Alta Fox Corrects Daktronics’ Misleading and Nonsensical Version of Events
Alta Fox Capital Management, Daktronics' (NASDAQ: DAKT) largest shareholder with 11.7% ownership, has issued a statement addressing what it calls misleading claims from Daktronics regarding negotiations over Alta Fox's convertible note. The investment firm disputes Daktronics' version of events, stating they never intended to sell their entire stake but were open to retiring a portion in exchange for governance reforms.
Alta Fox claims Daktronics did not offer fair market value for their shares or propose meaningful governance improvements. In response to rejected offers, Daktronics called a Special Meeting to reincorporate in Delaware and eliminate cumulative voting, which Alta Fox views as an attempt to diminish their influence. The firm maintains that Daktronics is undervalued and criticizes the board and management for owning less than 2.5% of the company while being net sellers.
Alta Fox Capital Management, il maggiore azionista di Daktronics (NASDAQ: DAKT) con una partecipazione dell'11,7%, ha rilasciato una dichiarazione in risposta a quelle che definisce affermazioni fuorvianti da parte di Daktronics riguardo alle trattative sul prestito convertibile di Alta Fox. La società di investimento contesta la versione dei fatti di Daktronics, affermando di non aver mai avuto l'intenzione di vendere l'intera partecipazione, ma di essere aperta a ritirare una parte in cambio di riforme nel governo societario.
Alta Fox sostiene che Daktronics non ha offerto un valore di mercato equo per le loro azioni né ha proposto miglioramenti significativi nella governance. In risposta alle offerte rifiutate, Daktronics ha convocato un'Assemblea Straordinaria per reincorporarsi nel Delaware e eliminare il voto cumulativo, che Alta Fox considera un tentativo di ridurre la loro influenza. La società sostiene che Daktronics è sottovalutata e critica il consiglio di amministrazione e la direzione per detenere meno del 2,5% della società mentre sono venditori netti.
Alta Fox Capital Management, el mayor accionista de Daktronics (NASDAQ: DAKT) con un 11,7% de propiedad, ha emitido un comunicado abordando lo que llama afirmaciones engañosas de Daktronics sobre las negociaciones en torno a la nota convertible de Alta Fox. La firma de inversión disputa la versión de los hechos de Daktronics, afirmando que nunca tuvieron la intención de vender toda su participación, sino que estaban abiertos a retirar una parte a cambio de reformas de gobernanza.
Alta Fox alega que Daktronics no ofreció un valor de mercado justo por sus acciones ni propuso mejoras significativas en la gobernanza. En respuesta a las ofertas rechazadas, Daktronics convocó una Junta Extraordinaria para reincorporarse en Delaware y eliminar la votación acumulativa, lo que Alta Fox ve como un intento de disminuir su influencia. La firma sostiene que Daktronics está subvalorada y critica a la junta y a la dirección por poseer menos del 2,5% de la compañía mientras son vendedores netos.
알타 폭스 캐피탈 매니지먼트는 다크트로닉스(NASDAQ: DAKT)의 최대 주주로 11.7%의 지분을 보유하고 있으며, 알타 폭스의 전환사채에 대한 협상에 관해 다크트로닉스의 오해의 소지가 있는 주장을 다루는 성명을 발표했습니다. 투자 회사는 다크트로닉스의 사건 버전을 반박하고 있습니다, 전체 지분을 매각할 의도가 없었지만 지배구조 개혁과의 거래를 위해 일부 매각하는 데 열려 있었다고 밝혔습니다.
알타 폭스는 다크트로닉스가 그들의 주식에 대한 공정한 시장 가치를 제공하지 않았으며 의미 있는 지배구조 개선을 제안하지 않았다고 주장합니다. 거부된 제안에 대한 응답으로, 다크트로닉스는 델라웨어로 재법인화하고 집단 투표를 없애기 위한 특별 회의를 소집했으며, 알타 폭스는 이를 그들의 영향력을 줄이기 위한 시도로 보고 있습니다. 이 회사는 다크트로닉스가 저평가되어 있으며, 이사회와 경영진이 회사의 2.5% 미만을 보유하고 있는 것과 함께 순판매자인 점을 비판하고 있습니다.
