NEW YORK, May 11, 2016 /PRNewswire/ -- Imation Corp.
("Imation") (NYSE: IMN), a shareholder of Arlington Asset
Investment Corp. ("Arlington" or the "Company") (NYSE: AI), today
sent a letter to Arlington shareholders highlighting the need for
significant and immediate Board change at Arlington.
The full text of the letter is below and available at
www.RISEUPARLINGTON.com:
May 11, 2016
Dear Fellow Arlington Asset Shareholder:
THE VALUE OF YOUR INVESTMENT IN ARLINGTON
ASSET IS AT RISK
Arlington Asset Investment Corp.'s ("Arlington Asset") annual
meeting of shareholders is less than a month away and you have an
important decision to make that will impact the value of your
investment. As owners of Arlington's common stock, we cannot
stand idly by and watch Arlington's board (the "Board") oversee a
management team that squanders shareholder resources, consistently
underperforms its peer group and broader market benchmarks, and
executes ill-conceived strategies that threaten the Company's
dividend, all while taking home millions in compensation.
It's clear to us that Arlington's incumbent, legacy directors
are content with the status quo and incapable —or unwilling
—to make the right choices or act in the best interests of all
shareholders.
We strongly urge you to help protect value at Arlington by
voting on the GOLD proxy card FOR the election of
Imation's five director nominees to the Board — Scott R. Arnold, Barry
L. Kasoff, Raymond C.
Mikulich, Donald H. Putnam
and W. Brian Maillian. Our
highly-qualified, independent, shareholder-first nominees have the
necessary expertise in the sophisticated and complex
mortgage-backed securities ("MBS") and asset management arenas to
make changes at Arlington for the benefit of ALL
shareholders.
ARLINGTON HAS UNDERPERFORMED FOR YEARS AND
MANAGEMENT COMPENSATION IS EXCESSIVE AND MISALIGNED
Arlington has significantly underperformed over the last five
years both on an absolute and a relative basis and is
suffering the consequences of a poorly thought-out and poorly
executed hedging strategy. However, management continues to
cash big checks.
Over the last five years, Arlington's stock price has plummeted
15.3% on a dividend adjusted basis. By comparison, over the same
time frame, Arlington's self-selected peer group as listed in its
2016 proxy statement had a dividend adjusted performance of
positive 40%.
Importantly, even as shareholder value has nosedived,
Arlington's management and the Board have been richly compensated.
During this same five-year period, total compensation for
Arlington's named executive officers was $36.7 million and total Board compensation was
$4.9 million. We believe this
level of compensation is unwarranted, excessive and misaligned with
shareholder interests. Notably, we believe Arlington's richly
paid Board and management team have lost faith in their company –
the current Board has sold nearly $15
million of Arlington stock at prices above $25 per share, and management and the
Chairman of the Board have not purchased one share of Arlington
stock in the open market in the last five years.
If elected, Imation's nominees pledge to overhaul the Company's
compensation practices with an owner's eye to create true alignment
of interest between management and
shareholders. Additionally, unlike Arlington's current
management and Board, we plan to put our money where our mouth is.
If we receive a voice in the boardroom and approve the go-forward
management structure and strategy at Arlington, we would be
prepared to invest up to 15% of the outstanding stock at 1.0x
tangible book value[i] to buy out shareholders or improve the
balance sheet. This represents an investment of up to $60 million at a premium to current stock trading
levels.
ARLINGTON'S HEDGE POSITION IS POOR AND ITS
DIVIDEND IS NOT SUSTAINABLE
For supposedly being "experts" at developing investment
strategies, we believe Arlington's ability to develop proper
hedging strategies is laughable. In fact, Arlington's incumbent
slate has no direct MBS investing experience outside of its
management representatives. As a shareholder you must ask:
How is the incumbent Board qualified to oversee management
when they lack basic industry expertise? Case in
point— Arlington's current hedged positions are failing miserably.
At the end of the third quarter of 2015, Arlington reported a core
short in the ten-year sector of the yield curve, as opposed to
spreading out its hedging vehicles similar to the sensitivities of
the MBS portfolio they were managing.
On the other hand, Imation's nominees collectively have
decades of experience trading, structuring, hedging and investing
in MBS, advising government sponsored entities that issue MBS and
operating and serving as investment professionals in asset
management. We are confident that, if elected, our nominees
will be able to diversify Arlington's portfolio to yield higher
returns and recalibrate the hedges to reduce investment losses.
Furthermore, while Arlington's dividend may appear attractive on
its face, a simple close examination reveals that the dividend is
in fact unsustainable at current levels. When claiming that the
stock has performed well, the Company does not take into account
dividends reinvested in the Company, which is how a long term
shareholder evaluates performance. We believe dividends need
to be looked at in conjunction with examining tangible book value
or even stock price. The Company should pay dividends from
its operating earnings; dividends should not just be a return of
capital. We believe that under the Company's current dividend
policy, a portion of the dividend represents a return of capital
rather than a distribution from true economic earnings— essentially
a strategy of Paul robbing Peter to pay Mary.
