Current Board Has Been Unable to Unlock Value
for All Shareholders
Seeks to Undertake a Comprehensive Strategic
Alternatives Process
Carnegie Technologies Intends to Submit a
Proposal to Purchase magicJack for $8.50 per share
Please replace the release with the following corrected version
due to multiple revisions to Nabil El-Hage's information
section.
The corrected release reads:
CARNEGIE TECHNOLOGIES AND FOUNDER PAUL
POSNER NOMINATE FIVE HIGHLY QUALIFIED CANDIDATES FOR THE BOARD OF
MAGICJACK VOCALTEC LTD.
Current Board Has Been Unable to Unlock Value
for All Shareholders
Seeks to Undertake a Comprehensive Strategic
Alternatives Process
Carnegie Technologies Intends to Submit a
Proposal to Purchase magicJack for $8.50 per share
Carnegie Technologies Holdings, LLC and Founder Paul M. Posner
(“Carnegie”), the holder of approximately 1.6% of the shares in
magicJack VocalTec Ltd. (“magicJack” or the “Company”) (NASDAQ:
CALL), today announced the nomination of five highly qualified
candidates for election to magicJack’s Board of Directors at its
2016 Annual Meeting of Shareholders. The Carnegie nominees include
Frank Bell, Nabil El-Hage, Richard Kimsey, Morris Miller and
Richard Talarico. Carnegie also supports the election of magicJack
director nominee Gerald Vento, and Alan B. Howe, a nominee of Kanen
Wealth Management, LLC (“Kanen”).
“magicJack shareholders deserve a Board that is committed to a
process that can unlock value for all shareholders,” said Paul
Posner, Founder and CEO of Carnegie Technologies. “With a history
of value destructive decisions and ineffective leadership, it is
time for significant change at the board level and to put in place
skilled, experienced directors that have the willingness to return
cash to shareholders, and the capability to effectively evaluate
all the company’s assets and run a comprehensive strategic
alternatives process that includes a sale of the company in whole
or in parts.”
magicJack shareholders should consider the following:
- The current board of directors has been
ineffective in producing an enhancement in
the stock price for shareholders. The 90-day average
stock price before the current board announced the acquisition of
Broadsmart on March 15, 2016 was $8.32. The stock immediately sold
off on the news of this ill-conceived transaction. The Company’s
average stock price in the 90 days before the Kanen letter of
August 23, 2016 to effectuate change at the Company was $6.09, near
historic lows – a 27% loss from the level just prior to the board
action to buy Broadsmart. Currently, the average stock price over
the past 90 days of $6.62 is a slight improvement, due primarily to
the actions of Kanen.
- The current board of directors has
not returned cash to
shareholders. Despite holding a large cash balance for
several years, the Company never made any cash distributions to
shareholders. Shareholders have therefore received neither cash nor
share value appreciation.
- The current board has used the Company’s cash resources poorly,
including 1) embarking on share buybacks that – by the Company’s
own admission – have not increased the stock price, but simply
reduced the market capitalization of the Company; and 2) overpaying
for the acquisition of Broadsmart, a company in a new and intensely
competitive vertical, that has performed well below the guidance
provided by the Company almost immediately after consummation of
the transaction.
- The current board has been ineffective in producing a liquid market
for the Company’s shares. Two years ago, there was roughly $10
million of daily trading activity in CALL stock. Today, there is
less than 10% of that total. As such, shareholders have little
chance of trading their shares without dramatically affecting the
stock price.
- The current board is unable to make corporate decisions
effectively, as seen by the public statements to
“redomesticate” the Company from Israel to the United States. The
Company initially made comments that it intended to ask
shareholders to approve such move at the annual shareholder
meeting, back on May 10, 2016, only to defer such decision on the
2Q 2016 Earnings Call on August 9, 2016 and subsequently on the 3Q
2016 Earnings Call on November 9, 2016. In the Company’s
preliminary proxy materials of December 30, 2016 listing the agenda
of items to consider at the annual shareholder meeting, the
proposal is not even mentioned.
- The current board continued a pattern
of ineffective decision making and seemingly lacked the capacity to negotiate squarely with Kanen,
a significant shareholder of the Company, while also considering
the strategic priorities of all shareholders. In
the Company’s preliminary proxy materials, the Company’s board
seemingly endorsed a $45 million share buyback (on October 5 and
October 20), only to reverse direction completely on December
29.
