CAMBRIDGE, ON, Sept. 7 /CNW/ - ATS Automation Tooling Systems Inc., today
sent the following letter to its shareholders in response to a Dissidents'
Circular filed September 5th, 2007 by two hedge funds, Goodwood Inc. and Mason
Capital Management, LLC.
The full text of the letter follows:
September 7, 2007
Dear ATS Shareholder:
Late Wednesday afternoon two hedge funds filed a dissidents' circular in
which they ask ATS shareholders to vote against the re-election of the current
Board of Directors and instead vote to elect a new slate of directors
dominated by members of these two firms.
We believe that this action is unwarranted, unnecessary and runs counter
to the best interests of ATS shareholders. A proxy contest at the 11th hour
that offers no new ideas is a needless distraction that can only disrupt and
delay the ongoing execution of ATS's strategic plan, which is building
significant positive momentum.
The Board of Directors urges you to discard the dissident proxy and vote
FOR the re-election of ATS's current directors at the company's Annual General
Meeting, which will take place, as scheduled, on Thursday, September 13, 2007.
Over the past several months we have held regular discussions with both
firms, Goodwood Inc. and Mason Capital Management, LLC, regarding the
company's strategic direction and near-term plans, and they have expressed
support for the plan we are now executing.
Now, by their actions, they are working to disrupt that plan and impede
our progress. What many shareholders may not appreciate is that this is not
the first time Goodwood and Mason have worked contrary to the best interests
of ATS and its shareholders. As discussed below, they played an instrumental
role in causing ATS to withdraw the Photowatt IPO. This withdrawal now lies,
inappropriately, at the heart of their criticism of the current Board and
Our Strategic Plan is On Track
The fundamental issue for ATS shareholders is whether to continue
building on the positive momentum ATS has created in recent months. The
alternative is to permit Goodwood and Mason to lead ATS - a global
manufacturing solutions company with more than 3,500 employees and customers
that include the world's largest and most demanding multinational corporations
- on a detour that would see ATS install a new Board of Directors and interim
management team while at the same time somehow moving "more quickly" on the
initiatives your current Board and management team are already implementing as
expeditiously as possible.
We think the choice is clear.
Building Positive Momentum
Over the past two years ATS has significantly strengthened its core
operations and sharpened its strategic focus. During this period, we have:
- Implemented a global business strategy;
- Closed three underperforming Automation Systems Group (ASG) factories
and reduced our North American workforce by 21%;
- Opened three new ASG facilities in Asia, doubled our Asian workforce
to 400, and upgraded established factories in China and Singapore, all
in response to challenges in the North American automotive industry
and the global migration of manufacturing to lower cost countries;
- Established stronger regional management teams in North America, Asia
and Europe; and
- Significantly restructured and revitalized the Precision Components
Group (PCG), including the sale or closure of three factories, to
enhance the value of this business.
Building on these accomplishments, ATS set three key strategic priorities
in June 2007 when it announced plans to:
- Focus on becoming the world's best automation company by building on
the many strengths of our core ASG business;
- Enhance Photowatt's value to ATS shareholders and position it for
long-term success; and
- Pursue strategic alternatives for PCG, including a sale of the
Since June, among many other achievements, we have:
- Announced two consecutive quarters of significantly improved
automation order bookings and posted a 23% increase in year-over-year
order backlog levels - clear evidence of improved performance within
our core ASG business;
- Hired Jim Rowan, a world-class executive with a 25-year track record
of success in building and managing global manufacturing companies, as
President of ASG, and made several other key management appointments;
- Strengthened Photowatt by raising $110 million of new investment
capital through a successful rights offering, securing a fourth
long-term silicon supply contract, and approving a plan to spin out
Photowatt to ATS shareholders as soon as the necessary tax ruling and
shareholder approval have been obtained;
- Engaged a leading international executive recruiting firm and
conducted an extensive search that resulted in the identification of
an outstanding candidate for the CEO position at Photowatt. This
individual is a French citizen who currently serves as a senior
executive with a publicly-traded company and who has significant
experience in the renewable energy and photovoltaic power sectors. We
are currently in the process of finalizing an employment agreement
with this individual; and
- Engaged Scotia Capital with a mandate to pursue a sale of PCG and
commenced discussions with potential buyers.
The bottom line is that our plan is working. We are building positive
momentum operationally, strategically and financially as we move to extend our
gains in our core automation business under a new management team, complete
the spin-out of Photowatt and conclude a successful sale of PCG.
Last Minute Proxy Challenge is Disruptive and Counterproductive
We share the dissidents' desire to execute our plan as quickly as
possible, but we fail to see how a disruptive proxy contest or a new Board of
Directors will help achieve that goal.
