Accounts managed by Evermore Global Advisors, LLC own approximately 1.8% of the outstanding shares of ModusLink Global Solutions ("ModusLink"). We are writing to express our outrage regarding the company's lack of substantive communication with respect to the status of (i) accounting irregularities disclosed in June and (ii) Goldman Sachs' review of strategic alternatives, which commenced nearly one year ago. Given the significant impact the outcomes of these initiatives may have on the value of the company, it is imperative that management communicate their status with shareholders. Announcing in a Form 8-K that the company expected to receive a notification letter from NASDAQ without disclosing any further information into this serious issue is appalling.
In addition to the lack of communication by company management regarding the issues outlined above, we have a number of serious concerns about the company, including:
The absence of a CEO who should be leading the strategic review of alternatives with Goldman Sachs
The fact that the two most senior corporate officers who had oversight over accounting and disclosure issues, CFO Steven Crane and General Counsel Peter Gray, are still working at the company and continue to receive massive bonuses
There is no aspect of ModusLink's current state of affairs that would indicate there is any form of serious leadership in the management ranks or at the Board level, which is totally unacceptable.
Proxy season is quickly approaching and we are not the only shareholders with little patience left for the status quo, as evidenced by the recent director nominations by affiliates of Steel Partners. Last year, the Board barely survived a proxy contest with Peerless Systems. Since that time, the accounting issues have come to light, Joe Lawler has been fired, and there apparently has been no progress on the strategic review. Investors do not have the tolerance for another expensive proxy fight, especially after management has made such an impressive series of missteps over the past three years.
We ask again for the company to communicate with shareholders on where it stands with regards to:
The search for a new CEO
The strategic review of alternatives
Anything less than full disclosure to shareholders on these matters in the very near future will lead us to conclude that the current Board members and senior managers are no longer capable of fulfilling their duties to ModusLink's shareholders.