ISS Supports HDF’s “Compelling Case” for Change
and Recommends Shareholders Vote on HDF’s Blue Proxy Card FOR the
Election of Fabian Blank to the Enzo Board
Notes Enzo’s “History of Broken Promises”
Highlights Concerns Facing Enzo Including
“Operational Deterioration,” “Substandard Corporate Governance,”
and “Prolonged Absolute and Relative TSR Underperformance”
Follows Glass Lewis Also Supporting Case for
Change at Enzo and Recommending for Both Harbert Nominees
HDF Urges Enzo Shareholders to Vote FOR HDF’s
Highly-Qualified Independent Nominees Fabian Blank and Peter
Clemens on the BLUE Proxy Card Today
Harbert Discovery Fund, LP and Harbert Discovery Co-Investment
Fund I, LP (collectively “HDF”), the beneficial owners of more than
11.8% of the outstanding shares of Enzo Biochem, Inc. (NYSE: ENZ)
(“Enzo” or the “Company”), today announced that a leading proxy
advisory firm, Institutional Shareholder Services Inc. (“ISS”), has
recommended that shareholders vote on the BLUE proxy card in
support of HDF’s nominee, Fabian Blank.
In its report, ISS highlights the need for change at the Company
and its track record of underperformance1:
- “The dissident has made a compelling case
that board change is warranted, as evidenced by operational
deterioration, prolonged absolute and relative TSR
underperformance, and substandard corporate governance.”
- “[T]here are no clear signs of
recovery in share price or operating performance to provide
shareholders with confidence that the turnaround strategy is taking
root or that the market has been receptive to its chances of
success.”
- “ENZ has a history of broken
promises, as evidenced by the AmpiProbe development
history.”
- “ENZ has stated that it is a complicated business and
shareholders may have a misunderstood view of the company.
Nonetheless, the communication around the AmpiProbe development is
indicative of an inability to clearly
communicate with shareholders.”
ISS commented on Enzo’s corporate governance issues and the
reactive nature of its recent actions:
- “ENZ also missed the opportunity to
enhance its governance structure in the immediate aftermath of the
2015 proxy contest, instead waiting until recently to
appoint the first woman to its board, strengthen the lead
independent director role, and propose a majority voting standard
for uncontested director elections.”
- “Although the board states that it has integrated shareholder
feedback into its governance improvements, such feedback
did not translate into changes until
recently.”
The ISS report highlighted perplexing comments from Enzo nominee
Dr. Bruce Hanna regarding CEO Elazar Rabbani, further calling into
question the Board’s independence and judgement:
- “When asked by ISS how he was recruited to the board in 2016,
director Hanna replied that he has been familiar with ENZ for almost 40 years, having
served as a consultant to ENZ in the late 1980's, and that he has
been a longtime associate of CEO
Rabbani.”
- “Further, when discussing Rabbani's performance as CEO, Hanna
offered significant praise, going so far as to liken Rabbani to
Steve Jobs (despite the TSR and operational
underperformance discussed above).”
- “These factors raise doubts for
shareholders about whether Hanna is sufficiently capable of
challenging management.”
- “There are also board independence
concerns, including the combined CEO/chairman role, the fact
that 40 percent of the board is non-independent, and the family and
professional relationships between Rabbani, Weiner, and
Hanna.”
ISS notes the benefits Fabian Blank’s experience and perspective
would bring to the Board:
- “Dissident nominee Blank seems qualified
to contribute industry expertise and a fresh perspective
which would be additive to the board and appears to be sufficient
to prompt the board to address performance and oversight
concerns.”
- “He currently serves on the board of Georgia Healthcare Group
plc (LSE:GHG), a similarly sized healthcare company to ENZ based in
the Republic of Georgia, experience which would be additive to the board given that only one other
ENZ director has public board experience.”
- “Blank's experience in European and other international markets
will fill an experience gap that was created when Bortz resigned in
December 2019…”
- “...Blank's understanding of family business dynamics, having
served as a CEO of a family business, would be valuable to ENZ given the presence of Rabbani and
Weiner as executive directors.”
ISS also recognizes the additive experience of Peter
Clemens:
- “… [F]rustrated shareholders who believe that additional
urgency is needed given the company's poor performance and subpar
governance may find that dissident nominee Clemens' qualifications
could also be additive to the board in light
of his experience as a CFO at two public healthcare
companies (where he likely would have had to work directly
with each company's board on a regular basis).”
Earlier this week, proxy advisory firm, Glass, Lewis & Co.
(“Glass Lewis”) recommended shareholders vote for both HDF
nominees. In its report, Glass Lewis concluded2:
- “[W]e are ultimately inclined to conclude Harbert…submits the much stronger fundamental case.”
