MIAMI, Oct. 20 FL-FairholmeLetterURI
MIAMI, Oct. 20 /PRNewswire-FirstCall/ -- Today, Fairholme Capital Management, L.L.C., a Miami-based registered investment adviser with $9.5 billion of assets under management, delivered to the Board of Directors of United Rentals, Inc. (NYSE: URI) and filed as an exhibit to a Form 13D the following letter:
October 20, 2008
United Rentals, Inc.
Five Greenwich Office Park
Greenwich, Connecticut 06831
Attention: Board of Directors
Ladies and Gentlemen:
Fairholme Capital Management, L.L.C. is a Delaware limited liability company and registered investment advisor. We have read the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 16, 2008 by United Rentals Inc., a Delaware corporation (the "Company"), and are troubled that the Board of Directors (the "Board"), with little ownership, unilaterally and without meaningful explanation, determined to amend the Company's Rights Agreement ("Rights Agreement") to, among other things, modify the definition of "Acquiring Person" contained therein and, consequently, materially reduce the "flip-in" percentage and all related beneficial ownership "trigger event" thresholds from 25% to 15%.
The directors' decision to amend the Rights Agreement in the manner adopted, runs counter to the Board's fundamental duties, as careful, loyal and faithful fiduciaries of the Company's public stockholders -- the true owners of the Company. We believe that the Board is obliged, more than ever in the prevailing economic environment, to vigilantly protect the economic interests of its stockholders and to pursue and enable all viable transactions to enhance and maximize stockholder value. The Rights Agreement as now amended is an unnecessary and unreasonable barrier to that obligation.
We find it particularly disturbing that the Board chose to substantively amend the Rights Agreement in this manner at a time when the majority of large public companies have entirely eliminated their "poison pills" and dismantled other structural and organic takeover defenses and entrenchment devices.
While we recognize the Board's technical ability to amend the Rights Agreement, we also do not believe that the exercise of unilateral authority in this context is a prudent business judgment.
In addition, we suspect that the amendment to the Rights Agreement is similarly unacceptable to your most significant stockholders who have supported the Company when recent, past, corporate decisions have been less than stellar.
In our view, it is most inappropriate for the Company's management and directors to entrench themselves and deter potential offers and proposals from being made directly to the Company's stockholders, which may offer an attractive control premium or business combination opportunity.
Moreover, even a significant percentage of the ever-vanishing minority of Fortune 500 and S&P 500 issuers who still maintain in effect a stockholder rights plan have included in their rights agreements "permitted offer exceptions," "qualified offer" provisions and other chewable features. Many others have included "sunset clauses."
Accordingly, we believe that the amendment to the Rights Agreement is inconsistent with Risk Metrics' (ISS') voting policy recommendations in addition to being unreasonable, unfair and entirely inconsistent with the best corporate governance practices and policies that the Company should aspire to establish and maintain.
We look forward to your response.
Yours faithfully,
/s/ Bruce R. Berkowitz
Bruce R. Berkowitz
Managing Member, Fairholme Capital Management, L.L.C.
CONTACT: Bruce R. Berkowitz
305-358-3000
SOURCE Fairholme Capital Management, L.L.C.
