In the letter, Kerrisdale Capital said, "We believe that Morgans' improved earnings are the result of the Yucaipa-appointed management team, and are not a result of any actions of the current Board. Reducing corporate expenses provides minimal value to shareholders, since an acquirer can reduce corporate expenses itself. Given that the current Board is responsible for Morgans' exposure to costly litigation, we find it inappropriate that the Board celebrates resolving the costly litigation that they themselves invited. In terms of the de-risking of a legacy balance sheet and refinancing of the Hudson and Delano mortgages, the current Board has merely replaced lower-cost debt with higher-cost debt, while incurring unnecessary refinancing fees."
- Financials Industry