Donerail’s Attempt to Take Effective Control
of Turtle Beach is Especially Alarming Given Repeated Misstatements
and Omissions Regarding Engagement with Turtle Beach
Stockholders Should Vote the BLUE Proxy Card
or Risk the Value of Their Investments
Leading gaming accessory maker Turtle Beach Corporation (Nasdaq:
HEAR) (“Turtle Beach” or the “Company”) today highlights the
misinformation perpetuated by the Donerail Group (“Donerail”) in
its efforts to take effective control of the Company.
The Turtle Beach Board believes stockholders should have ALL of
the facts regarding its extensive and constructive engagement with
Donerail. Of note:
- Among other misstatements and omissions, Donerail intentionally
omits from its public statements and its proxy statement – as filed
with the Securities and Exchange Commission on April 22, 2022 –
every single one of the 17 instances where Turtle Beach or its
advisors requested Donerail provide basic, required financing
information for its acquisition offers. Stockholders should ask
Donerail why it did not include accurate and complete information
in its proxy statement – an important regulatory filing for which
Donerail and its board nominees have a shared responsibility to
ensure accuracy and completeness.
- Most recently, Donerail made misleading statements about
executive compensation at Turtle Beach, concocting a number that
aggregates nearly a decade of compensation for more than 12
executives and board members, while ignoring stock vesting, option
strike prices, and other factors that tend to inflate proxy filing
stock comp valuations. Turtle Beach believes stockholders should
express their views if they find these tactics dishonest and
insulting.
- The Turtle Beach Board has been openminded and responsive to
stockholder input and has attempted to find a constructive
resolution with Donerail, on numerous occasions, to avoid a costly
and time-consuming proxy contest. Stockholders can trust that the
Turtle Beach Board will continue to act in their best
interest.
- Donerail continues to make material omissions of facts and
events in order to advance its agenda to gain effective control of
Turtle Beach without offering any premium to stockholders.
Stockholders should be aware that taking Donerail at its word is
highly risky as Donerail appears willing to say anything in order
to achieve its self-serving agenda.
Turtle Beach Stockholders Should Not Be
Misled by Donerail’s Omissions, Falsehoods and Mischaracterizations
of Engagement
Turtle Beach’s engagement with Donerail has included the
following1, much of which is omitted from Donerail’s proxy
statement to the detriment of stockholders.
- February 19, 2021: First engagement with Donerail
- Donerail launched as a firm only weeks prior with $300M assets
under management (AUM).
- Turtle Beach investor relations team holds introductory meeting
with Donerail.
- March 8, 2021: Juergen Stark and members of management meet
with Donerail
- Turtle Beach management holds first meeting with Donerail where
Donerail asks general questions about the business.
- March 18, 2021: Donerail sends presentation to management
ahead of a call
- April 1 – April 6, 2021: Will Wyatt demands to be added to
the Board in multiple conversations**
- Over the course of three conversations, Wyatt makes repeated
requests to be added to the Board. When asked about his
qualifications, Wyatt cites only capital markets experience, which
is already represented on the Board, and dodges all other questions
regarding his qualifications. In response to Donerail’s request,
Turtle Beach offered Donerail the opportunity to enter into an NDA
so that Wyatt could get to know the business and the Board could
evaluate him as a candidate, but Wyatt immediately declines.
- April 27, 2021: Donerail sends proposal to acquire the
Company for $34.50 (with no verified financing), representing a 14%
premium to the closing share price
- The Company notifies Wyatt that they will connect Donerail with
their advisors to discuss the offer, and holds an introductory call
between advisors and Donerail.
- Follow up discussion between advisors reveal no financing
commitments can be verified following Donerail’s offer to acquire
the Company for a purchase price well in excess of Donerail’s total
AUM.
- May, 11, 2021: BofA holds initial call with Donerail to
discuss acquisition proposal terms, including request for more
specifics on sources of financing**
- May 13, 2021: Donerail holds investor call on Turtle
Beach**
- Throughout the invitation-only call, Donerail extensively
misrepresents its engagement with Turtle Beach to date, including
claiming that Donerail had presented to the entire Board, and
presents inaccurate financial metrics and information about Turtle
Beach. Donerail also makes no mention of the fact that they
submitted an offer to acquire the Company.
- During the presentation Wyatt states, “by the way, this
management team is exceptional.”
- May 17, 2021: BofA makes follow-up request to Donerail for
financing information**
- May 24, 2021: BofA makes additional request to Donerail for
financing information**
- June 2, 2021: BofA makes two additional requests to Donerail
for financing information**
- June 19, 2021: Juergen sends Donerail email response from
the entire Board in response to Wyatt’s letter from June 16,
2021**
- BofA makes additional financing request to Donerail.
