RANDOLPH, MA, June 14, 2012 /CNW/ - JEC Capital Partners LLC ("JEC") confirmed that on Monday, June 11th, 2012, shareholders owning more than 14% of the outstanding shares of KIT digital, Inc (the "Company") met with a majority of the members of the Company's board, but the board was unwilling to add the four directors proposed by the stockholders to the board. Both the Company and the shareholders agreed to hold this meeting for the express purpose of expanding the board by adding four new directors with requisite qualifications to lead the company forward. In the weeks prior to the meeting, the shareholders had presented the board with director candidates who would to add significant domain expertise, capital markets experience, and ownership representation to the board - experience and qualifications that are sorely needed on this functionally crippled Board.
In response to the Company's Strategic Transaction update, JEC added what the Company's announcement failed to state, which is that the "Committee" is comprised of a single director, Wayne Walker. JEC believes that the Company's Board of Directors took this unusual action because it concluded that every other sitting director was conflicted or otherwise not independent. Shareholders are concerned about Mr. Walker's appointment as the "Committee" because they believe he lacks relevant M&A and transactional experience. The shareholders believe that Mr. Walker's experience serving as a bankruptcy attorney dealing with estates and transactions of limited value and complexity is insufficient to permit him to solely manage this critical role for the Company. The absurdity of the single member "Committee" is compounded by the fact that it potentially will recommend a transaction to the full board, which (except for Mr. Walker) is conflicted and not independent.
JEC reported that it continues to be concerned about either the motives or the competence, if not both, of the current board in light of its approval of the Company's recently completed death-spiral equity financing. Shareholders believe that this event has contributed greatly to the destruction of shareholder value as evidenced by the share-price decline following announcement of the financing. These shareholders believe that Interim-CEO Barak Bar-Cohen was principally responsible for the negotiation of this financing.
JEC confirmed that, by their own admission, the current directors have limited experience as directors of public companies, no related business or technology expertise, and were all were hand-picked by Kaleil Isaza Tuzman, the Company's recently departed former CEO. Additionally, both Lars Krojier and Joseph Mullin have openly expressed a desire to resign from the Board. Mr. Bar-Cohen has also openly expressed his opinion that the Company is, "being held back by its dysfunctional directors." In fact, Mr. Bar-Cohen has actively sought shareholder intervention to assist in the boardroom for the purpose of replacing existing directors. Finally, JEC stated that it believes the existing board is seeking to add only directors with whom they have existing relationships, rather than shareholder representatives or truly independent, qualified directors.
While the shareholders believe in the inherent and strategic value of the Company's products and technologies, the shareholders also believe that a strategic transaction review left in the hands of an apparently dysfunctional Board and a rookie Interim-CEO will not produce an acceptable outcome for shareholders. The fact that all but one of the existing directors cannot serve on the Strategic Transaction Committee is reason enough for them to depart the Board before a potential strategic transaction is ripe for consideration by the Board. We reiterate our demand for the immediate appointment of the four shareholder-proposed independent directors.
For further information:
Michael Torok, Managing Director, JEC Capital at (617) 680-6709.