Mr. David L. Richter
President and Chief Executive Officer
Hill International, Inc.
One Commerce Square
2005 Market Street, 17th Floor
Philadelphia, PA 19103
Warren Buffett: If You Own A Good Business, Keep It
As a shareholder, we appreciate your efforts to improve the financial performance of the company, but we remain disappointed in the results. During the First Quarter Earnings call, commitments were made which have not been realized and the share price has dropped below $3.25.
Our previous offer to acquire the outstanding shares of the company on a fully diluted basis for $5.50 per share was declined by the Board of Directors. Subsequently another shareholder forced a proxy vote, during which we believe certain undisclosed commitments were made to several large shareholders, who in return voted to back the current management’s recommendationnot to explore strategic alternatives. We believe support for management’s “do nothing” recommendation was based on your assurances, made in public filings in July, that you would deliver long-term and sustainable value to shareholders by (i) realizing $25 million in cost savings that would translate into significantly higher earnings; (ii) generating consulting fee revenues between $650 million and $675 million for 2015; and (iii) achieving EBITDA between $52 million and $68 million for 2015.
To date no tangible results have been realized. Instead, the company (i) has stated that it will not realize the full $25 million in cost savings this year; (ii) lowered its guidance on consulting fee revenues to between $630 million and $640 million; (iii) lowered its guidance on full year EBITDA to $50 million to $58 million; and debt has increased. Consequently, we remain concerned with the company’s prospects.
While disappointed with both the financial performance and increased debt, we would propose to acquire all the outstanding shares of the company on a fully diluted basis for $4.75 per share. Our new offer is based in part upon our revised view of the prospects of the company. Nevertheless, our offer represents a premium in excess of 45% to the current trading price. We are prepared to sign a confidentiality agreement with a standstill provision and complete confirmatory due diligence in a timely manner. We strongly recommend the company engage with us or hire an advisor to review strategic alternatives.
We suspect the majority of shareholders have lost confidence in management and would now support our offer or a review of strategic alternatives. We will await your response.
Thomas J. Campbell
President, DC Capital Partners, LLC
Chairman, Michael Baker International, LLC