- Based on the above, it is Carnegie’s
opinion that the current accommodation to
the Kanen proposal is insufficient, either in changing
the dynamics at the board of directors (in replacing one director
and adding another), and in rejecting the proposed $45 million
share buyback. Carnegie therefore proposes
replacing a majority of the board of directors and commencing the
exploration of comprehensive strategic alternatives for the
Company, including a sale of the Company in whole or in
parts. The directors Carnegie has nominated have long
histories in the communications and technology industries, have
served on public company boards, and have created shareholder value
through both organic and inorganic initiatives. The proposed board
also has experience in CEO searches, a critical matter as the
Company announced the retirement plans of the current CEO whom we
wish to retain as a board member in order to ensure a smooth
operational transition.Carnegie is optimistic about the Company’s
potential under its ownership and intends to put forth a proposal
to the newly elected board to acquire all
of the outstanding shares of the Company for $8.50 per
share. The prospective offer, which is subject to
confirmatory due diligence, reflects a premium to current and
historic stock price levels of the Company since the current board
of directors approved the acquisition of Broadsmart. Further, it
provides all shareholders an opportunity to sell their positions in
a highly illiquid stock. Carnegie has retained The Bank Street
Group as its financial advisor, as well as Meitar Liquornik Geva
Leshem Tal as its Israeli counsel and Wiggin and Dana LLP as US
securities law counsel in its pursuit of this matter.
magicJack shareholders of record at the close of business on
January 25, 2017 will be entitled to vote at the 2016 Annual
General Meeting scheduled for February 28, 2017, at 10:00 am Israel
time. For additional details, please go to www.MJProxy.com
Director Nominee Information
FRANK BELL, 62, is a telecommunications expert
specializing in starting up/transforming and streamlining
companies, driving revenue growth and profitability, and maximizing
market value. Mr. Bell has led 8 successful start-up and turnaround
companies and has more than 30 years of relevant industry
experience. Currently, Mr. Bell is President of Wireless Consulting
Services, Inc. where he provides Executive and Senior Level
Management consulting services for wireless operators, focusing on
start-ups, restructures, and retail distribution & market
expansions. His current work is focused on companies including:
TracFone (a subsidiary of America Movil - Mexico); RBD Marketing
(dba SalesMakers, Inc. - USA); and Limitless Mobile LLC (UK). Past
clients include: Sprint PCS, Ericsson, Columbia Capital, MC Venture
Partners, and Thermo Companies. He is currently serving as a
contract executive to RBD Marketing and is responsible for all
corporate strategy and business development. Prior to his executive
consulting roles, Mr. Bell was President of Global Sales and
Marketing for Globalstar which provides satellite voice and data
services in 120+ countries around the world. At Globalstar, Mr.
Bell successfully re-engaged distribution partners and launched
three new products resulting in a doubling of revenue for duplex
sales (the company’s satellite phone) in just one year and an
increase in the stock price of 800%. Prior to Globalstar, Mr. Bell
led Open Mobile (Puerto Rico) for six years as its President and
Chief Operating Officer. Under Mr. Bell’s leadership, the company
achieved its 5-year subscriber business plan in 18 months, was
EBITDA positive in 5 months, and all equity was returned to
investors within 4 years. Prior to Open Mobile, Mr. Bell was a
Founding Officer of MetroPCS and was responsible for delivering
over 1 million wireless subscribers in Florida. Prior to MetroPCS,
Mr. Bell had multiple roles with profit and loss responsibility at
SprintPCS, Pacific Telesis (PacTel Paging), and DialPage (a
Providence Journal Company). Mr. Bell has a MA - Human Resource
Management & Organizational Development from Pepperdine
University in Malibu, CA; and a BS - Business Administration from
Old Dominion University in Norfolk, VA. He also served as a Captain
in the US Army. Mr. Bell brings consumer, business, international,
and public company telecommunications experience and will provide
insightful direction to the Company.
