UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|X| Soliciting Material Pursuant to Section 240.14a-12
Angelica Corporation
(Name of Registrant as Specified In Its Charter)
Pirate Capital LLC
Jolly Roger Fund LP
Jolly Roger Activist Portfolio Company LTD
Thomas R. Hudson Jr.
Christopher Kelly
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee previously paid with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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On September 10, 2007, (i) Pirate Capital LLC, (ii) Jolly Roger Fund LP, (iii)
Jolly Roger Activist Portfolio Company LTD, (iv) Thomas R. Hudson Jr. and (v)
Christopher Kelly (collectively, "Pirate Capital Group") issued a press release
attaching a letter addressed to shareholders of Angelica Corporation. The
members of Pirate Capital Group are participants (the "Participants") in a
solicitation of proxies in support of electing nominees to the board of
directors of Angelica Corporation at its 2007 Annual Meeting of Shareholders.
Information about the Participants is filed herewith as Exhibit 1 and a copy of
the press release is filed herewith as Exhibit 2.
PIRATE CAPITAL GROUP STRONGLY ADVISES SECURITY HOLDERS TO READ ITS PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. INFORMATION RELATING TO THE PARTICIPANTS IS CONTAINED IN EXHIBIT 1
HERETO.
Pirate Capital Group's proxy statement will be available for free at the
Securities and Exchange Commission's website at http://www.sec.gov, along with
any other relevant documents, including the soliciting material that identifies
the Participants' nominees and describes their interests and qualifications. In
addition, the Participants will provide copies of the proxy statement upon
request and without charge. Requests for copies should be made in writing to the
Participants' proxy solicitor, The Altman Group, Inc., at 1200 Wall Street West,
3rd Floor, Lyndhurst, New Jersey 07071, or by telephone at (201) 806-2206.
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Exhibit 1
Pirate Capital Group intends to make a preliminary filing with the Securities
and Exchange Commission of a proxy statement and accompanying proxy card to be
used to solicit votes for the election of Thomas R. Hudson Jr. and Christopher
Kelly to the Angelica Corporation ("Angelica") Board of Directors (the "Board")
at Angelica's 2007 Annual Meeting of Shareholders.
The following persons and entities, whom we also refer to collectively as
"Pirate Capital Group" or "Participants," are participants in the proxy
solicitation: (i) Pirate Capital LLC, a Delaware limited liability company
("Pirate Capital"); (ii) Jolly Roger Fund LP, a Delaware limited partnership and
an investment fund ("Jolly Roger"); (iii) Jolly Roger Activist Portfolio Company
LTD, a Cayman Islands exempted company and an investment fund ("JR Activist"
and, together with Pirate Capital and Jolly Roger, the "Funds"); and (iv) the
Participants' nominees to the Board, Thomas R. Hudson Jr., the Manager of Pirate
Capital, and Christopher Kelly, General Counsel and Chief Compliance Officer of
Pirate Capital.
The Participants have interests in this solicitation from either direct or
indirect beneficial ownership of the common stock, $1.00 par value per share, of
Angelica (the "Shares"). Participants beneficially own approximately 9.8% of
Angelica's Shares. Jolly Roger is the record and beneficial owner of 100 Shares,
and a beneficial owner of an additional 148,090 Shares. Pirate Capital is the
general partner of Jolly Roger. Pirate Capital is also the investment advisor
to, and Mr. Hudson is a director of, Jolly Roger Offshore Fund LTD, a British
Virgin Islands company and an investment fund ("JR Offshore"), and JR Activist,
which are the beneficial owners, respectively, of 0 and 786,957 Shares. Pirate
Capital and Mr. Hudson may be considered to be the beneficial owners of the
935,147 Shares that are collectively owned by Jolly Roger, JR Offshore and JR
Activist. Mr. Kelly is not a beneficial owner of any Shares.
Participants who are nominees to the Board are expected to receive customary
compensation from Angelica in exchange for their services as directors, if
elected. The Funds will reimburse each of the nominees for any out-of-pocket
expenses that arise from investigating or defending any claim brought against
such nominee for his actions taken in connection with the proxy solicitation.
PIRATE CAPITAL GROUP STRONGLY ADVISES SECURITY HOLDERS TO READ ITS PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION.
Exhibit 2
Pirate Capital Believes that Electing Its Nominees to Angelica Board Would
Address Need for Change
NORWALK, Conn., September 10, 2007 (PR NEWSWIRE) - Pirate Capital Group today
issued a letter addressed to shareholders of Angelica Corporation discussing
Angelica's recently announced financial results. The letter is reproduced below.
