In a 13D filing after the close Friday on InFocus Corporation (Nasdaq: INFS), Caxton Associates disclosed an 8.9% stake (3.55 million shares) in the company. This is up from the 1.2 million shares stake the firm disclosed in a quarterly regulator filing.
In the filing, Caxton said they believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.
The firm said unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders. They also said the Board should immediately work with management to develop a new business plan and said the new plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.
On October 10th, InFocus lowered their third quarter guidance and hired Banc of America to evaluate strategic alternatives.
From the 'Purpose of Transaction' section of the filing:
The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock. The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:
1) The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates. At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight. We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking. Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.
2) The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates. Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.
3) As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances. The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets. This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.
Representatives of the Reporting Persons have had conversations with members of the Company's operating management and with members of the Board, as well as with certain significant shareholders of the Company. The Reporting Persons reserve the right to communicate further with the Company's operating management and with members of the Board, as well as with other shareholders and third parties, about these and other matters.
The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board. Any such actions could relate to or result in one or more of the matters referred to above. The Reporting Persons also reserve the right to purchase or otherwise acquire additional Common Stock, or to sell or otherwise dispose of Common Stock owned by them, in each case in open market or privately negotiated transactions or otherwise.