Ader Group Seeks IGT Shareholder Support On The GOLD Proxy Card
-HIGHLY QUALIFIED, INDEPENDENT ADER NOMINEES TO HALT VALUE DESTRUCTION-
NEW YORK, Jan. 28, 2013
NEW YORK, Jan. 28, 2013 /PRNewswire/ -- The Ader Group today announced that it
is mailing definitive proxy materials to International Game Technology
stockholders, urging them to promptly vote for Ader's three highly qualified,
independent director nominees on the GOLD proxy card. IGT's Annual Meeting of
Stockholders is scheduled to be held on March5, 2013.
The Ader Group is also mailing a letter to IGT stockholders, the text of which
ADER LONG/SHORT FUND LP
January 28, 2013
Dear Fellow IGT Stockholder:
CHANGE IS OVERDUE: DEMAND AN END TO UNDER-PERFORMANCE NOW – VOTE GOLD FOR
BETTER REPRESENTATION ON IGT'S BOARD OF DIRECTORS!
The Ader Group is a group of concerned shareholders led by AIM that, together
with other participants in the solicitation, beneficially own approximately
3.0% of IGT's outstanding common stock. We, like you, have been troubled by
the steady diminution in the value of our investment in recent years, and
believe our company can do better. As described below and in the accompanying
proxy materials, we believe your company is in dire need of meaningful change
at the Board and management levels.
We believe that IGT is at a critical point and that there are tremendous
opportunities to create shareholder value. Our action plan would include
significant Revenue Enhancement Opportunities in both Gaming Operations and
Product Sales, including (i) improvements to IGT's mix and market share in
Gaming Operations by refocusing on highly profitable business lines, (ii)
exploiting IGT's global reach with an emphasis on expansion into Asia and
Latin America and (iii) repositioning IGT for an upswing in the domestic
replacement cycle. We also expect that substantial cost savings are
achievable, including in (i) Selling, general & administrative expenses, where
savings would, in part, focus on significantly curtailing the use of IGT's
recently acquired Gulfstream V private jet, (ii) Research & development where
we would expect a reallocation of resources to core businesses and (iii) cost
of goods sold where we believe there may be a number of margin improvement
opportunities. We expect that this action plan would greatly enhance value
for all shareholders.
We are convinced that our highly qualified, independent nominees are in the
best position to look out for your interests. We urge you to vote FOR the
Ader slate by signing, dating and returning the enclosed GOLD proxy card
TODAY. If you hold your shares in "Street-name" (i.e., through a bank, broker
or other custodian), you custodian may also enable voting by telephone or by
Internet–please follow the simple instructions provided on your GOLD proxy
INDEFENSIBLE SHARE PRICE PERFORMANCE UNDER CURRENT MANAGEMENT AND INCUMBENT
Current management has been in place since April 2009. October 5, 2009 was
the first day of current management's first full fiscal year at IGT. Over the
three-plus year period since that time, IGT's share price, even after
adjusting for dividends paid during the period, has declined by 20.3%, from
$18.96 to $15.12 per share on January 25, 2013. Moreover, we believe that
IGT's superficial actions taken in response to the Ader Group's first voicing
of its concerns were an important contributor to the recent uptick in IGT
share price since September 2012. What better testament to the continued need
and desirability for shareholder oversight in the boardroom could there be?
Under the leadership of current management and the incumbent Board, we believe
that IGT is suffering from:
oThe failure to focus on the core slot machine and systems business that
generated IGT's historic success;
oA lack of casino gaming industry experience in IGT's Board and executive
management ranks; and
oPoor capital allocation decisions highlighted by a series of costly
non-strategic acquisitions, one of which has resulted in a substantial
recent reorganization charge.
Under almost any measure, IGT's stock price performance has been
disappointing. The following chart illustrates the 1-, 2- and 3-year
performances of IGT common stock, as compared to the performance of the S&P500
and the NASDAQ.
We believe the lack of focus by the incumbent Board and the management team on
your company's core business has caused an unsustainable deterioration in the
core business demonstrated by the company's market share losses, degradation
in customer relationships and loss of key employee talent. Shareholders
should ask themselves: Do I trust this management and board, which have
overseen the destruction of shareholder value, to correct this flawed strategy
and improve the value of my investment?
