Star Equity Fund Calls on SVT Board to Conduct Strategic Review For ALL Assets
May 31 2023 - 6:57PM
Star Equity Fund, LP (“Star Equity” or “we”) is an investment fund
focused on unlocking shareholder value and improving corporate
governance at its portfolio companies. Star Equity owns 5.4% of the
common stock of Servotronics, Inc. (NYSE American: SVT)
(“Servotronics,” “SVT,” or the “Company”) and calls on SVT’s Board
to conduct a strategic review for
ALL its assets.
In addition, we urge all stockholders to vote WITHHOLD on the
re-election of incumbent board members Edward Cosgrove, Christopher
Marks, and William Farrell at the Company’s 2023 annual meeting of
shareholders (the “Annual Meeting”), which will be held in a
virtual format on June 9, 2023 at 9:00 a.m., E.T.
Rather than pursuing its current strategy, we
believe the long-suffering SVT shareholders would be better served
by the Company exploring strategic alternatives for
ALL its assets. We believe the Company should sell
both its Consumer Products Group (CPG) and Aerospace (ATG) segments
to strategic buyers and also sell its real estate assets. Following
pressure from our public campaign, SVT did announce its intent to
sell the CPG segment; however, intent does not drive
shareholder value, execution does. We believe that
Cosgrove, Marks, and Farrell lack the necessary experience or
skillsets to execute on the objectives they have outlined and lack
the urgency to prioritize the necessary steps toward enhancing
shareholder value. We believe the employees and clients of the ATG
segment would be better served by being part of a larger entity
than as part of a very small standalone controlled by the
incumbents.
Although our public campaign at Servotronics has
prompted the Company to implement several positive changes, we
firmly believe that the incumbent directors Cosgrove, Marks, and
Farrell lack the skillsets to lead the Company into new markets or
ventures, nor design and execute a business plan that will increase
value for shareholders. Under the watch of the incumbents Cosgrove
and Marks, who have served on the Board 11 and 7 years,
respectively, the Company has experienced a prolonged period of
poor operating and financial performance. Mr. Farrell, while much
newer on the job, has failed to make a significant impact at the
Company after one full year as CEO as evidenced by stagnant revenue
growth, negative operating income, and ballooning SG&A costs as
a percentage of revenue at SVT’s core ATG segment since his
appointment. We view their continued directorship as an impediment
to further positive change and harmful to shareholders’ interests.
We have no confidence in their ability to orchestrate a much-needed
turnaround at Servotronics.
Although we are pleased with some of the results
we believe have been driven by our public campaign, there is much
more to be done at Servotronics. Rather than pursue board
representation, we have concluded that shareholder value would be
better maximized through a sale of all the Company’s assets.
Additionally, we encourage our fellow shareholders to join us in
voting WITHHOLD on incumbent directors Ed Cosgrove, Chris Marks,
and Bill Farrell. We will continue to monitor the situation at SVT
and our recommendation is reflective of our continued commitment to
maximizing shareholder value at the Company.
About Star Equity Fund, LPStar
Equity Fund, LP is an investment fund affiliated with Star Equity
Holdings, Inc. Star Equity Fund seeks to unlock shareholder value
and improve corporate governance at its portfolio companies.
About Star Equity Holdings,
Inc.Star Equity Holdings, Inc. is a diversified holding
company with two divisions: Construction and Investments.
For more information
contact: |
|
Star Equity Fund,
LP |
The Equity
Group |
Jeffrey E. Eberwein |
Lena Cati |
Portfolio Manager |
Senior Vice President |
203-489-9501 |
212-836-9611 |
jeff.eberwein@starequity.com |
lcati@equityny.com |
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