GREENWICH, Conn., Aug. 13, 2020 /PRNewswire/ -- Dolphin
Limited Partnership III, L.P. ("Dolphin III") and other entities,
long-term holders with approximately 4.9% of the Series A Common
Stock of A. H. Belo Corporation (NYSE Ticker Symbol: AHC),
announced today that a May 2020
letter was sent to both Robert W.
Decherd, Chairman, President and CEO, and John A. Beckert, lead independent director, with
request to forward to the entire board.
Dolphin III's recent correspondence, notwithstanding AHC's
valuable franchise assets and approximate 9% pro forma annual
dividend yield, noted: (i) with an approximate $1.70 share price, $36
million market capitalization and no analyst coverage, it
believes it is no longer logical to remain public, (ii) FY 2019
recurring cash operating expense appears to have been approximately
$184 million, (iii) there was
approximately $77 million or
$3.60/share of 2019 FYE ($71 million or $3.30/share as of June 30,
2020) cash, assets convertible to cash, investments and tax
recovery and no debt, (iv) in April, AHC advised of an expected
2020 $8.0 million cash decline
(before a $2.3 million tax
recovery), (v) while AHC had generally managed years of
secular revenue declines with corresponding expense reductions, AHC
should implement deeper cuts to achieve attractive and consistent
profitability, (vi) adjusting for approximately $3.6 million of non-recurring expense, FY 2019
EBITDA appears flat, (vii) FYE 2019 tangible book value, adjusted
for lease accounting, was approximately $2.75/share, (viii) AHC, at cost, has hundreds of
millions of fully depreciated assets requiring valuation, and
(ix) AHC had made significant strides with its frozen defined
benefit plans.
Therefore, it remains Dolphin III's view that AHC should (i)
pursue strategic alternatives, including a going private
transaction (possibly with an ESOP), (ii) pursue deeper expense
cuts to achieve consistent attractive profitability, (iii)
discontinue acquisitions based upon recent sizable goodwill
writedowns and (iv) pay stockholders a $1.06 per share ($22.8
million in the aggregate) special dividend with realization
of secured notes receivable expected June
2021.
Dolphin also noted that in 2018, AHC reincorporated to
Texas from Delaware and, like Delaware (but unlike some states), the
fiduciary obligation of a director of a Texas corporation, is solely to its
shareholders. Accordingly, Dolphin III expressed concern for AHC,
under its corporate opportunity, not having acquired the available
nearly 1.0 million shares of Series A and Series B Common Stock
(representing approximately 7.1 million votes) from affiliates and
insiders including its former CEO and a director and deny voting
control. During 2019-2020 and, as recently as February 2020, approximately 1.0 million shares
of Series A and B Common Stock were purchased by Mr. Decherd at
$4.00 and $5.00 per share, respectively, while AHC's active
2.2 million share repurchase program covering both Series was not
renewed upon its Q4 2019 expiration.
Dolphin III outlined and concluded that it believed a strategic
transaction would generate value above the prices paid, including
recently, by Mr. Decherd reflected in the above paragraph and had
offered support for such, including public merger transactions at
attractive valuations.
While AHC was asked to comment as to any factual inaccuracies in
Dolphin III's recent letter, AHC offered no corrections in its
reply letter.
About Dolphin:
Dolphin Limited Partnership III, L.P. and other Dolphin
Partnerships have a history of working constructively to generate
value on behalf of all shareholders. Dolphin was initiated in or
about 1995.
Contact: Margaret Bae, Esq.
Olshan Frome Wolosky LLP
(212) 451-2300
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SOURCE Dolphin Limited Partnership III, L.P.