Engaged Capital Has Proposed No Plan Aside From
Running a Self-Serving and Value Destructive Sale Process
Activist Hedge Fund has a History of Destroying
Stockholder Value
Urges Stockholders to Protect Their Investment
by Voting “FOR” Each of Rent-A-Center’s Highly Qualified Director
Nominees on the WHITE Proxy Card
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RENT-A-CENTER, INC. HIGHLIGHTS HOW ENGAGED
CAPITAL IS SEEKING TO ADVANCE ITS OWN INTERESTS AT THE EXPENSE OF
ALL OTHER STOCKHOLDERS
Engaged Capital Has Proposed No Plan Aside From
Running a Self-Serving and Value Destructive Sale Process
Activist Hedge Fund has a History of Destroying
Stockholder Value
Urges Stockholders to Protect Their Investment
by Voting “FOR” Each of Rent-A-Center’s Highly Qualified Director
Nominees on the WHITE Proxy Card
Rent-A-Center, Inc. (NASDAQ/NGS: RCII) (“Rent-A-Center” or the
“Company”), the nation's largest rent-to-own operator, today mailed
a letter to its stockholders in connection with its 2017 Annual
Meeting of Stockholders to be held on June 8, 2017.
The Rent-A-Center Board unanimously recommends stockholders vote
the WHITE proxy card
“FOR” the Company’s
highly-qualified and experienced director nominees: Mark E. Speese,
Jeffery M. Jackson and Leonard H. Roberts.
Rent-A-Center’s letter to stockholders and other materials
regarding the Board's recommendation for the 2017 Annual Meeting of
Stockholders can be found at http://investor.rentacenter.com.
The full text of the letter is below:
TIME IS SHORT!VOTE “FOR” THE
EXECUTION OF THE BOARD’S STRATEGIC PLAN AND “FOR” YOUR BOARD’S
NOMINEES ON THE WHITE CARD TODAY – BY SIGNING, DATING AND RETURNING
THE WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED
Dear Rent-A-Center Stockholder,
We are less than three weeks away from the 2017 Rent-A-Center
Annual Meeting of Stockholders, on June 8, 2017. As you know,
activist hedge fund Engaged Capital, LLC (“Engaged Capital”) is
seeking to replace three of our highly-qualified and accomplished
directors with three of its own hand-picked nominees. We urge you
to protect the value of your investment by voting for the Company’s
slate of Directors – as Engaged Capital’s slate lacks the requisite
skills, experience and commitment to best protect your
interests.
In seeking representation on the Rent-A-Center Board, Engaged
Capital is acting solely in its own interests and at the expense of
all other Rent-A-Center stockholders. As a testament to Engaged
Capital’s lack of understanding of Rent-A-Center’s business and
industry, its only proposal has been to pursue an opportunistic,
self-serving sale process at a time when the Company is undergoing
a significant operational transformation. Engaged Capital’s sale
proposal is not surprising given its short-term focus. The hedge
fund first took a stake in Rent-A-Center in October 2016 and
continued to build its position while the Company's shares were
trading at multi-year lows.
Notwithstanding Engaged Capital’s short-term time horizon and
interest, the Rent-A-Center Board and management team have held
extensive discussions with Engaged Capital in an effort to maintain
a constructive dialogue and reach a resolution that would have
avoided the disruption and expense of a contested election. In
fact, the Rent-A-Center Board even offered two director seats to
Engaged Capital, which Engaged Capital promptly rejected. Following
this rejection, Engaged Capital has expressed no interest in
negotiating with the Rent-A-Center Board to reach an amiable
resolution, which further demonstrates its singular focus on solely
advancing its own interests at the expense of all other
Rent-A-Center stockholders.
We urge you to protect the value of your investment in
Rent-A-Center and vote “FOR” all three of the Company’s
experienced and highly-qualified director candidates – Mark E.
Speese, Jeffery M. Jackson and Leonard H. Roberts – on the
WHITE proxy card TODAY.
