NEW YORK, March 3, 2015 /PRNewswire/ -- Vertex Capital
Advisors, LLC (together with its affiliates, "Vertex"), one of the
largest stockholders of Axcelis Technologies, Inc. ("Axcelis" or
the "Company") (NASDAQ: ACLS), owning approximately 6.7% of the
outstanding common stock of the Company, today issued the following
statement:
"We were dismayed to read the February
13, 2015 Axcelis letter to stockholders; a letter we believe
to be a fanciful communication whose central purpose appears to be
an effort to obscure and divert attention from the longstanding
reality at the Company: Axcelis has a storied history of poor
operating performance, poor corporate governance, and miserable
stockholder returns. It was not until the Company was faced
with outside stockholder pressure from Vertex at last year's annual
meeting of stockholders that the Company's Board of Directors (the
"Board") seemed prodded into action. Many of the "bold"
actions the Axcelis Board touts in its letter to stockholders,
appear to have been undertaken in reaction to our involvement and
suggestions we made to the Company to create stockholder
value.
In our view, Axcelis is a textbook example of one of the
principal defects in today's corporate world; the concentration of
power and decision-making authority in bureaucratic,
self-perpetuating boards and management teams that too often lack
the vision, business acumen, and objectivity required to skillfully
direct operations and maximize value for the people they represent
and must ultimately be responsible to, the stockholders.
Nowhere is this demonstrated more clearly than in the Company's
recent letter.
We strongly believe in the Company's potential and, because of
that, have over $20 million
invested in the Company. But in light of its poor
historical track record, which extends over a decade now, we simply
do not have confidence in the current Board's ability to properly
oversee management and protect the interests of stockholders.
While the Company's three newly proposed nominees for election
at the 2015 Annual Meeting of Stockholders (the "Annual Meeting")
may help improve oversight, we note that none have any relevant ion
implantation experience and two have no outside board
experience. We fail to see how these new nominees are better
than the more highly-qualified individuals we have nominated.
Stockholders should question whether the addition of three new
individuals nominated by the same Board that has failed Axcelis
stockholders for so long, is just a textbook defensive move from an
entrenched board. We believe that significant changes must
still be made to the composition of the Board.
We note that two of the newer additions to the Board -
Arthur George, Jr. and Joseph Keithley - who were apparently part of
the Board's "refreshment" process, are questionable choices in our
opinion to ensure good corporate governance and straightforward
thinking, since both serve as directors of Nordson Corporation,
together with Axcelis' Chief Executive Officer and President,
Mary Puma. It is
unfortunate that the Board has chosen not to meaningfully engage
with us on the composition of the Board and has instead decided to
drag Axcelis into a costly and unnecessary proxy contest.
The Board's rejection of our most recent settlement proposal,
which was designed to hold the Company accountable for the
reasonable and achievable financial targets they set, is an
illuminating example of the lack of accountability at Axcelis that
has led to a generation of underperformance. Based on the Company's
persistent inability to deliver upon its stated financial goals, we
believe the Board's rejection of our settlement proposal is just
another act of self-preservation and entrenchment.
At the Annual Meeting, Axcelis stockholders will finally have a
real choice; stick with the status quo (and trust the current
management and Board to attempt to finally deliver results) or
elect a slate of truly independent, experienced nominees that will
hold Axcelis management accountable. We strongly believe
our highly qualified nominees have the experience, skills and much
needed independence to help Axcelis become the premier player in
ion implantation.
AXCELIS STOCKHOLDERS HAVE SUFFERED SIGNIFICANT
LOSSES
UNDER THE DIRECTION OF THE AXCELIS BOARD
Consider the following:
- Under the 13 year tenure of the current CEO, Mary Puma, the Company underperformed the Nasdaq
index by 218.3% prior to the filing of our Schedule 13D on
September 16, 2014 (the "Schedule 13D
filing").
- Since March 17, 2008, when the
Board rejected an unsolicited cash proposal worth $6 per share from Sumitomo Heavy Industries,
Ltd., arguing that the offer undervalued the Company, Axcelis has
lost 62.7% in market value, underperforming the Nasdaq index by
171.8% prior to our Schedule 13D filing, and never trading as high
as $6 since such offer.
