Aerojet Rocketdyne Executive Chairman Warren Lichtenstein Highlights 10 Irrefutable Facts Ahead of Special Meeting
Aerojet Rocketdyne's Executive Chairman, Warren Lichtenstein, criticized a recent report from Institutional Shareholder Services (ISS) for its lack of substantive analysis regarding the company's board candidates and strategic plans. Lichtenstein is urging shareholders to vote for his slate of eight candidates, claiming they possess the necessary qualifications and a plan for value creation, while accusing Eileen Drake's slate of failing to provide transparency and accountability in addressing the company's declining performance. Lichtenstein's group represents approximately 5.6% of shares.
- Lichtenstein's slate offers a detailed strategy targeting at least $65 per share value within three years.
- Lichtenstein's group claims to have a superior CEO candidate in Mark Tucker.
- The company has faced production delays and customer dissatisfaction that threaten shareholder value.
- In fiscal year 2021, the company experienced a 79.9% decline in free cash flow, indicating financial instability.
Contends Recent Report from ISS is Devoid of Substantive Analysis of the Respective Slates’ Business Assessments, Nominees, CEO Candidates and Strategic Plans
Notes ISS Clearly Lacks Understanding of the Sector and Ability to Analyze Aerojet Rocketdyne’s Business
Shares Telling Side-by-Side Comparison of the Lichtenstein Value Proposition vs. the Drake Value Proposition
Urges Shareholders to Vote on the GREEN Proxy Card to Elect Chairman’s Refreshed Slate of Eight Highly Qualified Nominees, Which Has the Right CEO and a Superior Plan for Value Creation
“It is unfortunate that ISS issued a report that lacks any substantive analysis of the respective slates’ business assessments, credentials, CEO candidates and strategic plans. ISS clearly lacks the ability to evaluate the business aspects of companies in Aerojet Rocketdyne’s sector. Clients who have capital at risk and were looking for informed voting perspectives deserved better than an unjustifiably one-sided report that reads like a highly personalized newspaper editorial. We take solace in the fact that
My fellow nominees and I urge all
THE 10 CRITICAL FACTS FOR SHAREHOLDERS
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FACT: After the Lockheed Martin Corporation deal was announced in
December 2020 ,Ms. Drake and her boardroom allies downplayed public regulatory headwinds and ignored documented requests for comprehensive contingency planning.Ms. Drake did not provide the Board with a formal contingency plan untilDecember 2021 . That left the Company ill-prepared when the deal was challenged by theFederal Trade Commission inJanuary 2022 and terminated the following month.
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FACT: During fiscal year 2021, the Company’s key customers expressed frustration with management’s inability to meet production timelines and provide on-time delivery. Over the past 18 months, the concerns of customers such as Boeing and Raytheon have spilled into the public domain. This is a major threat to shareholder value given that
Aerojet Rocketdyne generates90% of its revenue from a half-dozen customers.
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FACT: Starting in the spring of 2021,
Mr. Lichtenstein was sidelined becauseMs. Drake initiated an internal investigation (which ultimately found no breach of fiduciary duty or violation of law) into his transaction-related conduct.Mr. Lichtenstein was prevented from accessing normal-course information and troubleshooting issues that were eroding the Company’s financial and operational foundation. The reality isMr. Lichtenstein was investigated for engaging in normal-course contingency planning thatMs. Drake refused to take on herself because of her focus on obtaining a more than change-in-control payment.$25 million
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FACT: During fiscal year 2021, the Company burned through cash at an alarming rate. Although
Aerojet Rocketdyne reported in free cash flow in 2021,$162 million of that was from a one-time CARES Act payment. In reality, the Company only generated$100 million in free cash flow for the year – a startling$62 million 79.9% decline. These negative trends continue to this day – essentially halfway through 2022.
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FACT: During fiscal year 2021, several of the Company’s programs in its Defense and Space units have gone from “in the black” to deeply “in the red.” Underperforming business units have been the root of negative cash flow and unhappy customers. We fear this underperformance is only spreading under
Ms. Drake while the Board is gridlocked and she has no real oversight. Again, these disturbing trends continue to the present.
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FACT: The Drake slate has not been honest with shareholders about the financial and operational deterioration that has set in at
Aerojet Rocketdyne . Throughout their campaign,Ms. Drake and her allies have not acknowledged – in any public communication – the substantive business issues that are threatening shareholder value. AllowingMs. Drake to operate under the “oversight” of her own hand-picked Board will not remedy this situation.
