HOUSTON, May 29, 2015 /PRNewswire/ -- JCP Investment
Management, LLC (together with its affiliates, "JCP"), and the
other participants named herein, collectively own approximately
5.4% of the outstanding Class A shares of Casella Waste Systems,
Inc. ("Casella" or the "Company") (NASDAQ: CWST). Today, JCP sent
an open letter to Casella's Board of Directors (the "Board") in
connection with its campaign to elect three highly-qualified
directors, Brett W. Frazier,
James C. Pappas and Joseph B. Swinbank, to the Board at the 2015
Annual Meeting.
The full text of the letter follows:
May 29, 2015
Dear Members of the Board,
JCP Investment Management, LLC (together with its affiliates,
"JCP" or "we"), and the other participants in its solicitation
seeking to elect three highly-qualified directors to the Board of
Directors (the "Board") of Casella Waste Systems, Inc. ("Casella"
or the "Company"), collectively own approximately 5.4% of Casella's
outstanding Class A shares.
JCP has invested in Casella since March of 2010. Since publicly
disclosing our nomination of Brett W.
Frazier, James C. Pappas and
Joseph B. Swinbank to the Board on
April 28, 2015, we have received
numerous telephone calls from shareholders and analysts alike who
share our views and are eager for change on the Board. In addition,
multiple potential strategic acquirers have contacted us expressing
interest in Casella.
Strong apparent interest in Casella as an attractive acquisition
target means that now more than ever substantial shareholder
representation is urgently needed on the Board to ensure that
appropriate actions are taken to create value for ALL shareholders.
This Board should set a date for the 2015 Annual Meeting without
delay to allow shareholders to elect their representatives that
they believe are best suited to capitalize on the available
opportunities.
We continue to be open, as we always have been, to a
constructive engagement with the Board. In the spirit of such
a collaborative effort we have proposed to the Board a framework
for a mutually acceptable resolution that we believe is in the best
interests of all shareholders. In our view, it is incumbent
that this Board engages with us immediately and open-mindedly to
ensure optimal composition of the Board.
Availability of Strategic Alternatives
JCP has already been contacted by multiple potential strategic
acquirers of Casella, each with unquestionable financing abilities.
We believe others may have interest in pursuing a transaction
with Casella as well. In the current climate of inexpensive and
readily available financing and given the undervaluation of
Casella's shares relative to the underlying value of its assets, we
are confident Casella represents an attractive acquisition
target.
Multiples in the waste management space have reached near record
levels, materially higher than where the Company is currently
trading. To maximize value for shareholders, we believe now is the
time for Casella to test the market and evaluate all available
strategic alternatives, including the sale of the Company in whole
or in part.
While we believe a case may be made for a going concern strategy
where a significant portion of Casella's assets would be sold at
favorable multiples to pay down debt, this strategy would entail
significant amounts of risk and time. Given the considerable
uncertainty underlying the Company as a going concern, we believe
Casella should hire an investment bank to explore strategic
alternatives.
In our view, a new and improved Board should be charged with
exploring available strategic opportunities. Given the Company's
chronic underperformance and the inability or unwillingness of the
incumbent Board to take the right steps to enhance shareholder
value, we are skeptical that the Board as currently composed would
properly oversee any strategic alternatives review process.
Delay of 2015 Annual Meeting
Like many shareholders, we are troubled by the Board's decision
to postpone the 2015 Annual Meeting from July 7, 2015 to an unspecified future date. Now
is the time to reconstitute the Board with the right people to
oversee a robust exploration of strategic alternatives and ensure
Casella capitalizes fully on available opportunities to maximize
value for shareholders.
As we previously explained in our April
28, 2015 press release, shareholders are prohibited from
calling special meetings and cannot act by written consent, which
effectively means shareholders cannot seek Board change between
annual meetings. We are unaware of any steps taken by the Board to
call or prepare for the 2015 Annual Meeting, such as setting a
meeting date or establishing a record ownership date. If the Board
will not engage seriously in discussions with us to enhance the
composition of the Board in the interest of all shareholders, we
call on the Board to cease its stall tactics and establish a date
for the 2015 Annual Meeting immediately.
