F9 Investments Details LL Flooring’s Abysmal Performance, Sham Strategic Review Process, and Urgent Need for Change in Its Boardroom in Latest Letter to Shareholders
$LL
F9 Investments Believes LL Flooring’s Board Seeks to Entrench Itself Rather than Meaningfully Address Company’s Precarious Position
Under the Current Board, LL Flooring’s Stock Price Has Plummeted More Than 93% In Three Years
F9’s Three Highly Qualified Director Nominees – Tom Sullivan, Jason Delves, and Jill Witter – Are the Right Individuals to Restore Value to LL Flooring
Dear Fellow LL Flooring Shareholders,
F9 Investments, LLC and our affiliates collectively own approximately 8.85% of LL Flooring’s common stock. We are the Company’s largest shareholder, and our aims are aligned with those of all LL Flooring shareholders: to protect the value of our investment and halt the Company’s precipitous decline, which has occurred at the hands of the current Board of Directors (the “Board”).
The Board is burying its head in the sand and seeking to entrench itself rather than meaningfully address the Company’s precarious financial position. In fact, the Board would have you believe its so-called strategic plan is working, despite the Company’s own recent admission that there is substantial doubt regarding its ability to continue operations.
The facts are indisputable: LL Flooring’s financial performance continues to decline across all metrics—including sales, profitability, and liquidity.
UNDER THE CURRENT LEADERSHIP, LL FLOORING’S STOCK PRICE HAS PLUMMETED
MORE THAN 93% IN THREE YEARS, VASTLY UNDERPERFORMING ITS PEERS, THE BROADER MARKET, AND ALL REASONABLE EXPECTATIONS:
In August 2020, management chose to abandon the Company’s highly recognized brand identity, Lumber Liquidators, to rename the business LL Flooring – a strategic failure that squandered substantial brand equity with customers and the market. Yet while the Company’s executives are harming the value of the Company and its shareholders by their misguided directives, they continue to benefit handsomely from an utterly out-of-sync compensation program that is not tethered to performance.
BOARD’S STRATEGIC REVIEW PROCESS IS A SHAM:
IT HAS SUMMARILY REJECTED OR IGNORED MULTIPLE PREMIUM OFFERS TO ACQUIRE COMPANY FROM BONA FIDE BIDDERS AS LL FLOORING’S SHARE PRICE CRATERS
Since January 2023, LL Flooring has received numerous offers with prior-day premiums as high as 100%+. The Board’s disingenuous “strategic review” and sale process have been a complete sham, characterized by a disturbing pattern of premium bids rejected, falling bid prices, limited transparency, and an uneven playing field for bidders – all despite the Board’s insistence that the bids received “significantly undervalued” the Company.
Instead, the Board’s preferred plan is to enter into a sale-leaseback commitment for its primary asset – LL Flooring’s Sandston, VA distribution center – in a desperate, shortsighted attempt to generate cash that will likely increase expenses and destroy value for shareholders in the long run.
OTHER SIGNIFICANT SHAREHOLDERS ARE CALLING FOR CHANGE
Notably, several other significant LL Flooring shareholders unaffiliated with F9 have also publicized their concerns regarding the Company’s current leadership and strategy. Donovan S. Royal, a large shareholder of LL Flooring with more than a decade of experience in the flooring industry, has publicly voiced concern
that the current Board is prioritizing its own interest over those of shareholders. Rightfully, he suggests that shareholders “should be frightened at the prospect of this Board negotiating any kind of sale of assets, as they have already demonstrated a lack of expertise in not only selling the declining quantities of hard surface flooring inventory on hand but also the entire Company.”
Another large shareholder, Howard Jonas, on behalf of a consortium of LL Flooring investors, has also said he is “gravely concerned by the significant increase in the company’s SG&A as a percentage of net sales,” and noted that a change in management is necessary for stockholders to benefit from the full value of the Company.
These viewpoints reiterate our assertion that shareholders deserve an immediate change of course, driven by new Board directors who will dutifully protect the value of all stakeholders’ investments in LL Flooring and execute a plan to position the Company for long-term success and value creation.
F9’S THREE HIGHLY QUALIFIED NOMINEES BRING THE FLOORING INDUSTRY EXPERTISE, OWNERSHIP MENTALITY, AND ACTIONABLE PLAN NECESSARY TO RESTORE THE VALUE OF LL FLOORING FOR ALL SHAREHOLDERS
As the largest shareholder of LL Flooring, we have nominated three candidates for election to LL Flooring’s nine-person Board at the Company’s upcoming Annual Meeting of Shareholders scheduled for July 10, 2024. We believe in order to protect the value of our investment and that of all stakeholders, LL Flooring desperately needs new, strong leaders in the boardroom who can provide much-needed oversight and who bring a track record of creating value. Our highly qualified nominees – Tom Sullivan, Jason Delves, and Jill Witter – have successfully led this Company in the past as well as other similar businesses under various market conditions. Together, they bring an actionable, achievable plan to help stabilize LL Flooring’s business and position the Company for long-term growth, profitability, and shareholder value creation.
With your vote, we will be one step closer to ensuring LL Flooring is on a better path to creating lasting shareholder value and getting the Company back in the groove.
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.
Source:
https://www.sec.gov/Archives/edgar/data/1396033/000119312524157168/d814230ddfan14a.htm