NEW YORK, Oct. 30, 2018 /PRNewswire/ --
Dear Board and Management of PAR Technology Corporation (NYSE:
PAR),
Nineteen days have passed since this Board of Directors received
our letter expressing concerns regarding the direction of the
Company. We urged this Board to explore strategic alternatives and
publicly announce its intent to do so. Given we own 10.3% of this
Company we are extremely disappointed this Board has yet to issue a
response – but not surprised.
Based on the recent S-3 shelf filling, we have concluded that
this Board must take immediate steps to proceed with an outright
sale of the entire Company immediately and PUBLICLY DISCLOSE ITS
INTENTIONS THROUGH ISSUING A PRESS RELEASE. Should this Board
neglect such action, management's pattern of gross incompetence
could expose the Company to a potential tidal wave of shareholder
litigation and additional value destruction.
The failure to respond to our letter shows the noncommittal
nature of this Board of Directors, management and the Sammon family
– and their intention to avoid any opportunity to sell the Company.
The reality is, any normal public company would immediately
issue a response to shareholder communications, acknowledging its
agreement that the Company is undervalued and its commitment to
closing the glaring valuation gap. Instead, the Company went quiet
for over fifteen days and compounded the mistake by making a shelf
filling – giving the impression to the public that it believes the
assets within PAR are fairly valued. It is unacceptable for this
Board to keep "a foot in both camps". In fact, pursuing the
offering would be a clear indication that this Board is unwilling
to take the necessary steps to maximize shareholder value – adding
to its track record of failures and strategic blunders.
It appears blindingly obvious to us that this management team
and Board of Directors remains beholden to a sentimental agenda
that makes no sense from a financial and strategic point of view.
We believe that drawing down upon this S-3 shelf filling would be a
blatant act of fiscal irresponsibility and reckless behavior.
Diluting shareholders at the current market valuation of ~$300mm
would be extraordinarily dilutive considering the legacy assets
within PAR are worth in excess of the current market cap, ascribing
NEGATIVE value to Brink, its burgeoning SaaS business that can be
worth many billions of dollars over time.
PAR ($ in
MM)
|
|
|
SOTP Value ($ in
MM)
|
|
|
|
|
|
|
|
|
Stock
Price
|
$17.61
|
|
Government
|
|
125
|
|
|
|
Hardware/Service
|
|
100
|
Basic
Shares
|
16.20
|
|
Working
Capital
|
|
25
|
Stock Options
+Warrants
|
0
|
|
Surecheck
|
|
20
|
Dil Shares
Outstanding
|
16.20
|
|
Real
Estate
|
|
25
|
|
|
|
PixelPoint
|
|
15
|
Market Cap
|
$285.3
|
|
Total
|
|
310
|
Cash
|
8.7
|
|
Per Share (w/o
BRINK)
|
$19.14
|
Debt
|
6.1
|
|
|
|
|
Enterprise
Value
|
282.7
|
|
Implied Value of
Brink
|
(27.3)
|
|
|
|
Per
Share
|
|
-$1.69
|
The assets within PAR are about as undervalued as can be. As
stated in our previous letter, we believe that by capitalizing on
the payments opportunity and achieving management's near-term
installed unit objectives, Brink can generate in excess of $200mm
in EBITDA by 2020. This asset alone can be worth over
$2 to $4
Billion exiting 2020. Furthermore, the enormous
potential of the legacy assets within PAR is irrefutable. These
assets generated over $18mm in EBITDA in 2005 AND we believe they
can generate over $20mm today if managed efficiently. Should
this Board be willing to dilute shareholders at this nonsensical
valuation it would demonstrate a continuation of this Company's
focus on irrational "empire building".
A close look at the Company's history displays the profile of a
nepotistic corporate culture and complete disregard for shareholder
value. In fact, we believe John
Sammon will attempt to install his daughter, Karen Sammon as CEO of the Company once the SEC
investigation closes and use cash from the shelf filing to begin a
senseless acquisition spree and misallocation to fitness clubs,
losses and other corporate excess rather than focusing on
generating shareholder value. While we applaud Karen Sammon for her strong work ethic and
identifying and purchasing Brink, we believe her severe lack of
qualifications and inexperience to take on the CEO role would only
further compound the mismanagement of PAR and its burgeoning SaaS
business.
