Lamassu, dissed by Ditech’s lack of response, vows proxy fight
Lamassu Holdings, the Southern California investment firm that first disclosed holding a large chunk of Ditech Networks in December, has since offered to acquire the company outright, according to a filing today with the SEC. Not having gotten a proper respons and “Assuming that (its) offer will be completely ignored or dismissed without a thorough evaluation,” Lamassu intends to nominate two members to Ditech’s board at its next shareholder meeting.
In a letter sent to Ditech’s chief executive and board Feb. 20, Lamassu managing member Timothy Leehealey said he was “writing to express my surprise and disappointment with the response, or more precisely, the lack of response to my offer made over three weeks ago. I have been frustrated that no one from the company has reached out to me to even begin a dialog.”
“Though I have spoken with (CEO Todd) Simpson several times in the past weeks, each of these calls were initiated by me and provided little to no clarity into any process the company has undertaken to evaluate my offer. At the very least, I would expect any evaluation to include some discussion between myself and the management and Board,” wrote Leehealey. “As a shareholder, your lack of response is alarming.”
The Mountain View maker of equipment used to enhance voice quality and cancel echo in phone calls, reported results for its fiscal 2009 third quarter Feb. 19, including a net loss of $3.8 million, down from a $19.7 million loss the same quarter the year before.
While Leehealey acknowledges that Ditech was able to reduce its operating expenses in its last quarter, “it continues to burn cash on a daily basis,” he complained.
That cash is a big part of what Lamassu is trying to get at. Ditech had $49 million worth of it and other investments as of Dec. 31, which is about twice what the entire company is currently valued at by investors.That’s down from $65.7 million at the end of its last fiscal year on April 30, 2007.
No mention is made of the terms of any proposed deal, but Leehealey says there is no “financing contingency,” implying it has access to all the money it needs to procede. He also assures Ditech that he believes, “we can conduct diligence in a very compressed time frame” to get a deal done.
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My opinion is that this LeeHealey guy has zero credibility in the marketplace. His comments about DITC burning cash are ironic since his own company, AccessData, has been burning cash for years — AD hired tons of people two years ago to bring to market higher-margin enterprise software. The only problem is that the AccessData software sucks (see http://www.eddupdate.com/2008/05/ftk-20-product.html) and no one is buying it. LeeHealey has zero experience managing a public company and little to no background in the DITC marketplace or products. His reckless web postings in various locations are evidence that he has doesn’t even have the temperment to manage a public company. Zero experience and poor personal skills means that he is an empty shirt and DITC management should not allow Leehealey to distract its operations any more than he already has.