NEW YORK, May 17, 2016 /PRNewswire/ -- Imation Corp.
("Imation") (NYSE: IMN), a shareholder of Arlington Asset
Investment Corp. ("Arlington" or the "Company") (NYSE: AI), today
sent a letter to Arlington shareholders highlighting the failed
strategy undertaken by the Company's incumbent Board of Directors,
led by Executive Chairman Eric
Billings, and CEO Rock Tonkel. Under their watch, Arlington
has had persistent poor performance, while executive compensation
has soared.
Imation urges all Arlington shareholders to read the letter
below and watch the video available at
http://www.riseuparlington.com/an-overview/, which
underscores the fact that the Company's dividend is unsustainable
and is at risk. Imation encourages shareholders to vote the
GOLD proxy card today to elect its nominees to create a
sustainable enterprise and lasting value for all shareholders.
The full text of the letter is below and available at
www.RISEUPARLINGTON.com:
May 17, 2016
Dear Fellow Arlington Shareholder:
YOU HAVE A CHOICE: STICK WITH A "DO NOTHING"
INCUMBENT BOARD OR VOTE "FOR" IMATION'S NOMINEES WHO ARE
COMMITTED TO ACTING IN YOUR BEST INTERESTS
We believe Arlington Asset Investment Corp.'s ("Arlington" or
the "Company") Board of Directors (the "Board") has failed as
fiduciaries to shareholders for years. The Company's
financial performance over the past five years has been awful, both
on an absolute and relative basis, despite the Company's claims to
the contrary.
The facts are clear — for years Arlington has been a poor
investment relative to its peers. From 2011 to 2015,
one dollar invested in Arlington's
peers1 is worth $1.40
whereas a dollar invested in the Company is worth less than
$0.85. Even with such woeful
underperformance, since 2011 management has paid itself
$36.7 million, and the Board has
earned close to $5
million,2 both amounts in excess of peers and
contrary to shareholder value creation over the same time
period. Since Rock Tonkel was named CEO in June of 2014,
Arlington's stock price is down 38.5% on a dividend adjusted basis,
yet he has earned an estimated $6.4
million over the same period, of which $5.1 million was cash bonuses and performance
stock units. This misalignment of performance and
executive compensation is simply unacceptable and the incumbent
Board needs to be held accountable.
Imation and its nominees, on the other hand, are proposing a
sensible, level-headed approach to capital allocation and executive
compensation that is based on share price performance and tangible
book value creation. We also see numerous ways to
significantly lower overhead expenses.
Unfortunately, the incumbent Board and management are doing
everything in their power to obstruct our attempts to have a free
and open dialogue about the future direction of the Company in
order to protect their incumbency and the millions of dollars they
pay themselves. Disturbingly, they have refused to provide us
with a copy of the Company's shareholder list in order to try to
obstruct us from contacting you directly. As shareholders
we all should ask – what are they are so afraid of? Meanwhile,
the Company has engaged in a robust outreach program, at
significant shareholder expense, to ensure you only hear one side
of the story – theirs.
DON'T BE FOOLED: ARLINGTON'S CURRENT DIVIDEND
IS UNSUSTAINABLE
AND LEVERAGE HAS SOARED
Arlington is trying to paint a rosy picture of its financial
performance and health. Do not take the bait.
While the Company has paid a healthy dividend yield for years, it
comes at a significant cost that could render those dividends
unsustainable in the near-term. A closer examination reveals some
very disturbing trends:
- Arlington has been masking its poor financial health by funding
its dividend from capital reserves and capital raises versus from
operating profit. This is one of the least fiscally responsible
actions a company can take and mimics tactics employed in the
run-up to the financial crisis that crippled the world economy. We
believe the Board continues to pursue this reckless strategy simply
in an effort to win this proxy fight and justify the millions of
dollars they pay themselves.
- The Company's financial leverage has soared to 9.6x, up from
4.2x in the past two years.
- Arlington conjures up convenient Non-GAAP figures as the basis
for its compensation and dividend ratio. According to the Company's
metrics and methodology, since the onset of 2010, there was
cumulative core operating earnings of $442
million. In reality, since the onset of 2010, operations
have yielded only $129 million
in value creation to the enterprise. Since 2014, operating
losses have totaled $22
million.
Arlington's recently announced first quarter 2016 earnings
results revealed the continued strategic failures of the Company –
tangible book value declined $2.37
per share, or 14%, in the past three months. And, in the last
month alone, Arlington's hedges lost $100
million. Meanwhile, compensation expense was up 6.3%
year-over-year.
IS THE BOARD ALIGNED WITH SHAREHOLDERS?
IS ERIC BILLINGS A FULL TIME EMPLOYEE? WHY IS HE SELLING HIS
STOCK? WE HAVE QUESTIONS AND WE NEED ANSWERS.
- The average tenure of the current board members is over 11
years, and approximately two-thirds of the Board have served since
the reorganization and value destruction of Friedman, Billings,
Ramsay Group Inc.
- Did you know that Arlington's Executive Chairman, Eric Billings, has made more than $15 million in compensation from 2011 through
2015? Did you know that Mr. Billings is also Senior Managing
Partner at his eponymous hedge fund, Billings Capital Management?
