Most importantly – “Further, unlike the recent Movate f/k/a CSS transaction, which CSP also controlled both sides of, a fairness opinion should be required this time by the Board of Directors (and/or Committee) to effect this deal. We hope that the Board, and particularly the Directors not affiliated with the controlling stockholder, will carefully consider these concerns, and take appropriate steps to protect the interests of the minority stockholders, including, but not limited to, requiring that a “majority of the minority” approve the take-private transaction. We believe such (a) requirement(s) is (are) generally recognized as (a) market protection(s) afforded to holders against self-interested transactions by a controlling stockholder and is a basis for a more favorable standard for review under Delaware Law. We call on other Company stockholders who may share our concerns to review and make their views known.”
Edgar here - https://www.sec.gov/edgar/browse/?CIK=0001031029
Board Changes
Since 2022, the independent Board Member composition has changed significantly. As a quick recap, the 2022 offer was rejected by a committee of independent directors, of which there were three (the rest are tied to CSP). Per the Q2 2023 report:
On July 18, 2023, CSP EAF II GP Limited general partner of CSP Fund II LP (“CSP”) has submited an open offer ("the Proposal") to acquire all of the outstanding shares of common stock (“Common Shares”) of Startek, Inc. (“Startek”) that are not already beneficially owned by CSP Management Limited at a price per share of $ 3.80 in cash. Subsequently, the Board of Startek has appointed a Special Committee comprising of three independent directors to evaluate the Proposal. The Committee has appointed independent advisors to assist them in their evaluation.
Their full rejection:
Special Committee of Startek Updates Stockholders on Status of Preliminary Non-Binding Proposal by CSP
September 9, 2022
DENVER--(BUSINESS WIRE)--Sep. 9, 2022-- The Special Committee of the Board of Directors of Startek, Inc. (NYSE: SRT) announced today that it has rejected the preliminary, non-binding proposal, dated August 8, 2022, by CSP Management Limited and certain of its affiliates (collectively, CSP) to acquire all the shares of Startek that CSP does not already own for $4.65 per share in cash. CSP is currently the beneficial owner of approximately 56% of the outstanding shares of Startek.
In July 2022, at the request of the Committee, management of the Company prepared an updated financial forecast (Forecast) for the 2022 calendar year and the four following calendar years 2023 to 2026. The Forecast projects annual revenue growth, beginning in calendar year 2023 and for the duration of the Forecast period, to exceed 5%. The Forecast projects that the margin for variable profit and for adjusted earnings before interest, taxes, depreciation and amortization, will steadily increase over the Forecast period, with the latter approaching 11% by calendar year 2026. The Forecast was reviewed by the full Board of Directors of the Company to ensure the Board's comments were reflected. On August 1, the Company provided the Forecast to the Committee. The Committee and its financial and legal advisors separately engaged in several additional discussions with management of the Company to assist the Committee in determining whether to adopt the Forecast for purposes of evaluating the CSP proposal.
Based upon this work, the Committee to return the Company to improved financial performance over the Forecast period. The Committee adopted the Forecast for purposes of evaluating the CSP proposal. The factors that the Committee has considered include the trading history of Startek stock, financial analyses of Startek using the Forecast, the macroeconomic environment, the Company’s limited float and liquidity, the ability to pay of a financial sponsor such as CSP, communications that the Committee has received from shareholders, and CSP’s statement that it is currently not a seller of its majority stake in the Company. The Committee has determined, at this time, that the proposal at $4.65 is inadequate and not in the best interests of the shareholders of Startek.
Foros, the Committee's financial advisor, notified CSP on August 21, 2022 that the Committee had determined that the proposed price of $4.65 was inadequate and explained the basis for this determination as described in the preceding paragraphs of this press release. Since that time, rather than submitting a revised proposal, CSP has repeatedly requested more “specific directional guidance on how [the Committee] is thinking about value and price.” The Committee considered this request by taking into account that CSP already possesses the full Forecast and has understood since August 21 that the Committee is using this Forecast for its financial analysis of proposals by CSP. After considering this factor, as well as the Committee’s objective of maximizing value for shareholders, the Committee determined and informed CSP that it would be inappropriate and redundant to provide additional directional guidance to CSP beyond the explanations already provided to CSP. The Committee has reiterated to CSP that the Committee remains available to evaluate and respond to a revised proposal by CSP.
There can be no assurance that any revised proposal or definitive offer will be made or accepted, that any agreement will be executed, or that any transaction will be consummated.
Foros is serving as financial advisor to the Special Committee and Freshfields is serving as legal counsel.
So, the original committee was the three independent directors. What’s changed? One left (Julie) and two more came in. They never disclosed if it was a unanimous vote, but the member who left seems like one that would vote against, and new members were recruited and elected post-offer failure.
