UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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Forgent Networks, Inc.
108 Wild Basin Road, Austin, Texas 78746
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
The Red Oak Fund, LP, a Delaware limited partnership;
Pinnacle Fund, LLLP, a Colorado limited liability limited partnership;
Bear Market Opportunity Fund, L.P., a Delaware limited partnership;
Pinnacle Partners, LLC, a Colorado limited liability company;
Red Oak Partners, LLC, a New York limited liability company;
David Sandberg.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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On July 8, Chris Calnan, Staff Writer for the Austin Business Journal emailed
David Sandberg the following:
"David,
Would it be possible to speak with you for a story I'm writing about the proxy
fight at Asure Software?
My deadline is next Tuesday but I want to tee things up this week.
Thank you in advance.
CC"
On July 13, Mr. Sandberg replied via email to all of the questions Mr. Calnan
emailed to Mr. Sandberg. This reply - in full - is provided below.
"Chris
Unfortunately my time has escaped me and I can not do a call today. I am
emailing you replies to each of your questions and - though I am traveling
tomorrow - will try to call you if free for a follow up. Email is always good
on my end as well - feel free to email with follow up questions. I have made a
best effort to be informative and not give brief and uninformative 1-line
replies and I again apologize that I am unable to speak today.
Regards,
David
David,
Thanks for the quick response.
Could you talk about the goal of Red Oak on this investment? Is it to
eventually sell off the parts of the company and close it down, the "asset play"
strategy referred to by Asure?
Absolutely not. In fact, we first bought stock less than 2 weeks after
now-CEO Nancy Harris publicly disclosed in ASUR's October earnings conference
call that ASUR would be EBITDA and cash positive for its fiscal 2009 year. Our
motive to invest was based on the earnings statements. Moreover, when we first
bought stock at 26 cents per share, there was no dissolution play - we were
buying it at 2x its dissolution value, estimated as follows: As of that
quarter's reported information, ASUR had $0.47/share ($14 million) in cash but
also had over $6 million in remaining lease payments, a greater than $3 million
legal claim which had already been judged against ASUR but which ASUR was
appealing, and other likely shut down costs, severance, and liabilities.
Additionally, it was still hemorrhaging significant monies at the time of the
call. As such, if our intent was to shut the businesses down and dissolve" the
company and if ASUR suffered NO other losses from that day forward (please note
they have in fact burned $6 million in cash since that quarter), this effort
would have yielded $14mm cash less $ 6mm lease less $3mm legal less an estimated
$1mm in severance and other costs = $4mm in cash, or just under 13 cents per
share. Even a much more optimistic valuation of what could be obtained in a
liquidation would never justify buying at the prices we paid, if the goal had
been to make an alleged "asset play." We never had this intent and even a
cursory analysis by the management would have demonstrated to them that this
theory does not hold water.
Was that the intention when Red Oak initially invested in the company after it
reported significant losses?
No, see above . It would not have made sense when we first invested and it
would make even less sense now.
We first invested in the fall of 2008 less than two weeks after Nancy Harris
stated that ASUR was about to turn around, and so we invested in spite of the
previous several quarters of losses. We are disappointed that this prediction,
like so many others Asure has made, so far has turned out to be wrong, but we
are trying to put in place a new board because we believe there is value in the
company if it is better supervised.
How does your group of investors regard this month's lawsuit? Is it a desperate
move or is it a legitimate suit?
First, my group - as we have said in our filings - includes only the Red Oak
fund, Pinnacle Fund, and Bear Market Fund. Second, We are not changing our
stripes - we stand by our public statements and in fact refer you to our most
recent June 29 and July 7 press releases regarding our position that the lawsuit
lacks merit and is intended to distract shareholders from the poor performance
of the Company and management's previously inaccurate statements regarding their
financials.
ASUR's directors are desperate to hide information regarding additional losses
and cash burns generated under their leadership. We believe this is why they
refused to disclose information regarding how much shareholder cash they were
spending and what they spent it on, even though none of it had to do with
competitive information and all of it was relevant. It also explains why they
refused to allow shareholders to ask questions - for the first time ever - on
the most recent (June 18) earnings call. The complaint they filed has now
revealed--perhaps by accident - that ASUR's cash is materially lower than
expected and than they guided it would be in our April 27 Dallas meeting (when
they claimed they would end the year at $10mm in cash - they are already at $8mm
and have burned $3 million in just 2 months). This accelerated burn rate runs
directly contrary to their public statements that they are reducing costs and
that the business will be EBITDA breakeven by year end, and can only be
explained either by a sizable increase in their already large operating losses
or by significant non operating spends, or both. In either case, ASUR should
have informed shareholders about these material events in a timely manner,
especially after they were directly asked about it in our letter. Management
lost - by a wide margin - the go-private vote and we believe they filed this
lawsuit because they feared that with their poor track record they would lose in
the upcoming vote as well. We are greatly dismayed at their wasteful actions
which have already cost shareholders millions and which seem only to entrench
the Director's and advance their own interests.
(Company officials aren't commenting beyond what they say in news releases.)
Did you guys really form an affiliated group to take over the company without
identifying yourselves as such?
No. At no point did we agree to, coordinate, or allow anyone to affect our
purchase or sale decisions and there exist no economic or other affiliations
between us and any of the other individuals named in the suit. In fact, we
believe the other shareholders they sued have owned this stock for years. In
addition, we made our own decisions at all times and have no agreements with
respect to voting except for requesting the giving or withholding of revocable
proxies. We are of course gratified that other investors agreed with us, some
of them publicly and others by voting in a similar manner. That does not make
any of them a "group" with us and we have no control over any other investor,
including our nominees. All we want to see is a board of directors that is
aligned with shareholders and committed to increasing value for them, and we
don't want to control the board ourselves. There just is not a common plan or
purpose--although I suspect that after being wrongly sued by management, all of
us would like to vote them out. But that is a decision each person needs to
make individually.
Management is trying to claim a group exists because some of the statements
criticizing the go-private effort used similar language. They ignore the fact
that Red Oak's statements were already public and it is not unusual for people
to repeat in their own statements positions taken by others that they think are
valid. Shareholders are allowed to talk to one another and do NOT have to
automatically agree with and vote for entrenched management, especially when -
under management's leadership - since 2003 alone ASUR has lost more than $40
million and its stock has declined greater than 90, all while insiders who owned
very little stock to begin with did not purchase stock but did reprice their own
options not once but twice. ASUR is desperate and is attempting to group all
shareholders who vocally opposed them or who attended a meeting in late April
where management was questioned. If they succeed then they hope to
disenfranchise or dilute all shareholders who have opposed them. We think this
is why they are claiming 18 different entities or individuals have formed a
"group."
Any concern that the company officials are being distracted by this fight
rather than focusing on how to survive the recession?
Of course this gives us pause, but the bigger picture here is our belief that
management is not capable to profitably run this Company - at least not as
evidenced by the results ASUR has reported under their leadership over many
years and even recently. Although we would hope they would focus on the
business, they seem more concerned with attempting to preserve their position in
office. We are concerned about how much they are spending on this effort, but
if the alternative to "distracting" them is to keep them in office, the choice
seems obvious. We tried without success to sit down with the board and avoid a
fight, but they do not seem interested in a resolution. It likely doesn't help
that we demand transparency from management, such as how much Chairman Dick
Snyder has been paying his son Jeremy out of shareholder funds, or how much
executives have spent treating themselves to the celebrity-caliber Cooper
Clinic, again out of shareholder funds - all while the company has lost tens of
millions and shareholders have suffered."