EL SEGUNDO, Calif.,
Aug. 23, 2016 /PRNewswire/ -- As a
follow up to an August 10, 13D filing
with the SEC, and a letter to the Board of Directors of Westell
Technologies, Inc (Nasdaq: WSTL) ("Westell" or the "Company"), Cove
Street Capital, LLC ("Cove Street") announces their intention to
vote against the Board of Directors of Westell. Cove Street's
attempts to establish a constructive dialog with Westell have been
rejected, most recently in the form of a letter from CEO
Tom Gruenwald—the public face of the
company who is unfortunately tasked with answering for the
Company's past mistakes—professing that Cove Street's suggestions
are being "considered" by the Board.
"We believe that the stock's performance over the last 15 years
and the current share price speak for themselves," states Cove
Street Principal and Portfolio Manager, Jeffrey Bronchick, CFA. "As such, it is not
clear to us what is left for the Board to consider."
Cove Street presently owns 16.3% of the common stock class A
shares outstanding, making it the second largest shareholder after
the Penny Family Trust. Cove Street's research suggests the
following:
- The last five years of operating results clearly indicate that
the Company does not have enough scale to consistently operate
profitably, produce positive free cash flow, or generate returns
above its cost of capital.
- The lack of scale combined with end market cyclicality and
customer concentration—the top 2 customers accounted for 34.2% of
revenue in FY 2016—create considerable risk of further negative
free cash flow and shareholder value destruction.
- Given the current share price, unless the Board acts quickly,
the Company is at risk of being delisted from the NASDAQ.
- There are numerous buyers for the Company's assets and waiting
to sell after more cash has been burned will likely only diminish
the Company's bargaining position.
- The current Board has shown no ability to facilitate a
turnaround of the Company's fortunes, despite having brought in a
number of CEOs and supported numerous failed growth
initiatives.
Mr. Bronchick continues, "We fully understand that as A-class
shareholders we can be outvoted by the Penny Family's B-class
shares. Despite that, shareholders still have the opportunity to
voice their displeasure for the current state of affairs at the
upcoming annual meeting. To borrow an apt quote from Carl Icahn, 'A lot of people died fighting
tyranny. The least I can do is vote against it.'"
Important Information:
Cove Street Capital, LLC, a Delaware Limited Liability Company,
is a California based, SEC
registered investment advisor that commenced operations in
2011.
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SOURCE Cove Street Capital, LLC