ENGAGED CAPITAL: SHORT-TERM FOCUS AND
HISTORY OF STOCKHOLDER VALUE DESTRUCTION
Engaged Capital is a short-term focused activist hedge fund with
a history of destroying stockholder value.
- Short-term investor: Engaged
Capital exited its ten most recent activist campaigns after an
average holding period of only ~13 months.1
- Consistent value destruction:
Companies at which Engaged Capital has secured a Board seat
have underperformed the S&P 500 index
by an average of 7.8% from the time of Engaged Capital’s
new director appointments. Excluding those companies that were sold
subsequent to Engaged Capital’s new director appointments,
underperformance relative to the S&P
500 was an average of 20.7%.2
The accompanying chart illustrates outcomes for stockholders in
three situations in which Engaged Capital has been involved in
companies and that involvement has created adverse results for
stockholders. 3, 4
In short, Engaged Capital has a track record of running
short-term attacks on companies using aggressive rhetoric and
dubious claims that ultimately result in poor returns for all
stockholders.
ENGAGED CAPITAL HAS DEMONSTRATED ZERO
UNDERSTANDING OF RENT-A-CENTER’S BUSINESSAND HAS OFFERED NO
PLAN BEYOND RUNNING A SELF-SERVING SALE PROCESS
The Rent-A-Center Board of Directors takes its fiduciary
responsibilities to stockholders seriously. The Board regularly
reviews the Company’s strategic priorities and opportunities, and
assesses them against a variety of strategic options. Everything we do is in the context of creating value
for ALL of our stockholders.
The Rent-A-Center Board thoroughly reviewed Engaged Capital’s
single, self-serving suggestion of immediately launching an
opportunistic sale process. The Board determined that continuing to
execute on our strategic plan will deliver substantially more value
to all stockholders than conducting a sale process at this time,
which will only transfer that upside to any potential buyers. Aside
from an outright sale of the Company, Engaged Capital has offered
NO plan, NO ideas and NO strategy to drive value for
stockholders.
Rent-A-Center Board and Management
Turnaround Plan Already Producing Results
Engaged Capital: No Operating Plan,
No Ideas, No Strategy
√ Rent-A-Center has a comprehensive
turnaround plan carefully designed to grow and improve all segments
of the business
x Engaged Capital has not
demonstrated an understanding of Rent-A-Center’s business, the
rent-to-own industry or the attractive stockholder value potential
embedded in our strategic plan
√ Plan was developed via a
thoughtful and thorough process with input from the entire Board
and senior management team
x Engaged Capital has offered no
view on an operating strategy
√ Plan includes specific,
highly-actionable items the Company has and will continue to pursue
in each of its segments to turn the business around and drive value
for all stockholders
x Engaged Capital’s only proposal
is to sell the Company now to benefit itself, while shares are
trading near multi-year lows
√ Strategic plan has already
produced positive results and is being overseen by an experienced,
independent and diverse Board that is committed to driving change
and progress
x Selling the Company today would
deprive existing stockholders of the significant upside embedded in
the Board’s strategic plan
We believe that voting for Engaged Capital’s nominees is a vote
for value destruction and would usurp the opportunity for
Rent-A-Center stockholders to share in the upside embedded in the
strategic plan, which is well underway and already delivering
significant progress. It’s clear to us that Engaged Capital is
pursuing a campaign solely for its own benefit, which will not
maximize value for all Rent-A-Center stockholders.
PROTECT THE VALUE OF YOUR INVESTMENT – VOTE
THE ENCLOSED WHITE PROXY CARD
TODAY
In order to preserve the value of your investment and ensure the
Company continues to execute on its strategic plan, it is important
to support the Rent-A-Center Board’s compelling slate of nominees.
Engaged Capital’s nominees will answer to only one stockholder and
blindly pursue its agenda to immediately run an opportunistic sale
process, despite how value destructive it may be for our
stockholders other than Engaged Capital.
