Letter to the Tecumseh Board of Directors (part 1)
c/o General Counsel & Secretary
Tecumseh Products, Inc.
1136 Oak Valley Drive
Ann Arbor, MI 48108
February 20, 2013
Members of the Board of Directors:
Between myself, plus Mr. [redacted], along with a dozen or so accounts that we (independently) manage or advise, we represent ownership of well over 500,000 shares of TECUA and TECUB. (I, personally, own approximately 185,000 Class A shares, and 100,000 Class B shares.)
Having read Roumell Asset Management's ("Roumell") 13D amendment from today, we are writing to request that you immediately appoint Douglas M. Suliman, Jr., and Stephen P. Jackson, Jr. to the Tecumseh board, or expand the board, and include these two gentlemen as the company's nominees in the upcoming proxy statement. We believe the people at Roumell have evidenced themselves to possess exceptional analytical skills, regarding ways to unlock the substantive "hidden value" within Tecumseh Products, which they have laid out in their public filings. We also have been very impressed by the quality, caliber, and steadfastness of Roumell's work, as evidenced by their questions and comments in the company's earnings conference calls.
While we would leave it up to the board to negotiate the specific compensation terms of the Roumell suggested nominees, we have evaluated the backgrounds and qualifications of the two candidates, and believe they represent critically needed skills on the Tecumseh board, at this important time of change, and that they would add tremendous value for all shareholders.
We have similarly been impressed by all aspects of Jim Connor, in fulfilling his role as CEO. We believe Jim has established a strong level of credibility during the time he has served. We are impressed by his background in the "restructuring" field, and we further believe he has evidenced a level of integrity and clear thought, such that we strongly support his being appointed to the position of Chairman of the Board, at this time. We agree with Roumell that having a separate Chairman and CEO at this time is much less important. Rather, what IS critically important is having a laser-sharp focus in confronting all of the strategic options and imperatives that the company now faces. Having a combined Chairman-CEO would enhance that focus, and allow the company to move forward expeditiously. (continued)
Unfortunately, Yahoo isn't "taking" the rest of the letter, so I'm going to try to break it up in smaller parts.
The company is owned by its shareholders, and the serious decline in the stock price, over the last several years, has brought about a situation of "undue undervaluation." Representing nearly 3% ownership of the entire company, myself, Mr. [redacted], and our affiliates are concerned that the board has taken an excessive period of time in pursuing the necessary "unlocking of value" that is the shareholders' right to realize. When Mr. Connor indicated, a number of quarters back, that the company was being looked at with a "clean sheet," I don't think any of us thought it would take this long, with still nothing happening. We support the elevation of Jim Connor to the Chairman position, and the appointment of the two Roumell suggested nominees to the board, because we believe it is important that the board send a clear message that the shareholders come first....and that it is time for the board to focus, single-mindedly, on taking the actions necessary that will allow the common stock to reflect something much closer to the company's intrinsic value. (continued)
We believe that a rationalization of the company's asset base, including sale of the Brazilian RF operation, sale of land in the India "technology corridor," and maintaining operations that, we believe, could earn 5%+ operating margins, would allow for a dramatic upward revaluation of Tecumseh's common stock on Wall Street. We also believe that the actions noted would not merely represent a "financial engineering gimmick," but, rather, would reflect a strategy that is in the best long term interests of the company, and its shareholders.
While most or all of the shares we represent are held in "Street Name," if you would like us to send you a list of all of the holders represented, please let us know, and it will be provided to you. I can be reached at [redacted].