NEW
YORK, Dec. 7, 2023 /PRNewswire/ -- Wynnefield
Capital and its affiliates, collectively the largest institutional
stockholder of TechPrecision Corporation (NASDAQ: TPCS), with a
4.5% beneficial ownership interest, today issued the following
public letter to the Company's Board of Directors.
***
Wynnefield Capital: Demands TechPrecision Hold Public
Conference Call to Explain Proposed Acquisition of Votaw Precision
Technologies to Stockholders.
Dear Board of Directors,
Wynnefield Capital and its affiliates (collectively,
"Wynnefield") own 393,857 shares of common stock, or 4.5%, of
TechPrecision Corporation (NASDAQ: TPCS) ("TechPrecision" or the
"Company") as of September 30, 2023.
Wynnefield is TechPrecision's largest institutional stockholder,
according to Bloomberg.
On Friday, December 1, 2023,
Wynnefield's counsel called TechPrecision's outside counsel to
express our dismay at TechPrecision's announcement of a definitive
agreement to purchase Votaw Precision Technologies, Inc. ("Votaw")
without holding a public conference call to explain its rationale
for the proposed acquisition or how it would finance this huge
acquisition of a company more than twice the size of TechPrecision.
This announcement accelerated TPCS's recent share price decline to
below $6.00, resulting in an
end-of-day 52-week low of $6.06
per-share and a year-to-date decline of 26.8% as of November 30, 2023. Wynnefield has allowed
multiple days for TechPrecision to announce a public conference
call, but the TechPrecision Board of Directors has remained
silent.
The reported Votaw purchase price of $85
million is on a cash and debt free basis, plus an additional
$25 million as an earnout payment,
resulting in a potential total purchase price of $110 million, excluding significant transaction
costs and other unknown quantities. In comparison, TechPrecision's
market capitalization totals approximately $53 million. The Company has just $0.1 million in cash and $12.5 million in long-term debt and long-term
lease liabilities as of September 30,
2023.
Wynnefield, like other stockholders, is concerned about how the
Board of Directors and management intend to pay for this
transaction in a challenging capital-raising marketplace. We fear
significant dilution of existing stockholders and an unsupportable
increase in the Company's debt leverage.
We seek to understand better for ALL stockholders the
following:
- EXPLAIN the strategic direction and reasoning behind
this transaction.
- DETAIL claimed synergies amounting to "annual savings of
several million dollars in overhead and millions of dollars in
CAPEX over the coming years".
- DISCUSS current financing details for this
transaction.
- COMMIT to allow existing TechPrecision stockholders to
vote on the Votaw acquisition.
Stockholders know TechPrecision's last acquisition, STADCO, is
still not fully integrated after more than two years and remains a
failed turnaround. This precedent suggests poor execution and
judgement.
We consider our public conference call request to be
"Stockholder Investor Relations -101" and good corporate
governance. This unusual dereliction of duty may further build upon
stockholder frustration regarding the Company's lack of
transparency that culminated in significant withheld votes and
broker non-votes votes AGAINST current non-employee directors at
the Company's 2023 Annual Meeting of Stockholders held on
September 12, 2023. The Company's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 13, 2023,
clearly discloses voting results illustrating an unfavored Board of
Directors:
|
Board
nominee
|
For
|
Withheld
|
Broker
Non-Votes
|
|
Robert A.
Crisafulli
|
1,711,823
|
1,318,177
|
3,199,123
|
|
Andrew A.
Levy
|
1,766,035
|
1,263,965
|
3,199,123
|
|
Richard S.
McGowan
|
1,736,491
|
1,293,509
|
3,199,123
|
|
Walter M.
Schenker
|
1,721,243
|
1,308,757
|
3,199,123
|
|
Alexander
Shen
|
2,738,298
|
291,702
|
3,199,123
|
The unfavorable vote against the Board of Directors undoubtedly
reflects the Company's stockholders' belief that STADCO's
underperformance was never fully explained.
On Wednesday, November 29, 2023,
Robert D. Straus, Portfolio Manager
at Wynnefield, left a voicemail for Alex
Shen, CEO of TechPrecision. A returned call was not
received.
Wynnefield is asking for the Company's Board of Directors and
management to greatly enhance the transparency of this proposed
acquisition and the Company's operations in general so that
TechPrecision's stockholders – the OWNERS – are allowed to
understand this transaction and its effect on the Company's capital
structure. Curious minds want to know why the Board of Directors
and management would want to alienate their stockholder base
through their insulting behavior at a point in time when they
likely need the support of its stockholders to consummate its
proposed acquisition of Votaw.
Beyond simply requesting a public conference call, Wynnefield
offers deep expertise on strategic and operations messaging as well
as governance matters.
Respectfully yours,
Nelson J. Obus,
Founder
Robert D. Straus, Portfolio
Manager
***
Media:
Daniel
Yunger
Kekst CNC
daniel.yunger@kekstcnc.com
View original
content:https://www.prnewswire.com/news-releases/wynnefield-capital-compelled-to-send-open-letter-to-techprecision-board-302008927.html
SOURCE Wynnefield Capital