Providence Service Corporation Makes Its Spring 2009 Presentation Publicly Available
Management to Embark on Series of Nationwide Investor Meetings
“Over the next few weeks, I plan to meet with many of our stockholders, large and small,” said
“Given Providence’s momentum and success, it is unfortunate that a dissident group seems steadfastly committed to continuing a distracting and costly proxy contest that only serves to interfere with the progress we are making. As such, in addition to having the opportunity to solicit stockholder input and ideas as to how we can continue to grow shareholder value and position
The dissident group has no relevant experience in the social services industry: The members of the dissident group are all affiliates of Avalon Correctional Services, Inc., which operates private correctional facilities for governmental payers in three states,
Oklahoma, Texas, and Wyoming, and has no relevant experience in the social services industry.
Avalon Correctional Services has a history of challenging relationships with government payers: For
Providenceto continue to be successful, it is critical that we continue to maintain our very strong relationships with the government payers that we work with in 42 states and the District of Columbia. Avalon Correctional Services, which currently operates in only three states, Oklahoma, Texas, and Wyoming, has a history of challenging relationships with government payers, including in its home state of Oklahoma, where decertification and halted funding led to its discontinuation of all of its residential care/outpatient mental health operations in 1996, and, more recently, in Colorado, where its correctional facility contracts were terminated, pulled and/or suspended in 2008, at both the state and county level, leading to the discontinuation of its correctional facility operations in Coloradothat same year.
Since first becoming a stockholder of
Providencein October 2008, the members of the dissident group have acted in ways that would suggest that their interests are not aligned with those of other stockholders and that they may have an undisclosed agenda to obtain effective control over Providence: The dissident group, within less than a month of becoming a Providencestockholder, made a transaction proposal to us that, if accepted, would have facilitated their ability, with a proposed investment of potentially less than $1.0 million, to (1) immediately raise their aggregate voting interest in Providencefrom 18.6% to almost 25%, (2) obtain the ability, without further investment and in their sole discretion, to subsequently increase both their voting and their ownership interest in Providence to over 33%, and (3) in the interim, secure for themselves a greater than 42% annual dividend yield. The ProvidenceBoard, after due consideration, rejected such a one-sided proposal as not being in the best interests of ALL stockholders.
The dissident group has not provided us with any plans or proposals to enhance stockholder value: Despite our numerous interactions with members of the dissident group, neither
Donald C. Smithnor any of the other members of the dissident group have identified to us any suggestions for operational improvements, or other initiatives to enhance value for ALL Providence stockholders.
The leaders of the dissident group, Avalon Correctional Services and
Donald C. Smith, have a history of engaging in substandard corporate governance practices that are diametrically contrary to how Providenceapproaches corporate governance and how we believe many of our investors would want us to approach corporate governance: In 2005, Donald C. Smith, the founder, sole director and controlling stockholder of Avalon Correctional Services, a company that is publicly-traded on the pink sheets, voluntarily delisted Avalon Correctional Services from the Nasdaq Stock Market (after being threatened with delisting for failure to have any independent directors (in other words, directors other than Donald C. Smith) on its Board of Directors) and terminated the registration of its shares under the Securities Exchange Act in order to avoid being required to comply with the corporate governance and other provisions of the Sarbanes-Oxley Act of 2002.
“We continue to believe that it is in the best interests of all
The Providence Service Corporation, through its owned and managed entities, provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.
This press release contains “”forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to the global credit crisis, capital market conditions, and other risks detailed in
SOURCE The Providence Service Corporation