Your Board unanimously recommends that stockholders vote
“FOR” Rent-A-Center’s three highly-qualified candidates –
Mark E. Speese, Jeffery M. Jackson and Leonard H. Roberts –
for election at the Company’s Annual Meeting, which is a vote in
favor of a Board that is committed to acting in your best
interests.
We urge you to protect the value of your investment and
disregard Engaged Capital’s self-serving campaign by simply
discarding any blue proxy card that you may receive from Engaged
Capital. Instead, please use the enclosed WHITE proxy card
to vote “FOR” your Board’s nominees TODAY – by
signing, dating and returning the WHITE proxy card in the
postage-paid envelope provided.
Thank you for your continued support.
The Rent-A-Center Board of Directors:
Mark E. Speese
Michael J. Gade
Jeffery M. Jackson
J.V. Lentell
Steven L. Pepper
Leonard H. Roberts
Rishi Garg
If you have any questions, or need assistance
voting your WHITE proxy card, please contact:
OKAPI PARTNERS LLC1212 Avenue of the
Americas, 24th FloorNew York, New York 10036Telephone: (212)
297-0720Toll-Free: (877) 259-6290Email: Info@okapipartners.com
About Rent-A-Center, Inc.
A rent-to-own industry leader, Plano, Texas-based,
Rent-A-Center, Inc., is focused on improving the quality of life
for its customers by providing them the opportunity to obtain
ownership of high-quality, durable products such as consumer
electronics, appliances, computers, furniture and accessories,
under flexible rental purchase agreements with no long-term
obligation. Rent-A-Center Franchising International, Inc., a wholly
owned subsidiary of the Company, is a national franchiser of
approximately 230 rent-to-own stores operating under the trade
names of "Rent-A-Center," "ColorTyme," and "RimTyme."
Forward-Looking Statements
This press release and the guidance above contain
forward-looking statements that involve risks and uncertainties.
Such forward-looking statements generally can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"intend," "could," "estimate," "should," "anticipate," "believe,"
or “confident,” or the negative thereof or variations thereon or
similar terminology. The Company believes that the expectations
reflected in such forward-looking statements are accurate. However,
there can be no assurance that such expectations will occur. The
Company's actual future performance could differ materially from
such statements. Factors that could cause or contribute to such
differences include, but are not limited to: the general strength
of the economy and other economic conditions affecting consumer
preferences and spending; factors affecting the disposable income
available to the Company's current and potential customers; changes
in the unemployment rate; difficulties encountered in improving the
financial and operational performance of the Company's business
segments; the Company’s chief executive officer and chief financial
officer transitions, including the Company’s ability to effectively
operate and execute its strategies during the interim period and
difficulties or delays in identifying and/or attracting a permanent
chief financial officer with the required level of experience and
expertise; failure to manage the Company's store labor and other
store expenses; the Company’s ability to develop and successfully
execute strategic initiatives; disruptions, including
capacity-related outages, caused by the implementation and
operation of the Company's new store information management system,
and its transition to more-readily scalable, “cloud-based”
solutions; the Company's ability to develop and successfully
implement digital or E-commerce capabilities, including mobile
applications; disruptions in the Company's supply chain;
limitations of, or disruptions in, the Company's distribution
network; rapid inflation or deflation in the prices of the
Company's products; the Company's ability to execute and the
effectiveness of a store consolidation, including the Company's
ability to retain the revenue from customer accounts merged into
another store location as a result of a store consolidation; the
Company's available cash flow; the Company's ability to identify
and successfully market products and services that appeal to its
customer demographic; consumer preferences and perceptions of the
Company's brand; uncertainties regarding the ability to open new
locations; the Company's ability to acquire additional stores or
customer accounts on favorable terms; the Company's ability to
control costs and increase profitability; the Company's ability to
retain the revenue associated with acquired customer accounts and
