1. |
Title of each class of securities to which transaction applies:
|
2. |
Aggregate number of securities to which transaction applies:
|
3. |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
|
4. |
Proposed maximum aggregate value of transaction:
|
5. |
Total fee paid:
|
[ ] |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
1. |
Amount Previously Paid:
|
2. |
Form, Schedule or Registration Statement No.:
|
3. |
Filing Party:
|
4. |
Date Filed:
|
•
|
“[Cruiser Capital] has made a compelling case for the addition of all three dissident nominees. Patrick Gottschalk, Mark
Bassett, and Keith Rosenbloom should collectively assist in addressing concerns with operational performance, corporate governance, and AVD's
ability to capitalize on industry tailwinds.”
|
•
|
“Ultimately, AVD suffers from two fundamental issues: an inability to execute, and deficient corporate governance.”
|
•
|
“Top-line growth has not been accompanied by meaningful progress elsewhere on the income statement, which is particularly concerning given AVD's
M&A strategy. Coupled with deficiencies in board refreshment, this inability to execute has translated into TSR underperformance.
These and other concerns make it challenging for investors to embrace the go-forward plan articulated by the board…”
|
•
|
“(I)n this case there is no reason to postpone necessary refreshment when there are qualified replacements on the ballot.”
|
•
|
“(T)he board's messaging suggests that a comparison to a specialty chemicals index may not be entirely appropriate – this is concerning, as AVD has historically referenced specialty chemicals indices in important public disclosures.”
|
•
|
“Importantly, AVD share price increased 4.3 percent on April 19, 2022, outperforming peers by 4.4 percentage points. This one-day reaction
suggests the dissident's campaign was welcomed by the market.”
|
•
|
“During engagement with ISS, the board was not able to clearly articulate why May 2015 approximated the trough in the downcycle…However, the
seven-year lookback presented by the board actually underscores the directionally-negative trend in absolute TSR and performance relative to peers, in that AVD has fared progressively worse as time has progressed.”
|
•
|
“(C)omparison of AVD to the board's own selected peers reveals troubling underperformance that has been directionally-negative. There are also concerns about the board's
communication strategy in this area, reflected in mixed messaging relating to the appropriateness of industry comparators, as well as in an insufficiently-supported attempt to present a seven-year lookback as the most appropriate
measurement period.”
|
•
|
“The [operational] story… is one of a company that is growing, but that has impediments or inefficiencies in the cost structure. When this
snapshot is extended to encompass the most recent downcycle, it becomes clear that the full story is more dire than the abridged version
suggests.”
|
•
|
“The inability to recover since the market
turnaround is particularly concerning given AVD's M&A strategy during the downcycle, which included at least a dozen acquisitions.”
|
•
|
“AVD has successfully grown revenue over the past decade, but the top line has come at the expense of progress elsewhere on the income statement. For instance, adjusted EBITDA has declined, which has in turn halved the adjusted EBITDA margin. This is a particularly concerning state of affairs, seeing that AVD has spent over $200 million on acquisitions since the downcycle started.”
|
•
|
“(S)hareholders may have a hard time buying into
the growth story that is now being articulated to the market, particularly since approximately 65 percent of long-term revenue growth is projected to derive from businesses that are still in their infancies. Ultimately, after
suffering through the downcycle, which continued to grip AVD into 2021, shareholders are likely wary of aspirational messaging. At this point, further
board refreshment is likely necessary for shareholders to develop comfort with any go-forward plan.”
|
•
|
“The most concerning aspect of AVD's board refreshment is that it does not appear to be proactive…until apparently pressured to action by external factors, the board was content with the status quo…the board should have been more proactive in adapting to changes, particularly when TSR and operational performance over the period are taken into consideration.”
|
•
|
“(T)he proxy statement indicates that AVD has refined corporate governance structures and processes to replace long-tenured directors. This
appears to be a reference, at least in part, to the director retirement policy. This policy provides that no director shall serve after turning 75 years of age without the consent of a majority of the other directors. It is challenging to not interpret this policy as a means for the board to have its cake and eat it.”
|
•
|
“Historically, AVD has not necessarily been a model of corporate governance best practices, but neither have shareholders been burdened with
significant controversies. However, a closer examination reveals that the board refreshment has not been proactive and that the board's pattern
of communicating with shareholders is fundamentally flawed.”
|
•
|
“The messaging surrounding refreshment, and by extension this proxy contest, has also been problematic…Messaging like this demonstrates a lack of respect for shareholders,
making it hard to place one's faith in AVD to execute on the optimistic go-forward plan and projections”
|
•
|
“While management failed to execute, the board failed to evolve appropriately. Board refreshment over the past decade was neither proactive nor
adequate… The inability to execute and the parallel concerns with board composition and refreshment likely contributed to the significant and
directionally-negative TSR underperformance experienced by shareholders over the past several years.”
|
•
|
“The board is asking shareholders to have faith in a go-forward plan with a growth element that relies heavily on business lines still in their
infancies. Performance and governance over the past decade provide shareholders with little reason to have faith in this proposition.”
|
•
|
“This is also a cyclical industry, and AVD has not even managed to fully recover from the most recent downcycle. Given that AVD must make hay
while the sun shines, there is a sense of urgency underpinning the case for change…shareholders do not have the luxury of time.”
|
•
|
“[Cruiser Capital] has not only nominated a slate that is suited for the specific challenges of this situation, but has targeted the incumbents appropriately. The three targeted incumbents arguably bear the most responsibility for AVD's state of affairs, not just because they
are the longest-tenured independent directors, but because of their responsibilities on the board.”
|
•
|
“We believe the collective expertise of Messrs. Basset, Gottschalk and Rosenbloom speaks directly to observed weaknesses at AVD: the board has not, in our view, convincingly demonstrated it is capable of consistently generating shareholder value, efficiently managing
costs, identifying, securing and integrating key strategic opportunities or reliably driving profitable growth in the absence of exogenous black swan events, nor does it appear the board is well prepared to address its own deficiencies, including very weak succession planning, opaque or incomplete investor communication and a negligible commitment to true board refreshment. We thus believe election of the full Dissident slate represents a fairly low risk, high reward outcome for unaffiliated investors here.”
|