Company Now Discloses Carnegie’s Prior All-Cash
Offer
Carnegie has Nominated Five Highly Qualified
Candidates for the Board; Requests a Full Strategic Alternatives
Process
Company is Attempting to Deny Shareholders the
Opportunity to Vote for Carnegie’s Director Nominees
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 commented on magicJack’s recent additional
disclosures to shareholders.
“First and foremost, Carnegie has nominated a slate of highly
skilled and experienced directors to guide magicJack as it faces a
number of critical financial, operating and commercial decisions,”
said Paul Posner, Founder and CEO of Carnegie Technologies. “The
current board has failed to create value for shareholders and the
time for new board oversight is now. On the Company’s most recent
disclosure, however, shareholders should note that the Company is
attempting to deny them the opportunity to vote for Carnegie’s
nominees by claiming, incorrectly, that the nominations were
technically flawed. We are confident that we have met every
standard for the nomination process and that the definitive proxy
materials will include Carnegie’s director nominees.“
Added Posner, “As we stated in our earlier communication,
Carnegie is optimistic about the Company’s potential under its
ownership, which is why we announced our intention to make an offer
to the newly elected Board, subject to confirmatory due diligence,
to acquire magicJack at $8.50 per share. Now that the Company has
provided disclosure of its previously confidential prior
negotiations with Carnegie, the context for bringing needed change
for shareholders has been revealed for all to see.”
Concluded Posner, “While Carnegie is still interested in
presenting an all-cash offer to acquire magicJack, shareholders
deserve the benefit of a new Board that will judge that offer
against a comprehensive set of alternatives. They also deserve a
new Board that has the industry and capital markets skillset to
guide this company effectively and unlock value for all
shareholders absent any transaction or alternative. Shareholders
will soon have an opportunity to exercise their right to bring
about change and we look forward to their support for our slate of
director nominees.”
magicJack shareholders should recognize that the Company’s
current track-record is very clear:
- The share price has languished over the
last two years except for when shareholders have independently
taken action. magicJack’s stock closed at $5.80 on August 19, 2016,
the date of the Kanen Wealth Management, LLC (“Kanen”)
announcement, which is 58% lower than the average share price of
2014 and 30% lower than the average level of 2015. In the three
months before the Kanen announcement, magicJack’s stock declined
3.7% whereas its peer group increased 23.5%.[1]
- The Company has failed to effectively
deploy or return cash to shareholders, never instituting a dividend
policy. Instead, the Board authorized the spending of $20 million
on share buybacks during 2015 and another $38 million in cash to
acquire Broadsmart in the first quarter of 2016. Meanwhile, the
market capitalization of the Company declined by 21% over that same
time period.
- The Company has failed to manage its
own initiative of redomestication and is facing a delisting by not
holding its annual meeting by the regulated date.
- The Company has failed to facilitate a
liquid trading market for its stock, as the daily average dollar
trading volume has declined by 95% over the past two years, from
$8.5 million to just $500,000 now.
- Carnegie presented its premium all-cash
offer to acquire magicJack on September 9, 2016. At the time, the
offer represented a premium of 40% to the Company’s 30- day average
price of $6.09 per share and 56% above the closing price of $5.46
on August 18, 2016, immediately prior to the letter from Kanen
actively seeking change at the Company.
- When presented with the Carnegie offer,
the current board apparently failed to run a comprehensive process
to evaluate if other interested parties would consider bidding for
some or all of the Company.
On January 5, 2017, Carnegie 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.
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
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.
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.
[1] Carnegie Technologies Holdings, LLC defines magicJack
VocalTec Ltd.’s peer group as 8x8, Inc., Fusion Telecommunications
International, Inc., j2 Global, Inc., Mitel Networks Corporation,
Ooma, Inc., RingCentral, Inc., ShoreTel, Inc., and Vonage Holdings
Corp.
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version on businesswire.com: http://www.businesswire.com/news/home/20170113005574/en/
InvestorsMacKenzie Partners, Inc.Paul Schulman,
212-929-5364orBob Marese, 212-929-5045orMediaGagnier
CommunicationsDan Gagnier, 646-569-5897orPatrick Reynolds,
646-569-5879
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