DAYTONA BEACH, Fla., Nov. 21 FL-ConsolidatedTomoka
DAYTONA BEACH, Fla., Nov. 21 /PRNewswire-FirstCall/ -- Consolidated-Tomoka
Land Co. (Amex: CTO; NYSE Alternext US: CTO) (the "Company") announced today
that its Board of Directors has reviewed and rejected a proposal from
Wintergreen Advisers, LLC ("Wintergreen"), the Company's largest shareholder,
because it would have provided Wintergreen with undue influence over the
Company and was deemed not in the best interests of the Company's other
shareholders.
The Company's Board has detailed its reasoning in the response to
Wintergreen and is also filing that correspondence in a Form 8-K. In that
filing, the Company will also include copies of prior correspondence exchanged
directly between the Company and Wintergreen regarding Wintergreen's demand
for inspection of corporate records and other matters (such as the nomination
of Board candidates) to provide investors with additional information related
to the Company's response. Included in that filing will be copies of the
Company's proposal to include Wintergreen nominees and settle outstanding
matters between the parties and Wintergreen's letter rejecting the Company's
proposal together with a copy of Wintergreen's counterproposal. The Company's
is making this filing for the benefit of its investors and in the interest of
disclosure and transparency.
The Wintergreen proposal required, in part, that the Company do the
following:
-- Immediately appoint a director nominee nominated by Wintergreen to fill
a vacancy on the Company's nine-member Board of Directors and have that
nominee named Chairman of the Board no later than the 2009 Annual Meeting of
Shareholders;
-- Nominate two additional Wintergreen director nominees as candidates for
the Board of Directors, to be included in the Board-endorsed slate of nominees
at the Company's 2009 Annual Meeting; and
-- Amend the Company's charter documents to provide for the annual
election of all Directors beginning in 2010 and allow Wintergreen to nominate
additional candidates for those seats.
Although the Board greatly respects the considerable investment that
Wintergreen has made in the Company and agrees that it warrants reasonable
representation on the Company's Board of Directors, the Board determined that
the proposed terms suggested by Wintergreen were so excessive that they would
have infringed on the rights of nearly three-quarters of the Company's
shareholders giving the Board no choice but to exercise its fiduciary
obligations and reject the proposal.
On November 11, 2008, the Company offered to fill the current vacancy on
the Board with a Wintergreen director nominee, as well as to include one
additional Wintergreen nominee on the Board-endorsed slate of nominees for
election as directors at the Company's 2009 Annual Meeting. Wintergreen
dismissed this offer and responded to it with the Wintergreen proposal
submitted to the Company on November 17, 2008.
The full text of the Company's response to Wintergreen follows:
FEDERAL EXPRESS
November 19, 2008
Wintergreen Advisers, LLC
Attn: Mr. David J. Winters
333 Route 46 West, Suite 204
Mountain Lakes, NJ 07046
Dear Mr. Winters:
On Wednesday, November 19, the Board of Directors of Consolidated-Tomoka
Land Co. (the "Company") met to review and discuss the proposed Settlement and
Standstill Agreement between the Company and Wintergreen Advisers that you
submitted on November 17.
As Consolidated Tomoka's largest shareholder, we recognize the significant
investment you have made in the Company, and we have consistently sought over
time to be highly considerate of and responsive to your ideas, suggestions,
and requests. This included your nominee becoming a Director in 2007, who
since voluntarily resigned in March 2008, and our most recent offer to fill
the Board's current vacancy with an independent Director nominated by
Wintergreen, as well as a second independent Director proposed by Wintergreen
to be included in the Board's slate for election at our 2009 Annual Meeting.
The Board continues to believe that a shareholder of Wintergreen's size is
entitled to reasonable representation on the Board; however, the Board's
fiduciary responsibility requires that it represent the best long-term
interest of all of the Company's shareholders. Regretfully, the Agreement
that you have proposed would require the Board to abandon its responsibility
and place the interests of Wintergreen Advisers above the interests of the
remaining roughly three-quarters of the Company's shareholders.
It is apparent to the Board from your proposal that Wintergreen Advisers
seeks to gain control of Consolidated Tomoka as quickly as possible and
without paying any change-in-control premium to the Company's other
shareholders. This is apparent both through the content of your proposal as
well as the manner in which it was proposed, which required that the Board
accept your terms without any modification within two days of receipt.
