Consolidated-Tomoka Land Co. Determines that Proposal from Wintergreen Advisers is Not in Best Interests of Shareholders
November 21 2008 - 11:59AM
PR Newswire (US)
DAYTONA BEACH, Fla., Nov. 21 /PRNewswire-FirstCall/ --
Consolidated-Tomoka Land Co. (Amex: CTO; NYSE Alternext US: CTO)
(the "Company") announced today that its Board of Directors has
reviewed and rejected a proposal from Wintergreen Advisers, LLC
("Wintergreen"), the Company's largest shareholder, because it
would have provided Wintergreen with undue influence over the
Company and was deemed not in the best interests of the Company's
other shareholders. The Company's Board has detailed its reasoning
in the response to Wintergreen and is also filing that
correspondence in a Form 8-K. In that filing, the Company will also
include copies of prior correspondence exchanged directly between
the Company and Wintergreen regarding Wintergreen's demand for
inspection of corporate records and other matters (such as the
nomination of Board candidates) to provide investors with
additional information related to the Company's response. Included
in that filing will be copies of the Company's proposal to include
Wintergreen nominees and settle outstanding matters between the
parties and Wintergreen's letter rejecting the Company's proposal
together with a copy of Wintergreen's counterproposal. The
Company's is making this filing for the benefit of its investors
and in the interest of disclosure and transparency. The Wintergreen
proposal required, in part, that the Company do the following: --
Immediately appoint a director nominee nominated by Wintergreen to
fill a vacancy on the Company's nine-member Board of Directors and
have that nominee named Chairman of the Board no later than the
2009 Annual Meeting of Shareholders; -- Nominate two additional
Wintergreen director nominees as candidates for the Board of
Directors, to be included in the Board-endorsed slate of nominees
at the Company's 2009 Annual Meeting; and -- Amend the Company's
charter documents to provide for the annual election of all
Directors beginning in 2010 and allow Wintergreen to nominate
additional candidates for those seats. Although the Board greatly
respects the considerable investment that Wintergreen has made in
the Company and agrees that it warrants reasonable representation
on the Company's Board of Directors, the Board determined that the
proposed terms suggested by Wintergreen were so excessive that they
would have infringed on the rights of nearly three-quarters of the
Company's shareholders giving the Board no choice but to exercise
its fiduciary obligations and reject the proposal. On November 11,
2008, the Company offered to fill the current vacancy on the Board
with a Wintergreen director nominee, as well as to include one
additional Wintergreen nominee on the Board-endorsed slate of
nominees for election as directors at the Company's 2009 Annual
Meeting. Wintergreen dismissed this offer and responded to it with
the Wintergreen proposal submitted to the Company on November 17,
2008. The full text of the Company's response to Wintergreen
follows: FEDERAL EXPRESS November 19, 2008 Wintergreen Advisers,
LLC Attn: Mr. David J. Winters 333 Route 46 West, Suite 204
Mountain Lakes, NJ 07046 Dear Mr. Winters: On Wednesday, November
19, the Board of Directors of Consolidated-Tomoka Land Co. (the
"Company") met to review and discuss the proposed Settlement and
Standstill Agreement between the Company and Wintergreen Advisers
that you submitted on November 17. As Consolidated Tomoka's largest
shareholder, we recognize the significant investment you have made
in the Company, and we have consistently sought over time to be
highly considerate of and responsive to your ideas, suggestions,
and requests. This included your nominee becoming a Director in
2007, who since voluntarily resigned in March 2008, and our most
recent offer to fill the Board's current vacancy with an
independent Director nominated by Wintergreen, as well as a second
independent Director proposed by Wintergreen to be included in the
Board's slate for election at our 2009 Annual Meeting. The Board
continues to believe that a shareholder of Wintergreen's size is
entitled to reasonable representation on the Board; however, the
Board's fiduciary responsibility requires that it represent the
best long-term interest of all of the Company's shareholders.