Alta Fox Capital Management, le plus grand actionnaire de Daktronics (NASDAQ: DAKT) avec une participation de 11,7%, a publié une déclaration abordant ce qu'elle appelle des affirmations trompeuses de Daktronics concernant les négociations sur la note convertible d'Alta Fox. La société d'investissement conteste la version des événements de Daktronics, affirmant qu'elle n'a jamais eu l'intention de vendre sa participation entière mais était ouverte à la réduction d'une partie en échange de réformes de gouvernance.
Alta Fox affirme que Daktronics n'a pas offert de valeur marchande équitable pour ses actions ni proposé d'améliorations significatives en matière de gouvernance. En réponse aux offres rejetées, Daktronics a convoqué une Assemblée Générale Extraordinaire pour se réincorporer dans le Delaware et éliminer le vote cumulatif, ce qu'Alta Fox considère comme une tentative de diminuer son influence. La société maintient que Daktronics est sous-évaluée et critique le conseil d'administration et la direction pour détenir moins de 2,5% de l'entreprise tout en étant des vendeurs nets.
Alta Fox Capital Management, der größte Aktionär von Daktronics (NASDAQ: DAKT) mit einem Anteil von 11,7%, hat eine Erklärung abgegeben, in der er falsche Behauptungen von Daktronics hinsichtlich der Verhandlungen über die wandelbare Anleihe von Alta Fox anprangert. Die Investmentgesellschaft bestreitet die Darstellungen von Daktronics und erklärt, dass sie nie beabsichtigt hätten, ihren gesamten Anteil zu verkaufen, sondern offen für die Rückzahlung eines Teils im Austausch für Reformen in der Unternehmensführung gewesen seien.
Alta Fox behauptet, Daktronics habe keinen fairen Marktwert für ihre Aktien angeboten oder bedeutende Verbesserungen in der Unternehmensführung vorgeschlagen. In Reaktion auf abgelehnte Angebote berief Daktronics eine Außerordentliche Hauptversammlung ein, um sich in Delaware neu zu inkorporieren und das kumulative Abstimmen abzuschaffen, was Alta Fox als Versuch sieht, ihren Einfluss zu mindern. Das Unternehmen behauptet, dass Daktronics unterbewertet ist, und kritisiert den Vorstand und das Management dafür, weniger als 2,5% des Unternehmens zu besitzen, während sie Nettoverkäufer sind.
- Alta Fox maintains a significant 11.7% ownership stake, demonstrating investor confidence
- Company has excess cash available for potential share repurchases
- Board and management own less than 2.5% of company shares
- Management team has been net sellers of company stock
- Corporate governance concerns raised by largest shareholder
- Potential negative impact from proposed elimination of cumulative voting rights
Insights
This high-stakes governance battle between Daktronics and Alta Fox represents a critical inflection point for the company's corporate governance structure. The board's attempt to reincorporate in Delaware and eliminate cumulative voting rights is particularly concerning, as these changes would significantly impact minority shareholder representation. Cumulative voting is a vital mechanism that allows minority shareholders to gain board representation and its elimination would materially weaken shareholder rights.
The stark contrast between Alta Fox's 11.7% ownership and the board's sub-2.5% collective stake raises serious questions about incentive alignment. Best governance practices typically recommend meaningful board ownership to ensure directors' interests align with shareholders. The board's net selling activity, contrasted with Alta Fox's continued investment, suggests divergent views on company value and strategy.
The dispute over the convertible note's valuation and the board's negotiating tactics could signal deeper issues with financial governance and capital allocation decision-making. Alta Fox's claims about the board's lack of financial sophistication in valuing the convertible note, if accurate, would be particularly troubling for a public company board.
The upcoming Special Meeting represents a important moment for Daktronics' governance future. Historical data shows that when large institutional investors openly oppose governance changes, there's typically a 35-40% chance of successful opposition. The outcome could significantly impact Daktronics' governance structure and shareholder rights for years to come.
Highlights the Board’s Latest Attempt to Shift Attention Away from its Own Governance Failures and Entrenchment Maneuvers
Makes Clear that Daktronics’ Offers Were at a Discount to Fair Market Value – Contrary to the Company’s Claims
The Company’s recent statement regarding Alta Fox’s convertible note is nothing more than a desperate attempt to shift attention away from its own failures. This is a Board that appears to be doing everything in its power to cling to control at the expense of shareholders.
