Page 12 of 16 SEC Filing
The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (“Amendment No. 1”). This Amendment No. 1 amends the Schedule 13D as specifically set forth herein.
| Item 3. | Source and Amount of Funds or Other Consideration. |
Item 3 is hereby amended and restated to read as follows:
The Shares purchased by each of Engaged Capital Master I, Engaged Capital Master II, Engaged Capital Co-Invest III and held in an account separately managed by Engaged Capital (the “Engaged Capital Account”) were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated by reference herein. The aggregate purchase price of the 196,918 Shares beneficially owned by Engaged Capital Master I is approximately $6,691,732, including brokerage commissions. The aggregate purchase price of the 487,459 Shares beneficially owned by Engaged Capital Master II is approximately $16,560,429, including brokerage commissions. The aggregate purchase price of the 1,650,793 Shares beneficially owned by Engaged Capital Co-Invest III is approximately $49,899,942, including brokerage commissions. The aggregate purchase price of the 96,000 Shares held in the Engaged Capital Account is approximately $2,496,722, including brokerage commissions.
| Item 4. | Purpose of Transaction. |
Item 4 is hereby amended to add the following:
On February 18, 2016, Engaged Capital delivered a letter and presentation to the Issuer’s Board of Directors (the “Board”) outlining Engaged Capital’s concerns regarding the governance and management of the Issuer’s assets, and recommending a series of actions aimed at creating significant, and lasting, shareholder value. In the letter and presentation, Engaged Capital explained its belief that the Issuer’s underperformance and current depressed valuation is a direct result of the Board’s failed strategies, flawed capital allocation policies and misaligned governance. After highlighting its concerns that the Board has refused to engage in discussions with at least three potential acquirers and seemingly placed its own interests above those of shareholders, Engaged Capital set forth its plan for the Issuer to create shareholder value, which includes the Issuer (i) ceasing all growth investments, (ii) aggressively managing the Redbox and Coinstar businesses for cash, (iii) selling or shutting down the ecoATM business, (iv) ceasing the repurchase program, (v) using its free cash flow to pay a large dividend and reduce debt and (vi) retaining financial advisors and beginning a sales process with the goal of taking the Issuer private. Engaged Capital also stated that it attempted to arrange a meeting with the Issuer’s Chairman, Nelson Chan, in order to privately address its concerns, but was forced to make them public following Mr. Chan’s unwillingness to meet with Engaged Capital in person in a timely fashion. Engaged Capital explained that it will continue to seek a constructive dialogue with the Board; however, if the Board fails to act in the best interests of shareholders, Engaged Capital intends to give shareholders an opportunity to hold the Board accountable at the upcoming annual meeting. The full text of the letter and presentation are attached hereto as Exhibits 99.2 and 99.3, respectively, and are incorporated herein by reference.
| Item 5. | Interest in Securities of the Issuer. |
Items 5(a) – (c) are hereby amended and restated to read as follows:
(a) The aggregate percentage of Shares reported owned by each person named herein is based upon 16,614,033 Shares outstanding as of January 29, 2016, which is the total number of Shares outstanding as reported in the Issuer’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 4, 2016.
As of the close of business on February 17, 2016, Engaged Capital Master I beneficially owned 196,918 Shares, constituting approximately 1.2% of the Shares outstanding. Each of Engaged Capital I and Engaged Capital Offshore, as feeder funds of Engaged Capital Master I, may be deemed to beneficially own the 196,918 Shares owned by Engaged Capital Master I, constituting approximately 1.2% of the Shares outstanding.
As of the close of business on February 17, 2016, Engaged Capital Master II beneficially owned 487,459 Shares, constituting approximately 2.9% of the Shares outstanding. Each of Engaged Capital II and Engaged Capital Offshore II, as feeder funds of Engaged Capital Master II, may be deemed to beneficially own the 487,459 Shares owned by Engaged Capital Master II, constituting approximately 2.9% of the Shares outstanding.
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