DEFA14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
|
|
|
o Preliminary
Proxy Statement
|
|
|
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|
|
|
o Definitive
Proxy Statement
|
|
|
þ Definitive
Additional Materials
|
|
|
o Soliciting
Material Pursuant to
Section 240.14a-12
|
|
|
ORBCOMM Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
þ
|
No fee required.
|
|
o
|
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:
|
|
|
o |
Fee paid previously with preliminary materials:
|
|
|
o |
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.:
|
April 13,
2009
Dear Fellow Shareholder:
The Annual Meeting of Shareholders is scheduled for May 6,
2009. This is a very important meeting, and we encourage you to
read the materials carefully. Your Board and management team
strongly recommend you vote for BOTH of your Boards
nominees Jerome B. Eisenberg and Marco
Fuchs by signing, dating, and returning the enclosed
WHITE proxy card as soon as possible. Your Boards
nominees have extensive executive, financial and industry
experience, and have been instrumental in developing
ORBCOMMs current strategy, which has positioned the
Company well to capitalize on long term industry trends. Indeed,
each of our nominees has a proven track record of developing and
implementing the right strategy to ensure our financial and
customer service goals are met.
As you know the past year has seen difficult economic and
capital market conditions, which have negatively affected the
market value of many companies, including our own. Despite these
conditions, ORBCOMM met its fiscal year 2008 financial plan,
generated positive Adjusted EBITDA and executed on a core
strategy that we believe has positioned your Company to achieve
significant growth without raising additional capital at
dilutive prices.
We are not sitting still. We are moving aggressively to respond
to market conditions. Our Board and management team have
developed a strategic plan that has already resulted in
significant changes that we expect will contribute to future
growth. We have increased focus on the government business and
are bringing new technology into the market (e.g., dual mode,
lower cost modems). We have targeted new countries that bring
new opportunities. We are also building out new services, such
as the Automatic Identification System (AIS) business, in which
ORBCOMM is the only provider of commercially available
satellite-based AIS service. This AIS business is expected to
generate high margin revenues that will contribute to Adjusted
EBITDA and cash flows. Our focus in 2009 is to grow in both
subscribers and revenues, improve profitability, and continue to
enhance our satellite network through our planned capital
investment program. Our strategic initiatives are designed to
prevent the need to raise dilutive capital at the expense of
you, our shareholders, and positions ORBCOMM to capitalize on an
economic turnaround when it occurs.
Now, a group of dissident shareholders, controlling just 1% of
the outstanding shares, has initiated a costly and disruptive
proxy contest to elect two of its members, Steven Chrust and
Michael Miron, to your Board of Directors. The dissident group
includes John C. Levinson and other members and associates of
Centripetal Capital Partners, LLC, a private equity investment
firm founded by Mr. Chrust. While Messrs. Chrust and Miron
hold themselves out as independent directors we
believe the objective of their campaign is to (a) take
managerial control of the Company, and (b) to engage in a
highly dilutive and unnecessary $25 million capital raise.
If they were successful in achieving their stated goals, the
dissident shareholders would recommend Mr. Miron become
CEO. In addition, the likelihood that fees associated with the
capital raise would be paid to Mr. Chrust creates an
inherent conflict of interest. Finally, they would have
disproportionate influence as shareholders with less then 1% of
the stock controlling 25% of the Board, as well as the
management of the Company.
THE
ORBCOMM STRATEGY IS THE RIGHT ONE
In 2008, ORBCOMM successfully achieved its Adjusted EBITDA and
Service Revenue targets, despite a difficult economic
environment. We reached these milestones by executing
effectively on our core strategy, deepening our already strong
customer relationships, and leveraging our attractive business
model. We broadened our customer base with key OEMs
implementing standardization plans. ORBCOMM grew Service
Revenues 34% to $23.8 million, while maintaining moderate
growth in Costs and Expenses. This led to improving Adjusted
EBITDA by $3.4 million to a positive $1.6 million for
the year.
ORBCOMMs focus remains on growing service revenues through
growth in subscriber communicators and AIS revenues. ORBCOMM
currently has the only commercially available satellite-based
AIS service. Our strategic business model, which calls for close
working relationships with our Value-Added Reseller (VAR) and
Original Equipment Manufacturer (OEM) network, is the most
efficient and effective way for ORBCOMM to capitalize on our
market opportunities. We believe our competitive advantage is
the low cost services offered by our low-earth-orbit satellite
based messaging network, which has many significant fixed site
and mobile applications. We leverage our VAR and OEM network,
which are experts at selling into their respective markets.
Through this strategy, your management team, which over the last
year has been led by CEO Marc Eisenberg, has generated results:
|
|
|
|
|
ORBCOMM has grown subscribers from fewer than 26,000 as of
December 31, 2001 to more than 460,000 as of
December 31, 2008.
|
|
|
|
|
|
ORBCOMMs three-year compounded annual growth rate in
subscriber communicators is 60%, in a market that Harbor
Research projects to grow 32.3% from 2008 through 2014.
|
ORBCOMM has been strategically adding sales and business
development professionals, highlighted by the addition of our
new Vice President of Business Development, formerly with GE
Equipment Services. We have added focus to the government
business and by bringing new technology into the market (i.e.,
dual mode, lower cost modems, and easily deployed
all-in-one
products). To help on this front, we hired a satellite and
government contracting industry veteran as SVP of Operations. We
have also bolstered our investor relations and business
development activities by adding a former Wall Street analyst to
our team to increase communications of these efforts.
Additionally, ORBCOMMs management has worked diligently to
manage our resources in order to be able to successfully launch
our second-generation satellites, and bring the business to
positive free cash flow, which is expected to expand
significantly after our capital investment cycle is completed.