September 10, 2007
Dear Fellow Angelica Corporation Shareholders:
ANGELICA'S RECENT DISMAL EARNINGS REPORT HIGHLIGHTS THE URGENCY FOR CHANGES AT
THE COMPANY
The recent announcement of Angelica Corporation's dismal operating results only
highlights what we believe to be a clear need for changes at the Company. Pirate
Capital Group has been an investor in Angelica Corporation since 2004 and is
currently its second largest shareholder, beneficially owning approximately 9.8%
of the Company's outstanding common stock. We will be asking for your vote at
the 2007 Annual Meeting of Shareholders in order to elect two highly-qualified
nominees, Thomas R. Hudson Jr. and Christopher Kelly, to the Board of Directors.
Pirate Capital Group believes it is time for Angelica shareholders to have a
stronger voice through representation in the boardroom by individuals who are
committed to:
o Promoting accountability of senior management for what we believe to
be inexplicable weakness in managing the Angelica franchise
o Encouraging and overseeing efforts to improve profitability and
maximize shareholder value
WE BELIEVE THE NEXT 12 MONTHS ARE CRITICAL FOR ANGELICA: THE BLEEDING MUST STOP
We see the next twelve months as critical for Angelica to stop what we believe
to be inept management and to deliver on a successful strategy to improve
organic growth, operating efficiency and, ultimately, corporate profitability.
In our opinion, Angelica's current management team has continually fallen short
of its stated projections and goals. Pirate Capital Group has been repeatedly
disappointed with what we perceive as management's inability to meet projected
targets, as well as the Company's poor performance and dilutive bolt-on
acquisition initiatives. As the steward of shareholder capital, management is
responsible for projecting realistic forecasts and goals, and not false optimism
or hope. Ultimately, we believe our highly-qualified nominees will help bring
about the changes necessary to enhance shareholder value.
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PERFORMANCE IS GETTING WORSE, NOT BETTER
Management recently announced losses for the second quarter of 2007 that were
more than twofold the losses for the second quarter of 2006. Things don't appear
to be getting better. They appear to be getting worse. The second quarter 2006
losses were $715,000, while the second quarter 2007 losses were more than twice
that: $1,447,000. Management is clearly having a difficult time figuring out how
to make a profit, and we believe that the addition of new directors will help
steer Angelica back on the right course.
MANAGEMENT HAS FAILED TO MEET ITS OWN FINANCIAL TARGETS
Since taking control of Angelica, the current CEO, Stephen M. O'Hara, and his
management team have time and time again failed to deliver on their own lofty
prognostications. First, at the end of the Company's fourth quarter 2005
earnings call, management announced expectations of acceleration in Angelica's
organic sales growth rate to 7% - 10% over the next few quarters. The reality is
that the Company has been able to grow organically at only about a 3% clip.
Second, management also set a gross margin target of 20% by fiscal 2008, from
which it subsequently retreated during the second quarter 2007 earnings call.
Given that Angelica's gross margin through the first half of fiscal 2007 sagged
to 13.1% from 14.1% in the first half of 2006, the lack of progress made in
fueling top-line growth, and the operating difficulties in its facilities that
include equipment problems and fires, we believe the Company will be hard
pressed to reach its gross margin targets by fiscal 2008. Third, during its
second quarter 2006 earnings call, management stated its belief that it could
garner a 20% to 25% surge in fiscal 2007 EBITDA over the previous fiscal year,
and later increased its forecast to range between $37 million and $41 million.
However, through the first half of fiscal 2007, Angelica's realized EBITDA
measures just over $10.5 million, below even the amount accrued during the first
half of fiscal 2006. As such, in order to reach its target EBITDA for 2007, the
Company would need to nearly triple its first half results. We believe any such
forecast is not credible.
THE COMPANY HAS INEPTLY MANAGED ITS EDISON FACILITY WHILE SENDING MIXED SIGNALS
ABOUT THE FACILITY'S PERFORMANCE
Not only do we believe that Angelica's large Edison, New Jersey facility was
ineptly managed from top to bottom, but notably, Angelica's senior management
team did a perplexing and complete about-face in its public statements regarding
the facility. Specifically, management stated during its first quarter 2007
earnings call that: "the Edison problems were mostly under control"; "by the end
of May, Edison was stabilized"; and "the triage is over and the challenge is now
building the new Edison." Without any prior warning, the evening before the
second quarter 2007 earnings call, management announced plans to sell or close
the Edison plant before the end of fiscal 2007. During its second quarter 2007
earnings call, management indicated that operating difficulties and management
issues led to its decision to divest. Ultimately, we believe that Angelica's
management failed shareholders on not one, but two, fronts. First, given the
issues already brewing at Edison since 2006, we believe management's ineffectual
and tardy response to the situation once again speaks volumes about its
inability to execute. Second, and perhaps even more troubling, was the complete
change in management's view on the viability of the Edison facility, without an
appropriate transition or explanation to bridge the gap between its two
irreconcilable messages - which we believe calls into question management
credibility.
