WASHINGTON (dpa-AFX) - Peerless Systems Corp. (PRLS), an activist minority stockholder, sent an open letter to shareholders of ModusLink Global Solutions, Inc. (MLNK) to get its two nominees into the ModusLink board.
ModusLink's nominees for directors are Thomas Johnson and Jeffrey Fenton, while Peerless has nominated its CEO Timothy Brog and Jeffrey Wald for the election.
In a letter to ModusLink's stockholders, Peerless said,' ModusLink has shamelessly resorted to issuing false and misleading statements and accusations simply because they are in danger of losing the upcoming election for two board members.'
Peerless said further that none of ModusLink's stockholder solicitation materials during the proxy contest had addressed the 'disastrous operating results and massive destruction of stockholder value that has occurred on this Board's watch'.
While ModusLink had recently reported its first operating profit in six quarters, Peerless said that one quarter does not make a trend, and that ModusLink's historical operating trends have been abysmal. Operating income for ModusLink declined from $10.1 million to a loss of $7.0 million and revenues had fallen from $1.1 billion to $876 million for fiscal 2006 to fiscal 2011.
Peerless said that while it owns 1,059,528 shares of ModusLink common stock, the entire group of independent board members had purchased in the aggregate 48,350 shares of ModusLink common stock. Two board members had never purchased any shares of ModusLink common stock.
Thursday, ModusLink had written to its stockholders that the Peerless nominees could interrupt the ongoing implementation of ModusLink's strategic plan, if elected. While holding about 2.4 percent of ModusLink stock, Peerless would gain control of 25 percent of the Board.
The sparring began on December 16, with ModusLink stating that Peerless, a ModusLink stockholder for only five months thence, had no strategy or plan for ModusLink, or experience about the industry.
On December 20, LCV Capital Management, LLC had backed Peerless' nominees, stating that the company lags behind its peers in nearly every financial metric. LCV had stated that it was vehemently opposed to Thomas Johnson's reappointment to the Board.
Jeffrey Fenton was a nominee of Raging Capital Management and LCV Capital Management last year. LCV Capital Management had said that ModusLink's investment and cost reduction plan, as well as its evaluation of strategic alternatives, were the direct result of the nomination of Fenton to the Board of ModusLink during last year's proxy season.
MLNK is currently trading at $5.48, down $0.11 or 1.97%, on the Nasdaq. Over the past year, the stock traded in a range of $3.25 - $7.16.
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