Wynnefield Urges Cronos Shareholders to Review Facts, Ignore Baseless Lawsuit against Company
21 March 2007 - 12:32AM
Business Wire
The Wynnefield Group, a long-term holder of 343,922 shares in the
Cronos Group (Nasdaq:CRNS), today urged other outside shareholders
to make their decision on how to vote in the proposed transaction
based on a review of the facts presented in the company�s upcoming
proxy filing. On Wednesday, February 28, 2007, the Cronos Group �
one of the world's leading lessors of intermodal containers �
announced that it had entered into a definitive agreement to be
purchased by a group including certain members of the company�s
management team, as well as other third-party investors. Under the
agreement, the group will purchase all of Cronos' assets and assume
all of Cronos� liabilities for a purchase price equal to $16.00 per
share. Within 48 hours of the company�s February 28, 07
announcement, Alan Kahn, who to us seems like a �serial plaintiff�
in going private transactions involving management, filed a lawsuit
seeking substantial monetary payment alleging among other things:
conflict of interest; unfair terms; breach of fiduciary duty; and
flawed sales process. Mr. Kahn bases much of his notion on the fact
that the Cronos common share �had recently traded as high as
$18.24� and the $16.00 bid therefore capped the Cronos share price.
Wynnefield thinks this is nonsense. What Mr. Kahn fails to mention
is that the stock traded at $18.24 only on one day (Jan 17, 2007).
What he fails to mention is that by Jan 24, 2007 the stock traded
at $14.49. On Jan 31, 2007 it traded at $14.37, and on Feb 3, 2007
it traded at $14.30. Informationally, the stock�s recent low was
$11.96 on Nov. 29, 2006. Further illustrating Mr. Kahn�s �ready,
fire, then aim� approach, the lawsuit was commenced even before the
company filed its proxy statement which will provide detailed
information about the sale process, other elements of the
transaction and the company�s plan going forward. Nelson Obus,
Managing Partner of Wynnefield commented, �It is unfortunate that
an individual who claimed for many years to be a value investor,
comports himself in this way. Wynnefield, like other value oriented
funds, invests on the basis that stocks of particular companies are
mispriced by the market. Value research is directed to
understanding what the market has not understood about a particular
situation and investing accordingly.� Mr. Obus went on to say,
�Alan Kahn certainly knows that stocks are infrequently fairly
valued, and to now allege that a single day when the stock achieved
its highest price in recent history should be the benchmark from
which a �premium� should then be offered is embarrassing to the
value investing community. However, since Alan did not even wait to
see what was in the proxy before filing his lawsuit, one can only
speculate on his underlying motivation. What we know for sure is
that this motivation is not based on the complete facts, since he
will not even have them until the proxy is filed.� �As a long-time
significant shareholder in this company, we urge all outside
shareholders to determine how to vote on the proposed transaction
based on the facts. And those facts will be presented in the
company�s upcoming proxy filing � not in the latest baseless
lawsuit from Alan Kahn,� concluded Obus. ABOUT THE WYNNEFIELD
GROUP: The Wynnefield Group includes several affiliates of
Wynnefield Capital, Inc. (WCI), a value investor specializing in
U.S. small cap situations that have company- or industry-specific
catalysts. WCI was established in 1992. Its founding partners,
Nelson Obus and Joshua Landes, held senior research and
institutional equity positions at Lazard Freres & Co. during
the 1980s, and the initial Wynnefield investors included many of
their colleagues at Lazard. The fund has grown to approximately
$400 million under management. Nelson Obus currently serves on the
board of directors of Layne Christensen Company (NASDAQ: LAYN),
serving on its audit committee and compensation committee.
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