Replies to post #2347 on USA Technologies Inc (USAT)
Agree, something is terribly wrong with this picture, how can they be so unprofitable year after year? How about a picture of where all the money is going including payments to Board and upper management down to the janitor. When you sell something for a dollar but it cost a dollar and twenty cents to sell it how many customers do you want? There way of thinking is if we have a ten million customers maybe we can cut our cost down to a dollar and five cents and only loose a nickle on each sell (and because we are bringing in so many new customers we can give management a raise).
Let me comment quickly on the ongoing proxy contest with Hudson Executive Capital. The Board has remained steadfast in their position, but if there is going to be a change in the majority of the Board, then USAT shareholders deserve a premium for their shares to allow for change of control. Individual shareholders has their own motivation on actions they take and our Board is going to factor these motivations as we make decisions that benefits all of our shareholders.
For example, we have been advised by legal counsel at Hudson Executive Capital has triggered a provision of Pennsylvania laws in their decision to attempt and take control of the USAT Board.
As a result, Hudson is required to disgorge or surrender to USAT any profits on a sale of their shares in this company for a period of 18 months after triggering the obligation under the statute, including as a result of an M&A transaction. We believe any of those profits belong to USAT and so advised Hudson last November.
Surprisingly, Hudson never addressed this matter in any of the multiple proxy materials they have been circulating for the past three months. Obviously, an assessment of the likelihood of recovery in these profits is among many factors our Board has used in assessing Hudson’s decision. Regardless of this ongoing issue, and as demonstrated by today’s results, we are focused on improving the performance of our business and capturing the significant opportunities in our space.
Donald Layden
From the Q & A:
George Sutton
Got you. You mentioned in your prepared comments in a change of control that you felt shareholders deserved a premium for their shares, which I am not sure I fully understand if it’s simply a Board for Board changeover.
When you say premium for their shares, there has been speculation of a potential sale of the business which would not necessarily be good from these current levels. So just want to make sure I understood the thoughts behind the comment.
Donald Layden
I am not sure I understand the question. I think we’ve been pretty consistent in saying that, if there is going to be a wholesale change in the composition of the Board or a majority of the Board is replaced or removed that in a transaction like that, the – normally, you would see a control premium paid that that would happen as a result of an acquisition.
That’s not that Hudson is proposing. Hudson is simply proposing replacing the Board without paying to acquire the company.
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