Rofin dispute with investor continues

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In an ongoing row with its investor, Rofin issued an open letter to its stockholders on 17 February, urging them to vote for the re-election of its director nominees at the company’s upcoming 2016 Annual Meeting of Stockholders, scheduled for 17 March. 

The letter comes in response to an announcement by Rofin’s shareholder, Silver Arrow Capital Advisors, asking stockholders to vote for Silver Arrow’s proposals to elect its own members to Rofin’s board.

The dispute started when investment firm Silver Arrow, which owns nine per cent of Rofin, released an open letter in October 2015 criticising Rofin’s management strategy as a reason for what Silver Arrow felt was underperformance in Rofin’s stock over the past five years.

Silver Arrow intended to nominate three individuals for election to the Rofin board of directors at the upcoming 2016 Rofin annual meeting of shareholders. These would replace three of Rofin’s directors standing for re-election.

In January, Rofin issued a letter in response, offering to appoint one of Silver Arrow’s three proposed candidates, Gebhard Rainer, but rejecting the other two candidates.

SilverArrow then responded arguing that the Rofin Nominating Committee did not follow a proper process for reviewing the Silver Arrow slate.

In its latest response, Rofin states: ’The company’s current Board composition provides the right combination of experience, backgrounds, and qualifications to effectively fulfil its responsibilities and increase stockholder value,’ going on to say that ‘SilverArrow is an unproven investor that has no track record of active public company ownership in its short five-year history, and none of its nominees have any experience in the specialised industrial laser industry.’ 

At the beginning of February, SilverArrow issued another attack on Rofin's CEO Thomas Merk following the release of the company’s latest financial report on 4 February. 

Robin’s stock fell by 10 per cent after it reported lower sales for its latest financial quarter.

Sales totalled $112.5 million for the three months ending 31 December, an 8 per cent decrease on the same period in 2014.

Rofin suggested that the drop in sales was largely due to the negative impact of currency movements ($18 million) and news of $12 million worth of order cancellations from China. In its critical letter, Silver Arrow said this ‘shows a continued lack of awareness of the developing macro issues in the region. The entrenched board seems to have lost sight of the international market.’

In its financials, Rofin also reported slightly improved profit margins with net income rising six per cent to $6.5 million. However, Silver Arrow put this down to a reflection of the impact of the strong US dollar.

Despite its static earnings, Rofin said it is positive for the year ahead and believes it will be the first-to-market with a new 2.5kW fibre laser. Its commercial launch this year will support growth in its high powered laser business, the company said.

Rofin is also targeting a 20 per cent reduction in the manufacturing cost of high power lasers in fiscal year 2016, following R&D efforts.

In its latest letter to stockholders, Rofin said: ‘Over the last several years we have made significant investments in new laser technologies, such as high-power fibre lasers, and we are now beginning to see the financial benefits of these investments… Rofin’s current board is committed to continuing on this path towards enhanced long-term value creation for ALL stockholders.’

Further information:

Rofin-Sinar Technologies

Silver Arrow Capital Advisors