Dialectic Capital Partners, LP Discloses Nomination of Four Highly Qualified Director Candidates for Election to the Californ...
March 06 2009 - 12:47PM
Business Wire
Dialectic Capital Partners, LP (�Dialectic�), an affiliate of
Dialectic Capital Management, LLC (�Dialectic Capital�), announced
today that it has nominated four highly qualified director nominees
for election to the Board of Directors (the �Board�) of California
Micro Devices Corporation (the �Company� or �CMD�) (Nasdaq:CAMD) to
replace four directors whose terms are up for election at the
Company�s 2009 Annual Meeting of Stockholders (the �Annual
Meeting�). Dialectic Capital, which, together with the nominees,
beneficially owns an aggregate of 2,006,000 shares, or
approximately 8.5% of the outstanding shares of common stock of the
Company, delivered written notice, dated March 4, 2009, of its
nomination to the Corporate Secretary of the Company in accordance
with the Company�s bylaws.
After Dialectic�s repeated attempts to engage in a constructive
dialogue were ignored by the incumbent Board, Dialectic has come to
the conclusion that the nomination of an alternative slate of
directors is the only viable option left to maximize stockholder
value, which Dialectic believes has suffered significant
deterioration at the hands of the current Board. Consistent with
views previously communicated by Dialectic representatives in
various public forums, Dialectic believes that the Board lacks in
accountability to its stockholders and that management�s incentives
are not aligned with stockholders� interests. Furthermore,
Dialectic believes that the Company�s operational and capital
allocation strategies are misguided, and that the Company cannot
afford to consummate another risky acquisition while supporting a
business that has never consistently earned an acceptable return on
capital.
Dialectic�s nominees, consistent with their fiduciary duties,
are committed to enhancing long-term stockholder value while
returning excess capital to stockholders after thoroughly reviewing
CMD�s strategic alternatives, including the potential sale of the
protection and silicon businesses. Importantly, Dialectic�s
nominees recognize the challenges of the current M&A market and
will not settle for depressed valuations for the sake of realizing
an immediate liquidity event. Instead, Dialectic�s nominees are
prepared to work cohesively with management until such time that a
transaction is determined to be in the best interests of all
stockholders.
John Fichthorn, Dialectic�s managing member, stated, �We have
assembled a highly qualified slate of directors that will return a
sense of accountability to the boardroom as well as provide a fresh
perspective on the Company�s operations. Each director will bring
proven financial and operational expertise necessary to realign
CMD�s cost structure, review capital allocation opportunities,
oversee management�s execution and objectively review all strategic
alternatives.� Fichthorn continued, �Dialectic has been a 5% holder
since September 2007. Having watched CMD�s enterprise value fall
below zero without the Board taking decisive action to improve
shareholder value, we believe that an immediate change in
leadership is warranted.�
Historical shortcomings that Dialectic believes are directly
attributable to the incumbent Board include:
- Misaligned incentives: The
aggregate stock ownership of the Board amounts to 77,000 shares, or
0.33% of CMD�s shares outstanding, and marks-to-market at a mere
$143,000. As a group, the insiders� economic exposure to CMD�s
equity is concentrated in nearly 1,800,000 underwater stock
options, which Dialectic believes encourages the pursuit of
high-risk/high-reward strategies while exposing management to
almost no downside. Dialectic further believes that this asymmetry
explains, to a large degree, why insiders have not purchased any
meaningful amount of stock in the Company in years and why
management is so focused on consummating a deal.
- Entrenched Board: Dialectic
believes that the Board has taken a series of steps to entrench
itself by, for example, depriving stockholders of their ability to
call special meetings and implementing a poison pill.
- Systematic capital misallocation:
Dialectic believes that the incumbent Board has a questionable
track record of allocating capital for the benefit of stockholders.
For instance, the acquisition of Arques proved disastrous as
measured by the operating losses of that business, the goodwill
write-offs taken by the Company and the speed with which management
opted to divest that business. Additionally, the Board�s reluctance
to undertake a meaningful share repurchase program in spite of
CMD�s dismal valuation suggests a lack of appreciation for simple
value creation mechanisms.
