NEW YORK, June 13, 2023 (GLOBE NEWSWIRE) -- Howard Jonas, leading a consortium of investors that maintains an economic interest in more than 5% of the outstanding shares of common stock of LL Flooring Holdings, Inc. (NYSE: LL), today sent a letter to LL Flooring’s Board of Directors strongly encouraging the Board to seriously consider the offer made on May 26, 2023 by F9 Investments, LLC and Cabinets to Go, LLC to acquire the company at a price of $5.76 per share as a fair starting point for acquisition discussions. Mr. Jonas urged the Company to constructively engage with the F9 Group and to advance an immediate sale process. The full text of the letter that was sent to LL Flooring’s Board of Directors on June 13, 2023 follows below:
June 13, 2023
Nancy M. Taylor
Chairperson of the Board of Directors
Charles Tyson
Chief Executive Officer
LL Flooring Holdings, Inc.
4901 Bakers Mill Lane
Richmond, Virginia 23230
Dear Ms. Taylor and Mr. Tyson:
I am writing on behalf of an investment consortium that I lead to strongly encourage the Board of Directors of LL Flooring Holdings, Inc. to seriously consider the offer made on May 26, 2023 by F9 Investments, LLC and Cabinets to Go, LLC (collectively, the “F9 Group”) to acquire the company. The consortium maintains an economic interest in more than 5% of the outstanding shares of common stock of LL Flooring through a combination of direct holdings and swaps.
We believe the F9 Group’s offer of $5.76 per share is a fair starting point for acquisition discussions and that the Board should engage with the F9 Group and immediately enter into a sale process for the company with $5.76 per share as an acceptable floor bid.
While we believe there is significant value in LL Flooring’s underlying net assets (including its strong brand and market position) that is in excess of the current market price, and potentially in excess of the $5.76 per share offer, unfortunately, as evidenced by the company’s record of severe underperformance over the last several years, it is apparent that management change would be necessary for stockholders to benefit from that value.
While competitors demonstrated strong performance in 2022, LL Flooring lagged considerably, with significant and alarming levels of negative operating cash flow and inventory buildup. First quarter 2023 results were also extremely disappointing, and we are gravely concerned by the significant increase in the company’s SG&A as a percentage of net sales.
If anything, LL Flooring’s record of underperformance suggests that failing to sell now could threaten further value erosion for stockholders.
In our view, a sale now, at this price or above, whether to the F9 Group or to an alternative bidder, would provide stockholders an attractive opportunity to obtain immediate liquidity at a fair valuation in excess of what LL Flooring, with its management as currently constituted, can be expected to achieve.
For these reasons, we strongly encourage you – if the Board has not already done so – to constructively engage immediately with the F9 Group and to advance an immediate sale process.
Sincerely,
Howard Jonas
cc: Steve Wolosky and Mitchell Raab, Olshan Frome Wolosky, LLP
Contact: Mitchell Raab, Esq. Olshan Frome Wolosky LLP mraab@olshanlaw.com