IGT MANAGEMENT'S HISTORY OF OVERPRICED, NON-CORE ACQUISITIONS AND POOR CAPITAL
DECISIONS HAVE DESTROYED SHAREHOLDER VALUE
Under current management and the incumbent board, IGT has repeatedly made
decisions regarding the operations and strategic direction of your company
that have negatively impacted shareholder value. Most importantly, the
current regime has neglected IGT's prime asset—the core slot machine and
systems business—resulting in an alienated customer base and deteriorating
Instead of focusing on its core business, IGT's board and management have been
distracted by a series of costly, non-strategic acquisitions. In the past two
oIGT purchased Entraction Holding for $113 million, which they effectively
shut down less than 18 months later.
oJust seven months after Entraction, IGT purchased Double Down
Interactive—an online social network casino game developer—for $500
million. The purchase price included retention payments of $85 million to
Double Down's 80 employees—an average of over $1 million per person! This
acquisition puts the company in the position of competing with some of its
own core slot machine and systems customers, which we believe is not in
the company's best interests. Not only did the Double Down acquisition
result in a changed focus as it relates to IGT's business strategy, it was
incredibly expensive. At the time of announcement, IGT management
analogized Double Down to the popular social gaming company Zynga. In the
twelve months since IGT acquired Double Down, Zynga's enterprise value has
declined by more than 80%. Shareholders should ask management: Would you
pay the same price today?
oJust one month after Double Down, IGT purchased BringIt – a provider of
virtual casino/arcade currency for game publishers, brands and media
websites – for $10.1 million (including $2.0 million of retention
In addition to overpriced acquisitions, your Board and management have made
poor capital decisions such as repurchasing IGT shares at inopportune prices.
We believe that this was evidenced when IGT announced a $400 million
accelerated share repurchase in June 2012, weeks before announcing fiscal 3^rd
quarter results which came in well short of Wall Street expectations. By our
calculations, these poorly timed repurchases have been executed at an average
13.58% premium to the price points at which your company could have executed
them - leading to over $50 million in value destruction. Did your board know
about the likely impending drop in the stock price and, if so, why did they
move forward with the stock repurchase at that time and, if not, why did they
not know? To be clear, we have no issue with returning capital to
shareholders; rather we object to the haphazard and costly way in which it
appears to have been executed.
Do NOT allow your company to continue down a path of value destruction by
"doubling down" on a flawed acquisition strategy and poor capital decisions.
A DEARTH OF CASINO GAMING EXPERTISE AND FINANCIAL DISCIPLINE AT THE IGT BOARD
AND EXECUTIVE MANAGEMENT LEVEL
Of the 13 individuals that make up IGT's current Board and executive
management team, in our view, only two individuals—Philip Satre and Robert
Miller— have significant experience in casino gaming and related areas prior
to joining IGT (although Paget Alves arguably has some gaming experience as a
director of GTECH Holdings Corporation). We believe that overall, casino
gaming expertise is woefully under-represented at the Board level, and that
therefore there is little hope your Board can effectively oversee management
in maximizing the opportunities inherent in this core business—in either the
domestic or global markets. Likewise, the executive management team of our
company lacks any experience in the casino gaming industry prior to their
respective tenures at IGT.
Furthermore, the collective background of the incumbent directors does not
appear to include any meaningful experience in or expertise involving the
capital markets. Given the value destruction that has been inflicted upon our
company as a result of the inopportune timing of the accelerated share
repurchase, we believe that this is an issue which must be addressed.
Furthermore, we believe that IGT's core gaming operations business affords the
company many untapped opportunities through the potential introduction of
various financial structured products which may allow our company to lower its
overall cost of capital. Additionally, given the inherent sensitivity of the
gaming operations business to changes in the interest rate environment, we
cannot overstate the importance of having capital markets and corporate
finance expertise at the Board level.
