New York, (ANTARA News/PRNewswire-AsiaNet) - The following is a letter from DCML LLC to Konica Minolta Group.
Esteemed members of Konica Minolta Group's Corporate Governance Committee:
We write regarding your pending acquisition of Danka Office Imaging (DOIC). We are longtime shareholders of DOIC's parent, Danka Business Systems PLC (the "Company").
Some of our members owned, through other entities, more than 1,400,000 shares of Company stock and $6,000,000 of subordinated debt from 2005 to 2007. Members of DCML also owned almost 500,000 shares of Company stock prior to the announcement of Konica Minolta's offer to buy DOIC. Today, we own in the aggregate, approximately 6% of the Company's common stock on a fully diluted basis
As shareholders of Danka, we are thankful for your recognition of DOIC's value, as represented by your acquisition offer. Unfortunately, we believe that you may not have appreciated the questionable manner in which Danka management has proposed to distribute the proceeds resulting from the sale of DOIC to Konica Minolta.
One could argue that the distribution of sale proceeds should not concern Konica Minolta, that such matters are not your responsibility after you have fulfilled your transaction obligations. As a legal matter, that is likely true. But because of your strong commitment to responsible corporate governance and to corporate ethics, we wish to bring to your attention the following facts and observations.
1. Danka's management and Board, with whom you have negotiated the DOIC sale, propose to distribute to ordinary shareholders $6.5 million from sale proceeds totaling at least $240 million, subject to escrow-related adjustments. Management, by contrast, will receive a pay-out of almost $10 million in change-of-control benefits. On its face, this is a wildly inequitable distribution.
2. Danka's management and Board are concerned that shareholders may not vote in favor of this distribution outcome, so they are improperly attempting to control the vote -- to make it difficult for shareholders to exercise their vote, by inhibiting the conversion of ADS to ordinary shares, and by voting the shares of all holders who do not otherwise vote themselves. These efforts are highly questionable.
3. If shareholders do not approve the proposed sale of DOIC, management and the Board have threatened to delist Danka, and complete the sale of DOIC to Konica Minolta without shareholder approval. It is difficult to conceive of a less shareholder friendly action. An ethical board committed to good governance would never threaten such action.
It is therefore clear that, while Konica Minolta has acted honorably and fairly in its effort to acquire DOIC, it is doing business with a management team and Board that is acting unfairly, unreasonably and unethically. A company like yours, committed to good governance and the highest standards of corporate behavior, might reasonably question whether it wishes to be associated with the activities of individuals who do not take seriously their fiduciary duties and may be the targets of future shareholder litigation.
Respectfully,
Robert Andrade
Rosty Raykov
DCML LLC SOURCE DCML LLC
CONTACT: Robert Andrade or Rosty Raykov,
both of DCML LLC,
(DANKY)
Esteemed members of Konica Minolta Group's Corporate Governance Committee:
We write regarding your pending acquisition of Danka Office Imaging (DOIC). We are longtime shareholders of DOIC's parent, Danka Business Systems PLC (the "Company").
Some of our members owned, through other entities, more than 1,400,000 shares of Company stock and $6,000,000 of subordinated debt from 2005 to 2007. Members of DCML also owned almost 500,000 shares of Company stock prior to the announcement of Konica Minolta's offer to buy DOIC. Today, we own in the aggregate, approximately 6% of the Company's common stock on a fully diluted basis
As shareholders of Danka, we are thankful for your recognition of DOIC's value, as represented by your acquisition offer. Unfortunately, we believe that you may not have appreciated the questionable manner in which Danka management has proposed to distribute the proceeds resulting from the sale of DOIC to Konica Minolta.
One could argue that the distribution of sale proceeds should not concern Konica Minolta, that such matters are not your responsibility after you have fulfilled your transaction obligations. As a legal matter, that is likely true. But because of your strong commitment to responsible corporate governance and to corporate ethics, we wish to bring to your attention the following facts and observations.
1. Danka's management and Board, with whom you have negotiated the DOIC sale, propose to distribute to ordinary shareholders $6.5 million from sale proceeds totaling at least $240 million, subject to escrow-related adjustments. Management, by contrast, will receive a pay-out of almost $10 million in change-of-control benefits. On its face, this is a wildly inequitable distribution.
2. Danka's management and Board are concerned that shareholders may not vote in favor of this distribution outcome, so they are improperly attempting to control the vote -- to make it difficult for shareholders to exercise their vote, by inhibiting the conversion of ADS to ordinary shares, and by voting the shares of all holders who do not otherwise vote themselves. These efforts are highly questionable.
3. If shareholders do not approve the proposed sale of DOIC, management and the Board have threatened to delist Danka, and complete the sale of DOIC to Konica Minolta without shareholder approval. It is difficult to conceive of a less shareholder friendly action. An ethical board committed to good governance would never threaten such action.
It is therefore clear that, while Konica Minolta has acted honorably and fairly in its effort to acquire DOIC, it is doing business with a management team and Board that is acting unfairly, unreasonably and unethically. A company like yours, committed to good governance and the highest standards of corporate behavior, might reasonably question whether it wishes to be associated with the activities of individuals who do not take seriously their fiduciary duties and may be the targets of future shareholder litigation.
Respectfully,
Robert Andrade
Rosty Raykov
DCML LLC SOURCE DCML LLC
CONTACT: Robert Andrade or Rosty Raykov,
both of DCML LLC,
(DANKY)
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