Urgent Change is Needed at LL Flooring: F9 Investments Sends Open Letter to Shareholders
All Three F9 Director Nominees Have Received Support from Leading Independent Proxy Advisory Firm Glass Lewis and Other Large LL Flooring Shareholders
F9’s Nominees Have the Critical Flooring Industry Expertise, Shareholder Alignment, and Strategic Plan Necessary to Help Restore LL Flooring’s Value
Every Vote Counts! It is Not Too Late to Change Your Vote and Support F9’s Nominees
F9 Urges Shareholders to Vote the GOLD Proxy Card “FOR” F9’s Three Highly Qualified Nominees –
The full text of the letter is below and available at www.LLGroove.com.
Dear Fellow LL Flooring Shareholders,
The situation at
LL FLOORING’S STOCK PRICE IS AT ITS ALL-TIME LOW AND THE COMPANY IS CONSIDERING FILING FOR BANKRUPTCY ACCORDING TO PUBLISHED REPORTS1.
Yet rather than addressing the numerous critical issues facing the business head-on, LL Flooring’s Board continues to make poor and puzzling operational and financial decisions that are jeopardizing the future of the Company. Consider the following:
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On
June 28, 2024 , the Company disclosed that it believes it will not have sufficient liquidity to maintain compliance with its credit agreement as soon as this quarter.
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One day prior to the Company’s disclosure, Bloomberg reported that
LL Flooring has retainedAlixPartners , a financial services consultancy that recently advisedBed Bath & Beyond on its bankruptcy proceedings, to receive assistance with operations and explore ways to boost its cash reserves.
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In a
May 8, 2024 filing,LL Flooring disclosed a “going concern” that its precarious financial condition raised substantial doubt regarding its ability to continue business operations for more than a year. During its first quarter 2024 earnings call that same day, the Company disclosed it has retained Houlihan Lokey Inc. to evaluate financing alternatives.
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The Board is currently seeking to enter into a sale-leaseback commitment for its primary asset – LL Flooring’s
Sandston, Virginia distribution center – in a shortsighted and desperate effort to generate cash which will likely increase expenses and destroy value for shareholders in the long run.
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LL Flooring’s stock price continues to crater. The Company’s stock has fallen 85.4% since the start of 2024, dropped 97.3% over the past three years, and plummeted a whopping 99.4% under the Chair of the Board Nancy Taylor’s ineffective leadership. The stock closed at
$0.56 per share onJuly 5, 2024 .
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Despite this disturbing decline, since
January 2023 LL Flooring’s Board has rejected a number of premium bids for the Company valued up to 14x LL Flooring’s current stock price. Since then, the Board’s disingenuous strategic review and sale process has seen falling bid prices, limited transparency, and an uneven playing field for bidders based on the Board’s insistence that bids it received “significantly undervalued” the Company.
The facts are clear: LL Flooring’s Board of Directors has presided over staggering value destruction for shareholders, significant operational losses, a sham sale process, and so-called strategic initiatives that have placed the Company at immediate risk of going out of business. It is simply delusional for this Board to expect shareholders to vote for the status quo and re-elect its incumbent directors – two of whom have sat on the
It should be clear to all shareholders that urgent change is needed in the
F9’s three highly qualified director nominees
In its report, Glass Lewis concluded:
- “…we consider election of F9's slate to represent the most compelling alternative available at what appears to be a fairly critical juncture for LL.”
- “We see little clear and measurable cause for shareholders to endorse the view that perpetuation of the incumbent board's tack is likely to represent the most attractive route forward at this time.”
- “We believe the board carves out very little in the way of credible footing for its operational defense, which largely eschews recognition of the Company's observably poor performance, valuation and competitive positioning.”
Further, independent proxy advisory firm
- “It is clear that LL is in need of an urgent turnaround… a successful turnaround under the current management team and board is far from certain.”
- “LL's prolonged TSR underperformance, significant operating challenges over the past two years, and the unsuccessful sale process thus far suggest that some level of change is warranted at the board level.”
