However, the most important point remains that the Special Committee which negotiated this transaction
was irredeemably conflicted.
It is said that the first law of holes is, if you find yourself in a hole, stop digging. But with each
statement made by OSW Leadership, they seem to make the deal appear even worse.
In their attempt to refute our governance concerns, OSW Leadership first
states that members of the Special Committee did not negotiate on their own behalf. But three bullet points later, they acknowledge that Steiner proposed the adjustment which directly favored members of the Special Committee
in a manner which no other shareholder enjoyed. This is why process matters so much, and why a Special Committee normally seeks to avoid even the appearance of conflict. A Special Committee prepared to accept unfair and
conflicted terms is not any less offensive to good governance than one determined to propose them.
Further, OSW Leadership asks
us to believe that we should ignore conflicts because these amounts are not a significant portion of the capital raise. Unfortunately for OSW Leadership, it is not up to them to determine how conflicted is too conflicted. We
believe good governance demands that a transaction such as this have no conflicts.
OSW Leadership seeks to use an invented trust us
loophole to excuse their abuses of governance norms, including their novel definition of the term Special Committee. Considering that in this transaction 80% of the Special Committee was conflicted while only 67% of the non-recused Board of Directors was conflicted, it becomes clear that the entire process was upside-down and backwards. If stockholders vote to accept this, the Special Committee as a concept risks becoming a farce,
and a thing of the past.
If OSW Leadership had confidence that this insider transaction was truly a good deal which appealed to all shareholders, they
could have made the vote contingent on approval of a majority of unconflicted shareholders. They did not, because it is not.
Since DFAM made its concerns
public, numerous shareholders representing a large share of the unconflicted shares outstanding have reached out to us to express their substantial concerns about this deal. We have not heard from a single shareholder who believes this deal
was executed properly or with the best interests of all shareholders in mind.
While DFAM takes no view on what should happen after a NO vote, our
conversations with these shareholders have further increased our confidence that OSW would easily and quickly raise the required funds. OSW shareholders would be much better off if OSW Leadership would listen to its shareholders rather than continue
to push their conflicted, insider deal.
Sincerely,
Jordan
Moelis, Managing Partner, Deep Field Asset Management LLC