Cordoba Asset Delivers Letter To The Board Of Overhill Farms Urging Sale Of The Company

 Cordoba Asset Delivers Letter To The Board Of Overhill Farms Urging Sale Of
                                 The Company

States that Company is Deeply Undervalued as a Result of Poor Management
Execution and Failed Licensing Deals and Partnerships

Urges Board to Immediately Abandon All Non-sale Transactions and Commence a
Formal Process to Fully Explore the Sale of the Company to the Highest Bidder

PR Newswire

NEW YORK, March 18, 2013

NEW YORK, March 18, 2013 /PRNewswire/ --Cordoba Asset, LLC ("Cordoba"), a
significant shareholder of Overhill Farms, Inc. (NYSE: OFI) ("Overhill" or the
"Company") announced today that it has delivered a letter to the Board of
Directors of Overhill (the "Board"). In the letter, Cordoba expressed concern
that at its current stock price the market is giving little value to the
future earnings power of the business and appears to value Overhill slightly
above its liquidation value. Cordoba set forth details of its analysis of the
Company's underperformance, which it believes is largely attributable to poor
management execution. Cordoba stated that the best path to maximize value for
shareholders is through the sale of the Company as a whole. Accordingly,
Cordoba concluded that the Board should immediately abandon all non-sale
transactions and take the necessary steps to commence a formal process to
fully explore the sale of the Company to the highest bidder.

The full text of the letter follows:

Cordoba Asset, LLC
521 Middle River Drive
Fort Lauderdale, Florida 33304

March 18, 2013

Overhill Farms, Inc.
2727 East Vernon Avenue
Vernon, California 90058
Attention: Board of Directors

Dear Members of the Board,

Cordoba Asset, LLC owns an aggregate of 250,000 shares of common stock, $.01
par value (the "Common Stock") of Overhill Farms, Inc. ("Overhill" or the
"Company") and we have carefully followed the Company for over four years. We
are writing to you because we are deeply concerned that Overhill is
undervalued and at Overhill's current closing stock price of $3.90 as of March
15, 2013, the market is giving little value to the future earnings power of
the business and appears to value the Company slightly above its liquidation
value. Based on our analysis of the Company and review of its prospects, we
have grown confident that value can be maximized for the benefit of all
shareholders only through the sale of the Company as a whole. Accordingly, we
urge the Board of Directors of Overhill (the "Board"), with the help of its
financial advisor, Piper Jaffray & Co., to abandon all non-sale transactions
immediately and take the steps necessary to commence a formal process to fully
explore the sale of the Company to the highest bidder.

We believe the market's lack of confidence in Overhill is largely a result of
the poor management execution that has caused enormous destruction of
shareholder value. Based on discussions we have had with other shareholders,
we are confident that our sentiments are broadly shared. In the past few
years, Overhill has consistently failed to attract meaningful new business or
increase production volume enough to reach optimum asset utilization.
Management has also been too slow to implement necessary changes to reduce the
Company's bloated cost structure and generate profitability.

Private label food production economics are very sensitive to throughput
levels due to the inherent high levels of fixed costs (i.e. plant costs,
utilities and labor). Without adequate throughput, economic margins decrease
resulting in subpar profits, as illustrated by Overhill's financial
underperformance.

Yet despite these poor results, management has continued to hide behind
excuses, blaming a poor economy and high commodity costs for its failures.
Meanwhile Overhill's publicly traded competitors are announcing record profits
and are experiencing roaring stock performance. As demonstrated by the table
below, Overhill's returns place it at the bottom of its peer group.

Performance since March 9, 2009, the Bottom of the market
                               Price Return Annualized Price      Total Return
                                            Return
ConAgra                        142.5%       24.8%                 181.0%
Tyson                          198.1%       31.4%                 211.7%
Armanino Foods                 200.0%       31.6%                 299.2%
Smithfield Foods               360.5%       46.5%                 360.5%
Inventure Foods                514.5%       57.5%                 514.5%
Seneca                         54.1%        11.5%                 54.1%
Average                        245.0%       33.9%                 270.2%
Overhill Farms                 33.6%        7.5%                  33.6%
OFI Under performance of the   -211.4%      -26.4%                -236.6%
group

Management has regularly blamed the lackluster financial performance on a poor
economy in earnings press releases and conference calls. As a result of their
failure to address the underlying causes for underperformance, we feel the
Company has missed on all opportunities to participate in an improving
economy. Further, management has repeatedly failed to deliver on promises of
possible deals and cost cutting initiatives. Instead, Overhill is risking
shareholder value by entering unchartered territory in its attempt to take on
deals such as its licensing deal with Boston Market Corporation ("Boston
Market") that require operational know-how that the Company does not possess.

