Tessco Confirms Preliminary Consent Solicitation by Robert B. Barnhill, Jr.
TESSCO Technologies (NASDAQ: TESS) announced that founder Robert Barnhill Jr. has filed with the SEC to remove five board members and replace them with his selected candidates. The current board, excluding Barnhill, contains seven directors, six of whom are independent. A Special Committee has been formed to review Barnhill's proposal without requiring immediate action from shareholders. TESSCO is focused on capital reallocation, growth strategies in distribution and innovative products, and enhancing e-commerce initiatives, anticipating profitability improvements in the latter half of the fiscal year.
- Anticipation of improved profitability in the second half of the fiscal year.
- Focus on strategic objectives including capital reallocation and growth in high-margin products.
- Formation of a Special Committee to review the consent solicitation indicates proactive governance.
- Potential governance instability due to Barnhill's attempt to remove board members.
- Uncertainties surrounding shareholder reactions and possible disruptions in management.
HUNT VALLEY, Md.--(BUSINESS WIRE)--TESSCO Technologies Incorporated (NASDAQ: TESS), a leading value-added distributor and solutions provider for the wireless industry, today confirmed that Robert B. Barnhill, Jr., founder and a member of Tessco’s Board of Directors, filed with the U.S. Securities and Exchange Commission preliminary materials to solicit consents to remove five duly elected members of Tessco’s Board and replace them with four hand-picked director candidates selected by Mr. Barnhill.
Tessco issued the following statement:
Tessco’s Board of Directors, excluding Mr. Barnhill, comprises seven highly qualified and experienced directors, six of whom are independent, and all of whom are active, engaged and committed to acting in the best interests of Tessco and all of its shareholders.
Our Board has formed a Special Committee of all directors other than Mr. Barnhill (the “Special Committee”). The Special Committee, in consultation with legal advisors, is carefully reviewing Mr. Barnhill’s consent solicitation materials and will communicate its recommendation to shareholders in due course. Tessco shareholders are not required to take action at this time.
Tessco remains focused on our strategic objectives, which have included reallocating capital to our commercial business and executing on a three-pillar strategy that includes driving growth in our core distribution business, in our high-margin innovative Ventev products, and in our value-added and managed services offerings. In addition, we continue to make progress on our e-commerce and technology initiatives, including enhancing tessco.com. Further, we took actions to streamline operations in our retail business in response to the global retail market decline and the impact of COVID-19, including reducing payroll expenses, renegotiating customer contracts, significantly lowering retail inventory and tightly managing fulfillment and delivery expenses. As a result, we expect to see overall profitability improve in the second half of this fiscal year. Our bolstered management team now combines a strong group of long-tenured individuals with several newly-hired industry veterans with successful track records. Our Board has been instrumental in guiding the team as it executes our strategic initiatives in pursuit of enhancing our financial performance and delivering value to our shareholders.
Tessco is uniquely positioned to capitalize on the exponential growth, technological change and resultant complexity that continues to drive our industry. As we move forward, we will continue to refine and enhance the Company’s current strategic plan in order to ensure that we are pursuing the right course of action for all stakeholders, and will continue to make decisions and act in the best interests of the Company's shareholders.
Sidley Austin LLP and Ballard Spahr LLP are serving as legal counsel to the Special Committee of Tessco’s Board of Directors.
About TESSCO Technologies Incorporated (NASDAQ: TESS)
TESSCO Technologies, Inc. (NASDAQ: TESS) is a value-added technology distributor, manufacturer, and solutions provider serving commercial and retail customers in the wireless infrastructure and mobile device accessories markets. The company was founded more than 30 years ago with a commitment to deliver industry-leading products, knowledge, solutions, and customer service. Tessco supplies more than 46,000 products from 350 of the industry’s top manufacturers in mobile communications, Wi-Fi, Internet of Things (“IoT”), wireless backhaul, and more. Tessco is a single source for outstanding customer experience, expert knowledge, and complete end-to-end solutions for the wireless industry. For more information, visit www.tessco.com.