- Financial underperformance: By
most measures, CMD has lagged its peers in terms of revenue growth
and profitability. Excluding a brief period of profitability in
2004-2006, which Dialectic believes was primarily related to
technology introduced prior to 2001, the return on stockholder
capital has been unacceptable.
Stockholders can refer to Dialectic�s previous SEC filings for
additional information.
The Company currently has a total of six directors. Dialectic is
seeking to replace four incumbent directors whose terms of office
expire at the Annual Meeting.
Dialectic�s four independent director nominees will bring
substantial business leadership and corporate governance expertise
to the Company�s Board. The nominees are:
- John Fichthorn. Mr. Fichthorn is
a co-founder of Dialectic Capital, an investment management firm,
and has been a portfolio manager there since 2003. From 2000 to
2003, he was employed by Maverick Capital, most recently as
Managing Director of the technology group. From 1999 to 2000, he
was an analyst at Alliance Capital working as a dedicated
short-seller across multiple hedge fund products and as a member of
the technology team. From 1997 to 1999, he was analyst at Quilcap
Corporation, a short biased hedge fund where he covered all
sectors, with a focus on technology. From 1995 to 1997, Mr.
Fichthorn worked at Ganek & Orwicz Partners where his
responsibilities included small cap research, international
closed-end fund arbitrage and operations. After graduating from
college, he briefly worked at Aviation Week and Space Technology.
Mr. Fichthorn holds a B.A. in Astronomy from the University of
North Carolina at Chapel Hill.
- Bryant Riley. Mr. Riley is the
Managing Member and founder of Riley Investment Management LLC and
founder and Chairman of B. Riley & Co., LLC, a Southern
California-based brokerage and investment banking firm providing
research and trading ideas primarily to institutional investors
since 1997. Riley Investment Management LLC is an investment
adviser, which provides investment management services, and is the
general partner of Riley Investment Partners Master Fund, L.P. Mr.
Riley also serves on the Board of Directors of the following public
companies: Aldila, Inc., Alliance Semiconductor Corporation, DDi
Corp., lcc International, Silicon Storage Technology, Inc. and
Trans World Entertainment Corporation. Mr. Riley holds a B.S. in
Finance from Lehigh University.
- J. Michael Gullard. Mr. Gullard
is a General Partner at Cornerstone Management, Inc., a
professional turn-around and restructuring firm. He joined the firm
in 1984. Mr. Gullard has 35 years of financial, general management
and venture capital experience in the technology industry. He was
the Chief Executive Officer and the Chief Financial Officer at
Telecommunications Technology, Inc. from 1979 to 1984. Previously,
Mr. Gullard held a variety of senior financial and operational
management positions at Intel Corporation from 1972 to 1979. Mr.
Gullard also serves on the Board of Directors of the following
public companies: Alliance Semiconductor Corporation, JDA Software
Group Inc., Planar Systems Inc. and Proxim Wireless Corporation.
Mr. Gullard is also the Non-Executive Chairman of the Board at
DynTek, Inc. Mr. Gullard holds a B.A. degree in Economics from
Stanford University and an M.B.A from the Stanford University�s
Graduate School of Business.
- Kenneth Potashner. Mr. Potashner
has served as Chairman of the Board of Newport Corporation, a
leading global supplier of advanced-technology products and
systems, since September 2007 and as member of its Board of
Directors since 1998. Since May 2003, Mr. Potashner has been an
independent investor. From 1996 to May 2003, he was Chairman of the
Board of Directors of Maxwell Technologies, Inc., a manufacturer of
ultracapacitors, microelectronics, power systems and high voltage
capacitors. He also served as President and Chief Executive Officer
of Maxwell Technologies from 1996 to October 1998. From November
1998 to August 2002, Mr. Potashner was President, Chief Executive
Officer and Chairman of SONICblue Incorporated (formerly S3
Incorporated), a supplier of digital media appliances and services.
