Star Equity Fund Launches Proxy Solicitation at Firsthand Technology Value Fund
May 15 2023 - 8:30AM
Star Equity Fund, LP (“Star Equity Fund” or “we”) is an investment
fund focused on unlocking shareholder value and improving corporate
governance at its portfolio companies. Star Equity Fund owns 6.2%
of the common stock of Firsthand Technology Value Fund, Inc.
(Nasdaq GM: SVVC) (“Firsthand” or “Company”) and, for the benefit
of all SVVC shareholders, announced today that it has filed its
definitive proxy statement with the Securities and Exchange
Commission and commenced soliciting proxies urging all shareholders
to vote the WHITE proxy card to elect its director nominees Robert
G. Pearse and Hannah M. Bible to the Company’s board of directors
(the “Board”) at the Company’s 2023 annual meeting of shareholders
(the “Annual Meeting”). SVVC’s Annual Meeting will be held in a
virtual format on May 26, 2023, at 5:00 p.m. ET / 2:00 p.m. PT.
The Incumbent Board Has Overseen Colossal Value
Destruction at SVVC
SVVC’s stock price performance has been abysmal
throughout the incumbent Board’s tenure. Since inception in April
2011, SVVC’s stock price has declined 95% while NAV per share has
declined 79%. SVVC total shareholder return has severely
underperformed the broader US stock market as measured by the
S&P 500 Index, the NASDAQ Composite Index, and the MVIS US
Business Development Companies Index over any comparison time
frame.
SVVC’s investment performance has been equally
disappointing. SVVC’s investment portfolio as of December 31, 2022
has unrealized losses of over $100 million, representing a 72%
decline from the cost basis of these investments. Additionally,
SVVC’s preliminary March 31, 2023 NAV per share of $3.75 represents
an all-time low. This terrible track record of value destruction
illustrates that change in SVVC’s Board composition cannot come
soon enough for shareholders.
We Believe SVVC’s Incumbent Directors
are Entrenched and Misaligned
As we have highlighted before, we believe SVVC
maintains an egregiously anti-shareholder investment management
agreement with Firsthand Capital Management (“FCM”) whereby
management fees are assessed annually on 2% of gross
assets, thus compensating FCM on how they mark their
investments rather than stock price performance. In our view, this
management agreement enriches the entrenched Board at the expense
of shareholders.
Additionally, independent directors Burglin,
Lee, Petredis, and Yee collectively own a paltry
~$2,500-worth of SVVC shares despite having an average Board tenure
of 11 years. We believe this low ownership contributes to the
Board’s complacency regarding the horrendous performance of SVVC’s
stock price because they do not have real “skin in the game.”
Furthermore, SVVC’s has manipulated its
governance to quash shareholder attempts to drive change at the
Company. SVVC’s bylaws stipulate that although in an uncontested
director election, directors are elected by a plurality of votes
cast (i.e., a Company nominee just needs one “for” vote to be
elected), in a contested election, a director
candidate must receive “for” votes from a majority of all shares
outstanding to be elected. This presents a significant hurdle for
shareholder-supported candidates to win election to the Board – we
expect that the incumbent directors, even if they receive fewer
votes than shareholder-supported candidates, will be deemed by the
Company to remain on the Board unless shareholder-supported
candidates receive “for” votes from a majority of the shares
outstanding. Amazingly, this means that if dissidents receive
support from 49% of all shareholders and incumbents 1%, then the
incumbents remain as directors. In our view, this bylaws provision
was adopted specifically to frustrate shareholders seeking change
to the Board and to further entrench the incumbent directors.
Star Equity’s Nominees are Highly
Qualified, Highly Motivated, and Fully Prepared to Immediately
Effectuate Meaningful Change at SVVC
Our two nominees, Robert G. Pearse and Hannah M.
Bible, are qualified, fully committed, and ready to maximize
shareholder value for all shareholders at SVVC. Mr. Pearse has
extensive experience as both a venture capitalist and corporate
executive and engineer for technology companies in Silicon Valley
such as the Hewlett-Packard Company (n/k/a HP Inc.) and NetApp,
Inc. We believe Mr. Pearse’s business development experience as
well as his technical and financial acumen will make him a valuable
addition to the Board. Ms. Bible has over 20 years of legal
experience and has served as director and chair on the boards of
several public companies. We believe that Ms. Bible’s significant
legal experience across a variety of industries, corporate
governance expertise, and her prior public company board experience
makes her well qualified to join the Board.
If elected to the Board, our nominees would push
for:
- Immediate
termination of the investment management agreement with FCM.
- Changing the
anti-shareholder bylaws including the voting requirements on
director nominees.
- Better
facilitation of shareholder input and participation at the
Company.
- Changing the
overall strategy of SVVC to a traditional BDC
- Cease making
venture capital investments.
- Instead, issue
interest-bearing loans to less speculative portfolio
companies.
- Reinstate a
regular dividend in order to help the stock price converge with NAV
per share over time.
Star Equity Fund remains resolute in its opinion
that a change in Board composition is vital to altering corporate
governance practices, improving financial results, and ultimately
unlocking shareholder value at SVVC. We believe long-suffering SVVC
shareholders deserve better, and we aim to give them an opportunity
for much-needed change on the Board at the 2023 Annual Meeting.
Additional Information and Where to Find
It Star Equity Fund, LP (“Star Equity Fund”),
together with the other participants in its proxy solicitation
(collectively, “Star Equity”), filed a definitive proxy statement
and accompanying WHITE proxy card with the Securities and Exchange
Commission (“SEC”) to be used to solicit votes for the election of
its slate of highly qualified director nominees at the 2023 annual
meeting of stockholders of Firsthand Technology Value Fund, Inc., a
Maryland corporation (the “Company”).
STAR EQUITY STRONGLY ADVISES ALL STOCKHOLDERS OF
THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS
AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE
PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST.
About Star Equity Fund, LP Star
Equity Fund, LP is an investment fund affiliated with Star Equity
Holdings, Inc. Star Equity Fund seeks to unlock shareholder value
and improve corporate governance at its portfolio
companies.
About Star Equity Holdings,
Inc. Star Equity Holdings, Inc. is a diversified
holding company with two divisions: Construction and
Investments.
|
For more information contact: |
Star
Equity Fund, LP |
|
The
Equity Group |
Jeffrey E. Eberwein |
|
Lena Cati |
Portfolio Manager |
|
Senior Vice President |
203-489-9501 |
|
212-836-9611 |
jeff.eberwein@starequity.com |
|
lcati@equityny.com |
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