VOTE ON THE BLUE PROXY CARD
GameStops Prudent Capital Allocation Strategy vs. Hestia and Permits Short-Term Financial
Engineering
Following the
Companys February 2019 sale of Spring Mobile, Hestia Capital sent a letter to your Board, recommending a short-term strategy of using virtually all of the proceeds to buy back stock. In the letter, Hestia Capital stated, the Board should
immediately pursue a tender offer of between $500M and $700M, and continue to buy back as much as $100M in stock per year.
Had GameStop assented to
Hestia Capitals irrationally aggressive call to buy back $700 million of its shares in 2019, the recent market volatility would have placed the Company and the balance sheet in a precarious and unsustainable position. Rather than pursue
this ill-advised short-term financial engineering tactic, your Board took a balanced and long-term approach to GameStops capital allocation, returning excess capital to stockholders as appropriate,
managing judicious debt levels, and strengthening our balance sheet to continue to provide for the business successful transformation as we look toward the pivotal launch of the next generation of video game consoles later in 2020. Our actions
have included:
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A Dutch auction tender offer and a series of open market purchases totaling approximately 38.1 million
shares, at a weighted average cost of $5.21 per share, totaling a return of approximately $200 million to stockholders throughout 2019
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Redemption of the Companys $350 million unsecured bonds in early 2019
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Reduction of its current outstanding unsecured debt by $51.8 million, bringing the 2019 fiscal year
reduction in debt to just over $400 million.
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Our capital allocation strategy has directly translated to GameStops present
capacity to weather this unprecedented market disruption caused by the COVID-19 pandemic, serving our customers with progressively innovative capabilities as they adjust to increased time at home. Hestia and
Permits approach would have proved ruinous and catastrophic for the Company and all of its stockholders.
In contrast, with our prescient capital
allocation strategy, we have increased GameStops financial flexibility and strengthened our balance sheet, building sufficient cash and liquidity to navigate the COVID-19 pandemic and emerge as a strong
and vibrant company.
Hestia and Permits short-sighted buyback demand demonstrates their lack of operational skills, insights and understanding of
what it takes to operate a global business that supports the long-term interests of all GameStop stockholders. Protecting and enhancing sustainable stockholder value requires more than myopic short-term financial engineering it requires the
foresight and adept understanding of all aspects of operational and financial execution, as well as a strong sense of business ethics and fiduciary duty to stockholders, that GameStops Board and new management team possess and continue to
deliver.
GameStops Proactive Board Refreshment and Management Succession
Hestia and Permit have commenced this
proxy fight despite the Companys effective execution of its strategic plan and capital allocation and its prior efforts to collaborate constructively with them. In April 2019, the Company appointed Lizabeth Dunn and Raul Fernandez as part of a
settlement with Hestia and Permit. Yet Ms. Dunn, a Board member nominated by Hestia and Permit last year, has refused to join Hestia and Permits slate, but has elected instead to join with and support your Boards nominees named on
the BLUE proxy card.
The GameStop Board Recommends Stockholders
Vote on the BLUE Proxy Card, via the internet or telephone or by mail by promptly Signing and Dating the enclosed BLUE Proxy
Card and Returning it in the enclosed postage-paid envelope
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