Under Current Board, LL’s Stock Price is Down
More Than 63%, 93%, and 83% on a 1-, 3-, and 5-Year Basis,
Respectively
F9 Urges Shareholders to Vote the GOLD Proxy
Card “FOR” Its Three Highly Qualified Director Nominees – Tom
Sullivan, Jason Delves, and Jill Witter – Who Are the Right
Individuals to Restore Value to LL Flooring
F9 Files Definitive Proxy Materials and Mails
Letter to LL Flooring Shareholders
F9 Launches www.LLGroove.com
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 filed definitive proxy
materials with the Securities and Exchange Commission (“SEC”) for
the election of three highly qualified, independent director
candidates – Thomas D. Sullivan, John Jason Delves, and Jill Witter
– to LL Flooring’s Board of Directors (the “Board”) at the
Company’s 2024 Annual Meeting of Shareholders (the “Annual
Meeting”) to be held on July 10, 2024.
In connection with the filing of definitive proxy materials, F9
is mailing a letter to LL Flooring’s shareholders urging them to
hold the Board accountable for the Company’s abysmal stock price
performance on an absolute and relative basis, an ineffective
operational strategy, tremendous waste of capital, and flawed
strategic review process, among many other failures. The letter
also highlights F9’s three highly qualified director nominees, who
will 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.
May 31, 2024
Dear Fellow LL Flooring Shareholders,
As the largest shareholder in LL Flooring Holdings, Inc. (“LL
Flooring” or the “Company”) (NYSE: LL), F9 Investments, LLC
together with its affiliates (collectively “F9” or “we”), owns
approximately 8.85% of the Company’s common stock. We are deeply
concerned about the severe value erosion of our investment and the
utter lack of urgency and engagement demonstrated by the Company’s
entrenched Board of Directors (the “Board”).
LL Flooring has vastly underperformed
its peer group and broader market indices by a shockingly wide
margin over all relevant time periods, and the Company’s stock
price is down more than 57% this year alone. As a result of the
Board’s many failures, the survival of this former industry leader
is now in extreme peril, further evidenced by the negative “going
concern” opinion recently issued by the Company’s
auditors.
Simply put, shareholders deserve an immediate change of course.
Accordingly, we have nominated three highly qualified directors to
LL Flooring’s Board in connection with the upcoming 2024 Annual
Meeting of Shareholders, scheduled for July 10, 2024.
By way of background, F9 is a sophisticated private investment
firm with a strong track record of creating enduring value at
leading building products and home improvement businesses,
including Cabinets To Go, Southwind Building Products and F9
Builder Services, which provides end-to-end solutions to builders.
F9 was founded and is solely owned by industry veteran, serial
entrepreneur and investor, Tom Sullivan. Mr. Sullivan is also the
founder and former CEO and Chairman of Lumber Liquidators, LL
Flooring’s predecessor company, which he grew into the largest
hardwood flooring retailer in the United States. When Mr. Sullivan
left the company in 2016, Lumber Liquidators had become a publicly
traded company with a $430 million market cap, 383 outlet stores in
46 states and Canada, and more than 2,000 employees. Since his
departure, LL Flooring’s market cap has astonishingly dwindled to
approximately $50 million, whereas F9’s cost basis is $4.90 per
share, ~200% above the current share price.
So, why are we here?
We are committed to halting the Company’s dangerous downward
spiral and restoring the business to its former prominence and
profitability by instituting meaningful change to LL’s Board. We
are therefore nominating three highly qualified directors – Tom
Sullivan, Jason Delves, and Jill Witter – who have a proven track
record of successfully operating this and similar businesses under
various market conditions. Moreover, they have an actionable,
achievable plan to stabilize the business and position LL Flooring
for long-term growth and shareholder value creation.
LL Flooring’s current Board has overseen
abysmal stock price performance on an absolute and relative basis,
an ineffective operational strategy, tremendous waste of capital,
and flawed strategic review process, among many other
failures.