- Since 2011, the year Axcelis anxiously points to in its
February 13th letter to stockholders, the Company only generated
meager profits in four quarters – the best was a paltry
$0.04 profit. Losing money is apparently the norm under current
management!
- In Q4 2014 – a quarter that benefited from strong cyclical
tailwinds in the industry – the Company recorded only 0.3% net
income margin.
- Indeed, in Q4 2014, the Company recorded 30% gross margin,
while Applied Materials Inc., its main competitor, did north of
40%. In fact, over the past twenty earnings calls, management has
reiterated a low 40% gross margin target – which should be
achievable – but again and again they have failed their own words
and gross margins remain at 30%.
- Over the last ten years, cumulative operating losses have
exceeded $153,000,000.
- Over the last five years, the same management team cost
stockholders $46,000,000 of
cumulative operating losses, during a period when the industry has
prospered.
- Meanwhile, during that same 10 year and 5 year period,
Mary Puma, the CEO, earned over
$9,200,000 and $3,700,000, respectively. What value did Ms. Puma
create for stockholders? When she took over as CEO in 2002, Axcelis had about $21
million of retained earnings; now, the Company is sitting on
$351 million of cumulative
deficit.
Witnessing this tremendous destruction in value, members of the
Board appear to have simply collected their director fees without
taking any significant proactive actions. While stockholders
have suffered losses, most of Axcelis' directors have individually
earned $900,000 to $1,000,000 over
the last 10 years. Collectively, these directors received a "king's
ransom" at the expense of the stockholders for presiding over a
devitalized entity plagued by long-term underperformance.
THE AXCELIS BOARD AND MANAGEMENT ONLY TOOK
ACTION AFTER VERTEX PUBLICLY CRITICIZED THE COMPANY AT LAST YEAR'S
ANNUAL MEETING
It was not until the 2014 annual meeting of stockholders, when
Vertex openly criticized the Board, the methodology of its
financial guidance and its cost structure, that the Board was
finally pressured into initiating some changes to create
value. While we were encouraged to see the Board institute
certain cost-cutting measures, we believe much more must be
done. We are also encouraged by the Company's plans to
appoint an independent chairman after the Annual Meeting, another
suggestion from Vertex, but have significant concerns that the
Board will simply select an individual who agrees to follow the
long-term plans of CEO Mary Puma and
will therefore not ensure accountability.
AXCELIS' FEBRUARY
13 LETTER TO STOCKHOLDERS RAISES SIGNIFICANT
CONCERNS
Yet another mirage that we believe the Company's letter to
stockholders appears to create is the "castle in the air" image
that this is a board open to the opinions of others, that seeks to
select highly qualified individuals to the Board and management and
has the critical ability to meet the challenges of the present, as
well as the foresight to plan for the future. In our view,
nothing could be further from the truth. We see an insular
board, built on a foundation of personal ties and interlocking
affiliations among board members. Consider the following:
- The first nominee added as a director following the Board's
purported "refreshment" process in 2011 is a director who sat on
the board of another company with CEO Mary
Puma.
- The questionable appointment of Joseph
Keithley, in particular, appears to put into bold relief the
longstanding and ongoing agenda of Mary
Puma and "her Board," namely, the unambiguous attempt to
entrench itself in power and dominate the agenda of the company. We
question how any reasoning individual can think otherwise, when the
first action the Board led by Mary
Puma takes to initiate good governance, in 2011, is to
appoint "one of its own"?
- The Board re-appointed three directors, John Fletcher, Stephen
Hardis, and H. Brian
Thompson, each of whom received withhold votes of over 57%
of the shares voted at the 2008 annual meeting of stockholders.
Why has the Board allowed
these so called "zombie" directors, who make up the compensation
committee, to continue to serve on the Board today?
- The Board re-appointed Mr. Thompson after
he had the distinction of receiving withhold votes of greater than
50% again in 2014. This is an outrageous repudiation of the
wishes of stockholders.
- Why did it take outside pressure from stockholders before two
of these three "zombie" directors agreed to resign from the Board
after the 2015 annual meeting of stockholders?
- At least 25% of the shares cast at the
last two annual meetings of stockholders have been voted against
the entire Board.