- July 15, 2021: Donerail purchases 125,000 shares of Turtle
Beach stock**
- In contrast to Donerail’s assertions that it is acting in the
best interest of all stockholders, Donerail directly benefited at
the expense of other stockholders by acquiring 125,000 shares in
mid-July 2021, and promptly thereafter releasing their first public
letter indicating they had put in an offer to acquire the Company
at a significantly higher share price, only to then sell 285,000
shares days later at a price that was substantially below their
acquisition offer price but delivered them a profit of roughly
$500,000 on the 125,000 shares alone.
- July 21, 2021: Donerail sends revised proposal to acquire
the Company for $36.50 (again, with no verified financing),
representing a 17% premium to the closing share price**
- Donerail cites desire for expedited confirmatory due diligence.
The Company confirms receipt of revised proposal by email the next
day.
- July 27, 2021: BofA makes additional request to Donerail for
financing information**
- August 25, 2021: BofA makes additional request to Donerail
for financing information**
- November 16, 2021: BofA call with Donerail, Donerail states
its strong preference to see the Company sold and its intention to
run a proxy contest**
- December 20, 2021: Donerail sends revised proposal to
acquire the Company for $32.86 (again, with no verified financing),
representing a 30% premium to the closing share price
- The Company and advisors review revised proposal and issue
press release noting Donerail’s lack of credible financing despite
the Company’s significant effort to engage.
- Donerail issues press release two days later regarding revised
proposal, having not yet produced baseline information outlining
their ability to finance an acquisition, despite touting an offer
price well in excess of its own AUM and with no track record of
ever acquiring or operating a business.
- BofA makes additional request to Donerail for financing
information.**
- December 21, 2021 – January 11, 2022: Wyatt sends multiple
emails to Turtle Beach Board member Yie-Hsin Hung**
- Turtle Beach advisors respond to Wyatt on behalf of the Board,
reiterating in each correspondence that Donerail needs to send
proposal related correspondence to the Company’s advisors, not
Board members.
- BofA makes six additional requests
for financing information during this period of time.
- January 13, 2022: Turtle Beach responds to Donerail’s
repeated outreach to Board and management**
- In its response, the Company cites its 11 months of attempted
productive engagement with Donerail and reiterates protocol for
engagement with the Board and requests once again for verifiable
financing information. The Company states that if Donerail doesn’t
become a viable acquiror, Turtle Beach will limit future
interactions to those the Company would provide to any
stockholder.
- In response to the financing information request, Wyatt replies
that they will “gather as a team and revert back with appropriate
materials in short order,” acknowledging
himself they’ve not yet provided the necessary financing
information.
- January 21, 2022: BofA makes additional request to Donerail
for financing information**
- March 3, 2022: Donerail announces intent to nominate
directors
- Donerail announces that it no longer wants to acquire Turtle
Beach and instead intends to replace the entire Turtle Beach Board
of directors with its own hand-selected nominees at the Annual
Meeting.
- March 14, 2022: Turtle Beach makes settlement proposal;
Donerail rejects**
- In an attempt to avoid a costly and distracting proxy contest
that would not be in the best interests of all Turtle Beach
stockholders, the Company sends a letter and term sheet to Donerail
outlining a good-faith cooperation agreement under which Donerail
and Turtle Beach would mutually agree on two director candidates to
be added to the Board.
- Donerail rejects proposal and offers a counter-proposal under
which Donerail would agree to three director candidates to be added
to the Board and two director resignations. Donerail also requests
the Board form a strategic review committee as part of its
counter-proposal.
- March 21, 2022: Turtle Beach makes revised settlement
proposal; Donerail rejects**
- Turtle Beach makes revised settlement proposal to Donerail,
improving the terms in Donerail’s favor, including offering to
appoint two new mutually agreed upon independent directors from a
pool of candidates that would have included all of Donerail’s
nominees. The revised settlement proposal also notes the Company
would designate a board member to sit on the strategic review
committee, if one is deemed necessary.
- Donerail again rejects Turtle Beach’s generous proposal in
favor of pursuing taking control of the Company.
- March 22, 2022: Donerail nominates full slate of
directors
- Donerail nominates full state of directors to stand for
election at the Annual Meeting.
- Donerail claims to be a 5.3% owner of Turtle Beach, despite
1.7% of its holdings being in the form of options with an April 14,
2022 expiration.
1 Timeline is inclusive of only the most notable interactions
with Donerail through the nomination of its full slate of
directors.
** Denotes an event disclosed in Turtle Beach’s public history
of constructive engagement, but NOT in Donerail’s definitive proxy
statement. Note that, in its definitive proxy statement, Donerail
states “Between March 13, 2022 and April 18, 2022, counsel for the
Company and counsel for Donerail corresponded at various times to
discuss certain matters including, but not limited to, the terms
of a potential settlement agreement between Donerail and the
Company and the Books and Record Request.” This is the only
reference to settlement proposals.
Please visit www.VoteTurtleBeach.com for
more information.