LL Flooring’s financial performance continues to deteriorate
rapidly across all metrics, including sales, profitability, and
liquidity. Buried deep in its latest 10-Q filing with the SEC, the
Company disclosed it has a “going concern” issue due to its
inability to maintain compliance with its debt covenants. Rather
than putting forth a plan to stop the bleeding, LL Flooring’s
approach is to cover up its wounds with duct tape and hope things
get better. Specifically, leadership’s primary solution is to sell
a single distribution center and potentially other long-term assets
and seek additional financing to meet its obligations. However,
this will only serve to increase expenses and further dilute
shareholder value.
All the while, in 2023, LL Flooring paid its entrenched
directors a total of over $1.6 million, including $287,500 to the
long-tenured independent Board chair under whose leadership the
Company’s stock price has declined an outrageous ~98%. Worse yet,
the payments were not tied to performance and were approximately
half in cash, furthering the misalignment with shareholders. In an
unveiled, egregious display of atrocious corporate governance, on
May 20, 2024, LL Flooring announced that the Board would forgo the
equity component of its annual Board compensation but would
continue to receive its cash payments.
Moreover, the Company’s August 14, 2023, announcement that it
would explore strategic alternatives appears to be nothing more
than a thinly veiled effort by the Board to buy time to execute its
“hope and prayer” strategy, and save the Board and management’s
lucrative jobs.
The Board has disclosed that it has received multiple premium
offers from bona fide bidders, including F9, only to reject or
ignore them as the Company’s share price craters.
WHAT IS GOING ON IN THE LL
BOARDROOM?
We believe the only way to protect and enhance the value of your
investment is to elect F9’s three director nominees – Tom Sullivan,
Jason Delves, and Jill Witter – who have shareholders’ best
interest at hand. This stands in stark contrast to the current
boardroom where, appallingly, only one of nine directors complies
with the Company’s self-imposed director ownership requirement and
the scant remaining shareholder capital is being wasted on
high-priced legal and financial advisors to protect incumbent
directors.
F9’S NOMINEES ARE IDEALLY POSITIONED TO
ADDRESS LL’S CONSIDERABLE STRATEGIC, FINANCIAL, OPERATIONAL, AND
GOVERNANCE CHALLENGES
Most importantly, as independent directors chosen by
shareholders who have an “ownership mentality,” the F9 nominees
would bring greater focus, alignment, and accountability to the
boardroom. We believe that the election of these three individuals
will assist in holding management and the Board accountable for
their actions and ensure that the Company operates with a long
overdue focus on shareholders by committing to driving performance,
maintaining strong corporate governance, and creating meaningful
shareholder value.
F9’S NOMINEES PROVIDE EXPERTISE, EXPERIENCE
AND A COLLABORATIVE APPROACH TO ASSIST LL’S BOARD IN RESTORING THE
COMPANY TO PROMINENCE
LL Flooring is in dire need of a lifeline. Shareholders should
not expect meaningful change from a Board that has failed to
deliver on its promises for years. Now is the moment to have your
voice heard and to protect your investment.
VOTE ON THE GOLD PROXY CARD TODAY “FOR” F9’S NOMINEES TOM
SULLIVAN, JASON DELVES, AND JILL WITTER AND “WITHHOLD” ON ALL LL
NOMINEES
Shareholders must act decisively to safeguard their investment.
EVERY VOTE MATTERS NO MATTER HOW MANY SHARES YOU OWN. We
urge shareholders to protect the value of their investment by
voting for our nominees using the GOLD proxy card.
You can vote by Internet or by signing and dating the enclosed
GOLD proxy card or GOLD voting instruction form and mailing it in
the postage paid envelope provided. Do NOT vote using any white
proxy card or voting instruction form you receive from LL Flooring.
Please discard the white proxy card.
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 email at info@campaign-mgmt.com.
For more information, including voting instructions, visit our
website 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.
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.LLGROVE.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/20240531864299/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
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