Regretfully, the Agreement that you have proposed would require the
Board to abandon its responsibility and place the interests of
Wintergreen Advisers above the interests of the remaining roughly
three-quarters of the Company's shareholders. It is apparent to the
Board from your proposal that Wintergreen Advisers seeks to gain
control of Consolidated Tomoka as quickly as possible and without
paying any change-in-control premium to the Company's other
shareholders. This is apparent both through the content of your
proposal as well as the manner in which it was proposed, which
required that the Board accept your terms without any modification
within two days of receipt. Among other things, your proposal
requires that three (3) Wintergreen Directors be named to the
Company's Board of nine (9) by the 2009 Annual Meeting, one of whom
would become Chairman, and that beginning in 2010, Wintergreen be
permitted to nominate candidates for the remaining six (6) seats on
a declassified Board. Accepting these demands could confer
considerable power to one shareholder at the expense of others and
put Wintergreen in a position to assert majority control of the
Board by 2010. The Board would be remiss if we did not reiterate
its sincere concern about several strategic recommendations that
Wintergreen has made over the years. Specifically, Wintergreen has
advocated that the Company adopt the following strategies
including: -- abandoning the Company's 1031 strategy, which
provides predictable income by investing in lower-risk and
geographically dispersed income properties; -- discontinuing land
sales in favor of self-development of our properties; -- suspending
the quarterly dividend in spite of the fact that some of our
investors require a dividend to continue to own our stock; and --
pursuing an aggressive stock repurchase program during the peak of
the real estate cycle when available funds were needed for income
property investments, roads, and other infrastructure that would
improve shareholder value. Had Consolidated-Tomoka adopted these
strategies the Company would be in severe financial distress at
this point. The Company would have significant debt, potential high
vacancy rates in new self-developed properties, minimal income from
land sales, and negative cash flow requiring the Company to sell
off valuable assets at depressed prices in order to meet ongoing
operational expenses. In contrast, the Board's adopted strategy has
allowed the Company to remain profitable with a strong balance
sheet and little debt, positioning us to outperform most of our
peer group during the current economic environment. We are further
perplexed by these strategy changes because at the time of your
initial investment you expressed very strong support for the
Company's management team and our strategy and business plan, which
were formally adopted in 1999, and which have been clearly
articulated and remain substantially unchanged. As you know, our
core strategy is to utilize 1031 exchanges to convert agricultural
land holdings into stable income-producing properties to generate
dependable cash flow at any point in the real estate cycle, and we
believe the strategy has been firmly validated in this current
environment. We welcome your positive involvement with the Company,
but the Board would fundamentally violate its fiduciary
responsibility if it adopted your proposal and allowed one
shareholder to gain significant control of the Company,
particularly when that shareholder has advocated a range of
strategies that in both hindsight and going forward would be very
detrimental to shareholder value. Again, we hope that you will
reconsider your present course, but until such time, the Board must
act in the best interests of all of its shareholders and reject
your proposal. Respectfully, /s/Linda Crisp Linda Crisp Corporate
Secretary On behalf of the Board of Directors of
Consolidated-Tomoka Land Co. About Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based company primarily
engaged in converting Company owned agricultural lands into a
portfolio of net lease income properties strategically located in
the Southeast, through the efficient utilization of 1031
tax-deferred exchanges. The Company has low long-term debt and
generates over $9 million in annual before tax cash flow from its
real estate portfolio. The Company also engages in selective self-
development of targeted income properties. The Company's adopted
strategy is designed to provide the financial strength and cash
flow to weather difficult real estate cycles. Visit our website at
http://www.ctlc.com/ . "Safe Harbor" Certain statements contained
in this press release (other than statements of historical fact)
are forward-looking statements. The words "believe," "estimate,"
"expect," "intend," "anticipate," "will," "could," "may," "should,"
"plan," "potential," "predict," "forecast," "project," and similar
expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on
which they were made. Forward-looking statements are made based
upon management's expectations and beliefs concerning future
developments and their potential effect upon the Company. There can
be no assurance that future developments will be in accordance with
management's expectations or that the effect of future developments
on the Company will be those anticipated by management. The Company
wishes to caution readers that the assumptions which form the basis
for forward-looking statements with respect to or that may impact
earnings for the year ended December 31, 2008, and thereafter
include many factors that are beyond the Company's ability to
control or estimate precisely. These risks and uncertainties
include, but are not limited to, the strength of the real estate
market in the City of Daytona Beach in Volusia County, Florida; our
ability to successfully execute acquisition or development
strategies; any loss of key management personnel; changes in local,
regional and national economic conditions affecting the real estate
development business and income properties; the impact of
environmental and land use regulations; the impact of competitive
real estate activity; variability in quarterly results due to the
unpredictable timing of land sales; the loss of any major income
property tenants; and the availability of capital. Additional
information concerning these and other factors that could cause
actual results to differ materially from those forward-looking
statements is contained from time to time in the Company's
Securities and Exchange Commission filings, including, but not
limited to, the Company's Annual Report on Form 10-K. Copies of
each filing may be obtained from the Company or the SEC. While the
Company periodically reassesses material trends and uncertainties
affecting its results of operations and financial condition, the
Company does not intend to review or revise any particular
forward-looking statement referenced herein in light of future
events. DATASOURCE: Consolidated-Tomoka Land Co. CONTACT: Bruce W.
Teeters, Sr. Vice President, Consolidated-Tomoka Land Co.,
+1-386-274-2202, Facsimile: +1-386-274-1223 Web site:
http://www.ctlc.com/
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