NABIL EL-HAGE, 58, is an expert in corporate governance
and corporate finance. Mr. El-Hage founded the Academy of Executive
Education, LLC, an independent provider of executive education and
advisory programs to institutional clients specializing in
providing corporate governance education. Prior to founding the
Academy of Executive Education, Mr. El-Hage served as Senior
Associate Dean for External Relations and Adjunct Professor of
Business Administration at Harvard Business School and has also
served as Professor of Management Practice at Harvard Business
School in the Finance Area and as a Senior Lecturer at Harvard
Business School. While at Harvard, Mr. El-Hage was voted Capstone
Professor six times, a rare honor, and was also awarded the
prestigious Student Association Teaching Award in 2006. In addition
to his academic experience, Mr. El-Hage gained experience in
venture capital and private equity with TA Associates, Levant
Capital Partners, and Advent International, as well as operating
experience as the Chief Financial Officer of The Westwood Group,
Inc. and Back Bay Restaurant Group, Inc. He also has served as
Chairman and Chief Executive Officer of Jeepers! Inc., a private
equity-financed national chain of indoor theme parks. Mr. El-Hage
has served on the boards of numerous private and public companies,
ranging from start-ups to those with several billion dollars in
revenues. He also previously served as the independent chairman of
the MassMutual Premier Funds, a $10 billion+ mutual fund complex.
Mr. El-Hage’s diverse areas of expertise in corporate governance,
management, and finance which have been honed through both business
and academic excellence coupled with his extensive board experience
will deliver a great deal of knowledge and perspective to the
Company.
RICHARD KIMSEY, 62, brings more than 30 years’ experience
in the telecommunications industry and has played a lead role in
several prominent companies. Most recently, Mr. Kimsey founded the
third largest urgent care business in western Florida, Lavender
Health Care. Prior to establishing Lavender, Mr. Kimsey was CEO of
Caribbean Operations for Cable & Wireless, plc where he was
responsible for transforming fourteen disparate, slow-moving island
phone companies into a cohesive, fast-moving integrated
communications service provider. Prior to Cable & Wireless, Mr.
Kimsey was CEO of TelePacific Communications, a California-based
competitive carrier, where he laid the foundation for TelePacific
to be named one of Inc. Magazine's Top 100 "Fastest-Growing Private
Companies in America". Prior to leading TelePacific, Mr. Kimsey
served as President, Southeast Region for Sprint PCS where he was
responsible for the planning, start-up, implementation and
profit-and-loss management of the company’s operations in thirteen
states. As leader of Sprint PCS’ most successful region, Mr. Kimsey
was responsible for a significant portion of the company’s $6
billion in annual revenue, and directed the activities of over
3,000 associates while his region led the other three Sprint PCS
regions in almost every key performance metric. Prior to joining
Sprint PCS, Mr. Kimsey served as executive director for Cox
Enterprises, Inc. where he was in charge of personal communications
systems (PCS) development while overseeing the strategy and
successful implementation of the delivery of wireless
telecommunications over cable television infrastructure. Prior to
joining Cox Enterprises, Mr. Kimsey spent eight years with
BellSouth’s cellular operations where he was involved in the
startup of their cellular operations in the United States and
Australia. Mr. Kimsey earned a master’s degree in Business
Administration from Vanderbilt University and a Bachelor’s of
Science degree from the University of Tennessee. Mr. Kimsey’s
directly related experiences in competitive telecommunications
businesses along with his MBA and CPA background will provide
extraordinary and relevant guidance and perspective to the
Company.
MORRIS A. MILLER, 50, is a technology investor and
co-founded Rackspace Hosting, Inc. Most recently, Mr. Miller serves
as the Chief Executive Officer of Xenex Disinfection Services LLC,
a world leader in automated room disinfection through the use of
Xenon technology and innovative hospital disinfection protocols.
Mr. Miller is responsible for Xenex’s overall business strategy and
oversight of day-to-day operations. Mr. Miller has previously
formed Sequel Ventures and Cutstone Ventures which invests in and
acts as an advisor to numerous start-ups including Inventables and
Golfballs.com. Prior to Sequel and Cutstone, Mr. Miller was a
Co-Founder of Rackspace Hosting, Inc. and served as its Managing
Director and Chief Executive Officer after prior roles of being its
President and Chief Operating Officer beginning in 1999. Prior to
Rackspace, Mr. Miller served as Managing Director for
Knightsbridge, LLC and as a Principal at Curtis Hill Publishing
Company. He also held various positions at Matthews &
Branscomb, a San Antonio law firm. Mr. Miller served as a board
member of Rackspace Hosting, Inc. from 1999 to 2015 and has served
as a Member of the Advisory Board at Inventables, Inc., The Search
Monitor LLC, and Adometry, Inc. (formerly known as Click Forensics,
Inc) which was sold to Google. Mr. Miller received a B.A. in
Psychology from The University of Texas at Austin, and a J.D. from
the Dedman School of Law at Southern Methodist University. Mr.