ATS's ability to succeed requires focus, attention to detail and the
support and guidance of an expert Board of Directors that understands our
business and is up to speed on the many moving pieces involved in executing on
ATS has such a Board, and it includes three independent and highly
qualified directors who joined within the past two years, bringing fresh
perspective and expertise. These directors are joined by four longer-serving
members who are also eminently qualified and have deep knowledge of ATS and
the global automation industry.
Goodwood and Mason propose to replace this Board with seven new
directors, only three of whom are independent of Goodwood and Mason and none
of whom has any significant experience in the global automation industry. We
do not believe this group is well qualified to serve the best interests of ATS
or its shareholders.
Many Criticisms, No Plan
In their circular, Goodwood and Mason level a number of criticisms against
the current Board and management. While there is no question that the past few
years have been challenging for ATS, many of these criticisms are self-serving
and wither upon closer examination.
- "The Spheral Solar Debacle". In their circular, Goodwood and Mason
criticize ATS's decision to make a significant investment in Spheral
Solar. This is classic Monday morning quarterbacking. ATS's investment
in Spheral Solar should be viewed within the context of ATS's overall
investment in solar power, which has been a demonstrable success for
ATS and its shareholders.
For example, in 1997, long before solar power was on the investment
community's radar screen, ATS made a strategic decision to enter this
business through the acquisition of Photowatt France for $17 million.
This early decision was also not without risk but has proven to be
enormously successful over time.
- The "Costly Failed Photowatt IPO". Goodwood and Mason blame the
failure of the Photowatt IPO on ATS's Board of Directors, ATS's senior
management, Photowatt's management, and ATS's underwriters. Notably
excluded from this list is Goodwood and Mason themselves, both of
which we believe played a significant role in its failure.
Prior to cancellation of the IPO, Goodwood and Mason were lobbying ATS
management to proceed instead with a rights offering that would
provide better value to them, including an opportunity to build their
positions in ATS at a reduced price while receiving a significant fee
for agreeing to backstop the offering.
Then, in the final days and hours of the Photowatt IPO marketing
process, both firms cancelled large orders to purchase Photowatt
shares they had placed with the underwriters. We believe the last
minute removal of their orders led to a loss of investor confidence,
created confusion in the market and contributed significantly to the
cancellation of the offering.
It is therefore disingenuous at best for Goodwood and Mason to blame
the failure of the Photowatt IPO on everyone but themselves.
ATS remained committed to achieving its longstanding goal of
positioning Photowatt as a successful standalone company. In August
2007, ATS successfully completed a $110 million rights offering,
albeit with additional expense, including $2.3 million in fees paid to
none other than Goodwood and Mason in exchange for their agreement to
backstop the transaction. Furthermore, the delay in raising this
capital due to the cancellation of the IPO caused Photowatt to have to
postpone its expansion plans.
Goodwood and Mason's other criticisms can be dealt with as follows:
- In addition to all of the actions and accomplishments noted above, ATS
has hired Jim Rowan, an accomplished senior executive with 25 years of
experience in the global manufacturing industry to lead the ongoing
revitalization of ATS's core Automation Systems Group.
- ATS's President and CEO maintains the full confidence of the Board of
Directors. It is the Board's view that the current CEO is the right
person to lead the execution of ATS's value creation plan. It is also
the Board's view that his qualifications to do so are unquestionably
superior to the individual Goodwood and Mason suggest in their
circular would be their choice to serve in some sort of interim senior
executive capacity should they succeed in gaining control of the
- ATS prides itself on the quality and transparency of its disclosure,
including that disseminated in accordance with applicable statutory
regulations over the course of the prolonged marketing period spanning
the Photowatt IPO and ATS rights offering.
- ATS has already identified PCG as non-core and is in the process of
selling the business.
- ATS has significantly enhanced and strengthened its management team in
recent months and is near to finalizing the hiring of a new CEO for
Photowatt, as mentioned above.
- Finally, the interests of ATS's Board and management are aligned with
ATS shareholders. ATS's executives and directors are subject to
minimum shareholding requirements and directors have elected to
receive significant portions of their compensation in deferred stock
Goodwood and Mason make reference to the fact that Mr. Jutras sold a
portion of the rights received by him through the rights offering.
They neglect to mention, however, that Mr. Jutras sold those rights in
order to partially fund the exercise of the remainder.
Since being appointed CEO in February 2005, Mr. Jutras has increased
his share ownership of ATS by more than 27,000 shares. He currently
owns (directly or indirectly) 106,932 shares.
Keep the Positive Momentum Going - Vote FOR the Re-election of the ATS
There is no question that the last two years have been challenging ones
for ATS, but the past is not the issue. The issue is the future and on that
score we have a clear plan for creating shareholder value, Goodwood and Mason
have told us they support that plan, and we are delivering results against the
plan and the strategic priorities we set back in June.
Goodwood and Mason are offering you nothing more than a promise to do the
same things, but faster. Much as we share their desire to see tangible results
more quickly, we believe their position is naive and their ability to deliver
on their promise is poor, at best.
