Believes Terran’s Shares Are Materially
Undervalued and Remains Committed to Working Constructively with
Terran to Protect and Maximize Shareholder Value
Notes Terran’s Board Has Ignored Numerous
Meeting Requests
A group of concerned investors (the “Concerned Investor Group”)
in Terran Orbital Corp. (NYSE: LLAP) (“Terran” or the “Company”)
comprised of Sophis Investments LLC, Roark’s Drift LLC, and Tyvak
Nano-Satellite Systems’ Co-Founders, Jordi Puig-Suari, Roland
Coelho and Austin Williams, together with certain affiliates, which
beneficially owns approximately 8.4% of the Company’s common stock,
today sent a third request to the Company’s Board of Directors (the
“Board”) to discuss protecting and optimizing long-term shareholder
value. After repeated attempts, the Concerned Investor Group
relayed yet another message to encourage constructive dialogue with
the Board regarding opportunities to enhance shareholder value,
including, (i) separating the roles of Chairman and CEO and hiring
a new CEO with demonstrable industry experience and credibility,
(ii) reconstituting the Board and instituting best-in-class
corporate governance practices, and (iii) conducting a strategic
review process. The full text of the letter follows:
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231109691122/en/
November 9, 2023
VIA E-MAIL AND
OVERNIGHT MAIL Terran Orbital Corporation 6800 Broken
Sound Parkway NW, Suite 200 Boca Raton, FL 33487 Attention: Board
of Directors
Re: Third Request for Meeting to Discuss
Protecting and Optimizing Long-Term Shareholder Value
Dear Members of the Board of Directors,
Sophis Investments LLC, Roark’s Drift, LLC,
Austin Williams, Roland Coelho, Jordi Puig-Suari and certain of
their respective affiliates (collectively, the “Concerned Investor
Group,” “we” or “our”) beneficially own, in the aggregate,
16,581,465 shares of common stock of Terran Orbital Corporation
(“Terran” or the “Company”), representing approximately 8.4% of the
shares of common stock outstanding. As our goal remains to protect
and maximize the material value we believe is embedded within
Terran, we are following up on our previously unanswered
correspondence addressed to Terran’s Board of Directors (the
“Board”) dated October 11, 2023 and October 15, 2023.
The Concerned Investor Group is the
Company’s largest independent shareholder and is comprised of
co-founders of the Company who have a demonstrable, intimate
understanding of Terran, deep industry expertise relevant to its
business, and who are committed to helping the Company realize its
full potential.
Despite the statements made by the Company
during its Virtual Town Hall held on October 26, 2023 and in its
October 19, 2023 open letter to shareholders that it welcomes and
considers shareholder feedback, the Board has ignored our multiple
requests for a meeting. Moreover, the Board has seemingly dismissed
out of hand the proposals outlined in our letter dated October 11,
2023 regarding opportunities to enhance shareholder value,
including (i) separating the roles of Chairman and CEO and hiring a
new CEO with demonstrable industry experience and credibility, (ii)
reconstituting the Board and instituting best-in-class corporate
governance practices, and (iii) conducting a strategic review
process. It is simply unacceptable that the Board has refused to
meet with us and rather has decided to adopt a seemingly hostile
and dismissive attitude toward us as shareholders. We believe such
a stance only further erodes shareholder value and market
confidence in Terran.
Based on our due
diligence, we anticipate that the Company will report FY2023
revenue of approximately $143 million, materially below Company
guidance of $250 million provided throughout the
year.1 Our reduced revenue
projection is based on the revenue shortfall due to the delays in
customer activity referenced in the Company’s September 20, 2023
prospectus and again during the October 26, 2023 Virtual Town Hall.
Make no mistake: a 43% miss vs. revenue guidance, with less than
eight weeks to go in the year and without proactively providing
investors with an interim update, raises major concerns while
continuing to call into question the Board and management’s
credibility. Furthermore, in light of the Company’s cash burn rate,
treating such a large miss nonchalantly or unduly relying on
prospective new orders or delinquent customer payments to
materialize is, in our view, a reckless gamble with shareholders’
capital.
As of the date of this letter, Terran’s stock
price is down over 40% since September 18, 2023 following its
latest dilutive capital raise,2 remains below $1 despite announcing
~$160 million in new orders in recent weeks, and is at risk of
being delisted by the New York Stock Exchange. The Board can no
longer ignore what we believe the market clearly knows: there are
major issues that need to be addressed at the Company.
