
about the Company.
- I understand that the industry the Company competes in is
intensely competitive and the Company's reluctance to share certain
information may be in the best interest of the Company with regard
to its financial results (its ability to grow and gain market share
from its competitors). However, in conducting itself in this
manner, the Company has conveyed a certain message to its existing
shareholders and perhaps alienated itself from new ones.
- I believe the Company could ameliorate this issue and continue
growing with the help of the right strategic partner. In addition
to being able to provide capital to accelerate the growth of IDW
Entertainment, I think the Company would benefit from substantial
cost and revenue synergies by joining with a larger strategic
partner while not being burdened by the disclosure requirements of
being independent or publicly traded.
- The Company announced earlier this year that it plans to
"uplist" to a major stock exchange and to increase its public
profile. To date, very little progress on this front has been
demonstrated or is visible.
- Based on our internal research and speaking with other
investors, I think "uplisting" will do very little to maximize
shareholder value. I believe public media investors are principally
focused on liquidity and would most likely ascribe a "discount" to
the Company's intrinsic value predicated on its extremely
concentrated ownership base and importantly its dual-class share
structure.
Perhaps most important to our analysis is that while IDW has
successfully grown its publishing and games business, its recent
foray into entertainment (television, film, etc.) adds a
substantial layer of complexity / volatility to the Company's
financials and operations, will require increased disclosure and
specific expertise, and will also require substantial amounts of
capital over time. The Company cannot efficiently access this
capital as a sub-scale independent public company.
The Company is in an enviable position as the fourth largest
comic book publisher by dollar share. I am consistently amazed by
the quality of the Company's leadership and their ability to
source, incubate, and add to their growing library of
content/intellectual property. The creative talent, ingenuity
of management, and library of content would be invaluable to many
large scale players who are starved for new funnels of content on
their growing distribution platforms.
The proliferation of the internet and the jockeying for position
of various "over the top" providers (Netflix, HBO NOW, Amazon Prime
Instant Video, Hulu, etc.) has not only made libraries of original
content more valuable, but also increased the overall demand for
content in the aggregate. I do not expect this to change. What does
seem clear is that there is a much higher degree of success in TV /
Entertainment when a small "studio" like IDW can leverage the
marketing, advertising, and social media resources of a larger
distribution platform.
It should also not be lost on management or the Board that
control premiums in the marketplace for portfolios of content are
at record highs. The Company should try to structure a
stock-for-stock transaction with a larger public company that would
allow current shareholders to receive a premium for their stock,
while allowing them the option to participate in the value and
synergy IDW will add to the new platform.
I am asking the Board to do the right thing for all shareholders
today. By seeking a strategic partner at this stage in the game,
the Company can maximize the return of value to shareholders while
also providing the Company resources to grow, without many of the
competitive risks of staying a small and illiquid dual-class
independent public company.
ADW Capital and its affiliates beneficially own approximately 8
percent of the Company's shares and urge the Board to take our
recommendations seriously. I look forward to hearing your
response.
Sincerely yours,
Adam D. Wyden
Managing Member of ADW Capital Partners, L.P.
For further information:
Adam D.
Wyden,
e-mail:
adam@adwcapital.com
tel:
646-684-4086
SOURCE ADW Capital Partners, L.P.