Indaba Capital Questions Stagwell’s Desired Appointment of Madison Avenue Partners’ Eli Samaha to MDC’s Board Given Apparent Link to Mark Penn

Rhea-AI Summary

Indaba Capital Management, the largest unaffiliated shareholder of MDC Partners (MDCA), has expressed concerns over Stagwell Media's recommendation to appoint Eli Samaha to MDC's newly-combined Board. Indaba highlighted a potential conflict of interest, revealing Samaha's ties to Mark Penn, MDC’s CEO, which were omitted in Stagwell's announcement. Derek Schrier of Indaba criticized this lack of transparency, asserting it raises governance issues and reinforces their opposition to the current transaction terms.

Positive

• Indaba's position as the largest unaffiliated shareholder may lend weight to governance discussions.
• Concerns raised may prompt increased scrutiny of corporate governance practices.

Negative

• Potential conflict of interest due to Samaha's ties with CEO Mark Penn.
• Stagwell's lack of transparency regarding board appointments could decrease shareholder trust.
• Indaba's opposition highlights significant shareholder dissent towards the transaction.

Indaba Capital Management L.P. (together with its affiliates, “Indaba” or “we”), which is the largest unaffiliated shareholder of MDC Partners Inc. (NASDAQ: MDCA) (“MDC” or the “Company”), today questioned Stagwell Media LP’s (“Stagwell”) announcement of its intention to recommend the appointment of Eli Samaha of Madison Avenue Partners, LP (“Madison”) to the newly-combined entity’s Board of Directors (the “Board”).

Derek Schrier, Managing Partner of Indaba, commented:

“In direct conversations with Indaba, Mr. Samaha disclosed that Madison’s principal investor is a high school classmate and long-time, ongoing friend of Mark Penn, the Chairman and Chief Executive Officer of MDC and Managing Partner of Stagwell. We have received feedback from other MDC shareholders that Mr. Samaha disclosed similar information to them. Stagwell’s July 15^th press release omits Madison’s link to Mr. Penn while boasting that Mr. Samaha ‘will bring strong independent perspective’ to the Board. This seemingly deceptive stunt reinforces to us that this transaction process is plagued by alarming conflicts and concerning interlocks. It gives us great concern that Stagwell and Mr. Penn appear to have disregarded the need for transparency with MDC shareholders when announcing Madison’s support and Mr. Samaha’s possible service as a director.

At bottom, last night’s development reinforces our opposition to the transaction on its current terms. It is clear to us that Mr. Penn will say anything to get his way. This type of operating mentality is a flashing red light when it comes to corporate governance.”

About Indaba Capital

Indaba was founded in 2010 to invest in corporate equity and debt. Based in San Francisco, Indaba currently has more than $1.5 billion in assets under management. Learn more at www.IndabaCapital.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210716005344/en/

FAQ

What concerns did Indaba Capital express about Eli Samaha's appointment to MDC's Board?

Indaba Capital raised concerns over a potential conflict of interest due to Eli Samaha's connections with Mark Penn, MDC's CEO, which were not disclosed by Stagwell.

How does Indaba Capital's position affect MDC Partners?

As the largest unaffiliated shareholder, Indaba Capital's opposition could influence governance practices and shareholder decisions regarding the transaction with Stagwell.

What was Stagwell Media's response to Indaba's concerns?

Stagwell has yet to directly address Indaba's concerns regarding transparency and governance related to the appointment of Eli Samaha.

Why is Indaba Capital opposed to the transaction with Stagwell?

Indaba is concerned about governance issues and potential conflicts of interest, particularly regarding the lack of transparency about board appointments.