The hedge fund looking to take over a Davenport-based newspaper publisher is urging shareholders to approve its potential new members to the Lee Enterprises board of directors.
Alden Global Capital on Thursday sent out a statement asking shareholders to support two new directors it has nominated to help reshape the Quad Cities publishing company. Lee already rejected Alden’s $24-per-share offer to buy the company and this week asked shareholders to help it fight off Alden’s advances.
In Alden’s proxy filing, it stated: “We believe the company and its news and information platform have untapped potential and, with the right enhanced strategy and improved leadership, can provide significant value for stockholders while improving the quality of journalism for readers and subscribers. Unfortunately, the current board’s decision to prioritize their own interests over what is clearly best for the company confirms our belief that Lee’s current board lacks the experience and commitment to good corporate governance needed to achieve that end.”
Alden wants to replace Lee Chairman Mary Junck and one other board member, even though Lee maintains that Alden didn’t meet its requirements to nominate board members. Alden sued Lee to force a vote on its nominees, and a trial on that is scheduled to begin Feb. 7 ahead of the company’s March 10 annual meeting.
“We believe that Alden seeks to substantially overhaul Lee’s board and leadership team not because the board is deficient, but precisely because the board has shown it will be thoughtful and thorough, and therefore unwilling to sell Lee at the unreasonable and unfair price that Alden has proposed,” Lee said in a statement.
Lee has said Alden’s $141 million bid “grossly undervalues” the company. Since Alden announced its bid in November, Lee shares have surged as high as $44.43 before falling back to close at $33.32 by mid-morning Friday.
Alden says Lee shareholders should welcome its nominees because they can help the company navigate the transition to digital publishing and improve profits. But Lee officials and local media advocates have been wary because Alden has a reputation for steep cost cuts and extensive layoffs at the more than 200 newspapers it owns.
Alden has said it owns 6.3% of Lee’s shares.
Lee Enterprises owns 77 daily newspapers across the nation, including the Quad-City Times, Dispatch/Argus and Muscatine Journal in the Quad Cities region.
On Nov. 22, Alden made an unsolicited bid to take control of Lee for $24 per share in cash.
The newspaper chain later announced that it may launch a “poison pill” plan that has the goal of making it more difficult and more costly for Alden to get controlling stake of the company. The plan would allow its other shareholders to buy shares at a 50% discount or possibly get free shares for every share they already own. The plan would take effect if Alden gets control of at least 10% of Lee’s stock.