- “Disconcertingly, investors hoping to see a bold response
steeped in critical measures of operational progress have instead
been greeted by what we consider to be a fairly loosely structured narrative functionally ripped
from Enzo's last battle, including rehashed promises of pending value
generation.”
Kenan Lucas, Managing Director and Portfolio Manager of HDF,
commented on the report: “While we are grateful for ISS’ support in
our case for change at Enzo by recommending the election of Fabian
Blank to the Board, we also urge shareholders to vote for Peter
Clemens. We believe Pete brings operational expertise and business
acumen that the Company clearly lacks and would be complementary to
Fabian’s industry and public board experience. The addition of both
Fabian and Pete’s voices in the boardroom is necessary to ensure
change is truly enacted. We believe this is the first step to
realizing value for Enzo’s shareholders and ending the pattern of
sustained underperformance, poor corporate governance practices,
and endless empty promises that has plagued the Company for
decades.”
Now is the time to vote your shares. Vote on the BLUE
proxy card FOR the election of Fabian Blank and Peter
Clemens today.
Please visit our website at www.cureenzo.com to learn more.
Important Information about Participants in a Proxy
Solicitation:
Harbert Discovery Fund, LP (“Harbert Discovery”), Harbert
Discovery Fund GP, LLC (“Harbert Discovery GP”), Harbert Discovery
Co-Investment Fund I, LP (“Harbert Discovery Co-Investment” and
together with Harbert Discovery, the “Discovery Funds”), Harbert
Discovery Co-Investment Fund I GP, LLC (“Harbert Discovery
Co-Investment GP”), Harbert Fund Advisors, Inc. (“HFA”), Harbert
Management Corporation (“HMC”), Jack Bryant (“Mr. Bryant”), Raymond
Harbert (“Mr. Harbert”) and Kenan Lucas (“Mr. Lucas” and together
with Harbert Discovery, Harbert Discovery GP, Harbert Discovery
Co-Investment, Harbert Discovery Co-Investment GP, HFA, HMC and
Messrs. Bryant and Harbert, the “Harbert Discovery Parties”)
(collectively, the “Participants”) have filed with the Securities
and Exchange Commission (the “SEC”) a definitive proxy statement
and accompanying form of proxy to be used in connection with the
solicitation of proxies from the shareholders of Enzo Biochem, Inc.
(the “Company”) in connection with the annual meeting of
shareholders of the Company (the “Annual Meeting”). All
shareholders of the Company are advised to read the definitive
proxy statement and other documents related to the solicitation of
proxies by the Participants in respect of the Annual Meeting, as
they contain important information, including additional
information related to the Participants, their nominees for
election to the board of directors of the Company and the Annual
Meeting. 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 website at http://www.sec.gov/ and are available
upon request from the Participants’ proxy solicitor, Okapi
Partners, by calling (888) 758-6707 (banks and brokers call collect
(212) 297-0720).
Additional information about the Participants can be found on
the Definitive Proxy Statement filed by the Participants on
December 6, 2019.
About Harbert Discovery Fund (HDF)
HDF invests in a concentrated portfolio of publicly traded small
capitalization companies in the US and Canada. We perform
significant due diligence on each portfolio company prior to
investing. In addition to researching all publicly available
information and meeting with management, our diligence includes
substantial primary research with industry experts, consultants,
bankers, customers and competitors. We often spend months or years
researching ideas before making an investment decision and we only
invest in companies that we believe are significantly undervalued,
and where there is the potential for change to enhance or
accelerate value creation. In an effort to unlock this potential
value, we seek to work directly with the boards and management
teams of our portfolio companies privately and collaboratively,
engaging with them on a range of factors including governance,
board composition, corporate strategy, capital allocation,
strategic alternatives and operations. We have effected positive,
fundamental changes at our current and past investments through
this behind-the-scenes, constructive approach. HDF currently has
board representation at three of our portfolio companies. In each
case, changes to the board were agreed upon privately and it is our
strong preference in every investment to avoid the unnecessary
distractions and costs of a public proxy campaign.
About Harbert Management Corporation (HMC)
HMC is an alternative asset management firm with approximately
$7.0 billion in regulatory assets under management as of December
31, 2019. HMC currently sponsors nine distinct investment
strategies with dedicated investment teams. Additional information
about HMC can be found at www.harbert.net.
_______________________________ 1 Permission to quote ISS
neither sought nor obtained. Emphasis added. 2 Permission to quote
Glass Lewis neither sought nor obtained. Emphasis added.
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version on businesswire.com: https://www.businesswire.com/news/home/20200117005390/en/
Investors Okapi Partners LLC Bruce Goldfarb / Chuck
Garske / Jason Alexander, 212-297-0720 info@okapipartners.com
Media Sloane & Company Dan Zacchei / Sarah
Braunstein, 212-486-9500 dzacchei@sloanepr.com /
sbraunstein@sloanepr.com
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