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MANAGEMENT'S BOLT-ON ACQUISITION STRATEGY HAS BEEN A BIG MISSTEP
From 2003 through the beginning of 2006, Angelica's management undertook a
series of acquisitions, at an aggregate cost we understand to have exceeded $125
million, or approximately 1x sales of the acquired assets. However, Angelica
shares continue to trade at a meaningful discount (approximately 0.5x sales) to
the amount paid for the acquisitions. As such, we believe there exists a serious
disconnect. In our opinion, either there was considerable value dissolution in
rolling up the acquisitions, or Angelica greatly overpaid for the acquisitions.
In either case, it appears to us that management bungled the acquisitions.
SHARE PRICE IS THE TRUE REFLECTION OF AN UNDERPERFORMING BUSINESS
We believe a true reflection of Angelica management's performance is the
underperforming price of Angelica shares relative to the broader market (because
Angelica is the only publicly traded domestic company in the industry, there is
no relevant industry index). Since the current management team took control on
September 15, 2003, Angelica share prices have had a cumulative annual
declination rate of 1.7%, versus a cumulative annual appreciation rate of 9.4%
for the S&P 500. Since the beginning of 2007, Angelica shares have fallen by
34.1% while the S&P 500 has risen over 2.5% - A PERFORMANCE GAP OF NEARLY 3,700
bps.
Clearly, such underperformance is COMPLETELY UNACCEPTABLE (especially given the
fairly benign operating environment over the past four years) for Angelica
shareholders. Ultimately, we believe this failure by management results from a
lack of (1) understanding of the underlying operations of the business, (2)
sense for pursuing an appropriate strategy for growth, (3) ability to execute
and (4) coherence in communicating with shareholders and the broader investment
community.
Angelica's 2007 Annual Meeting of Shareholders is fast approaching. It is
scheduled for October 30, 2007 at the Saint Louis Club, 14th Floor, 7701 Forsyth
Boulevard, Clayton, Missouri. Pirate Capital Group believes that the next twelve
months are vital to Angelica's efforts to find the right strategy to reverse the
negative trend fomented by the current management team and revealed by
Angelica's deteriorating operations and lagging stock price. We believe that
shareholders must demand change at the 2007 Annual Meeting. Pirate Capital Group
has nominated two distinguished individuals - Thomas R. Hudson Jr. and
Christopher Kelly - who are committed to closely monitoring and promoting the
accountability of senior management, and encouraging and overseeing efforts to
maximize shareholder value. We encourage you to carefully consider management's
performance and to support our efforts to improve the Company and maximize
shareholder value. We urge you to vote for the Pirate Capital Group nominees
when our proxy materials become available.
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About Pirate Capital LLC
Pirate Capital LLC ("Pirate Capital") serves as the investment advisor to four
event-driven hedge funds: Jolly Roger Fund LP ("Jolly Roger"), Jolly Roger
Offshore Fund LTD, Jolly Roger Activist Fund LP and Jolly Roger Activist Fund
LTD . Pirate Capital is registered with the Securities and Exchange Commission
as an investment advisor under the Investment Advisers Act of 1940.
About Pirate Capital Group
Pirate Capital Group consists of Pirate Capital, Jolly Roger and Jolly Roger
Activist Portfolio Company LTD, together with their nominees Thomas R. Hudson
Jr. and Christopher Kelly.
CONTACT: Pirate Capital Group
Isa Bolotin, Director of Client Services
203-854-1100
PIRATE CAPITAL GROUP STRONGLY ADVISES SECURITY HOLDERS TO READ ITS PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION.
Pirate Capital Group's proxy statement will be available for free at the
Securities and Exchange Commission's website at http://www.sec.gov, along with
any other relevant documents, including the soliciting material that identifies
Pirate Capital Group's nominees and describes their interests and
qualifications. In addition, the Pirate Capital Group will provide copies of the
proxy statement upon request and without charge. Requests for copies should be
made in writing to the Participants' proxy solicitor, The Altman Group, Inc., at
1200 Wall Street West, 3rd Floor, Lyndhurst, New Jersey 07071, or by telephone
at (201) 806-2206. Information relating to the participants in the solicitation
by Pirate Capital Group of proxies in support of electing nominees to the board
of directors of Angelica Corporation at its 2007 Annual Meeting of Shareholders
is contained in the Schedule 14A being filed on the date hereof and available
free of charge at the Securities and Exchange Commission's website at
http://www.sec.gov.
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