LL Flooring’s Board has avoided accountability for too long and cannot be allowed to continue to drive this Company into the ground. Our nominees are committed to restoring
NOW IS YOUR LAST CHANCE TO HOLD LL FLOORING’S BOARD ACCOUNTABLE FOR ITS FAILURES. WE URGE YOU TO VOTE FOR CHANGE TO PROTECT YOUR INVESTMENT BEFORE IT IS TOO LATE.
We thank you for your support.
Sincerely,
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VOTE ON THE GOLD PROXY CARD TODAY “FOR” F9’S NOMINEES
Shareholders must act decisively to safeguard their investment. YOUR VOTE MATTERS, NO MATTER HOW MANY SHARES YOU OWN. We urge all shareholders to protect the value of their investment by voting for F9’s nominees today using the GOLD proxy card.
You can cast your vote online at www.ProxyVote.com or by completing, signing and dating the GOLD proxy card or GOLD voting instruction form and mailing it in the postage paid envelope provided.
If you have not received the GOLD proxy card from F9 and have only received a WHITE proxy card sent to you by the Company, you can still support F9’s nominees using the WHITE proxy card. You can do so by checking the “WITHHOLD” boxes on all of the Company nominees and
If you have already voted for the Company nominees, you can change your vote to support the F9 nominees by re-casting your vote on either the GOLD proxy card or WHITE proxy card. Only your latest dated proxy card will count.
If you have any questions about how to vote your shares, please contact our proxy solicitor, Campaign Management, by telephone 1-(855) 264-1527 (shareholders) or (212) 632-8422 (banks & brokerages) or by email at info@campaign-mgmt.com.
For more information about F9 and detailed voting instructions, visit our website at www.LLGroove.com.
*F9 Investments has neither sought nor obtained consent from ISS to use ISS-published material in this press release
DISCLAIMER
Except as otherwise set forth in this press release, the views expressed in this press release reflect the opinions of
This press release is provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security nor as a recommendation to purchase or sell any security. Certain of the Participants (as defined below) currently beneficially own shares of the Company. The Participants and their affiliates may from time to time sell all or a portion of their holdings of the Company in open market transactions or otherwise, buy additional shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls, swaps or other derivative instruments relating to such shares.
Some of the materials in this press release contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” “plan,” “once again,” “achieve,” and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained herein that are not historical facts are based on current expectations, speak only as of the date of these materials and involve risks, uncertainties and other factors that may cause actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of F9.
The estimates, projections and potential impact of the opportunities identified by F9 herein are based on assumptions that F9 believes to be reasonable as of the date of this press release, but there can be no assurance or guarantee (i) that any of the proposed actions set forth in this press release will be completed, (ii) that the actual results or performance of the Company will not differ, and such differences may be material, or (iii) that any of the assumptions provided in this press release are accurate.
F9 has neither sought nor obtained the consent from any third party to use any statements or information contained herein that have been obtained or derived from statements made or published by such third parties, nor has it paid for any such statements. Any such statements or information should not be viewed as indicating the support of such third parties for the views expressed herein. F9 does not endorse third-party estimates or research which are used herein solely for illustrative purposes.
Important Information
THE PARTICIPANTS STRONGLY ADVISE ALL STOCKHOLDERS OF THE COMPANY TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER PROXY MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT WWW.SEC.GOV AND F9’S WEBSITE AT WWW.LLGROOVE.COM. THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE COMPANY’S STOCKHOLDERS. STOCKHOLDERS MAY ALSO DIRECT A REQUEST TO F9’S PROXY SOLICITOR, CAMPAIGN MANAGEMENT, 15 WEST 38TH STREET, SUITE #747,
Information about the Participants and a description of their direct or indirect interests by security holdings or otherwise can be found in the Definitive Proxy Statement.
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INVESTOR AND MEDIA CONTACTS
Investors:
Campaign Management
(212) 632-8422
michael.fein@campaign-mgmt.com
Media:
(212) 257-4170
F9Investments@gasthalter.com
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