RADNOR, Pa., April 6, 2020 /PRNewswire/ -- Safeguard
Scientifics, Inc. (NYSE:SFE) ("Safeguard" or "the Company")
today announced several organizational changes to drive total
shareholder returns.
Brian Sisko is stepping down as
CEO of Safeguard after 14 years of service. Under Mr. Sisko's
leadership, the Company embarked on its current strategy and has
returned over $187 million of cash to
its balance sheet, repaid its outstanding debt and returned over
$20 million to shareholders.
Mr. Sisko stated, "I am pleased to have taken the Company to its
current position and remain very optimistic about its future
prospects."
Dr. Robert J. Rosenthal, the
current Chairman of the Company's Board of Directors (the "Board"),
will assume the role of Executive Chairman of the Board to provide
continuity, expertise and oversight of the execution of the
Company's strategy. Dr. Rosenthal will not receive additional
compensation for assuming this expanded role.
Eric C. Salzman has been
appointed to the newly created role of Chief Restructuring Officer
("CRO"). The CRO will report to the Executive Chairman and
Board, and will be responsible for all aspects of the
value maximization strategy. Mr. Salzman joins Safeguard
after a 28-year career as an investment banker, growth equity
and special situations investor and restructuring advisor at
several Wall Street firms. Mr. Salzman helped oversee the
monetization of a $2 billion
portfolio of illiquid assets in the Lehman Brothers bankruptcy and
subsequently advised several investment funds on value-maximization
strategies for their respective portfolios. He has been an
advisor to Safeguard's Board since November
2019 and currently serves as a director on the board of 8x8,
Inc., (NYSE: EGHT). Mr. Salzman earned a B.A. Honors from the
University of Michigan and an MBA from
Harvard University.
"I am looking forward to working with Bob, the other members of
the Board and the Safeguard team to build on the work achieved
since Safeguard's new strategy was launched in 2018," said Mr.
Salzman. "Based on my experience in principal investing,
M&A, restructuring and value maximizing a number of illiquid
companies and portfolios, I believe I can effectively contribute to
the execution of the strategy and drive results for all
stakeholders, notwithstanding the volatile macroenvironment."
Dr. Rosenthal, said "I want to thank Brian for his unwavering
commitment to the Company and for bringing us to the current
position, with a strong balance sheet and significant potential for
monetization of our portfolio." Dr. Rosenthal continued, "We
are very excited to have Eric join us to lead the next
phase of our strategy, particularly given his extensive
experience in value-maximizing and monetizing portfolios. We
believe these changes will allow us to more effectively execute on
our strategy, continue to focus on our cost structure and position
Safeguard to operate in the current market and economic
environment."
Business Update in light of COVID 19
Safeguard holds minority ownership interests in 15 healthcare
and tech enabled companies representing over $200 million of deployed capital. A
majority of these ownership interests are in relatively mature
venture backed businesses, none are pre-revenue, and all but one
had greater than $5 million of
revenue for the year-ended December 31,
2019. Over the past several months, we have been
conducting an in-depth review of our companies valuations,
prospects and exit opportunities with the more recent assistance of
Mr. Salzman as an advisor to the Board.
The current economic and market conditions brought about by the
COVID 19 pandemic have impacted our entire portfolio. We are
working with the management teams of each portfolio company to take
actions to respond to this rapidly changing environment.
These steps include implementing cost reduction efforts,
securing additional capital and exploring a range of other steps
which could mitigate some of the expected negative repercussions of
current market conditions. We are also seeing a more
challenging merger and acquisition market that generally lowers
valuation expectations and extends exit timelines. Some of
our companies are seeing increased opportunities, but we have seen
multiple potential buyers for at least one of our companies
indefinitely delay proposals due to uncertainties impacting their
businesses related to COVID-19. As a result, Safeguard
currently expects to incur non-cash impairment charges to our
carrying values of several digital media and other interests of
$5 to $12
million during the three months ended March 31, 2020. In addition, we now expect
our follow-on funding requirements for the full year of 2020 may be
towards the higher-end of, and may exceed our prior estimate of
$5 to $10
million. Also, we now expect our corporate expenses*
for the year ended December 31, 2020
to be lower than our prior target of $6.4 to $6.8
million.