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FACT: The Drake slate has not provided shareholders with a detailed plan for fixing the business and producing long-term value. In their recent investor presentation,
Ms. Drake and her allies devoted a single slide to a forward-looking plan. In contrast, our slate has released a comprehensive strategy for repairing issues and delivering at least per share in value within three years.$65
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FACT:
The Delaware Court of Chancery recently found thatMs. Drake acted unlawfully by misusing the Company’s resources to support her takeover efforts – in violation of a temporary restraining order. We cannot find any other example of a current CEO who has been rebuked in such a manner by the preeminent business court in the country. Indeed, Ms. Drake’s conduct and the corresponding ruling demonstrate she lacks the credibility to continue runningAerojet Rocketdyne .
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FACT:
Ms. Drake and her boardroom allies have to date not committed to pre-release financial results for the first five months of the year ahead of the Special Meeting. The Chairman’s slate believes the Company’s shareholders deserve to know whether management’s targets for revenue, earnings, cash flow and other key metrics are being achieved. In our view, transparency around these metrics is especially important following the deterioration of the business in fiscal year 2021 and continued decline in 2022.
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FACT: If
Ms. Drake is allowed to prevail at the Special Meeting, she will have self-selected the Board that is supposed to objectively oversee her compensation, performance and strategic decisions. We cannot think of a worse foundation for good governance than allowingMs. Drake – who has violated a court order and misused corporate resources – to pick her overseers. Conversely, our slate has committed to admittedly long overdue governance enhancements that include eliminating the Executive Chairman role, appointing a Lead Independent Director and overhauling committee charters.
THE DISTINCT VALUE PROPOSITIONS
The Key Questions |
Drake |
Lichtenstein |
Top shareholder? |
No |
Yes |
Trustworthy with shareholders’ resources? |
No |
Yes |
Has made open market purchases? |
No |
Yes |
Called for robust contingency plan throughout 2021? |
No |
Yes |
Has large change-in-control payment? |
Yes |
No |
Has compensation aligned with shareholder value? |
No |
Yes |
Has shared a detailed strategy? |
No |
Yes |
Has shared a detailed business assessment? |
No |
Yes |
Has a slate primarily comprised of new candidates? |
No |
Yes |
Has experience completing large transactions? |
No |
Yes |
Was recently willing to take a large payment to leave? |
Yes |
No |
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Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect Steel Partners Holdings L.P.’s (“SPLP”) current expectations and projections about its future results, performance, prospects and opportunities. SPLP identifies these forward-looking statements by using words such as "may," "should," "expect," "hope," "anticipate," "believe," "intend," "plan," "estimate," "will" and similar expressions. These forward-looking statements are based on information currently available to SPLP and are subject to risks, uncertainties and other factors that could cause its actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These factors include, without limitation, the adverse effects of the COVID-19 pandemic to SPLP’s business, results of operations, financial condition and cash flows; material weaknesses in SPLP’s internal control over financial reporting; fluctuations in crude oil and other commodity prices; substantial cash funding requirements that may be required in the future as a result of certain of SPLP’s subsidiaries’ sponsorship of defined benefit pension plans; significant costs, including remediation costs, as a result of complying with environmental laws or failing to comply with other extensive regulations, including banking regulations; the impact of climate change legislation or regulations restricting emissions of greenhouse gases on costs and demand for SPLP’s services; impacts to SPLP’s liquidity or financial condition as a result of legislative and regulatory actions; SPLP’s ability to maintain sufficient cash flows from operations or through financings to meet its obligations under its senior credit facility; risks associated with SPLP’s business strategy of acquisitions; losses sustained in SPLP’s investment portfolio; the impact of interest rates on SPLP’s investments, such as increased interest rates or the use of a SOFR based interest rate in SPLP’s credit facilities; reliance on the intellectual property owned by others and SPLP’s ability to protect its own intellectual property and licenses; risks associated with conducting operations outside of
View source version on businesswire.com: https://www.businesswire.com/news/home/20220621005248/en/
gmarose@longacresquare.com / jgermani@longacresquare.com
mharnett@okapipartners.com / cjacques@okapipartners.com
Source: Steel Partners Holdings L.P.
FAQ
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