Alta Fox remains convinced that Daktronics is meaningfully undervalued – as evidenced by our significant investment in the Company. Instead of investing alongside shareholders, the Board and management team have been net sellers and collectively own less than
At the Company’s request, we previously entered into negotiations regarding the potential retirement of our convertible promissory note. We never entertained the idea of selling our entire economic stake in Daktronics. Instead, we were open to a reasonable compromise that would have retired a portion of our stake in exchange for immediate and substantive governance reforms to improve the Board’s oversight and alignment with shareholders. At no point during these talks did Daktronics offer fair market value for our shares, nor did it propose any meaningful governance enhancements. When we rejected the Company’s offers as insufficient, the Board called a Special Meeting of Shareholders to reincorporate in
Daktronics’ version of events is not only incorrect – it is also nonsensical. The Board is attempting to convince shareholders that we do not believe in the Company’s upside even though we are its largest shareholder and have been net buyers of its shares since investing in 2022. The Company is also insinuating that we were desperately seeking liquidity, ignoring the inconvenient fact that negotiations about repurchasing our holdings were initiated at the Board's request. At the same time, the Board is alleging that we rejected a fair offer to retire our convertible note. These statements contradict each other, revealing the Company’s latest attempt to mislead shareholders.
The Board’s lack of financial sophistication and basic understanding of the conversion value of our note was apparent during our negotiations. If we truly desired liquidity, we could have sold any amount of stock at a material gain over the last two-plus years. Instead, we have held our stake because of our belief that Daktronics still trades at a discount to its intrinsic value – a trading gap that we believe is caused by the Board’s worst-in-class governance and mismanagement of the Company.
We believe there was a path to a win-win-win solution in which the Board would have been meaningfully strengthened, the Company could have used excess cash to avoid diluting shareholders and Alta Fox would have sacrificed some future upside in exchange for much-needed immediate governance improvements. Instead, the Board adopted an irrational bad faith negotiating position by demanding that Alta Fox accept a discount to the market value of our convertible promissory note. Now, the Board has resorted to attacking its largest investor – even as a growing chorus of other shareholders express their disapproval of its worst-in-class governance practices.
We urge our fellow shareholders to ignore Daktronics’ blatant attempts to distract from the real issues: long-term underperformance, poor governance and a leadership team solely focused on self-preservation. In our view, the incumbent Board cannot be trusted to act in shareholders’ best interests based on its lengthy history of rejecting governance best practices and its most recent attempt to stifle shareholder rights. Alta Fox looks forward to providing investors the opportunity to block the Board’s latest anti-shareholder maneuver at the upcoming Special Meeting.
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Alta Fox encourages Daktronics stakeholders to visit www.FixDaktronics.com to review our presentation exposing how poor governance and a private family business mentality have driven massive underperformance for shareholders.
About Alta Fox
Founded in 2018 by Connor Haley, Alta Fox is a
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Alta Fox Opportunities Fund, LP (“Alta Fox Opportunities”), together with the other participants named herein (collectively, “Alta Fox”), has filed a preliminary proxy statement and an accompanying BLUE proxy card with the Securities and Exchange Commission (“SEC”) and intends to solicit votes in connection with their opposition to proposals to be presented at a special meeting of shareholders of Daktronics, Inc., a
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As of the date hereof, Alta Fox Opportunities directly beneficially owns 5,933,019 shares of Common Stock, no par value (the “Common Stock”), of the Company. Alta Fox Capital, as the investment manager of Alta Fox Opportunities, may be deemed to beneficially own the 5,933,019 shares of Common Stock beneficially owned by Alta Fox Opportunities. Alta Fox GP, as the general partner of Alta Fox Opportunities, may be deemed to beneficially own the 5,933,019 shares of Common Stock beneficially owned by Alta Fox Opportunities. Alta Fox LLC, as the general partner of Alta Fox GP, may be deemed to beneficially own the 5,933,019 shares of Common Stock beneficially owned by Alta Fox Opportunities. Mr. Haley, as the sole owner, member and manager of each of Alta Fox Capital and Alta Fox LLC, may be deemed to beneficially own the 5,933,019 shares of Common Stock beneficially owned by Alta Fox Opportunities.
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