Another shareholder voices opposition to Danka's planned liquidation

By Lisa Kerner

Charlotte, N.C., June 11 - Investor Ironwood Investment Management, LLC said it will vote its 10,960,354 American Depositary Shares of Danka Business Services plc, against the proposed voluntary liquidation of the company following the sale of Danka Office Imaging Corp. to Konica-Minolta Corp.

Ironwood's ADSs represent 16.91% of the ordinary shares outstanding, or 11.54% of the as-converted voting rights.

In a letter to fellow shareholders, Ironwood's Warren J. Isabelle noted that of the $240 million in gross proceeds from the sale, ordinary shareholders will receive $6.5 million, or $0.10 per ADS, the equivalent of $0.25 per ordinary share.

According to Isabelle, the remaining proceeds will be paid out as follows:

• $148 million to General Electric Credit;

• $67 million to convertible preferred shareholders;

• $14.2 million for professional fees and transaction expenses; and

• $10 million to management, of which approximately $5 million will be paid by Konica-Minolta.

"We find it inequitable that the convertible preferred shareholders, who in fact have no preference over ordinary shareholders except in liquidation, stand to receive nearly three-quarters of the residual proceeds, despite the fact that they represent, on an as-converted basis, less than 30% of all of the outstanding voting rights," Isabelle said in the letter.

According to Isabelle, "it appears the bankers and lawyers with their collective transaction expenses will receive twice that of the ordinary shareholders while management walks away with $3.5 million more than the total equity value offered the ordinary shareholders."

On June 10, DCML LLC, a 6% shareholder, called the planned liquidation "grossly unfair" to shareholders and said it too would vote against the plan at the annual meeting in August.

Danka Business Services, based in St. Petersburg, Fla., provides office imaging equipment, software, support, and related services and supplies in the United States.

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