BASED ON HER HISTORY, WE HAVE NO CONFIDENCE THAT YOUR CEO CAN REPAIR THE
DAMAGE WITHOUT BETTER BOARD GUIDANCE
Sadly, the record of IGT's CEO as a Chief Executive and board member at other
companies offers little reason to believe she can turn around IGT's fortunes
without keener and more expert board oversight. For example:
oMs. Hart was Chairman, CEO and President of Telocity from June 1999 until
April 2001. Telocity went public on March 28, 2000. By April 3, 2001,
Telocity common stock had declined by 82.1% from its IPO price.
oMs. Hart was Chairman and CEO of Excite@Home from April 21, 2001 through
the company's bankruptcy filing in September 2001. During this period,
Excite@Home common stock declined by 100%.
oMs. Hart was Chairman, CEO and President of Pinnacle Systems from March
2004 until August 2005. During her tenure, Pinnacle Systems common stock
declined by 45.1%.
oFollowing her tenure at Pinnacle Systems, Ms. Hart appears to have become
a "professional board member" between 2006 and 2009. During this period,
she served on the boards of IGT, Yahoo, Korn/Ferry International, Spansion
and LinTV. During her respective tenures as a board member of these
companies, only Yahoo experienced an increase in share price.
oHowever, Ms. Hart's most noteworthy action on the board of Yahoo appears
to have been her heading the special committee that hired Scott Thompson
as CEO. Mr. Thompson resigned less than five months later following an
investigation of his academic credentials. During the investigation, one
of Yahoo's largest investors identified inconsistencies in Ms. Hart's own
publicly reported academic credentials. Ms. Hart resigned from Yahoo's
board shortly after these inconsistencies were publicly identified.
We believe the need for a strong, expert and independent Board is clear.
THE ADER NOMINEES CONTRIBUTE SIGNIFICANT INDUSTRY EXPERTISE AND A MARKET-SAVVY
We believe significant change to the composition of IGT's Board of Directors
is warranted given the strong qualifications of the Ader nominees and the
serious issues facing your company. We are confident that our nominees' deep
experience in the gaming sector and expertise in the financial markets – both
capital markets and corporate finance – will benefit all shareholders.
If elected, our nominees will work with the other Board members and management
to review the company's strategies in its operating businesses and identify
opportunities to enhance shareholder value. Our nominees also intend to work
closely with Ms. Hart to address the lack of casino gaming industry expertise
at the management level.
The Ader slate brings a fresh but experienced focus to maximizing the value of
relationships with IGT's customers and successfully innovating products that
will appeal to end-users.
oMr. Mathewson is the former Chairman and Chief Executive Officer of IGT,
with an outstanding track record of creating value: under Mr. Mathewson's
leadership, IGT's stock price increased by 25,481% on a split-adjusted
basis between February 1986 and October 2003. Mr. Mathewson is also a
former Chairman of the American Gaming Association. We expect that Mr.
Mathewson will contribute a unique ability to revitalize and refocus the
board and management through the benefits of his long-standing
relationships in the casino gaming industry with both employee talent and
oMr. Silvers has 17 years of analytical experience focusing on the casino
gaming industry specifically, and the Nevada market generally. He too
will provide the benefit of his extensive hands-on work and relationships
with a large number of IGT customers in its core slot machine and systems
business, as well as with a number of IGT's competitors in these
businesses. Additionally, Mr. Silvers has extensive experience as an
investor in gaming equipment assets.
Additionally, our nominees have substantial capital markets experience which
will bring financial discipline to the board room. In particular:
oMr. Brooks is the former Chief Executive Officer of ACA Financial Guaranty
Corporation, a monoline bond insurance company, and has experience in
investing in distressed companies and debt;
oMr. Mathewson serves as a Trustee of Baron Investment Funds Trust and
Baron Select Funds. Mr. Mathewson is also a former executive officer and
board member of Jefferies & Company Inc.; and
oMr. Silvers has 17 years of extensive financial markets experience – in
both corporate finance and capital markets – principally involving the
casino gaming industry and the Nevada market.