How much is he making at his other full-time job? Did you know that
after he stepped down as CEO in June
2014, his compensation did not change? As shareholders, we
have the right to know how he spends his time.
- Did you know that since 2010, incumbent directors and officers
have sold $14.5 million in stock at
an average price of $25.39 per share,
a premium of 75.7% to the Company's tangible book value, and that
Mr. Billings personally has accounted for 99.6% of total sales in
the open market during this period?
- Did you know that open market divestitures among insiders have
accelerated as the Company's book value has decreased? Yet, why
aren't insiders buying the stock when it is down 38% in the past
year? If the Company is in fact being kept on the right track, we
believe Arlington must explain why its insiders are not buying
stock in their own company.
IMATION'S SLATE HAS A FOCUSED GOAL: INCREASE
SHAREHOLDER VALUE FOR ALL SHAREHOLDERS AND PROSPER FROM INCREASES
IN LONG-TERM TANGIBLE BOOK VALUE
Imation's nominees are capable, poised and 100% prepared to
execute a turnaround at Arlington. We believe that new thinking and
new people are required to fix old problems plaguing the
Company.
We believe Imation's nominees, together with three continuing
directors, would constitute a better Board, and that our outlined
plans will create a stable enterprise and lasting value for all
shareholders. In fact, upon our successful proxy solicitation
and our satisfaction with the go-forward management team and
strategy, we are prepared to make a cash investment of $60 million at 1.0x tangible book value
($14.45 as of 3/31/2016), which
represents a $2.07 premium based off
the $12.38 share price at market
close on May 13, 2016.
THE FUTURE OF ARLINGTON IS IN YOUR
HANDS.
WE URGE YOU TO VOTE THE GOLD PROXY CARD TODAY TO
ELECT IMATION'S NOMINEES WHO WE BELIEVE WILL EFFECTIVELY STEWARD
YOUR INVESTMENT AT ARLINGTON.
LEARN MORE AT
www.RISEUPARLINGTON.com
Your Vote Is Important. No matter how many shares of Arlington
you own, we urge you to vote your GOLD proxy today, to
ensure that your instructions are received in a timely manner.
Please vote by telephone or Internet by following the instructions
on the enclosed GOLD proxy card or by signing, dating and
mailing your card in the enclosed envelope.
If any of your shares of common stock are held in the name of a
brokerage firm, bank, bank nominee or other institution, they can
only vote your shares upon receipt of your specific
instructions.
Thank you for your support,
Joseph A. De Perio
Chairman, Imation Corp.
If you have any
questions, require assistance with voting your
GOLD proxy card, or need
additional copies of
the proxy materials, please contact our proxy solicitor:
OKAPI
PARTNERS
|
1212 Avenue of the
Americas, 24th Floor
|
New York, NY
10036
|
(212)
297-0720
|
Shareholders Call
Toll-Free at: 855-305-0857
|
E-mail:
info@okapipartners.com
|
About Imation Corp.
Imation (NYSE: IMN) is a holding
company that operates through a subsidiary engaged in global data
storage and data security business. At the corporate level, there
is an ongoing strategic review as Imation expects to seek and
explore new opportunities that will allow it to pursue a diverse
range of business opportunities and deploy its excess cash. For
more information, visit www.imation.com.
IMATION CORP., ROBERT B.
FERNANDER, CLINTON MAGNOLIA
MASTER FUND, LTD., CLINTON GROUP,
INC., JOSEPH A. DE PERIO, AND GEORGE
E. HALL, SCOTT R. ARNOLD,
BARRY L. KASOFF, W. BRIAN MAILLIAN, RAYMOND C. MIKULICH, AND DONALD H. PUTNAM (COLLECTIVELY, THE "PARTICIPANTS") HAVE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") A
DEFINITIVE PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY CARD TO
BE USED IN CONNECTION WITH THE PARTICIPANTS' SOLICITATION OF
PROXIES FROM THE SHAREHOLDERS OF ARLINGTON ASSET INVESTMENT CORP.,
INC. (THE "COMPANY") FOR USE AT THE COMPANY'S 2016 ANNUAL MEETING
OF SHAREHOLDERS (THE "PROXY SOLICITATION"). ALL SHAREHOLDERS OF THE
COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND
OTHER DOCUMENTS RELATED TO THE PROXY SOLICITATION BECAUSE THEY
CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION
RELATED TO THE PARTICIPANTS. 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'S WEBSITE AT
HTTP://WWW.SEC.GOV/ AND AT HTTP:///WWW.RISEUPARLINGTON.COM.
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR
DIRECT OR INDIRECT INTERESTS BY SECURITY HOLDINGS IS CONTAINED IN
THE DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A FILED BY IMATION
WITH THE SEC ON MAY 4, 2016. THIS
DOCUMENT CAN BE OBTAINED FREE OF CHARGE FROM THE SOURCES INDICATED
ABOVE.
1 For information on the Company's peer group, see
the Company's proxy statement for its 2016 annual meeting of
shareholders, filed on Schedule 14A with the SEC on April 18, 2016.
2 For more information on the Company's excessive
compensation practices, among other problems at Arlington, see
Imation's presentation to shareholders at
www.riseuparlington.com/presentation/.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/imation-corp-sends-letter-to-arlington-shareholders-300269681.html
SOURCE Imation Corp.