The group, Quinpario Partners LLC (an investment and operating company founded by former senior executives of Solutia Inc), has disclosed in a Schedule 13D filing with the Securities and Exchange Commission aggregate ownership of approximately 10.13% of Zoltek's outstanding shares, making it the company's largest unaffiliated common shareholder. Quinpario (headed by Jeffry Quinn, a former Solutia CEO and president) also delivered a letter to Zoltek's Chairman and CEO, Zsolt Rumy, with a copy to the company's Board of Directors. (The full text of the letter can be downloaded on the right.)
In November 2012, Quinpario proposed the acquisition of all of the outstanding shares of Zoltek, or an equity investment. In this latest action Quinpario is seeking a special shareholders meeting in order to remove the six current members of the Board of Directors and elect five new directors.
Zoltek, which is headquartered in St Louis, Missouri, USA, says it has advised the group’s counsel that, based on a preliminary review of the request, it appears to be deficient in several respects and it does not plan to call the special shareholders meeting.
Zoltek stated that it will respond to the group in greater detail once it has opportunity to consider the matters set out in the letter.
“Our Board members own a significant amount of Zoltek’s stock and, accordingly, our directors’ financial interests are directly aligned with those of our shareholders at large," says Rumy.
"We will continue to focus on building long-term shareholder value by leading the commercialisation of carbon fibres. Of course, if Mr. Quinn’s group were to submit a bona fide proposal that adequately compensates our shareholders for the value of our technology, industry-leading capacity and future growth potential, our Board would be pleased to consider it.”
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"The Quinpario Group's substantial investment in Zoltek is based on extensive due diligence, which has led us to conclude that Zoltek is failing to deliver fully on its potential." "Notably, despite five years of heavy investment in capacity expansion and operational improvements, the company's operational performance continues to stagnate, as evidenced by (i) flat revenue and operating income and (ii) deteriorating gross profit and cash from operations. This severe underperformance appears to be largely due to:
"Despite all of this, we continue to strongly believe in the long-term prospects of Zoltek's business and its significant growth potential." "We are concerned that enough is not being done to take appropriate actions to address the company's troubled performance. We are even more concerned that the Board was not even willing to formally consider viable strategic options upon presentation last year. The company's "just say no" approach is not in the best interests of its shareholders. Significant and immediate change is required at Zoltek." |
- For further information and analysis see: Ex-Solutia CEO seeks to oust Zoltek board (stltoday.com)