Forward-Looking Statements
This 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. All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans and future prospects, and our expectations for future operations, are forward-looking statements. These forward-looking statements are based on current expectations and analysis, and actual results may differ materially from those projected. These forward-looking statements may generally be identified by the use of the words “may,” “will,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” “believes,” “estimates,” and similar expressions, but the absence of these words or phrases does not necessarily mean that a statement is not forward-looking. These forward-looking statements are only predictions and involve a number of risks, uncertainties and assumptions, many of which are outside of our control. Our actual results may differ materially and adversely from those described in or contemplated by any such forward-looking statement for a variety of reasons, including those risks identified in our most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission (the “SEC”), under the heading “Risk Factors” and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. For additional information with respect to risks and other factors which could occur, see Tessco’s Annual Report on Form 10-K for the year ended March 29, 2020, including Part I, Item 1A, “Risk Factors” therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the SEC that are available at the SEC’s website at www.sec.gov and other securities regulators.
We are not able to identify or control all circumstances that could occur in the future that may materially and adversely affect our business and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among the risks that could lead to a materially adverse impact on our business or operating results are the following: termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners that are typically terminable by either party upon several months or otherwise relatively short notice; loss of significant customers or relationships, including affinity relationships; loss of customers either directly or indirectly as a result of consolidation among large wireless services carriers and others within the wireless communications industry; the strength of our customers’, vendors’ and affinity partners’ business; negative or adverse economic conditions, including those adversely affecting consumer confidence or consumer or business spending or otherwise adversely impacting our vendors or customers, including their access to capital or liquidity, or our customers’ demand for, or ability to fund or pay for, the purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; changes in customer and product mix that affect gross margin; effect of “conflict minerals” regulations on the supply and cost of certain of our products; failure of our information technology system or distribution system; system security or data protection breaches; technology changes in the wireless communications industry or technological failures, which could lead to significant inventory obsolescence and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; our relative bargaining power and inability to negotiate favorable terms with our vendors and customers; our inability to access capital and obtain financing as and when needed; transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand our business; claims against us for breach of the intellectual property rights of third parties; product liability claims; our inability to protect certain intellectual property, including systems and technologies on which we rely; our inability to hire or retain for any reason our key professionals, management and staff; health epidemics or pandemics or other outbreaks or events, or national or world events or disasters beyond our control; and the possibility that, for unforeseen or other reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings.
The above list should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk factors described in our most recent Annual Report on Form 10-K and other periodic reports filed with the SEC, under the heading “Risk Factors” and otherwise. Other risks may be described from time to time in our filings made under the securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this press release to confirm these statements to actual results or revised expectations.
Important Additional Information and Where to Find It
In connection with the consent solicitation initiated by Robert B. Barnhill, Jr. and certain other participants, TESSCO Technologies Incorporated (the “Company”) intends to file a consent revocation statement and accompanying consent revocation card and other relevant documents with the Securities and Exchange Commission (the “SEC”). STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE COMPANY’S CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), ACCOMPANYING CONSENT REVOCATION CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain a free copy of the consent revocation statement, any amendments or supplements to the consent revocation statement and other documents that the Company files with the SEC at the SEC’s website at www.sec.gov or the Company’s website at https://ir.tessco.com once such materials are electronically filed with, or furnished to, the SEC.
Certain Information Regarding Participants to the Solicitation
The Company, its directors and certain of its officers and employees will be deemed participants in the solicitation of consent revocations from the Company’s stockholders. Information regarding the direct and indirect interests, by security holdings or otherwise of the Company’s directors and executive officers is set forth in the Company’s definitive proxy statement for the 2020 Annual Meeting of Stockholders filed with the SEC on June 12, 2020. To the extent that such participants’ holdings in the Company’s securities have changed since the filing of such proxy statement, such changes have been reflected on Statements of Change in Ownership on Form 4 filed with the SEC. These documents can be found on the SEC’s website at www.sec.gov or the Company’s website at https://ir.tessco.com. Updated information regarding the identities of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Company’s consent revocation statement in connection with the solicitation of consent revocations from the Company’s shareholders and other relevant documents to be filed with the SEC.
