PITTSBURGH, March 23, 2020 /PRNewswire/ -- Hestia Capital
Partners LP, Permit Capital Enterprise Fund, L.P. and their
affiliates (the "Investor Group"), who beneficially own
approximately 7.6% of the outstanding common stock of GameStop
Corp. (the "Company") (NYSE: GME), announced today that they have
notified the Company of their intention to nominate two
highly-qualified individuals for election to the Board of Directors
at the 2020 Annual Meeting of Stockholders.
The Investor Group also issued an open letter to stockholders of
the Company. The stockholder letter and other important
information can be found at the Investor Group's website
www.RestoreGameStop.com.
The full text of the letter follows:
Permit Capital
LLC
100 Front Street,
Suite 900
West Conshohocken, PA
19428
(p)
610-941-5025
John.broderick@permitcap.com
|
Hestia Capital
Management LLC
175 Brickyard Road,
Suite 200
Adams Township, PA
16046
(p)
724-687-7842
kwolf@hestiacapital.com
|
March 23, 2020
Dear Fellow Stockholders:
Hestia Capital Partners LP (together with its affiliates,
"Hestia") and Permit Capital Enterprise Fund, L.P. (together with
its affiliates, "Permit" and, together with Hestia, the "Investor
Group" or "we") are two long-term stockholders of GameStop Corp.
(the "Company" or "GameStop"), with a combined ownership of
approximately 7.6% of the Company's outstanding stock. We are
writing to you today to express our deep concerns about GameStop's
Board of Directors (the "Board") and the need for immediate
change. In turbulent times like these, when so much about the
future is uncertain, we need Board-level leadership that will
instill a sense of confidence with customers, employees and
investors.
We believe the Board has repeatedly failed stockholders through
suboptimal strategic planning, poor capital allocation, inadequate
oversight of management and ineffective communications to
stockholders, customers and GameStop employees. As shown in
the table below, the result has been significant value destruction
and, in our view, the widespread erosion of stakeholder
confidence. The time for change is now.
We are not "activist" investors. Neither Hestia nor
Permit are short-term oriented investors in GameStop. Nor are we
activists. To the contrary, we are long-suffering investors, like
many of you, who have owned GameStop shares for the better part of
the last decade. We have nominated directors because we have
seen this Board take positive action only when stockholders press
persistently for change. We do not believe this Board will be
proactive on the many risks and opportunities that lay ahead.
Stockholder-nominated directors are therefore needed now, so that
our voices can be heard unfiltered and without delay by the
Board.
We have nominated two strong director
candidates. One of our nominees is Kurt Wolf, the Managing Partner of Hestia
Capital Management LLC, a value-oriented investment firm that he
founded in January 2009. Hestia has been an investor in
GameStop since 2012 and believes that with the right Board,
GameStop can begin leveraging its powerful brand and unique assets
to reestablish the Company as a leader in the gaming
ecosystem. We believe Mr. Wolf will bring a strong corporate
strategy background to the Board and a much-needed stockholder
voice into the boardroom.
Our other nominee is Paul Evans,
a seasoned public company Chief Financial Officer and Board member
who has built a reputation as a well-regarded financial executive
and turnaround operator in a variety of industries. His
ability to challenge assumptions and build consensus in boardrooms,
while maintaining financial discipline and management
accountability, will be invaluable to GameStop. Detailed
biographies for both nominees are included below.
Adding one stockholder-nominated director last year was not
enough. Based on the approximately 63% stock
price1 decline and numerous missteps over the past year,
adding one stockholder-recommended nominee last year did not
sufficiently change the Boardroom dynamics. We believe adding
a large stockholder, as well as another stockholder supported voice
with financial expertise, will give stockholders a greater say in
the future of the Company; something that is greatly needed.
We believe the recently announced Board changes are too
little and too late. The Board's self-refreshment
announced on March 9, 2020, was a
move in the right direction. But, in our opinion, it is too little
and too late.
