A former Activist Strategy target, Magnachip now has Pleasant Lake Partners owning close to 10% of the company and it just put out a letter and presentation on the company:
July 08, 2015
Magnachip Semiconductor Corporation
60 South Market Street, Suite 750
San Jose, CA 95113
Attn: Douglas Norby, Chairman
As you know, funds managed by Pleasant Lake Partners (“PLP”) are one of the largest shareholders of Magnachip with a 9.95% stake in the Company (though as we’ve expressed to you, PLP likely would be a larger shareholder if not for the Company’s adoption of a poison pill). We appreciate the conversations we’ve had with you in which we’ve shared our thoughts on the Company and its prospects. As outside, public investors, our conversations with you necessarily must be largely a one-way street; however, we are pleased to hear you affirm that your role and duty as Chairman of the Board is to maximize shareholder value, in whichever manner that may occur.
We appreciate that you and the Board have been working diligently to get the Company through its restatement. But now that the Company’s financials are current, we believe this Board needs to redouble its efforts and be proactive in unlocking and enhancing shareholder value. At $7.18 per share, we do not believe that the market is valuing Magnachip anywhere close to its standalone intrinsic value. Nor are we alone in this belief. We have heard from many other large shareholders and the consistent message is that Magnachip is significantly undervalued.
We are including a presentation that summarizes our own research and views on the Company. PLP invested in Magnachip because we believe that the Company has valuable assets and IP, which are, increasingly, becoming strategically important as analog fab capacity remains tight across the industry and as semiconductor consolidation reaches record levels.
In light of the above, as well as the Company’s significant underperformance since its IPO, we ask that the Board take all necessary steps to maximize shareholder value and that it do so now. As large shareholders, as well as fiduciaries to our own investors, we are prepared to work with you constructively to help you deliver shareholder value for the benefit of all Magnachip shareholders.
/s/ Jonathan Lennon
Pleasant Lake Partners LLC