CHICAGO, April 9, 2018 /PRNewswire/ -- SevenSaoi Capital,
LLC (together with its affiliates, "SevenSaoi," pronounced "7C"), a
long-only public equity investment firm that owns 2,590,198 shares
of common stock of PDL BioPharma, Inc. (NasdaqGS: PDLI) ("PDL" or
the "Company"), is pleased that, following SevenSaoi's nomination
of Shlomo Yanai to the PDL Board,
the Company has added Mr. Yanai to its slate of director nominees
for PDL's 2018 Annual Meeting. SevenSaoi introduced and nominated
Mr. Yanai to the PDL Board as part of a slate of highly-qualified
director candidates in March 2018.
Since becoming investors in PDL in May
2017, SevenSaoi's principals have met on several occasions
and had numerous conversations with the Company's management team
and its Lead Director to convey SevenSaoi's serious concerns
regarding how the Company is managed. In its letter to the
Board, which can be accessed below, SevenSaoi outlines these
concerns.
PDF: https://mma.prnewswire.com/media/664524/SevenSaoi_Capital_Board_Letter.pdf
"We know Mr. Yanai well and saw him have a significant impact at
another small-cap pharmaceutical company in which we were also an
investor, Sagent Pharmaceuticals. Mr. Yanai's experience at Sagent
Pharmaceuticals is particularly relevant for PDL's circumstances –
like PDL, Sagent was deeply undervalued relative to peers and had a
management team focused on making acquisitions despite this
disconnect," said Michael Cole, CEO
of SevenSaoi. "At Sagent, Mr. Yanai ensured the company did not
pursue value destructive acquisitions and instead explored
strategic alternatives that ultimately resulted in a successful
sale of Sagent to Nichi-Iko Pharmaceutical Co., Ltd."
On the basis of total shareholder return ("TSR"), PDL's stock
has severely underperformed its peer groups. PDL has
underperformed the Company's own self-selected peers by 36.4%,
187.5% and 276.0% over the past 3, 5 and 10 years, respectively.
Measured against leading proxy advisory firm Institutional
Shareholder Services' (ISS) selected peers, the Company has
underperformed by 95.1%, 108.6% and 168.6% over the same respective
timeframes. Beyond this massive underperformance, the market
presently values PDL at a 74% discount to the current fair value of
its portfolio of assets. That is, the fair value of its portfolio
assets, per PDL, is $696 million,
while PDL's enterprise value is only $179
million, as of April 6,
2018.
This massive valuation discount likely indicates investors' lack
of confidence in the current strategy of the existing Board and
management, both in terms of their inability to (1) accretively
invest PDL's substantial cash holdings of approximately
$400 million and (2) generate value
from current investments. In SevenSaoi's view, the combination of
PDL's undervaluation and its overcapitalization relative to peers
(cash comprises 87% of the Company's total market cap compared to a
peer average of 16%) merits a greater allocation of capital towards
share repurchases and increased acquisition discipline.
Given the Company's decade-long track record of destruction of
shareholder value, SevenSaoi is deeply concerned about PDL's
current campaign to acquire new pharmaceuticals companies and
products. SevenSaoi's letter to the Board details three main areas
of concern:
- Poor capital allocation and acquisition practices
- Misalignment of management compensation with shareholders'
interests
- Inconsistent communication of the Company's value to the
investment community and execution of its changing strategies
Cole continued, "We believe that PDL's current strategic
direction, which has been driven in part by its ill-conceived
executive compensation structure, is directly at odds with the
interests of the Company's shareholders. We are pleased that the
Company is adding Mr. Yanai, one of SevenSaoi's nominees, to its
Board in an encouraging step in the right direction toward
realigning the Board with shareholder interests. However, we
will continue to closely monitor the situation at PDL to make sure
the Company is focused on pursuing strategies that enhance
shareholder value."
SevenSaoi does not at this time plan to contest the Company's
slate of director nominees, and intends to withdraw its slate of
nominees, at the 2018 Annual Meeting. However, given the critical
choices the Company currently faces, SevenSaoi urges the Board to
appoint Mr. Yanai immediately to his directorship at PDL, rather
than wait for the Annual Meeting in June. SevenSaoi will continue
to be active investors and close observers of the Company's
progress in the coming year.
About SevenSaoi Capital, LLC
SevenSaoi Capital, LLC is a Chicago-based, long-only investment firm
focused on making private equity-style, fundamentally-driven,
long-term oriented investments in publicly-traded small cap
companies, primarily in the healthcare, technology, media, and
telecommunications industries. This strategy builds on its
principals' successful 20+ year track record of private and public
equity investment experience in these sectors. SevenSaoi invests in
deeply undervalued companies and constructively engages with
management teams and boards of directors to identify and execute on
opportunities to unlock value for the benefit of all
shareholders.
Media and Investor Contact:
SevenSaoi Capital LLC
J.T. O'Connor (773) 938 6307
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