It is too little because only four directors will step down this
year while two other long-tenured directors (one with airport and
waste management experience who has not purchased stock in more
than 14 years, and one with telecom experience who has never
purchased stock and who would have been required to retire from the
Board a year ago if the Board had not modified its mandatory
retirement age to provide a last-minute reprieve) will remain on
the Board for another 15 months. These two lame-duck
directors currently own very little stock and have no continuing
interest in the long-term success of the Company.
Furthermore, the Board decided to only fill three Board seats
now.
These changes were also too late. By the time the Board
finally realized it had the wrong Board composition – so wrong that
six directors rightly needed to leave the Board! – more than
$2.5 billion of value had already
been destroyed.2
We strongly believe that the two lame-duck directors should come
off now, rather than later, and our two nominees who have
continuing interests in helping GameStop succeed, should be added
to the Board.
2020 is a pivotal year for GameStop. Over the next
12 months, the Board will be faced with many difficult challenges,
including the uncertainties posed by COVID-19, the Company's
excessive cash consumption, the need to sell non-core assets in a
difficult financial market, a significant debt refinancing, the
exploration of real estate sale-leaseback transactions, and the
implementation of new strategic initiatives and investments for the
future, among other things. Given the current environment, we
cannot afford a Board that hesitates in its decision-making.
Our candidates will bring a stockholder mindset and commitment to
ensuring that the Board will act with urgency and focus on the key
strategic initiatives needed to protect GameStop's brand and build
a new level of customer, employee and investor confidence in the
Company's future. We believe our candidates' experience
navigating complex situations in difficult market conditions will
enable GameStop to become a more financially stable company that
can create value for all stakeholders.
Our candidates are:
Kurt Wolf. Mr. Wolf
is the Managing Member and Chief Investment Officer of Hestia
Capital Management LLC. Previously, Mr. Wolf worked in a
variety of financial, investing and operating roles, including as a
Senior Analyst at First Q Capital, LLC, a hedge fund focused on
investing in public companies that had previously been financed by
venture capital or private equity firms and as a co-Founding
Partner at Lemhi Ventures LLC, a health care services focused
venture capital incubator. Mr. Wolf was also a co-Founding Partner
at Definity Health Corporation, a leading company in the
consumer-driven health care space that was purchased by
UnitedHealth Group Inc. in December 2004. Earlier in his
career, Mr. Wolf worked as a consultant both with Deloitte
Consulting and The Boston Consulting Group. Mr. Wolf earned a
Master of Business Administration degree from the Stanford Graduate
School of Business and a Bachelor of Arts degree in Economics and
Mathematics from Carleton College.
Paul Evans. Mr.
Evans is a Senior Managing Director at Dillon Kane Group, a
privately held group of affiliated companies that invests in,
builds, and revitalizes technology solution businesses.
Additionally, Mr. Evans is a Board Director at Hill International,
Inc., a NYSE-listed company that provides program management,
project management, construction management and other consulting
services. As a Board Director at Hill International, Mr.
Evans is the Chairman of both the Audit and Risk Committees and
previously served as Interim Chief Executive Officer. Mr. Evans is
also a Board Director at Sevan Multi-Site Solutions, a private
equity-backed construction and program management company that
serves many leading retail companies. Prior to this, Mr. Evans
served in a variety of senior executive roles at MYR Group Inc., a
NASDAQ-listed holding company of specialty electrical construction
service providers that service the electrical infrastructure
industry. These positions included Vice President, Chief
Financial Officer and Treasurer, President of MYR Real Estate
Company and MYR's Principal Financial and Chief Accounting Officer.
Earlier in his career, Mr. Evans held a number of executive
management positions at several energy-related businesses,
including Chief Executive Officer of Conex Energy Corporation, a
privately-held company that developed renewable energy projects;
Treasurer and Corporate Officer at NorthWestern Energy, an energy
service provider assisting customers in Montana, South
Dakota and Nebraska; Vice
President of Finance at Duke Energy North America, a subsidiary of
Duke Energy, a NYSE-listed company; and as Executive Director of
Finance at NRG Energy, Inc., a NYSE-listed integrated power
company. Mr. Evans is a Certified Public Accountant and a member of
the American Institute of Certified Public Accountants. Mr. Evans
received a B.B.A. in Accounting from Stephen
F. Austin State University and a Masters of International
Management from Thunderbird School of Global Management.
