F9 Investments Believes LL Flooring’s Board
Seeks to Entrench Itself Rather than Meaningfully Address Company’s
Precarious Position
Under the Current Board, LL Flooring’s Stock
Price Has Plummeted More Than 93% In Three Years
F9’s Three Highly Qualified Director Nominees –
Tom Sullivan, Jason Delves, and Jill Witter – Are the Right
Individuals to Restore Value to LL Flooring
Recommends Shareholders Vote the GOLD Proxy
Card “FOR” All of F9’s Director Nominees
F9 Investments, LLC (“F9”), which together with its affiliates
collectively owns approximately 8.85% of LL Flooring Holdings, Inc.
(“LL Flooring” or the “Company”) (NYSE: LL) common stock and is the
Company’s largest shareholder, today mailed a letter to LL
Flooring’s shareholders highlighting the Board of Directors’ (the
“Board”) recent record of abysmal stock price performance and
flawed “strategic review” process.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240607143030/en/
(Graphic: Business Wire)
The letter also contains voting information for the election of
F9’s three highly qualified, independent director candidates –
Thomas D. Sullivan, Jason Delves, and Jill Witter – at the
Company’s 2024 Annual Meeting of Shareholders to be held on July
10, 2024. Together, F9’s nominees bring the experience, focus,
relevant industry expertise and proper oversight required to put LL
Flooring back on a path to success.
The full text of the letter is below and available at
www.LLGroove.com.
June 7, 2024
Dear Fellow LL Flooring Shareholders,
F9 Investments, LLC and our affiliates collectively own
approximately 8.85% of LL Flooring’s common stock. We are the
Company’s largest shareholder, and our aims are aligned with those
of all LL Flooring shareholders: to protect the value of our
investment and halt the Company’s precipitous decline, which has
occurred at the hands of the current Board of Directors (the
“Board”).
The Board is burying its head in the sand and seeking to
entrench itself rather than meaningfully address the Company’s
precarious financial position. In fact, the
Board would have you believe its so-called strategic plan is
working, despite the Company’s own recent admission that there is
substantial doubt regarding its ability to continue
operations.
The facts are indisputable: LL Flooring’s financial
performance continues to decline across all metrics—including
sales, profitability, and liquidity.
UNDER THE CURRENT LEADERSHIP, LL
FLOORING’S STOCK PRICE HAS PLUMMETED MORE THAN 93% IN THREE YEARS, VASTLY UNDERPERFORMING ITS
PEERS, THE BROADER MARKET, AND ALL REASONABLE
EXPECTATIONS.
In August 2020, management chose to abandon the Company’s highly
recognized brand identity, Lumber Liquidators, to rename the
business LL Flooring – a strategic failure that squandered
substantial brand equity with customers and the market. Yet while
the Company’s executives are harming the value of the Company and
its shareholders by their misguided directives, they continue to
benefit handsomely from an utterly out-of-sync compensation program
that is not tethered to performance.
BOARD’S STRATEGIC REVIEW PROCESS IS A
SHAM: IT HAS SUMMARILY REJECTED OR IGNORED MULTIPLE PREMIUM
OFFERS TO ACQUIRE COMPANY FROM BONA FIDE BIDDERS AS LL FLOORING’S
SHARE PRICE CRATERS
Since January 2023, LL Flooring has received numerous offers
with prior-day premiums as high as 100%+. The Board’s disingenuous
“strategic review” and sale process have been a complete sham,
characterized by a disturbing pattern of premium bids rejected,
falling bid prices, limited transparency, and an uneven playing
field for bidders – all despite the Board’s insistence that the
bids received “significantly undervalued” the Company.
Instead, the Board’s preferred plan is to enter into a
sale-leaseback commitment for its primary asset – LL Flooring’s
Sandston, VA distribution center – in a desperate, shortsighted
attempt to generate cash that will likely increase expenses and
destroy value for shareholders in the long run.
OTHER SIGNIFICANT SHAREHOLDERS ARE CALLING
FOR CHANGE
Notably, several other significant LL Flooring shareholders
unaffiliated with F9 have also publicized their concerns regarding
the Company’s current leadership and strategy. Donovan S. Royal, a
large shareholder of LL Flooring with more than a decade of
experience in the flooring industry, has publicly voiced concern
that the current Board is prioritizing its own interest over those
of shareholders. Rightfully, he suggests that shareholders “should
be frightened at the prospect of this Board negotiating any kind of
sale of assets, as they have already demonstrated a lack of
expertise in not only selling the declining quantities of hard
surface flooring inventory on hand but also the entire
Company.”
