Glass Lewis Supports HDF’s Case for Change at
Enzo and the Need for Fresh Perspectives in the Boardroom
Concludes that “Enzo has Underperformed Every
Benchmark Over Every Period”
Glass Lewis Describes the Company’s Arguments
as, “Decidedly Dubious,” “Entirely Unconvincing” and “Rehashed
Promises”
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, Glass, Lewis & Co. (“Glass Lewis”), has
recommended that shareholders vote on the BLUE proxy card in
support of HDF’s two highly-qualified independent nominees, Fabian
Blank and Peter Clemens.
In its report, Glass Lewis highlighted the need for change at
Enzo and the pervasive weakness of the arguments the Company has
made throughout its campaign1:
- “[W]e are ultimately inclined to conclude Harbert…submits the much stronger fundamental case.”
- “This is predicated on what we consider to be entirely legitimate concerns around strategy and
shareholder value, as well as the board's failure to produce arguments that
meaningfully update its own dated case from late 2015.”
- “We believe the continued presence of routine opposition to the
incumbent board by a rotating cast of dissident shareholders
suggests there may be some foundational and
atypical disconnect between the Company and investors.”
- “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.”
- “Thus, in lieu of simply maintaining the
status quo, we consider unaffiliated investors have been
afforded a reasonable opportunity to advance credible, incremental change, in each case
without introducing any substantive
risk of unilateral influence or materially eroding Enzo's
aggregate knowledge base.”
Glass Lewis also carefully examined Enzo’s performance against
peers across various periods, concluding that:
- “On balance, we consider the yield on our review is
fairly straightforward…the Company
has underperformed every benchmark over every
period, in all cases by no less than roughly 32%.”
- “We believe this suggests Enzo's misses against suitable
comparators have been fundamental and
expansive, and that there is little
credible capacity to suggest the Company has generated
stable, attractive value…”
Regarding Enzo’s lack of strategic and operational progress,
Glass Lewis notes that:
- “We are thus concerned Enzo is more focused on framing the
current contest as an existential threat to perpetually unattained
value-in-potentia, seemingly in lieu of
demonstrating clear cause for continued operational goodwill
among investors who have suffered expansive losses during the
tenure of the bulk of the existing board.”
- “[W]e consider Enzo has, in fact, employed a strategy which has
done little to stanch losses in
revenue, which, for FY2019, declined to the lowest annual level
since FY2008.”
- “[W]e do not consider this unbiased assessment of historical
performance suggests Enzo is operationally trending the right
direction or that management and the board have fulfilled their
late 2015 promise that the Company was
‘positioned to thrive now’.”
Glass Lewis discusses Enzo’s corporate governance issues and the
reactive nature of the actions the Company has taken, noting:
- “[T]here remain a raft of other governance factors that we
consider reflect poorly on Enzo and the board's general willingness
to undertake proactive -- as opposed to
reactive -- change.”
- “[W]hile we further note no clear opposition from Harbert in
relation to Ms. Fischer -- we consider the resulting agenda
modification nevertheless represents a decidedly dubious late-stage complication in the
context of a contested solicitation.”
- Referring to the separation of the president and CFO roles,
Glass Lewis notes, “the relatively uncontroversial nature of the
change suggests this represents another low
risk, high optical upside
modification intended to cultivate a more favorable impression of
Enzo's governance.”
Finally, in discussing HDF’s nominees, Glass Lewis states:
- “Speaking first to Fabian Blank, we identify a reasonable
health care services background, including what appears to be a
breadth of advisory roles spanning varying industry segments and
geographies.”
- “In contrast, the board's criticism of Mr. Blank -- which
highlights GHG's microcap status despite the fact that it is worth
nearly twice as much as Enzo and seemingly
pleads for guilt by association by repeatedly referencing a
thirty-years out-of-date association between Georgia and the former
Soviet Union -- is, in our view, entirely
unconvincing.”
- “Peter Clemens, in turn, has a background which includes
c-suite roles at several healthcare services firms, including
Surgical Care Affiliates and Caremark Rx, Inc.”
- “The presence of this senior executive experience at a range of
larger and more complex enterprises in the healthcare sector
supports Mr. Clemens' prospective ability to
add value to a range of key strategic and financial
discussions and overrides, in our view, nominal concerns
that Mr. Clemens has not previously served on the board of a
publicly-traded firm.”
Kenan Lucas, Managing Director and Portfolio Manager of HDF,
commented on the report: “We are extremely pleased that Glass Lewis
has supported our case for change at Enzo. HDF believes the
Company’s pattern of prioritizing the entrenched status quo over
its fiduciary duty to shareholders is no longer acceptable. Our two
independent nominees, Fabian Blank and Peter Clemens, will provide
the relevant skillsets and expertise required to help realize
Enzo’s value potential. We look forward to continuing constructive
engagement with the Board and management on the path to improvement
at Enzo.”
Now is the time to vote your shares. HDF, like Glass Lewis,
encourages you to 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 Glass Lewis neither
sought nor obtained. Emphasis added.
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Investor Contact Okapi Partners LLC Bruce Goldfarb /
Chuck Garske / Jason Alexander, 212-297-0720 info@okapipartners.com
Media Contact Sloane & Company Dan Zacchei / Sarah
Braunstein, 212-486-9500 dzacchei@sloanepr.com /
sbraunstein@sloanepr.com
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