NEW YORK, March 21, 2011 /PRNewswire/ -- Mangrove Partners,
owners of 149,373 shares representing approximately 5.71% of the
outstanding shares of CPEX Pharmaceuticals, Inc (Nasdaq: CPEX),
today expressed its deep disappointment in the Board of Directors
of CPEX for failing to seriously consider the dividend
recapitalization proposed by Mangrove Partners. Mangrove Partners
is confident that should the Board return just one of Mangrove's
many phone calls it would lead to a negotiated agreement delivering
a superior outcome to stockholders. Indeed, Mangrove called CPEX
multiple times last week to discuss the recapitalization but never
received a reply. Mangrove remains committed to finding a better
alternative for stockholders than the currently proposed merger
between CPEX and FCB I, stands behind its fully-financed dividend
recapitalization proposal, and is prepared to immediately enter
into negotiations. Unfortunately it appears the CPEX board
and management are only truly committed to their over $7 million in change of control payments.
Commenting on CPEX's actions, Nathaniel
August, Director of Mangrove Partners, said, "This is just
one more instance of the Board serving management's best interests
and not stockholders. Unfortunately, management's myopic focus on
capturing their enormous change of control payments has resulted in
the Board rejecting our proposal out of hand without even bothering
to ask us a single question or enter into negotiations."
With regards to the merger, Nathaniel
August commented, "We are heartened that our skepticism
towards the merger appears widespread and that the stock has been
consistently trading above the merger price since we approached the
Board with the recapitalization proposal. We have been contacted by
many other stockholders who believe in the proposed
recapitalization and who have expressed their desire to see it
implemented. Based on these expressions, we believe that
stockholders should be prepared to see the merger fail. In the
event the merger fails, it is our intention to again approach the
Board with the recapitalization proposal."
Mangrove also notes that Glass Lewis, a leading independent
proxy advisory firm, has recommended that stockholders vote against
the Footstar offer for CPEX. On the Board's process Glass Lewis
remarks:
"…we are unconvinced the board's process, however broad, secured
full and fair value for CPEX shareholders. Indeed our
analyses suggest the per share price offered by Footstar and its
affiliates falls well short of the value shareholders might
reasonably expect in exchange for forfeiting their interest in what
amounts to a long-lived annuity."
The Glass Lewis report goes on to state:
"Our concerns about the deal's financial terms are buttressed by
the board's failure to provide shareholders with clear, reliable
analyses to support the per share sales price. In place of a
comprehensive independent review, CPEX offers shareholders an
extremely brief fairness opinion by RBC, which relies primarily on
a flawed sum-of-the-parts analysis."
"Based on these factors, we believe shareholders should reject
the proposed transaction with Footstar."
Mangrove Partners intends to vote against the merger and
continues to believe better alternatives are available to
shareholders, most notably the fully-financed dividend
recapitalization it has presented to CPEX's Board of Directors.
Investors with questions concerning our reasons for voting
against the merger should call Steven C.
Balet or Geoff Sorbello at
Okapi Partners LLC, which is advising Mangrove Partners, toll free
at 1-877-285-5990.
SOURCE Mangrove Partners