Among other things, your proposal requires that three (3) Wintergreen
Directors be named to the Company's Board of nine (9) by the 2009 Annual
Meeting, one of whom would become Chairman, and that beginning in 2010,
Wintergreen be permitted to nominate candidates for the remaining six (6)
seats on a declassified Board. Accepting these demands could confer
considerable power to one shareholder at the expense of others and put
Wintergreen in a position to assert majority control of the Board by 2010.
The Board would be remiss if we did not reiterate its sincere concern
about several strategic recommendations that Wintergreen has made over the
years. Specifically, Wintergreen has advocated that the Company adopt the
following strategies including:
-- abandoning the Company's 1031 strategy, which provides predictable
income by investing in lower-risk and geographically dispersed income
properties;
-- discontinuing land sales in favor of self-development of our
properties;
-- suspending the quarterly dividend in spite of the fact that some of our
investors require a dividend to continue to own our stock; and
-- pursuing an aggressive stock repurchase program during the peak of the
real estate cycle when available funds were needed for income property
investments, roads, and other infrastructure that would improve shareholder
value.
Had Consolidated-Tomoka adopted these strategies the Company would be in
severe financial distress at this point. The Company would have significant
debt, potential high vacancy rates in new self-developed properties, minimal
income from land sales, and negative cash flow requiring the Company to sell
off valuable assets at depressed prices in order to meet ongoing operational
expenses. In contrast, the Board's adopted strategy has allowed the Company
to remain profitable with a strong balance sheet and little debt, positioning
us to outperform most of our peer group during the current economic
environment.
We are further perplexed by these strategy changes because at the time of
your initial investment you expressed very strong support for the Company's
management team and our strategy and business plan, which were formally
adopted in 1999, and which have been clearly articulated and remain
substantially unchanged. As you know, our core strategy is to utilize 1031
exchanges to convert agricultural land holdings into stable income-producing
properties to generate dependable cash flow at any point in the real estate
cycle, and we believe the strategy has been firmly validated in this current
environment.
We welcome your positive involvement with the Company, but the Board would
fundamentally violate its fiduciary responsibility if it adopted your proposal
and allowed one shareholder to gain significant control of the Company,
particularly when that shareholder has advocated a range of strategies that in
both hindsight and going forward would be very detrimental to shareholder
value.
Again, we hope that you will reconsider your present course, but until
such time, the Board must act in the best interests of all of its shareholders
and reject your proposal.
Respectfully,
/s/Linda Crisp
Linda Crisp
Corporate Secretary
On behalf of the Board of Directors
of Consolidated-Tomoka Land Co.
About Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based company primarily engaged
in converting Company owned agricultural lands into a portfolio of net lease
income properties strategically located in the Southeast, through the
efficient utilization of 1031 tax-deferred exchanges. The Company has low
long-term debt and generates over $9 million in annual before tax cash flow
from its real estate portfolio. The Company also engages in selective self-
development of targeted income properties. The Company's adopted strategy is
designed to provide the financial strength and cash flow to weather difficult
real estate cycles. Visit our website at www.ctlc.com .
"Safe Harbor"
Certain statements contained in this press release (other than statements
of historical fact) are forward-looking statements. The words "believe,"
"estimate," "expect," "intend," "anticipate," "will," "could," "may,"
"should," "plan," "potential," "predict," "forecast," "project," and similar
expressions and variations thereof identify certain of such forward-looking
statements, which speak only as of the dates on which they were made.
Forward-looking statements are made based upon management's expectations and
beliefs concerning future developments and their potential effect upon the
Company. There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management.
The Company wishes to caution readers that the assumptions which form the
basis for forward-looking statements with respect to or that may impact
earnings for the year ended December 31, 2008, and thereafter include many
factors that are beyond the Company's ability to control or estimate
precisely. These risks and uncertainties include, but are not limited to, the
strength of the real estate market in the City of Daytona Beach in Volusia
County, Florida; our ability to successfully execute acquisition or
development strategies; any loss of key management personnel; changes in
local, regional and national economic conditions affecting the real estate
development business and income properties; the impact of environmental and
land use regulations; the impact of competitive real estate activity;
variability in quarterly results due to the unpredictable timing of land
sales; the loss of any major income property tenants; and the availability of
capital. Additional information concerning these and other factors that could
cause actual results to differ materially from those forward-looking
statements is contained from time to time in the Company's Securities and
Exchange Commission filings, including, but not limited to, the Company's
Annual Report on Form 10-K. Copies of each filing may be obtained from the
Company or the SEC.
While the Company periodically reassesses material trends and
uncertainties affecting its results of operations and financial condition, the
Company does not intend to review or revise any particular forward-looking
statement referenced herein in light of future events.
SOURCE Consolidated-Tomoka Land Co.