Another large shareholder, Howard Jonas, on behalf of a
consortium of LL Flooring investors, has also said he is “gravely
concerned by the significant increase in the company’s SG&A as
a percentage of net sales,” and noted that a change in management
is necessary for stockholders to benefit from the full value of the
Company.
These viewpoints reiterate our assertion that shareholders
deserve an immediate change of course, driven by new Board
directors who will dutifully protect the value of all stakeholders’
investments in LL Flooring and execute a plan to position the
Company for long-term success and value creation.
F9’S THREE HIGHLY QUALIFIED NOMINEES BRING
THE FLOORING INDUSTRY EXPERTISE, OWNERSHIP MENTALITY, AND
ACTIONABLE PLAN NECESSARY TO RESTORE THE VALUE OF LL FLOORING FOR
ALL SHAREHOLDERS
As the largest shareholder of LL Flooring, we have nominated
three candidates for election to LL Flooring’s nine-person Board at
the Company’s upcoming Annual Meeting of Shareholders scheduled for
July 10, 2024. We believe in order to protect the value of our
investment and that of all stakeholders, LL Flooring desperately
needs new, strong leaders in the boardroom who can provide
much-needed oversight and who bring a track record of creating
value. Our highly qualified nominees – Tom Sullivan, Jason Delves,
and Jill Witter – have successfully led this Company in the past as
well as other similar businesses under various market conditions.
Together, they bring an actionable, achievable plan to help
stabilize LL Flooring’s business and position the Company for
long-term growth, profitability, and shareholder value
creation.
VOTE ON THE GOLD PROXY CARD TODAY “FOR” F9’S NOMINEES TOM
SULLIVAN, JASON DELVES, AND JILL WITTER AND “WITHHOLD” ON ALL LL
FLOORING NOMINEES AND JERALD HAMMANN
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 Jerald Hammann and checking the “FOR” boxes for all F9
nominees – Tom Sullivan, Jason Delves, and Jill Witter.
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.
With your vote, we will be one step closer to ensuring LL
Flooring is on a better path to creating lasting shareholder value
and getting the Company back in the groove.
We thank you for your support.
Sincerely,
Tom Sullivan
Jason Delves
Jill Witter
Solomon Partners Securities, LLC is serving as F9’s financial
advisor and Dentons US LLP is serving as its legal advisor.
DISCLAIMER
Except as otherwise set forth in this press release, the views
expressed in this press release reflect the opinions of F9
Investments, LLC and its affiliates (“F9”) and are based on
publicly available information with respect to LL Flooring
Holdings, Inc. (“LL” or the “Company”). F9 recognizes that there
may be confidential information in the possession of the Company
that could lead it or others to disagree with F9’s conclusions. F9
reserves the right to change any of its opinions expressed herein
at any time as it deems appropriate and disclaims any obligation to
notify the market or any other party of any such change, except as
required by law. F9 disclaims any obligation to update the
information or opinions contained in this press release, except as
required by law. For the avoidance of doubt, this press release is
not affiliated with or endorsed by LL.
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
F9 Investments, LLC, Thomas D. Sullivan, John Jason Delves and
Jill Witter (collectively, the “Participants”) filed a definitive
proxy statement and accompanying form of gold proxy card (as
supplemented and amended, the “Definitive Proxy Statement”) with
the Securities and Exchange Commission (the "SEC”) on May 31, 2024
to be used in connection with the 2024 annual meeting of
stockholders of the Company.
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, NEW YORK, NY 10018 (STOCKHOLDERS CAN E-MAIL
INFO@CAMPAIGNMANAGEMENT.COM OR CALL TOLL-FREE: (855) 264-1527.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240607143030/en/
INVESTOR AND MEDIA CONTACTS Investors: Michael Fein
Campaign Management (212) 632-8422 michael.fein@campaign-mgmt.com
Media: Jonathan Gasthalter/Nathaniel Garnick Gasthalter & Co.
(212) 257-4170 F9Investments@gasthalter.com
LL Flooring (NYSE:LL)
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LL Flooring (NYSE:LL)
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