Here’s the latest in the Pacific Sunwear/Adrenalina saga.
Press Release
ANAHEIM, Calif., Feb. 17, 2009 (GLOBE NEWSWIRE) — Pacific Sunwear of California, Inc. (NasdaqGS:PSUN – News), responded today to the February 12, 2009 letter and related press releases issued by Adrenalina (OTC BB:AENA.OB – News), a retail-entertainment company currently operating three stores in Florida.
Pacific Sunwear’s response, from Lead Independent Director Peter Starrett, is included below.
February 17, 2009
Mr. Ilia Lekach
Chairman and Chief Executive Officer
Adrenalina
20855 NE 16th Avenue, Suite #C16
North Miami Beach, Florida 33179
Dear Mr. Lekach:
As the Lead Independent Director on Pacific Sunwear’s Board of
Directors, and on behalf of the Board, I am responding to your latest
letter dated February 12, 2009 and related press releases.
First and foremost, you should know that the Board fully supports
Chairman and CEO Sally Frame Kasaks and the strategic program that is
underway to build value for PacSun shareholders. The Company, under
Ms. Kasaks’ leadership, has taken prudent and decisive actions
designed to strengthen its business and to improve long-term
performance. Selected actions include:
* Refocusing on our core PacSun concept and taking steps to
revitalize the brand’s merchandising and marketing programs;
* Eliminating underperforming stores, facilities and non-core
businesses demo and One Thousand Steps;
* Consolidating our distribution network to enhance efficiency
and lower costs; and
* Implementing a series of actions to better position the
Company in the current environment, including reducing
inventory levels significantly, cutting SG&A expense, and
managing the balance sheet with a focus on enhancing
liquidity and preserving financial flexibility.
We firmly believe that these actions will enhance PacSun’s ability to
weather the extraordinary challenges currently confronting the retail
industry and to improve profitability. In contrast, your “platform”
for enhancing shareholder value, as reflected in your public
statements, centers on a merger of PacSun with Adrenalina, a company
that currently operates three stores and has reported substantial
operating losses, and for which its own independent auditors have
raised questions about its ability to continue as a “going concern.”
While we can understand how you and other Adrenalina shareholders may
benefit from a combination with PacSun, we do not believe that such a
merger would in any way be in the best interests of PacSun’s
shareholders. Based on our regular dialogue with shareholders and
vendors, we also strongly dispute your public contentions that your
unspecified “plan” has the support of either our largest shareholders
or “pillars” of the surf or skate apparel industry.
That said, we are receptive to ideas from shareholders for
strengthening our business and enhancing our operating results. In
your capacity as a shareholder, Ms. Kasaks has previously invited you
to communicate all such ideas directly to her, with the understanding
that we are not interested in a business combination with Adrenalina.
In response to her invitation, you sent a single communication on
January 11, 2009 to which Ms. Kasaks promptly responded. We have
enclosed a copy of this correspondence for your reference. While we
cannot reconcile our invitation to communicate directly with the
Company’s CEO and your single submission with the outrage that you
express in your letter of last week, we again encourage you to share
your ideas for PacSun with us. If you have any such new ideas, please
contact me through the Company to describe them. If they have
potential merit, I would be pleased to meet with you to discuss them
further.
Your decision to initiate a proxy contest is unfortunate, as it’s in
shareholders’ best interests for the Company to dedicate its
financial, management and other resources exclusively to the important
task of operating our business. It’s also clear to the Board that
PacSun shareholders will not be well served by a proxy contest pursued
by you in furtherance of your stated desire (as most recently
confirmed in a February 12 Reuters report and in your February 13
press release) to combine PacSun and Adrenalina and install yourself
as CEO. But make no mistake, if that is the course you wish to pursue,
we will do all that is necessary to protect shareholders.
Sincerely,
Peter Starrett
Lead Director
Pacific Sunwear of California, Inc.
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