Activist Voce Capital Sends New Letter to Air Methods Board

Oct 20 2015 | 5:26pm ET

Activist investor Voce Capital Management has penned an open letter to the board of Air Methods Corporation (AIRM) in which it reiterates its concerns over the air ambulance company’s corporate governance and pushes it to evaluate strategic alternatives. 

The missive is the third public one since June from Voce, which owns a 4.9% stake in Air Methods and is its sixth-largest shareholder. AIRM closed today at $38.35 per share, up $0.32, after surging more than 4% on the news of Voce’s new communication.

In its September statement, Voce pegged the company’s intrinsic value at $55-$60, and blames the difference to its traded value on capital structure. 

Voce’s letter details the hedge fund’s frustration with AIRM’s management. In addition to the public statements, Voce describes multiple meetings, letters and discussions with management since June, none of which have apparently appeased the activist investor’s concerns. “While we have appreciated the open lines of communication,” the most recent letter states, “We are disappointed by the board’s inertia and unwillingness to act in the best interests of shareholders.”

Voce also cites support for its views by other shareholders. “We have spoken with many other top shareholders, most of whom (like us) have been owners for multi-year periods,” it writes. “We haven’t met a single shareholder that didn’t share our frustrations nor concur that an evaluation of all options, including a sale of the company, represents a better path forward for shareholders than anything the board or management has articulated to date.”

Voce also calls AIRM’s board to task for being unresponsive to its suggestions, terming replies to Voce’s concerns “timorous, terse and trite” and calls out four of the firm’s ten directors for holding their seats for more than twenty years each. The fund goes on to raise a number of board-level corporate governance concerns, including diminished shareholder influence, composition, compensation, and stock sales. “None of these represent best governance practices and, taken together, reflect an autocratic governance posture at odds with the Board’s mellifluous tune about receptivity to shareholder concerns,” Voce writes.

Three of AIRM’s directors are up for reelection in 2016, including chairman David Kikumoto. Voce’s letter makes it clear that the fund has no qualms about taking its agenda to the company’s 2016 annual meeting. “Some companies (and directors) overstay their welcome, and shareholders suffer as the asset begins to decline in value,” the letter says. “A strong board recognizes this turning point, and embraces the opportunity that it represents, while a weak one fails to see it or, even worse, stubbornly attempts to resist it.  

“Shareholders are about to discover which type of board they have elected at Air Methods and will decide whether it properly represents their best interests going forward,” it concludes.

Founded in 2011 by former Goldman Sachs executive Daniel Plants, San Francisco-based Voce Capital Management is a fundamental value-oriented, research-driven alternative asset manager. It has approximately $100 million in assets under management. 

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