PROTECT YOUR INVESTMENT–VOTE GOLD FOR A STRONGER VOICE IN THE BOARDROOM NOW
Over the past four months, AIM has tried repeatedly to engage in a
constructive dialogue with the independent directors of IGT–the very
directors that are supposed to represent the interests of ALL shareholders as
the owners of this company–regarding operating performance and governance
issues at IGT. Our efforts have failed: we were allowed only a single
30-minute teleconference in which the incumbent directors asked only one
substantive question. ALL of AIM's requests for in-person meetings with IGT's
independent directors have been declined.
Finally, you should also be aware that the incumbent IGT directors own only a
less-than 0.1% interest in your company, exclusive of options. In contrast,
the Ader Group represents a greater-than 3.0% ownership interest. Excluding
stock options, the Ader Group represents an ownership interest in IGT that is
more than 100 times the aggregate ownership interest of the three directors we
seek to replace. We are convinced that shareholders will benefit from
stronger, and more aligned, representation in the Boardroom now – before the
management and Board can do any more damage.
The choice is yours: you may either support the incumbents, with the existing
board's record of overseeing a failed strategy and the destruction of
significant shareholder value, or you may support new, highly qualified,
independent nominees who are committed to working for the best interests of
all shareholders. We believe the choice is clear: we urge you to vote FOR
all the Ader nominees using the enclosed GOLD proxy card TODAY.
Jason N. Ader
Your Vote Is Important, No Matter How Many Or How Few Shares You Own.
If you have questions about how to vote your shares, or need additional
assistance, please contact the
firm assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
Stockholders Call Toll-Free: (877) 825-8621
Banks and Brokers May Call Collect: (212) 750-5833
We urge you NOT to sign any White proxy card sent to you by IGT. If you have
already done so, you have every right to change your vote by signing, dating
and returning the enclosed GOLD proxy card TODAY in the postage-paid envelope
provided. If you hold your shares in Street-name, your custodian may also
enable voting by telephone or by Internet—please follow the simple
instructions provided on your GOLD proxy card.
The Ader Group (whose members are identified below) has nominated Raymond J.
Brooks, Jr., Charles N. Mathewson and Daniel B. Silvers (the "Ader Nominees")
as nominees to the board of directors of International Game Technology (the
"Company") and is soliciting votes for the election of the Ader Nominees as
members of the board. The Ader Group has sent a definitive proxy statement,
GOLD proxy card and related proxy materials to stockholders of the Company
seeking their support of the Ader Nominees at the Company's 2013 Annual
Meeting of Stockholders. Stockholders are urged to read the definitive proxy
statement and GOLD proxy card because they contain important information about
the Ader Group, the Ader Nominees, the Company and related matters.
Stockholders may obtain a free copy of the definitive proxy statement and GOLD
proxy card and other documents filed by the Ader Group with the Securities and
Exchange Commission ("SEC") at the SEC's web site at www.sec.gov. The
definitive proxy statement and other related documents filed by the Ader Group
with the SEC may also be obtained free of charge from the Ader Group.
The Ader Group consists of the following persons: Ader Investment Management
LP, Ader Long/Short Fund LP, Doha Partners I LP, Ader Fund Management LLC,
Ader Investment Management LLC, Jason N. Ader, Daniel B. Silvers, Andrew P.
Nelson and Laura T. Conover-Ferchak. The members of the Ader Group and the
Ader Nominees are participants in the solicitation from the Company's
stockholders of proxies in favor of the Ader Nominees. Such participants may
have interests in the solicitation, including as a result of holding shares of
the Company's common stock. Information regarding the participants and their
interests may be found in the definitive proxy statement of the Ader Group,
filed with the SEC on January 25, 2013 and first disseminated to stockholders
on or about January 28, 2013.
Certain information contained herein constitutes "forward-looking statements,"
which can be identified by the use of forward-looking terminology such as
"may," "will," "seek," "should," "expect," "anticipate," "project,"
"estimate," "intend," "continue" or "believe" or the negatives thereof or
other variations thereon or comparable terminology. Such statements are not
guarantees of future performance or activities. Due to various risks and
uncertainties, actual events or results or actual performance may differ
materially from those reflected or contemplated in such forward-looking
SOURCE Ader Group
Contact: Rob Ford, +1-212-999-5585, firstname.lastname@example.org
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