ISS does little in their report to hide their serious concerns surrounding this deal on fairness, governance
and procedural grounds. While ISS ultimately cautiously recommended the deal, it was primarily because they were unsure of the risk around financing alternatives. Respectfully, we note that ISS are not experts in capital raising,
and point out that their core reason to vote for the deal fails if the reader reasonably believes financing alternatives are available.
We believe
there are many alternatives available. The capital markets are wide open at the moment. OSW makes dire proclamations about the risk of going to market for financing, but dozens of deals are getting done at very moderate discounts (unlike the
current proposal, which is at an almost 50% discount to todays share price). OSW Leaderships fear mongering is simply not grounded in reality.
For example, just two nights ago Lindblad Expeditions (like OSW a former SPAC operating in the cruise sector) filed a shelf registration indicating potential
preparations for raising capital and saw its shares climb more than 10% in response. (Incidentally, while OSW alleges its stock price move since April 29 is a reflection of market enthusiasm for this deal, we note that since
April 29 OSW is up 42% while Lindblad Expeditions is up 45%.)
Accordingly, we believe investors should read closely the portions of ISSs
report that draw on its governance expertise (in which ISS excoriates OSW Leadership for their behavior throughout this process), pay less heed to its views on the availability of financing alternatives (investors can evaluate that question for
themselves in light of the evidence in the market almost every day), and reasonably conclude that ISSs report offers a compelling argument for voting AGAINST the transaction.
We note that ISS says certain shareholders may reasonably choose to follow Deep Fields lead and vote against this transaction. For investors
who see the wide availability of financing alternatives in todays market, ISSs report may read as highly supportive of our position that shareholders must vote AGAINST this transaction. To anyone with lingering doubts that OSW can
quickly raise capital, we encourage you to call your favorite investment bank and simply ask the question.
From the beginning of this process, DFAM has
said that OSW does indeed need to raise capital, but that this transaction was the wrong one for myriad reasons especially with capital markets wide open. This week, our position has been affirmed by both leading proxy advisors. Glass
Lewis straightforwardly agrees with us in its official recommendation. On the other hand, ISS states that shareholders may reasonably choose to follow our recommendation, and it seems that would especially hold for investors who disagree
with ISSs primary concern which is the risk that other financing alternatives may not be readily available. It stands to reason that ISS sees clear merit in a shareholder who rejects this concern to vote AGAINST the transaction.
DFAM believes it has unanimous support from the leading proxy advisors that, if an investor believes capital markets are open to OSW, a vote AGAINST this deal is justified.
We have received inbound calls from many shareholders, all of whom have expressed the belief this deal is bad for the Company. It is offensive in the
short-term because this deal was the result of an ugly process which has the effect of unduly enriching insiders and badly diluting unaffiliated shareholders. And it is also value-destructive in the long-term, because in a world where
ESG investing is on the ascendancy, the specter of poor governance and utter contempt for unaffiliated shareholders will hang over the Company, its management, and members of its Board of Directors, for a long time to come.
We are confident that a majority of OSWs owners, with the interests of all shareholders in mind, will be reasonable enough to vote AGAINST
this awful proposal.
Sincerely,
Jordan Moelis, Managing
Partner, Deep Field Asset Management LLC