Don't let the dissidents set us back now. We have created positive
momentum on our strategy and in our business. Let's keep it going. Reject the
dissidents' appeals. Vote FOR the re-election of the ATS Board of Directors.
ATS recommends that all shareholders discard any dissident proxy you might
receive and vote only your Management proxy in favour of the slate of
directors as listed in our information circular. Regardless of how many shares
you own, it is important that you vote. Proxies must be returned no later than
September 11, 2007 at 10:00am Toronto time for your vote to count.
A copy of ATS's current Annual Report and Management Information Circular
for the September 13, 2007 meeting can be found on SEDAR at www.sedar.com, and
at ATS's website at www.atsautomation.com. Requests for a hard copy of the
Annual Report or Management Information Circular can also be made to
Due to the limited time available shareholders should vote using one of
the quicker options available as noted on the management form of proxy,
preferably by telephone voting, Internet or fax where applicable.
For more information or assistance with voting your proxy call Georgeson,
ATS's proxy solicitor toll free at 1-888-605-7636.
Thank you for your continued support.
Lawrence G. Tapp Ron J. Jutras
Chairman of the Board President and Chief Executive Officer
ATS Automation Tooling Systems Inc. provides innovative, custom designed,
built and installed manufacturing solutions to many of the world's most
successful companies. Founded in 1978, ATS uses its industry-leading knowledge
and global capabilities to serve the sophisticated automation systems' needs
of multinational customers in industries such as healthcare,
computer/electronics, automotive and consumer products. It also leverages its
many years of repetitive manufacturing experience and skills to fulfill the
specialized repetitive equipment manufacturing requirements of customers.
Through its Photowatt solar business, ATS participates in the growing
solar energy industry and through its precision components business it
produces, in high volume, precision components and subassemblies. ATS employs
approximately 3,500 people at 24 manufacturing facilities in Canada, the
United States, Europe, southeast Asia and China. The Company's shares are
traded on the Toronto Stock Exchange under the symbol ATA. Visit the Company's
website at www.atsautomation.com.
Forward Looking Statement
This press release contains certain statements that constitute
forward-looking information within the meaning of applicable securities laws
("forward-looking statements"). Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of ATS, or developments in ATS's business
or in its industry, to differ materially from the anticipated results,
performance, achievements or developments expressed or implied by such
forward-looking statements. Forward-looking statements include all disclosure
regarding possible events, conditions or results of operations that is based
on assumptions about future economic conditions and courses of action.
Forward-looking statements may also include, without limitation, any statement
relating to future events, conditions or circumstances. ATS cautions you not
to place undue reliance upon any such forward-looking statements, which speak
only as of the date they are made. Forward-looking statements relate to, among
other things: execution of ATS's strategic plan and positive momentum in its
strategy and in its business; its focus on building and extending its gains in
its Automation Systems Group; its enhancement of Photowatt's value; the
completion of the spin-out of Photowatt; and the potential sale of PCG. The
risks and uncertainties that may affect forward-looking statements include,
among others: general market performance and restructuring within the North
American automotive market; the receipt of all necessary approvals and advance
tax ruling relating to the Spin Out; the state of the capital markets; foreign
currency and exchange risk; strength of the Canadian dollar; performance of
the market sectors that ATS serves; that some or all of the trends towards
automation that ATS believes are attractive dissipate or do not result in
increased demand for automation; risks associated with operating and servicing
customers in a foreign country; that multinational companies withdraw from
global manufacturing for business, political, economic or other reasons;
unforeseen problems with the implementation of the ASG strategic initiatives
or failure of those measures to bring about improved performance at ASG; the
success of ongoing operational improvements at ASG; problems associated with
the expansion of production capability and adoption of new production
processes at Photowatt; managing the impact of supply shortages and higher
prices for polysilicon; Photowatt's ability to improve efficiencies of its
solar modules produced using lower grade polysilicon or refined metallurgical
silicon; Photowatt's ability to secure additional long-term polysilicon supply
contracts; the reduction in government incentives in Germany and its effect on
Photowatt; inability to advance collaborative development arrangements focused
on increasing power efficiencies of solar cells; political, labour or supplier
disruptions in manufacturing and supply of silicon; the ability of ATS to exit
the remaining PCG operations; and other risks detailed from time to time in
ATS's filings with Canadian provincial securities regulators. Forward-looking
statements are based on management's current plans, estimates, projections,
beliefs and opinions, and ATS does not undertake any obligation to update
forward-looking statements should assumptions related to these plans,
estimates, projections, beliefs and opinions change.
For further information:
For further information: Investors: Carl Galloway, Vice President and
Treasurer or Gerry Beard, Vice President and Chief Financial Officer, (519)
653-6500; Media: Josh Pekarsky, Longview Communications, (604) 694-6030; Alan
Bayless, Longview Communications, (604) 694-6035