IMMEDIATE ACTION IS REQUIRED — NOW IS THE TIME
FOR CHANGE AT ARLINGTON
As a fellow shareholder, we want you to understand the risks
presently plague Arlington— leverage is too high, the ongoing
dividend appears to be unsustainable and the hedge position has
failed, costing you millions. Meanwhile, management continues to
get rich with no accountability.
Imation is committed to changing Arlington for the better and
investing significant capital for the benefit of all shareholders.
We are taking this risk because we strongly believe our nominees
have the skillset to reduce the risks that currently haunt
Arlington and enhance returns at the Company.
As an investor, you are not required to continue to passively
accept painful investment losses. Instead, VOTE THE GOLD PROXY
CARD TODAY to elect Imation's nominees who pledge to articulate a
superior strategy for Arlington to restore shareholder
value.
The future of Arlington is in your hands. We urge you to VOTE
THE GOLD PROXY CARD TODAY to elect Imation's nominees who we
believe will effectively steward your investment at
Arlington.
LEARN MORE AT
www.RISEUPARLINGTON.com
Your Vote Is Important. No matter how many shares of Arlington
you own, we urge you to vote your GOLD proxy today, to
ensure that your instructions are received in a timely manner.
Please vote by telephone or Internet by following the instructions
on the enclosed gold proxy card or by signing, dating and mailing
your card in the enclosed envelope.
If any of your shares of common stock are held in the name of a
brokerage firm, bank, bank nominee or other institution, they can
only vote your shares upon receipt of your specific
instructions.
If you have any questions or require any additional information
concerning the Arlington Asset Annual Meeting, please contact our
proxy solicitor, Okapi Partners at:
OKAPI PARTNERS
Okapi Partners LLC
Banks and Brokerage Firms, Please Call:
(212) 297-0720
Shareholders and All Others Call Toll-Free:
(877) 566-1922
Email: info@okapipartners.com
|
Thank you for your support,
Joseph A. De Perio
Chairman of the Board, Imation Corp.
About Imation Corp.
Imation (NYSE: IMN) is a holding
company that operates through a subsidiary engaged in global data
storage and data security business. At the corporate level, there
is an ongoing strategic review as Imation expects to seek and
explore new opportunities that will allow it to pursue a diverse
range of business opportunities and deploy its excess cash. For
more information, visit www.imation.com.
IMATION CORP., ROBERT B.
FERNANDER, CLINTON MAGNOLIA
MASTER FUND, LTD., CLINTON GROUP,
INC., JOSEPH A. DE PERIO, AND GEORGE
E. HALL, SCOTT R. ARNOLD,
BARRY L. KASOFF, W. BRIAN MAILLIAN, RAYMOND C. MIKULICH, AND DONALD H. PUTNAM
(COLLECTIVELY, THE "PARTICIPANTS") HAVE FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") A DEFINITIVE PROXY STATEMENT
AND ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION WITH
THE PARTICIPANTS' SOLICITATION OF PROXIES FROM THE SHAREHOLDERS OF
ARLINGTON ASSET INVESTMENT CORP., INC. (THE "COMPANY") FOR USE AT
THE COMPANY'S 2016 ANNUAL MEETING OF SHAREHOLDERS (THE "PROXY
SOLICITATION"). ALL SHAREHOLDERS OF THE COMPANY ARE ADVISED TO READ
THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE
PROXY SOLICITATION BECAUSE THEY CONTAIN IMPORTANT INFORMATION,
INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. THE
DEFINITIVE PROXY STATEMENT AND AN ACCOMPANYING PROXY CARD WILL BE
FURNISHED TO SOME OR ALL OF THE COMPANY'S SHAREHOLDERS AND ARE,
ALONG WITH OTHER RELEVANT DOCUMENTS, AVAILABLE AT NO CHARGE ON THE
SEC'S WEBSITE AT HTTP://WWW.SEC.GOV/.
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR
DIRECT OR INDIRECT INTERESTS BY SECURITY HOLDINGS IS CONTAINED IN
THE DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A FILED BY IMATION
WITH THE SEC ON MAY 4, 2016. THIS
DOCUMENT CAN BE OBTAINED FREE OF CHARGE FROM THE SOURCE INDICATED
ABOVE.
[i] The Company's tangible book value was $14.45 per share as of 3/31/2016 according to the Company's Quarterly
Report on Form 10-Q filed with the SEC on May 10, 2016.
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SOURCE Imation Corp.