Mr. Potashner was Executive Vice President and General Manager of
Disk Drive Operations for Conner Peripherals, a manufacturer of
storage systems, from 1994 to 1996. From 1991 to 1994, he was Vice
President of Worldwide Product Engineering for Quantum Corporation,
a manufacturer of disk drives. From 1981 to 1991, he held various
engineering management positions with Digital Equipment
Corporation, a manufacturer of computers and peripherals,
culminating with the position of Vice President of Worldwide
Product Engineering in 1991. Mr. Potashner also serves on the Board
of Directors of Applied Solar, Inc. Mr. Potashner holds a B.S.E.E.
from Lafayette College and an M.S.E.E. from Southern Methodist
University.
CERTAIN INFORMATION CONCERNING
PARTICIPANTS
Dialectic Capital Partners, LP (�Dialectic�), together with the
other participants named below, intends to make a preliminary
filing with the Securities and Exchange Commission (�SEC�) of a
proxy statement and an accompanying GOLD proxy card to be used to
solicit votes for the election of its slate of nominees at the 2009
Annual Meeting of Stockholders of California Micro Devices
Corporation (the �Company�).
DIALECTIC STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO
READ THE PRELIMINARY PROXY STATEMENT AND OTHER PROXY MATERIALS AS
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC�S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THE PROXY SOLICITATION WILL PROVIDE COPIES OF THE
PRELIMINARY PROXY STATEMENT WITHOUT CHARGE UPON REQUEST.
The participants in the proxy solicitation are Dialectic,
Dialectic Capital Management, LLC (�DCM�), Dialectic Offshore, Ltd.
(�DOF�), Dialectic Antithesis Partners, LP (�DAP�), Dialectic
Antithesis Offshore, Ltd. (�DAO�), John Fichthorn, Luke Fichthorn,
Bryant Riley, J. Michael Gullard and Kenneth Potashner (the
�Group�). As of March 6, 2009, (i) DCM beneficially owned 2,006,000
shares of common stock of the Company (the �Shares�), constituting
approximately 8.5% of the Shares outstanding, (ii) Dialectic
beneficially owned 317,715 Shares, constituting approximately 1.3%
of the Shares outstanding, (iii) DOF beneficially owned 186,221
Shares, constituting approximately 0.8% of the Shares outstanding,
(iv) DAP beneficially owned 575,619 Shares, constituting
approximately 2.4% of the Shares outstanding, (v) DAO beneficially
owned 926,445 Shares, constituting approximately 3.9% of the Shares
outstanding, (vi) John Fichthorn beneficially owned 2,006,000
Shares, constituting approximately 8.5% of the Shares outstanding,
(vii) Luke Fichthorn beneficially owned 2,006,000 Shares,
constituting approximately 8.5% of the Shares outstanding, (viii)
Bryant Riley beneficially owned 14,198 Shares, constituting
approximately 0.1% of the Shares outstanding, and (ix) J. Michael
Gullard and Kenneth Potashner did not directly own any Shares. DCM
is the investment manager of Dialectic, DOF, DAP and DAO and has
shared power to vote or direct the vote and shared power to dispose
or direct the disposition of the Shares held by such entities. John
Fichthorn and Luke Fichthorn act as the managing members of DCM
and, as a result, each of John Fichthorn and Luke Fichthorn may be
deemed to control such entity and to have a beneficial interest in
the Shares beneficially owned by DCM. However, each member of the
Group, as members of a �group� for the purposes of Rule 13d-5(b)(1)
of the Securities Exchange Act of 1934, as amended, may be deemed
to beneficially own the Shares owned in the aggregate by the other
members of the Group. Each member of the Group disclaims beneficial
ownership of the Shares he/it does not directly own.
California Micro Devices Corp. (MM) (NASDAQ:CAMD)
Historical Stock Chart
From Jun 2024 to Jul 2024
California Micro Devices Corp. (MM) (NASDAQ:CAMD)
Historical Stock Chart
From Jul 2023 to Jul 2024