In November 2010, almost 27 months ago, Overhill announced it had won a
multi-year agreement to license the Boston Market line of frozen foods. This
seemed like a potential "home run" deal for the small private label producer.
However, the Boston Market deal was unlike Overhill's legacy private label
business. Unfortunately, the deal required Overhill to develop new skills,
like an internal sales function as well as its own distribution, and step
outside of its core competency. If executed incorrectly, this large ($85m in
revenues) piece of business could further jeopardize the health of the
Company. A few months later, after realizing the complexities of the deal,
Overhill announced it partnered with a frozen food heavy weight Bellisio
Foods, Inc. ("Bellisio") to obtain sales and distribution capabilities. The
two companies agreed to split the production 50/50 and Bellisio would cover
the responsibilities that Overhill could not manage alone. Overall, the Boston
Market deal has only dragged down margins, even as revenues have increased,
and has soaked up excess cash flow due to increased working capital
requirements. We believe the partnership with Bellisio is too onerous and
does not allow Overhill to profit from the arrangement. In addition, most of
the excess cash flow produced from the legacy business while ramping up Boston
Market has gone into working capital, which shareholders would have liked to
see paid out as a dividend, as made clear in many conference calls.

We further see the Boston Market deal as being unsuccessful because it does
not solve the Company's real problem -- its very low plant capacity
utilization. Even though the deal increased revenues over $25 million, or 15%,
Boston Market only improved utilization by two to three hundred basis points,
according to our calculations.

Unfortunately, given the continued deterioration of the legacy business, we do
not believe the Company would be in any better position without the Boston
Market line. Any available alternative, other than an outright sale, will only
further jeopardize the shareholders' investment. For example, management's
proposed idea to move the Company's production facility fails to address the
serious issues with Overhill's business model and only serves to perpetuate
unprofitability and further increase the Company's already high expenses in
the short-term.

The Company's customer base has eroded to a level where new business is needed
just to break even. The production plants are too large for the current level
of business. By our calculations, the Company is currently operating at 58%
capacity utilization (plant #1 -- 50% and plant #2 -- 70%). Problem areas
include: Safeway, Jenny Craig and the Airline business. Announced new deals
like the one with Target Corporation have failed to generate material revenue
and have been quickly phased out. Unsuccessful partnerships like the one with
J.R. Simplot cause further concern. We estimate that Overhill's cost structure
is too high to profitably attract new business in its highly competitive
industry. We believe that only if Overhill achieved scale through a business
combination with a larger Company with deeper core competencies like sales and
distribution, can the business generate healthy cash flow. Overall, at this
juncture, we believe a sale of the Company is the optimal way to maximize
shareholder value.

Overhill does not benefit from, and is in fact burdened by, being a public
Company. The Company is too small to generate attention from Wall Street
firms and stock analysts. In addition, the management has failed to provide
the responsiveness to shareholder concerns or transparency of financial
results, that a public company's shareholders expect. It was not until the
last few years that the Company began hosting quarterly earnings conference
calls. Further, in the private label business customers frown upon public
disclosure of new business deals and projects, adding additional layers of
disclosure complexity.

Where does this leave us? Management has indicated that the Bellisio
arrangement is up for renewal this summer. In addition, during the Q1 2013
conference call management indicated that the business could produce less
Boston Market product and earn more money, a clear sign that the deal with
Boston Market is not a good fit for Overhill. When asked by an analyst on the
Q1 2013 conference call if the Boston Market deal was a better fit for a
larger Company, James Rudis, the Company's Chairman, President and Chief
Executive Officer, declined. After 18 months, Boston Market license has been
dilutive to margins and free cash flow. Overall, the shareholders have been
more than patient with management persistent failure to deliver on their
promises. We no longer have time. Action must be taken decisively and
urgently.

We firmly believe that there is a clear path to maximize value at Overhill
through a fair and thorough process for the sale of the Company as a whole.
We urge the Board to immediately take the necessary steps to commence such a
process in a manner consistent with its fiduciary duties to shareholders.
Should the Board fail to pursue such a course we are fully prepared to pursue
our rights as shareholders of Overhill to seek change in the composition of
the Board and ensure that the best interests of shareholders are properly
served.

Sincerely,

Vito Garfi
Managing Member

Investor contact:
Vito Garfi, (561)302-7004

SOURCE Cordoba Asset, LLC
 
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