Nemo is the parent/holding company L Catterton used in its acquisition of SLL, which of course
originally included the OSW business. What this appears to indicate is that Mr. Lazarus, OSWs Chief Financial Officer, and Mr. Fluxman, OSWs Executive Chairman and a member of the Special Committee tasked with negotiating the
transaction with SLL, each still hold their shares in Nemo, which is equivalent to stating that they own meaningful shares in SLL.
So the picture grows clearer: Mr. Fluxman participated as a member of the Special Committee which was formed in response to a bid made
by SLL a company in which he had a meaningful financial stake. There are not enough hyperbolic terms we could include to explain how wrong this is, on a moral and fiduciary basis.
Mr. Lazarus and Mr. Fluxman are putting new money into this deal, which we viewed as conflict enough. But this revelation that they had significant
economic exposure to the SLL bid all along further indicts the process, and demonstrates a shocking lack of concern for good governance and respect for minority shareholders through this process.
We can only guess at the size of Mr. Fluxmans continuing economic exposure to SLL. What we do know (from the Form
10-K filed by OSW on May 19, 2019) is that on the occasion of OSW combining with Haymaker Acquisition Corporation, Mr. Fusfield earned approximately $20 million which was contractually due to
him on an exit event. Recalling that in the year leading up to SLLs acquisition by L Catterton Mr. Lazarus and Mr. Fluxman earned more than twice as much money as Mr. Fusfield, one imagines that
Mr. Lazarus and Mr. Fluxman are likely to have very significant economic interests remaining in SLL.
It is unacceptable that Mr. Fluxman
participated in the Special Committee which evaluated a bid that came from a company in which he maintains significant ownership; it is embarrassing that Mr. Fluxmans potentially enormous stake in SLL was buried deep in a confusing
paragraph; and it is laughable that the size of his stake in the bidder remains undisclosed!
Marc Magliacano properly recused himself entirely from the
Board of Directors for the process of evaluating the SLL offer; but it was no matter, because SLL had another man on the inside: a well-paid and highly incentivized owner of SLL on the Special Committee, in the person of Mr. Fluxman.
We have in prior presentations laid bare clear evidence of a flawed and faulty insider process. But this is, in our opinion, probably the most consequential,
clear evidence that significant conflicts were apparent from the very beginning, and that they were ignored routinely throughout this travesty of a process.
Sincerely,
Jordan Moelis, Managing Partner, Deep Field Asset
Management LLC
About Deep Field Asset Management LLC
Deep Field Asset Management LLC (DFAM) is a privately-held, independent investment adviser with $136 million in assets under management as of
April 30, 2020. DFAM manages the Deep Field Opportunities Fund (Fund) a global concentrated investment fund that invests primarily in the small- and mid-cap space. The Funds objective is
to back superior management teams pursuing idiosyncratic,