Your
Vote Is Important, No Matter How Many or How Few Shares You
Own
You can vote by Internet,
telephone or by signing and dating the BLUE proxy card and mailing it in the envelope
provided.
If you have any questions about
how to vote your shares, or need additional assistance, please
contact:
MACKENZIE PARTNERS
HEAR@mackenziepartners.com
(212) 929-5500
or
Toll-Free (800)
322-2885
REMEMBER:
We urge you NOT to vote using
any WHITE proxy card sent to you by Donerail, as doing so will
revoke your vote on the BLUE proxy
card.
Forward-Looking Statements
This communication includes forward-looking information and
statements within the meaning of the federal securities laws.
Except for historical information contained in this release,
statements in this release may constitute forward-looking
statements regarding assumptions, projections, expectations,
targets, intentions or beliefs about future events. Statements
containing the words “may”, “could”, “would”, “should”, “believe”,
“expect”, “anticipate”, “plan”, “estimate”, “target”, “goal”,
“project”, “intend” and similar expressions, or the negatives
thereof, constitute forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties, which
could cause actual results to differ materially from those
contained in any forward-looking statement. Forward-looking
statements are based on management’s current belief and
expectations, as well as assumptions made by, and information
currently available to, management.
While the Company believes that its expectations are based upon
reasonable assumptions, there can be no assurances that its goals
and strategy will be realized. Numerous factors, including risks
and uncertainties, may affect actual results and may cause results
to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these
factors include, but are not limited to, risks related to, the
substantial uncertainties inherent in the acceptance of existing
and future products, the difficulty of commercializing and
protecting new technology, the impact of competitive products and
pricing, general business and economic conditions, risks associated
with the expansion of our business including the integration of any
businesses we acquire and the integration of such businesses within
our internal control over financial reporting and operations, our
indebtedness, the Company’s liquidity, and other factors discussed
in our public filings, including the risk factors included in the
Company’s most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, and the Company’s other periodic reports. Except as
required by applicable law, including the securities laws of the
United States and the rules and regulations of the Securities and
Exchange Commission (the “SEC”), the Company is under no obligation
to publicly update or revise any forward-looking statement after
the date of this release whether as a result of new information,
future developments or otherwise.
Important Additional Information
The Company, its directors and certain of its executive officers
are participants in the solicitation of proxies from the Company’s
stockholders in connection with the 2022 Annual Meeting of
Stockholders. The Company has filed a definitive proxy statement
and a BLUE proxy card with the SEC in connection with any
such solicitation of proxies from the Company’s stockholders.
STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH
PROXY STATEMENT, ACCOMPANYING BLUE PROXY CARD AND ALL OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS
THEY CONTAIN IMPORTANT INFORMATION. Information regarding the
identity of the participants and their direct or indirect
interests, by security holdings or otherwise, is set forth in the
definitive proxy statement and other materials filed with the SEC
in connection with the upcoming Annual Meeting. Stockholders can
obtain the definitive proxy statement and any amendments or
supplements to the proxy statement and other documents filed by the
Company with the SEC at no charge on the SEC’s website at
www.sec.gov. Copies are also available at no charge on the
Company’s website at https://corp.turtlebeach.com.
About Turtle Beach Corporation
Turtle Beach Corporation (https://corp.turtlebeach.com) is one
of the world’s leading gaming accessory providers. The Turtle Beach
brand (www.turtlebeach.com) is known for pioneering first-to-market
features and patented innovations in high-quality, comfort-driven
headsets for all levels of gamer, making it a fan-favorite brand
and the market leader in console gaming audio for the last decade.
Turtle Beach’s ROCCAT brand (www.roccat.com) combines detail-loving
German innovation with a genuine passion for designing the best PC
gaming products. Under the ROCCAT brand, Turtle Beach creates
award-winning keyboards, mice, headsets, mousepads, and other PC
accessories. Turtle Beach’s Neat Microphones brand
(www.neatmic.com) creates high-quality USB and analog microphones
for gamers, streamers, and professionals that embrace cutting-edge
technology and design. Turtle Beach’s shares are traded on the
Nasdaq Exchange under the symbol: HEAR.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427006251/en/
For Investor Information, Contact: Cody Slach or Alex Thompson
Gateway Investor Relations On Behalf of Turtle Beach 949.574.3860
HEAR@gatewayir.com For Media Information, Contact: MacLean Marshall
Sr. Director – PR/Communications Turtle Beach Corp. 858.914.5093
maclean.marshall@turtlebeach.com MacKenzie Partners Bob Marese /
Jeanne Carr 212.929.5405 / 212.929.5916 Joele Frank, Wilkinson
Brimmer Katcher Jed Repko / Nick Lamplough 212.355.4449
Turtle Beach (NASDAQ:HEAR)
Historical Stock Chart
From Feb 2024 to Mar 2024
Turtle Beach (NASDAQ:HEAR)
Historical Stock Chart
From Mar 2023 to Mar 2024