Indaba Issues Letter to ON24’s Board of Directors Regarding the Need for a Meaningful Capital Return Program and Stronger Corporate Governance
Indaba Capital Management, ON24's second-largest shareholder with nearly 9% ownership, has urged the company to implement a capital return plan of at least
- Indaba urges a return of at least $150 million to shareholders, indicating potential immediate value realization.
- Suggestions for a special dividend and share buybacks could enhance investor confidence.
- Indaba highlighted a concerning 80% decline in share price over the last two years.
- Criticism of excessive spending and capital allocation under current management raises concerns about financial stewardship.
Encourages the Company to Establish a Specific Plan for Returning At Least
Urges the Company to Appoint an Indaba Designee as a Director and Modernize Governance, Including by De-Staggering the Board
Members of the Board,
As you know, Indaba is ON24’s second largest shareholder. We are strong proponents of
Unfortunately, the need for change at
As the Board has overseen billions of dollars in value erosion over the past 24 months, it has not offset share price declines by meaningfully returning excess capital on the balance sheet to shareholders. This leads us to fear that the Board may allow
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Returning at least
in capital to shareholders. There is no plausible rationale for$150 million ON24 keeping so much cash on its balance sheet, especially when the Company has not disclosed a clear and credible plan for investing that capital and producing strong returns for shareholders. Shareholders should not have to bear the risk of entrustingMr. Sharan and his boardroom allies to steward their cash. That is why we believe the best path forward is returning at least to shareholders, while still leaving a significant amount of capital on hand for the Company’s operations and to fund prospective tuck-in acquisitions.$150 million
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Returning capital in a credible and confidence-inspiring manner. We believe the Board needs to be thoughtful about the best and most tax-efficient ways to return capital to shareholders. Ideally,
ON24 should draw on a combination of a special dividend, accelerated share repurchase (“ASR”) program, 10b5-1 share repurchase plan and provide a specific plan to shareholders. We believe a dividend, a$75 million ASR program and a$50 million 10b5-1 plan is appropriate and would be well received by shareholders.$25 million
- Improving corporate governance. If the Board wants to regain shareholder trust after overseeing massive value destruction, we believe it should appoint an Indaba designee as a director, de-stagger its director classes and set up a committee of independent directors to oversee capital allocation initiatives.
At this point, we hope the Board simply acts in shareholders’ best interests rather than seeming to prioritize the interests of ON24’s Co-Founder and Board. The time for debate is over. The time for transparent action is here.
Sincerely,
Managing Partner
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About
Indaba was founded in 2010 to invest in corporate equity and debt. It is based in
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FAQ
What actions is Indaba Capital advocating for ON24?
Why has Indaba Capital expressed concerns regarding ON24's Board?
What is the significance of ON24's 80% share price decline?
How does Indaba propose ON24 should return capital to shareholders?