NEW YORK, March 3, 2015 /PRNewswire/ -- RDG Capital Fund Management LP announced today it has delivered a letter to the Board of Directors of American Realty Capital Properties, Inc. (NYSE: ARCP) recommending the immediate appointment of at least three new independent directors.
The full text of the letter is included below:
March 3, 2015
The Board of Directors
American Realty Capital Properties, Inc.
2325 E. Camelback Road, Suite 1100
Phoenix, AZ 85016
To the Board of Directors of American Realty Capital Properties:
RDG Capital Fund Management LP (together with its affiliates, "RDG") is a shareholder of American Realty Capital Properties, Inc. ("ARCP" or the "Company"). We believe the Board of Directors of ARCP (the "Board") has lost the confidence of the Company's shareholders in light of recent management turmoil, admission of material weaknesses in the Company's internal controls over financial reporting, and revelations concerning alleged malfeasance. To restore the Board's credibility, we strongly recommend ARCP immediately add at least three shareholder representatives to the Board.
Although RDG has not communicated with Corvex Management LP ("Corvex") with respect to ARCP, we agree with the views expressed by Corvex in its 13D filing, stating that "it is beneficial to add representatives of the shareholders to the Board, particularly given the recent high level of personnel turnover at the company and the critical decisions the company is facing in the near term."
While we respect individual Board members' personal credentials, it is apparent to us that ARCP has been plagued by a toxic corporate culture and shareholders have lost confidence in the existing Board due to its failure to supervise former members of senior management who until only recently had the Board's full support.
To restore confidence in the Board, RDG strongly recommends that at least three shareholder representatives are immediately invited to join the Board, including prospective directors recommended by Corvex, which has advocated for such shareholder representation. RDG believes Corvex, the Company's second largest shareholder which owns considerably more stock in ARCP than all current directors combined, has interests aligned with, and is seeking change for the benefit of, all shareholders.
Furthermore, we agree with the views expressed by respected Dutch pension fund PGGM Investment Management in their recent letter to the Board stating good corporate governance dictates that new shareholder-recommended Board members with no prior affiliation with former members of senior management should be involved in the selection of a reputable CEO to lead the Company and maximize shareholder value moving forward.
We believe ARCP has a valuable portfolio of premier properties and a solid diversified base of credit worthy tenants. With the recent accounting investigation completed and a new CEO who can instill renewed confidence in management's integrity, RDG believes the Company can trade at a more appropriate valuation assuming a dividend payout ratio and yield reasonably in line with its net lease peers. However, RDG believes this appropriate valuation is predicated on shareholders' restored confidence in a new management team and a reconstituted Board that includes meaningful shareholder representation.
Sincerely,
Russell Glass
Managing Partner
About RDG Capital Fund Management
New York-based RDG Capital Fund Management ("RDG") is a private investment firm that manages investment funds which primarily focus on undervalued companies with identifiable catalyst opportunities to enhance shareholder value.
Important Disclosures
Any views expressed herein represent the opinions of RDG, whose analysis is based solely on publicly available information. No representation or warranty, express or implied, is made with respect to the accuracy, timeliness or completeness of the information contained herein. RDG expressly disclaims any and all liability based, in whole or in part, on such information, any errors therein or omissions therefrom. Any opinions expressed herein are subject to change without notification. Forward looking statements involve certain risks and uncertainties and assumptions. Actual results may differ materially from those contained in forward looking statements. RDG does not assume any obligation to update, correct or revise the information contained herein. RDG intends to review its managed funds' investment in the Company on a continuing basis and may from time to time and at any time in the future depending on various factors, including, without limitation, the outcome of any discussions referenced above, the Company's financial position and strategic direction, actions taken by the Board, price levels of the Company's shares, other investment opportunities available to RDG, conditions in the securities market and general economic and industry conditions, take such actions with respect to its managed funds' investment in the Company as it deems appropriate, including, without limitation: (i) acquiring additional shares and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of the shares or the Company in the open market or otherwise; (ii) disposing of any or all of such securities or instruments in the open market or otherwise; or (iii) engaging in any hedging or similar transactions with respect to such securities or instruments.
Figures may represent estimates of RDG or third parties and may not be indicative of future results. There is no assurance or guarantee with respect to the prices at which any securities of the Company will trade, and such securities may not trade at prices that may be implied or stated herein. The estimates and pro forma information set forth herein are based on assumptions that RDG believes to be reasonable, but there can be no assurance or guarantee that actual results will not differ materially. The information contained herein does not recommend the purchase or sale of any security nor is it an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information contained herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice. No representation or warranty is made that RDG's investment process or investment objectives will or are likely to be achieved or successful or that RDG's managed funds' investments will make any profit or will not sustain losses. Past performance is not indicative of future results. Nothing contained herein should be taken as any form of commitment on the part of RDG to take any action in connection with any particular security. RDG and its affiliates are in the business of buying and selling securities. They have, and may in the future, buy, sell or change the form of their position in the Company or any security for any or no reason whatsoever. RDG has neither sought nor obtained the consent from any third party to use any statements or information contained herein that have been obtained or derived from statements made or published by such third parties which RDG may not be able to independently verify. Any such statements or information should not be viewed as indicating the support of such third parties for the views expressed herein. Furthermore, RDG makes no representations or warranties as to the accuracy, timeliness or completeness of such information.
Contact:
Pranab Lohani
RDG Capital Fund Management LP
(212) 407-2197
plohani@rdgcap.com
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SOURCE RDG Capital Fund Management LP