Moratorium on Dilutive Equity Offerings
As one of Casella's largest shareholders, we believe it is our
responsibility to share with the Board a common concern that
shareholders have expressed to us. Following the Company's
September 2012 dilutive equity
offering, there is a sense of trepidation amongst shareholders that
the Board may engage in a further dilutive offering this year.
Share count cannot continue to increase without a commensurate
increase in earning power. Based on the Company's current
financial condition, we strongly believe there is no need for any
additional equity offering. Further dilutive actions by the Board
would clearly be contrary to the best interests of
shareholders.
To be clear, given the Company's history of underperformance and
poor corporate governance, we believe that the Board should refrain
from engaging in any significant transactions involving the
issuance of convertible notes, debt or stock without shareholder
approval.
Summary
JCP is determined that independent shareholder representatives
must be urgently added to the Board to ensure that decisions are
made with the best interests of shareholders as the paramount
objective. Strong interest in Casella as a potential acquisition
target is a reason to expedite rather than delay reinvigorating the
Board and renewing focus on shareholder value in boardroom
discussions. We look forward to a constructive engagement
with the Board and working with the Board to fully explore all
opportunities available to maximize shareholder value.
However, if no agreement can be reached we intend to continue to
pursue the election of our nominees to the Board and would expect
the Board to immediately set a date for the 2015 Annual Meeting to
allow shareholders to timely exercise their right to elect
Casella's directors.
Sincerely,
James C. Pappas
JCP Investment Management, LLC
CERTAIN INFORMATION CONCERNING
PARTICIPANTS
JCP Investment Management, LLC, together with the participants
named herein, intends to file a preliminary proxy statement and
accompanying proxy card with the Securities and Exchange Commission
("SEC") to be used to solicit votes for the election of their slate
of three highly-qualified director nominees at the 2015 annual
meeting of stockholders of Casella Waste Systems, Inc., a
Delaware corporation (the
"Company").
JCP INVESTMENT MANAGEMENT STRONGLY ADVISES ALL SHAREHOLDERS OF
THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS
AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE
COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are JCP Investment
Partnership, LP ("JCP Partnership"), JCP Single-Asset Partnership,
LP ("JCP Single-Asset"), JCP Investment Partners, LP ("JCP
Partners"), JCP Investment Holdings, LLC ("JCP Holdings"), JCP
Investment Management, LLC ("JCP Management"), James C. Pappas, Brett
W. Frazier and Joseph B.
Swinbank (collectively, the "Participants").
As of the date hereof, JCP Partnership beneficially owned
1,483,435 shares of Class A Common Stock, $0.01 par value per share ("Common Stock").
As of the date hereof, JCP Single-Asset beneficially owned 626,468
shares of Common Stock. JCP Partners, as the general partner of
each of JCP Partnership and JCP Single-Asset, may be deemed the
beneficial owner of the 2,109,903 shares of Common Stock owned in
the aggregate by JCP Partnership and JCP Single-Asset. JCP
Holdings, as the general partner of JCP Partners, may be deemed the
beneficial owner of the 2,109,903 shares of Common Stock owned in
the aggregate by JCP Partnership and JCP Single-Asset. JCP
Management, as the investment manager of each of JCP Partnership
and JCP Single-Asset, may be deemed the beneficial owner of the
2,109,903 shares of Common Stock owned in the aggregate by JCP
Partnership and JCP Single-Asset. Mr. Pappas, as the managing
member of JCP Management and sole member of JCP Holdings, may be
deemed the beneficial owner of the 2,109,903 shares of Common Stock
owned in the aggregate by JCP Partnership and JCP Single-Asset. As
of the date hereof, Mr. Frazier beneficially owned 40,000 shares of
Common Stock. As of the date hereof, Mr. Swinbank did not
beneficially own any shares of Common Stock.
About JCP Investment Management:
JCP Investment Management, LLC is an investment firm
headquartered in Houston, TX that
engages in value-based investing across the capital
structure. JCP follows an opportunistic approach to investing
across different equity, credit and distressed securities largely
in North America.
Investor Contacts:
James C. Pappas
JCP Investment Management, LLC
(713) 333-5540
John Glenn Grau
InvestorCom, Inc.
(203) 972-9300 ext. 11
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SOURCE JCP Investment Management, LLC