Enclosed is our updated financial addendum,
reflecting our revised financial projections described above. Our
projections incorporate the recent subcontract award from Lockheed
Martin for the Tranche 2 beta contract announced on October 24,
2023; and also account for the impact of certain potential new
orders that we believe our CEO candidate can deliver; while
discounting the Company’s largest (currently insufficiently funded)
backlogged order, which would provide incremental upside.
Despite the prospect of lowered near-term
financial guidance, we remain confident that Terran’s shares are
materially undervalued at current prices, accounting for the
downward guidance revision. We continue to believe that present
intrinsic value resides around $3/share, as demonstrated in our
financial addendum (or 12% lower assuming additional projected
dilution);3 however, our estimate of intrinsic value is at risk
under the status quo. Further delays in meeting to consider our CEO
candidate increase the risk of losing out on lucrative identified
potential pipeline wins, as neither the market nor prospective
customers will wait indefinitely for the Board to act in good faith
to help stabilize the business and position the Company for
diversified and profitable growth.
We are all hopeful that delays in customer
payments will be cured soon. Regardless of whether that comes to
fruition, we believe a separation of the Chairman and CEO roles and
reconstitution of leadership is still in the best interests of all
shareholders. There is also a non-negligible risk that delayed
customer payments are not received in time, or at all, a sentiment
apparently shared by and priced-in by the market.
Our primary concern remains protecting and
ultimately enhancing the value that we believe is embedded in
Terran, to the benefit of all shareholders. We continue to offer
solutions that, in our view, are the best hope for sustainably
reversing sentiment and performance at Terran. We reiterate the
urgency with which we believe action must be taken to address the
issues facing the Company and urge you to constructively engage
with us in good faith to ensure all options are explored. We remain
committed to maintaining an amicable and productive dialogue.
Furthermore, as previously noted, while we are in favor of a
strategic review, we are adamant that any strategic review should
only be undertaken after the Company has been stabilized and
leadership is reconstituted in order to best position the Company
to execute its business transformation with regained market
confidence. There are many precedents where conducting such a
review prematurely has time and time again yielded a tarnished
process and suboptimal outcome for shareholders.
We have received a flood of support from
shareholders and industry participants from around the world since
publishing our letter dated October 11, 2023. We continue to
seek a constructive engagement with the Company and those members
of the Board willing to prioritize the interests of all
shareholders, and again reiterate our request that the independent
members of the Board engage with us to schedule a meeting and speak
with our CEO candidate. To this end, we are offering to make
ourselves available, along with our CEO candidate, to meet in
person any time at your convenience the week of November 13, 2023,
whether at your offices in Irvine, California or Boca Raton,
Florida, or via video conference to accommodate those who may be
unable to travel.
We look forward to your prompt response.
Thank you.
Kindest regards,
Tassos D. Recachinas Sophis Investments, LLC,
on behalf of the Concerned Investor Group
For additional information, please review the attached financial
addendum or visit: www.llapvalue.com.
Olshan Frome Wolosky LLP is serving as legal counsel to the
Concerned Investor Group.
About the Concerned Investor Group
The Concerned Investor Group is comprised of Sophis Investments
LLC, Roark’s Drift LLC, and Tyvak Nano-Satellite Systems’
Co-Founders, Jordi Puig-Suari, Roland Coelho and Austin Williams
and certain affiliates thereof. Sophis Investments LLC is a
supportive, long-term investor and seeks to establish constructive
dialogues with issuers as appropriate. The Concerned Investor
Group, together with affiliates, beneficially owns 16,581,465
shares of common stock of the Company, representing approximately
8.4% of the shares outstanding.
1 August 15, 2023 Q2 2023 Company Earnings Call; May 15, 2023 Q1
2023 Company Earnings Call 2 Bloomberg 3 Sophis Investments LLC
internal estimates
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109691122/en/
For Media Nathaniel Garnick/Amanda Shpiner Gasthalter
& Co. (212) 257-4170 LLAPvalue@gasthalter.com
For Investors Tassos Recachinas Sophis Investments LLC
(212) 572-6360 contact@LLAPvalue.com
Terran Orbital (NYSE:LLAP)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Terran Orbital (NYSE:LLAP)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024