NEW YORK, March 6, 2013 (GLOBE NEWSWIRE) -- Moab Capital Partners, LLC ("Moab Capital" or "we") today announced that it has given notice to Mac-Gray Corporation ("Mac-Gray" or the "Company") (NYSE:TUC) that it will be nominating three independent candidates for election to Mac-Gray's Board of Directors (the "Board") at the 2013 Annual Meeting of Stockholders. Moab Capital is the investment manager of Moab Partners, L.P. ("Moab Partners"), an investment fund that beneficially owns 9.2% of Mac-Gray's outstanding shares. Moab Capital's nominees are Mark L. Bromberg, James E. Hyman and Michael M. Rothenberg.
Subsequent to last year's annual meeting, on May 25, 2012, ISS Proxy Advisory Services ("ISS") published a report that gave Mac-Gray's Board of Directors a score of 0.0 out of a possible 100.0 for Shareholder Rights. In its report, ISS noted multiple issues with Mac-Gray's Board of Directors including the failure to implement a stockholder proposal to declassify the Board supported by the majority of shares voted at two consecutive annual stockholder meetings. ISS also took issue with supermajority voting requirements to amend the Company's By-Laws. In its report, ISS wrote "The Board appears to suffer from a chronic delusion that it has primacy in the shareholder-director principal-agent relationship."
Moab Capital believes that a Board with more shareholder representation would not succumb to actions that warrant an ISS Shareholder Rights score of 0.0. In Moab Capital's view, Mac-Gray's Board sorely lacks shareholder representation. After excluding shares issuable upon the exercise of options, the Board as a whole holds just 1% of the Company's shares outstanding with a current market value of less than $2 million.
The three directors expected to be up for reelection in 2013 were all on the Board when it rejected two separate, unsolicited proposals to acquire Mac-Gray at substantial premiums. The first offer was from Coinmach Services Corporation in 2006, and the second from KP Capital in 2011. In both cases, the suitors were denied the ability to conduct due diligence. These three directors also sat on the Board while it rewarded CEO Stewart G. MacDonald, Jr. with salary increases and bonuses that appear unjustified given the Company's disappointing financial and stock price performance over the past several years. Two of the three directors expected to stand for reelection have been members of the Board's Compensation Committee during the same time period.
As we outline in a presentation attached as Exhibit D to our Schedule 13D filing with the Securities and Exchange Commission on March 6, 2013, Moab believes change needs to occur at Mac-Gray for four fundamental reasons including a history of overpriced and dilutive acquisitions which have not generated noticeable economies of scale, weak financial performance, a series of questionable actions by the Board of Directors, and disappointing stock price performance since the Company's IPO at $11.00 per share in 1997.
Even after considering the $1.6 million annual dividend increase announced by the Board on February 25, 2013, just days prior to the Board nomination deadline, Moab believes that Mac-Gray still pays an extraordinarily low dividend for a company that operates in a mature industry and has a conservative capital structure.
Our announcement today commences the fourth shareholder attempt to replace directors at the Company since 2009. Moab Capital's three nominees are seasoned executives that all possess significant operational, financial and/or strategic expertise. In addition to these qualities, we believe Messrs. Bromberg, Hyman and Rothenberg would bring fresh perspectives to the Board that will help maximize value for stockholders. Furthermore, nominee Mr. Rothenberg, as the General Partner of Moab Partners, would bring meaningful independent shareholder representation to the Board for the first time in several years.
Moab Capital is taking on this task, the fourth proxy fight against the Company since 2009, on behalf of all stockholders who believe Mac-Gray's Board could be more effectively furthering all shareholder interests. Moab Capital has decided on this course of action itself, and not in conjunction with any other stockholder.
Nominees
Mark L. Bromberg (age 61): Mr. Bromberg has over 35 years of experience as a founder and chief executive of numerous US and Canadian restaurant companies. In addition to being the founder of such Canadian restaurant concepts as Mr. Greenjeans®, Ginsberg + Wong® and Lime Rickey's® Restaurants, he served as CEO and/or Chairman of East Side Mario's® Restaurants, Prime Restaurant Group, and Metromedia Restaurant Group®. Since 2002, Mr. Bromberg has served as the President and CEO of Apex Restaurant Group, which has managed and/or currently manages multi-unit groups of retail and restaurant brands ranging from Left at Albuquerque, Airspace Lounge®, Cozymel's®, The Woodlands®, Bevmax® and various groups of franchised restaurants including Burger King®. Through an affiliate, Apogee Hospitality, Mr. Bromberg and his associates provide extensive management advisory services to hospitality, retail and service industry businesses world-wide. Among others, Mr. Bromberg has served as Chairman of the Canadian Restaurant Association, and as a Director on the Boards of Quiznos®, Quest Hospitality, Latitude Lounge Corporation and the National Restaurant Association. Mr. Bromberg holds both B Sc. and MBA degrees from Cornell University.