enhance the performance of acquired stores; the Company's ability
to enter into new and collect on its rental or lease purchase
agreements; the passage of legislation adversely affecting the
Rent-to-Own industry; the Company's compliance with applicable
statutes or regulations governing its transactions; changes in
interest rates; adverse changes in the economic conditions of the
industries, countries or markets that the Company serves;
information technology and data security costs; the impact of any
breaches in data security or other disturbances to the Company's
information technology and other networks and the Company's ability
to protect the integrity and security of individually identifiable
data of its customers and employees; changes in the Company's stock
price, the number of shares of common stock that it may or may not
repurchase, and future dividends, if any; changes in estimates
relating to self-insurance liabilities and income tax and
litigation reserves; changes in the Company's effective tax rate;
fluctuations in foreign currency exchange rates; the Company's
ability to maintain an effective system of internal controls; the
resolution of the Company's litigation; and the other risks
detailed from time to time in the Company's SEC reports, including
but not limited to, its Annual Report on Form 10-K for the year
ended December 31, 2016, and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 2017. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. Except as required by
law, the Company is not obligated to publicly release any revisions
to these forward-looking statements to reflect the events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Additional Information and Where to Find It
The Company, its directors, executive officers and other
employees may be deemed to be participants in the solicitation of
proxies from the Company’s stockholders in connection with the
matters to be considered at Rent-A-Center’s 2017 Annual Meeting. On
April 27, 2017, the Company filed its definitive proxy statement
(as it may be amended from time to time, the “Proxy Statement”) and
definitive form of WHITE proxy
card with the U.S. Securities and Exchange Commission (the “SEC”)
with respect to its 2017 Annual Meeting. The Company’s
stockholders are strongly encouraged to read the Proxy Statement,
the accompanying WHITE proxy card and
other documents filed with the SEC carefully and in their entirety
when they become available because they will contain important
information. Additional information regarding the identity of
participants, and their direct or indirect interests (by security
holdings or otherwise) is set forth in the Proxy Statement.
Stockholders can obtain the Proxy Statement, any amendments or
supplements to the Proxy Statement and other documents filed by the
Company with the SEC free of charge at the SEC’s website at
www.sec.gov. Copies also will be available free of charge at the
Company’s website at www.rentacenter.com, by contacting the Company’s Investor Relations
at 972-801-1100 or by contacting the Company’s proxy solicitor,
Okapi Partners LLC, toll free at 1-877-259-6290.
1 Uses stake at 13F reporting dates to determine ownership;
campaigns at: Volcano Corp., Silicon Image, Rentech, Outerwall,
Oplink Communications, HeartWare International, Boulder Brands, Big
5 Sporting Goods, Aerovironment, Abercrombie & Fitch.2
Calculated as total compound stockholder return from time of
Engaged nominee appointment through the present (or, in the case of
a sale, through the closing date), including dividend
reinvestment.3 Source: Company filings, FactSet, as of 5/17/17.
Data runs from date Engaged Capital joined each Board (Abercrombie
& Fitch: 6/19/14; Jamba Juice: 1/13/15; TriMas: 2/25/15)
through close of market 5/17/17.4 These investment illustrations do
not capture the possible corporate governance risks that may arise
if Engaged Capital’s nominees are elected to the Rent‐A‐Center
Board. For example, Jeffrey J. Brown, one of Engaged Capital’s
nominees, was a director of RCS Capital Corp. during the same
period when (a) that company filed bankruptcy, and (b) one of its
subsidiaries settled stockholder voting fraud charges and
surrendered its broker‐dealer licenses at the state and federal
levels.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170522005424/en/
Investors:Maureen Short, 972-801-1899Interim Chief
Financial Officermaureen.short@rentacenter.comorOkapi Partners
LLCBruce H. Goldfarb / Chuck Garske / Teresa
Huang212-297-0720orMedia:Joele Frank, Wilkinson Brimmer
KatcherKelly Sullivan / James Golden / Matthew
Gross212-355-4449
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