As always, we stand ready and willing to work constructively
with the Board if it is willing to do so. In the absence
of this, we want to assure you that we are committed to this effort
and will do whatever is necessary to refresh the Board with
stockholder-nominated directors.
Sincerely,
John
Broderick
|
Kurtis J.
Wolf
|
Partner
|
Managing Member of
the GP
|
Permit Capital
Enterprise Fund LP
|
Hestia Capital
Partners, LP
|
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Hestia Capital Partners LP ("Hestia LP") and Permit Capital
Enterprise Fund, L.P. ("Permit Enterprise"), together with the
other participants named herein (collectively, the "Stockholder
Group"), intend to file a preliminary proxy statement and
accompanying WHITE proxy card with the Securities and Exchange
Commission ("SEC") to be used to solicit votes for the election of
its slate of highly-qualified director nominees at the 2020 annual
meeting of stockholders of GameStop Corp., a Delaware corporation (the "Company").
THE STOCKHOLDER GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE
COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS,
INCLUDING A PROXY CARD, 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 THIS PROXY SOLICITATION WILL
PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN
AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are anticipated to be
Hestia LP, Hestia Capital Management, LLC ("Hestia LLC"),
Kurtis J. Wolf, Permit Enterprise,
Permit Capital, LLC ("Permit LLC"), Permit Capital GP, L.P.
("Permit GP"), John C. Broderick,
Adam Dukoff and Paul J. Evans.
As of the date hereof, Hestia LP beneficially owns directly
906,600 shares of Class A common stock, par value $0.001 per share (the "Common Stock"), of the
Company. Hestia LLC, as the general partner of Hestia LP, may be
deemed to beneficially own the 906,600 shares of Common Stock of
the Company directly owned by Hestia LP and an additional 394,500
shares of Common Stock of the Company held in certain separately
managed accounts. Mr. Wolf, as the Managing Member of Hestia LLC,
may be deemed to beneficially own the 906,600 shares of Common
Stock of the Company directly owned by Hestia LP and an additional
394,500 shares of Common Stock of the Company held in certain
separately managed accounts. In addition, Mr. Wolf is deemed to
beneficially own 21,400 shares of Common Stock that are
beneficially owned directly by Mr. Wolf, his wife and various
trusts for the benefit of his children.
As of the date hereof, Permit Enterprise beneficially owns
directly 3,053,536 shares of Common Stock. Permit GP, as the
general partner of Permit Enterprise, may be deemed to beneficially
own the 3,053,536 shares of Common Stock of the Company directly
owned by Permit Enterprise. Permit LLC, as the investment manager
of Permit Enterprise, may be deemed to beneficially own the
3,053,536 shares of Common Stock of the Company directly owned by
Permit Enterprise. John C.
Broderick, as a Partner of Permit LLC with sole voting and
dispositive power over such shares, may be deemed to beneficially
own the 3,053,536 shares of Common Stock of the Company directly
owned by Permit Enterprise. In addition, Mr. Broderick beneficially
owns directly 576,645 shares of Common Stock of the Company, which
includes 3,825 shares of Common Stock of the Company that are
beneficially owned directly by his wife.
As of the date hereof, Mr. Dukoff beneficially owns directly
48,900 shares of Common Stock of the Company. As of the date
hereof, Mr. Evans does not own beneficially any shares of Common
Stock of the Company.
Contacts:
Kurt Wolf at 724-687-7842
John Broderick at 610-941-5025
Source:
Hestia Capital Management, LLC & Permit Capital Enterprise
Fund, L.P.
1 From March 29,
2019, the last trading day before the cooperation agreement
was publicly announced, to March 9,
2020, the last trading day prior to the Board's
self-refreshment
2 Source: FactSet; Total shareholder return from
Feb 28, 2015 through Feb 28, 2020.
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SOURCE Hestia Capital Management, LLC & Permit Capital
Enterprise Fund, L.P.