- Why are the Company's "new" director
nominees being hand-picked by the "old" Board? This is hardly a
recipe for far-reaching improvement. Rather, it appears to be yet
another conspicuous example of self-preservation. This Board does
not appear "investor friendly" and welcoming of stockholder
feedback. Instead, it appears to be a closely-knit group that is
far-removed from the people it should be working
for....stockholders.
- Why have members of Axcelis' management
team sold virtually all of their stock? Within the last two
weeks, Kevin Brewer (EVP/CFO),
William Bintz (EVP/ Product
Development and Engineering), and Douglas
Lawson (EVP/Corporate Marketing & Strategy) have sold
71,007, 85,000 and 80,250 shares, respectively.
- The Axcelis board and management own less
than 2% of Axcelis stock. What does this suggest about their level
of confidence in the Company and alignment of interests with
stockholders?
VERTEX'S INTERESTS ARE ALIGNED WITH ALL
AXCELIS STOCKHOLDERS
Unlike the Axcelis Board and management who have no material
investment at stake in Axcelis, Vertex has over $20 million invested in Axcelis.
Clearly our interests are fully aligned with all of our
fellow stockholders. When the Board made it abundantly clear
that it was unwilling to meaningfully engage with us on the
composition of the Board, we had no choice but to nominate
principled, conscientious, independent, and forward-looking
individuals, each with a record of solid accomplishment, to the
Board. Indeed, we believe it was largely because of our
constructive efforts to engage the Board that the Board finally
felt enough pressure to reach out to stockholders.
Stockholders must demand clear-headed, independent agents of
change, not Board members who we believe will perpetuate the status
quo frame of mind. There is, however, one thing that the
present Board knows, and knows full well: a proxy fight is a
strenuous and time-consuming exercise. Even more concerning,
it is a costly expenditure of stockholder money. Unfortunately this
is the path that the Board has chosen to take."
Investor Contact
Eric
Singer
(212) 752-5750
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
Vertex Capital Advisors, LLC, together with the other
participants named herein (collectively, "Vertex"), intends to make
a preliminary filing with the Securities and Exchange Commission
("SEC") of a proxy statement and an accompanying proxy card to be
used to solicit votes for the election of a slate of director
nominees at the 2015 annual meeting of stockholders of Axcelis
Technologies, Inc. (the "Company").
VERTEX ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY
MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE
SOLICITATION WILL PROVIDE COPIES OF THESE MATERIALS WITHOUT CHARGE
UPON REQUEST.
The participants in this solicitation are anticipated to be
Vertex Opportunities Fund, LP ("Vertex LP"), Vertex Special
Opportunities Fund II, LP ("VSO II"), Vertex GP, LLC ("Vertex GP"),
Vertex Special Opportunities GP II, LLC ("VSO GP II"), Vertex
Capital Advisors, LLC ("Vertex Capital"), Eric Singer, Edward H.
Braun, Stephen L. Domenik, Richard
J. Faubert, John T.
Kurtzweil, and Peter J.
Simone.
As of the date hereof, Vertex LP beneficially owns directly
956,709 shares of Common Stock of the Company ("Common
Stock"). As the general partner of Vertex LP, Vertex GP may
be deemed to beneficially own the 956,709 shares of Common Stock
owned directly by Vertex LP. As of the date hereof, VSO II
beneficially owns directly 6,501,959 shares of Common Stock. As the
general partner of VSO II, VSO GP II may be deemed to beneficially
own the 6,501,959 shares of Common Stock owned directly by VSO II.
As the investment manager of Vertex LP and VSO II, Vertex
Capital may be deemed to beneficially own the 956,709 shares of
Common Stock owned directly by Vertex LP and the 6,501,959 shares
of Common Stock owned directly by VSO II. As of the date hereof,
Mr. Singer does not directly own any shares of Common Stock.
Mr. Singer, as the managing member of Vertex GP, VSO GP II and
Vertex Capital, may be deemed to beneficially own the 956,709
shares of Common Stock owned directly by Vertex LP and 6,501,959
shares of Common Stock owned directly by VSO II. As of the
date hereof, Mr. Braun beneficially owns directly 10,000 shares of
Common Stock and may be deemed to beneficially own 80,000 shares of
Common Stock underlying stock options that are currently
exercisable. As of the date hereof, none of Messrs. Domenik,
Faubert, Kurtzweil or Simone own any shares of Common Stock.
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SOURCE Vertex Capital Advisors, LLC