Importantly, your management team expects it can achieve these
goals without tapping the equity capital markets, which would
likely be punitive
and/or very
dilutive to your holdings in light of the current stock price
and capital market environment.
THE
SELF-SERVING AGENDA OF MESSRS. CHRUST AND MIRON AND THEIR
COMMITTEE IS NOT IN SHAREHOLDERS BEST INTEREST
We believe the purported strategy put forth by the dissident
shareholders is ill-conceived, misguided, and self-serving.
Additionally, in our view it has a high likelihood of destroying
shareholder value. Consider the following:
|
|
|
|
|
Messrs. Miron and Chrust, hold only 0.14% of the
outstanding shares, yet are asking for disproportionate
representation on the Board that far exceeds their interest in
your Company.
|
|
|
|
Electing Messrs. Miron and Chrust to the Board would remove
from the Board longtime shareholders who represent more than 7%
of the outstanding shares and who have helped grow the Company.
|
|
|
|
Our current CEO, Marc Eisenberg, has been invaluable in
overseeing the Companys significant growth in subscriber
communicators and Service Revenues, allowing the Company to
achieve positive Adjusted EBITDA.
|
|
|
|
Since 2005, Mr. Miron has been a consultant and advisor who
two independent members of our Board determined lacks meaningful
experience or knowledge of our business or industry.
Additionally, based on information he has provided us,
Mr. Miron has never sat on a public company board.
|
2
The dissidents ill-conceived plan to enhance value
involves proposing a re-direction by focusing on competing with
our resellers in the development and deployment of applications
for the end-market.
|
|
|
|
|
This misguided and potentially harmful strategy is one that our
Board previously reviewed and rejected.
|
|
|
|
Rather than compete with our customers, we have taken the
successful, cost effective and scalable approach of leveraging
our VAR and OEM network to grow subscriber communicators. We
would highlight that we have explored the possibility of getting
into the VAR business and believe it would cost well in excess
of the $25 million the dissidents are proposing to raise in
order to compete with many of our customers. We believe some of
our VARs have spent in excess of $25 million on individual
applications.
|
|
|
|
As Chris Quilty of Raymond James* noted, what the dissidents are
proposing ...is the exact same strategy that sunk ORBCOMM
earlier this decade when the company employed over 600 salesmen
and engineers and tasked them with evangelizing the technology
to every imaginable application. For our part, we are quite
comfortable with the companys indirect sales strategy,
which is both cost effective and scalable.
|
Raising
$25 million Highly Dilutive and
Ill-Advised
Raising at least $25 million of new capital is, we believe,
a self-serving idea that would destroy value for shareholders.
Mr. Miron already has arrangements in place that could
benefit Mr. Chrust personally as well as an unnamed
financial advisory firm, should he be able to convince ORBCOMM
to raise capital. We continue to believe we will have the
liquidity to build and launch our second generation of
satellites without raising additional equity capital.
Additionally, in this market, $25 million of new equity
capital would equate to about 40% dilution to current
shareholders. Chris Quilty of Raymond James* commented on this
portion of the plan, saying: In addition to being highly
dilutive, we view this measure as unnecessary and ill-advised at
this time. Our financial projections, which do not include any
significant new AIS revenues, support managements
assessment that no additional capital is required to fully
develop the companys second-generation constellation of 18
satellites. Should these projections fall short, ORBCOMM can
fall back on $20 million of vendor financing from Sierra
Nevada, or should be able to raise new capital at a
substantially higher valuation.
The dissidents agenda suggests Messrs. Chrust and
Miron are out to enrich themselves at the expense of other
shareholders, despite owning a very small portion of the
Companys stock furthermore, they will even ask
your Company to reimburse their personal expenses of conducting
this proxy contest. More importantly, we believe that the
strategy the group has offered will destroy shareholder value
and prevent ORBCOMM from successfully capitalizing on market
opportunities as economic conditions improve. This would not be
the first time Mr. Chrust has exerted his will over a
business to the detriment of shareholders. As a member of the
Board of Directors at Juniper Content Corporation, he was
responsible for raising $900,000 for the company, similar to the
tack he wishes to use for ORBCOMM. Juniper Content Corporation
is currently worth about $120,000 and trades at $0.02 per share.
In addition, at the time he joined the Board of Juniper Content
Corporation, the company was trading slightly above $1, which
equates to a 98 percent decline at current levels.
3
SUPPORT
YOUR BOARDS NOMINEES BY VOTING
THE WHITE PROXY CARD TODAY.
Your Board would like to remind you that your vote is
extremely important no matter how many shares you
own. Whether or not you plan to attend the annual meeting,
please sign, date, and return the WHITE proxy card
TODAY and discard all proxy cards that you may receive
from this dissident committee or Mr. Levinson.
IF YOU HAVE ANY QUESTIONS, OR NEED ASSISTANCE VOTING YOUR
SHARES, PLEASE CONTACT THE FIRM ASSISTING US IN THE SOLICITATION
OF PROXIES: MORROW & CO., LLC, TOLL FREE AT
(800) 607-0088
(BANKS AND BROKERS PLEASE CALL AT
(203) 658-9400).
We again thank you for your continued confidence and support.
Sincerely,
The Board of Directors of ORBCOMM Inc.
Certain
Forward Looking Statements
Certain statements contained in this letter may constitute
forward looking statements. Stockholders should be
aware that these forward looking statements are subject to a
number of risks and uncertainties, many of which are beyond our
control, which could cause actual results to differ materially
from such statements. Certain risks and uncertainties are
disclosed from time to time in our filings with the SEC. Except
as required by law, we undertake no obligation to update or
revise any forward looking statements.
|
|
|
* |
|
Permission to use quotation was neither requested nor received |