James E. Hyman (age 52): Mr. Hyman is President and CEO of TestAmerica Inc., the nation's largest provider of environmental testing services, a role he has held since 2011. In addition to his role at TestAmerica, Mr. Hyman has served as a Board Member of Grosvenor Americas, an operating company of Grosvenor, a privately owned global property group with assets under management exceeding $18 billion, since 2011. At Grosvenor Americas, Mr. Hyman serves as Chairman of the Audit Committee and is a member of the Compensation Committee. Before his roles at TestAmerica and Grosvenor, Mr. Hyman was Chairman, President, CEO, and a Director of Houston-based Cornell Companies, Inc., a New York Stock Exchange traded provider of government services, from 2005 until its sale in 2010. Earlier in his career, Mr. Hyman held executive positions with Starwood Hotels & Resorts Worldwide, GE Capital Services, McKinsey & Company, and JP Morgan, among others. He chairs the non-profit Mega-Cities Project, focused on urban development issues in the world's largest cities. Mr. Hyman received an MBA with Distinction from Harvard Business School and an AB with honors from The University of Chicago.
Michael M. Rothenberg (age 39): Since 1998, Mr. Rothenberg has worked in the investment management industry. In 2006, he co-founded Moab Capital Partners, LLC, a value-oriented event-driven money management firm. From 2003 to 2005, Mr. Rothenberg was a senior investment professional at Xerion Capital Partners, LLC, a $500 million hedge fund, where he was responsible for investing and trading a portfolio of distressed debt, bank debt, and event driven equities that peaked at $300 million. From 2002 to 2003, Mr. Rothenberg was the distressed debt Portfolio Manager at Troy Capital Management, LLC, an $80 million hedge fund where he was responsible for investing and trading a $25 million portfolio of distressed debt and event driven equities. From 2001 to 2002, Mr. Rothenberg was an investment analyst at Gracie Capital Partners, LLC, an event driven and distressed debt focused hedge fund. From 1998 to 2001, Mr. Rothenberg was an investment analyst at Perry Capital, LLC, an $11.5 billion hedge fund, where he focused on distressed debt, event driven equity, and private equity investments. Prior to entering the investment management industry, from 1995 to 1998, Mr. Rothenberg was an investment banking analyst at Peter J. Solomon Company, focusing on mergers and acquisitions. Mr. Rothenberg earned a B.S. in Economics in 1995 from The Wharton School at The University of Pennsylvania in Philadelphia, Pennsylvania, majoring in finance.
About Moab Capital Partners, LLC
Moab Capital is an SEC-registered independent investment advisor founded in 2006 and is located in New York, NY.
Additional Information
MOAB CAPITAL PARTNERS, LLC ("MOAB CAPITAL") WILL FILE A PROXY STATEMENT REGARDING THE ELECTION OF DIRECTORS OF MAC-GRAY CORPORATION (THE "COMPANY") AT THE COMPANY'S 2013 ANNUAL MEETING OF STOCKHOLDERS. SECURITY HOLDERS ARE ADVISED TO READ THIS PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY MOAB PARTNERS, L.P. FROM THE STOCKHOLDERS OF MAC-GRAY CORPORATION FOR USE AT ITS 2013 ANNUAL MEETING WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION. WHEN COMPLETED, THIS DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE AVAILABLE TO STOCKHOLDERS OF MAC-GRAY CORPORATION AT NO CHARGE FROM THE PARTICIPANTS AND AT THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
THE FOLLOWING MAY BE DEEMED, UNDER SEC RULES, TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM THE COMPANY'S STOCKHOLDERS IN CONNECTION WITH THE UPCOMING ELECTION OF THE COMPANY'S BOARD OF DIRECTORS: (I) MOAB CAPITAL, (II) THE OFFICERS AND MANAGEMENT OF MOAB CAPITAL, INCLUDING MICHAEL ROTHENBERG, (III) MOAB PARTNERS, L.P. AND (IV) MESSRS. MARK BROMBERG AND JAMES HYMAN, THE INDIVIDUALS NOMINATED BY MOAB CAPITAL FOR DIRECTOR. INFORMATION REGARDING THE PARTICIPANTS AND THE INTERESTS OF MOAB CAPITAL AND ITS AFFILIATES THAT ALSO OWN SHARES OF THE COMPANY MAY BE FOUND IN FILINGS BY MOAB CAPITAL WITH THE SEC ON SCHEDULE 13D, AS AMENDED, WHICH INCLUDES A COPY OF THE NOTICE OF NOMINATION AND PROVIDES DETAILED INFORMATION ABOUT THE PARTICIPANTS.