It is disheartening to see a continuation of John Sammon's legacy of poor performance and
mismanagement. The enormous value within PAR is undeniable.
Clearly, the market must be assigning a "Sammon family discount"
given the family's total disregard for minority shareholders. In
the course of our investigation, we were amused to discover that
Mr. Sammon is often referred to as "Dr. Sammon" – admittedly, one
must wonder if Mr. Sammon has spent the last 30+ years writing his
PhD dissertation on "how to destroy shareholder value". We
estimate that if "Dr. Sammon" had sold his PAR stock in 1982 when
the Company went public and simply invested in the S&P, he
would be worth over $5.5bn. How can
we trust someone to make a decision about minority shareholder
wealth when he clearly does not care about creating wealth for
himself or has awful track record of doing so?
We believe that if corporate overhead was right-sized and
certain assets were restructured, the Company could be generating
well in excess of $20mm+ of EBITDA today. The hiring of
unqualified family members, exuberant compensation, on-site
family-run fitness centers and other fiscally irresponsible
decisions have masked the massive cash-flow potential of the
Company and have been a distraction. To add insult to
shareholder injury, we were appalled to discover that over ten
years ago we heard Dr. Sammon received a verbal $400mm buyout offer
from a prominent private equity firm and failed to explore
further. Ever since, EBITDA has gone from $18mm+ per year to
negative and the stock is down materially – these strategic
blunders must end now.
The reality is, this management team has suffocated the assets
for too long. There are no more excuses for the Company to
remain complicit with the status quo – customers, employees
and all other stakeholders deserve better and would be in much
better hands under different ownership.
Fortunately, notwithstanding chronic mismanagement and strategic
blunders, PAR today has incredibly coveted and strategic assets.
In fact, we have spoken to several of PAR's competitors and we
can confirm their desire to acquire the entire Company should it be
put up for sale. A press release indicating the Company's intention
to pursue strategic alternatives would invite a whole new universe
of potential buyers that wouldn't otherwise know it's up for sale.
A public statement also indicates that a historically insular and
cavalier company is willing "to cross the rubicon" and take all
available steps to maximize shareholder value.
A properly managed sale process can offer a recovery of
substantial value for all shareholders and would offer some
redemption for the decades of mismanagement and negligence of the
minority shareholder. Also, a sale of the company prevents
putting intensely dilutive capital in the hands of people who have
little to no experience operating a successful business or
allocating capital.
We would like to remind the Board of its fiduciary duties to
represent the financial interest of ALL PAR shareholders as opposed
to the sentimental interests of the Sammon family. Anything less
than finally creating substantial value for PAR shareholders,
rather than continually paying lip service to it while acting
otherwise, is completely unacceptable.
We strongly oppose any capital raise that can come in
conjunction with this recent S-3 filling and we plan on holding
this Board of Directors accountable for any further value
destruction resulting from inaction on the matter of a sale of the
entire Company immediately.
Sincerely,
Adam D. Wyden
Managing Member of the General Partner,
ADW Capital Partners, L.P.
Cautionary Statement Regarding Forward-Looking
Statements:
The information herein contains "forward-looking statements."
Specific forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts and
include, without limitation, words such as "may," "will,"
"expects," "believes," "anticipates," "plans," "estimates,"
"projects," "targets," "forecasts," "seeks," "could" or the
negative of such terms or other variations on such terms or
comparable terminology. Similarly, statements that describe our
objectives, plans or goals are forward-looking. Our forward-looking
statements are based on our current intent, belief, expectations,
estimates and projections regarding the Company and projections
regarding the industry in which it operates. These statements are
not guarantees of future performance and involve risks,
uncertainties, assumptions and other factors that are difficult to
predict and that could cause actual results to differ materially.
Accordingly, you should not rely upon forward-looking statements as
a prediction of actual results and actual results may vary
materially from what is expressed in or indicated by the
forward-looking statements.
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content:http://www.prnewswire.com/news-releases/adw-capital-seeks-immediate-sale-of-par-technology-300740825.html
SOURCE ADW Capital Partners, L.P.