Management will continue to update shareholders on developments
within the portfolio and progress on our strategy at the regularly
scheduled quarterly update.
About Safeguard Scientifics
Historically, Safeguard
Scientifics (NYSE:SFE) has provided capital and relevant expertise
to fuel the growth of technology-driven businesses. Safeguard
has a distinguished track record of fostering innovation and
building market leaders that spans more than six decades.
For more information, please visit www.safeguard.com.
* Corporate expenses is a non-GAAP measure that excludes
depreciation, stock based compensation, severance and retirement
costs, and other non-recurring items and other. See complete
definition and reconciliation in our February 27, 2020 full-year 2019 financial
results press release.
Forward-looking Statements
Except for the
historical information and discussions contained herein, statements
contained in this release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Our forward-looking statements are
subject to risks and uncertainties. Forward-looking
statements include, but are not limited to, statements regarding
Safeguard's ability to maximize the value of monetization
opportunities of its ownership interests and drive total
shareholder returns. Safeguard's initiatives taken or
contemplated to enhance and unlock value for all of its
shareholders, Safeguard's efforts to execute on and implement its
strategy to streamline its organizational structure, reduce its
operating costs, pursue monetization opportunities for ownership
interests and maximize the return of value to its shareholders,
Safeguard's ability to create, unlock, enhance and maximize
shareholder value, the effect of Safeguard's management succession
plan on driving increased organizational effectiveness and
efficiencies, the ability of the management team to execute
Safeguard's strategy, the availability of, the timing of, and the
proceeds that may ultimately be derived from the monetization of
ownership interests, Safeguard's projections regarding the
reduction in its ongoing operating expenses, Safeguard's
projections regarding annualized operating expenses and expected
severance expenses, monetization opportunities for ownership
interests, and the amount of net proceeds from the monetization of
ownership interests that will enable the return of value to
Safeguard shareholders after satisfying working capital needs and
the timing of such return of value. Such forward-looking
statements are not guarantees of future operational or financial
performance and are based on current expectations that involve a
number of uncertainties, risks and assumptions that are difficult
to predict. Therefore, actual outcomes and/or results may
differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that
could cause actual results to differ materially include, among
others, our ability to make good decisions about the monetization
of our ownership interests for maximum value or at all and the
return of value to our shareholders, our ability to successfully
execute on our strategy to streamline our organizational structure
and align our cost structure to increase shareholder value, whether
our strategy will better position us to focus our resources on the
highest-return opportunities and deliver enhanced shareholder
value, the ongoing support of our existing ownership interests, the
fact that our companies may vary from period to period, challenges
to achieving liquidity from our ownership interests, fluctuations
in the market prices of our publicly traded holdings, if any,
competition, our inability to obtain maximum value for our
ownership interests, our ability to attract and retain qualified
employees, market valuations in sectors in which our ownership
interests operate, our inability to control our ownership
interests, our need to manage our assets to avoid registration
under the Investment Company Act of 1940, risks, disruption, costs
and uncertainty caused by or related to the actions of activist
shareholders, including that if individuals are elected to our
Board with a specific agenda, it may adversely affect our ability
to effectively implement our business strategy and create value for
our shareholders and perceived uncertainties as to our future
direction as a result of potential changes to the composition of
our Board may lead to the perception of a change in the direction
of our business, instability or a lack of continuity that may
adversely affect our business, and risks associated with our
ownership interests, including the fact that most of our ownership
interests have a limited operating history and a history of
operating losses, face intense competition and may never be
profitable, the effect of economic conditions in the business
sectors in which Safeguard's companies operate, and other
uncertainties described in our filings with the Securities and
Exchange Commission. Many of these factors are beyond the
Company's ability to predict or control. As a result of these
and other factors, the Company's past operational and financial
performance should not be relied on as an indication of future
performance. The Company does not assume any obligation to
update any forward-looking statements or other information
contained in this press release.
SAFEGUARD CONTACT:
Mark
Herndon
Chief Financial Officer
(610) 975-4913
mherndon@safeguard.com
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SOURCE Safeguard Scientifics, Inc.