Miller is also an alumnus of Phillips Exeter Academy, and a member
of APIC, BioMed SA, and ACG Central Texas.
RICHARD TALARICO, 61, has been associated with The
Hawthorne Group since March of 1986. Hawthorne is a private
investment and management company which invests through affiliates
primarily in media and communications companies. Hawthorne provides
management and administrative services to these business ventures.
Mr. Talarico became a partner in the firm in 1990. Mr. Talarico has
been involved in numerous start-up and turnaround investments
including the cable television, video post-production, advertising
and promotion agency and software development industries. Mr.
Talarico’s responsibilities have included structuring, negotiating
and financing activities and operating roles in the portfolio
companies including chief financial officer and chief executive
officer. Mr. Talarico has conducted many executive search
activities on behalf of portfolio companies and has served as a
board member on a number of these companies. Mr. Talarico was a
founding partner in Allin Communications Corporation in 1994, a
Hawthorne-backed investment. Mr. Talarico became Chairman of the
Board and Chief Executive Officer of the Company in July 1996. Mr.
Talarico led a successful public offering in November of 1996. Mr.
Talarico also served as Chairman of the Board of Directors from
July 1996 until September 2009 and continues to serve as a Director
of the Company. Mr. Talarico has served as an officer and director
of the Company’s other subsidiaries since their inception or
acquisition by the Company. Mr. Talarico also has served on the
Board of Directors of the Jefferson Regional Medical Center, a 341
bed acute care hospital, since 2011. In addition, Mr. Talarico is a
board member (since 2013) and Chairman of the Grants Committee of
the Jefferson Regional Foundation. The Foundation has assets in
excess of $75 million and makes charitable grants in the Hospital’s
service area. Since 2014, Mr. Talarico has served as a board member
of Brentwood Bank. The Bank, with assets of approximately $560
million dollars, has served the Western Pennsylvania area since
1922 with full commercial banking services including residential
and commercial lending. Mr. Talarico serves as chairman of the
Governance and Nominating Committee, and is a member of the
Asset/Liability, Loan and Audit Committees. Prior to joining The
Hawthorne Group, Mr. Talarico was a Tax Manager with the Pittsburgh
office of Arthur Andersen & Co. where he earned his Certified
Public Accountant certification in the Commonwealth of
Pennsylvania. Mr. Talarico graduated Cum Laude from Duquesne
University with a BS in Business Administration and earned a
Masters in Business Administration from the University of
Michigan.
Additional Information
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT OF
MAGICJACK VOCALTEC LTD. AND OTHER DOCUMENTS RELATED TO THE
SOLICITATION OF PROXIES ON BEHALF OF PAUL M. POSNER AND CARNEGIE
TECHNOLOGIES HOLDINGS, LLC, FROM THE SHAREHOLDERS OF MAGICJACK
VOCALTEC LTD., FOR USE AT ITS ANNUAL MEETING WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN ANY SUCH
PROXY SOLICITATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT
AND A FORM OF PROXY WILL BE AVAILABLE TO SHAREHOLDERS OF MAGICJACK
VOCALTEC LTD. FROM THE COMPANY AT NO CHARGE AND WILL ALSO BE
AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S
WEBSITE AT HTTP://WWW.SEC.GOV. IF YOU HAVE QUESTIONS OR NEED
ASSISTANCE VOTING YOUR SHARES, PLEASE CONTACT MACKENZIE PARTNERS,
INC. AT (800) 322-2885 (TOLL-FREE IN NORTH AMERICA) OR AT +1 (212)
929-5500 (CALL COLLECT) OR BY EMAIL AT
PROXY@MACKENZIEPARTNERS.COM.
About Carnegie Technologies
Carnegie Technologies brings together the best and brightest
minds to challenge the status quo and develop real,
revenue-generating communications products that take advantage of
the fundamental shifts in the communications technology ecosystem.
Founded in 2010 by Paul Posner following a successful 20-year
history operating wireless networks and developing adjunct
communications products, Carnegie Technologies has over 100
employees and engineering teams on four continents with deep
expertise in application development and software for mobile
devices, cellular core network operations, and more that is now
leveraged to drive the development of the next generation of
communications technology.
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version on businesswire.com: http://www.businesswire.com/news/home/20170105005969/en/
InvestorsMacKenzie Partners, Inc.Paul Schulman, 212-929-5364Bob
Marese, 212-929-5045orMediaGagnier CommunicationsDan Gagnier,
646-569-5897Patrick Reynolds, 646-569-5879
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