Fairview Capital seeks answers from Mac-Gray

By Lisa Kerner

Charlotte, N.C., April 11 - Fairview Capital Investment Management, LLC said there is a "rising tide of shareholder discontent" over Mac-Gray Corp.'s "poor" financial performance and "ineffective" acquisition strategy.

The investor made its comments in an April 10 letter to the company's board of directors, which was included in a schedule 13D filing with the Securities and Exchange Commission.

According to Fairview, Mac-Gray's board failed to address its concerns during the company's fourth-quarter earnings call on March 6, in which Mac-Gray reported "mediocre financial performance" and its intention to continue with its "questionable strategy."

Fairview was extremely disappointed to learn that Mac-Gray bought Automatic Laundry Co. for $116 million on April 1, saying the company had "grossly overpaid" for the acquisition, possibly setting the stage for "several more years of substandard financial performance."

Mac-Gray has ignored concerns raised by both River Road Asset Management, a 14.2% shareholder, and Fairview Capital, which holds 5.6% of Mac-Gray's common shares, the letter said.

Fairview Capital suggested the board of Mac-Gray do the following:

• Talk with shareholders;

• Conduct a thorough study of the WEB East and WEB West acquisitions to determine why they failed to create shareholder value;

• Provide shareholders with a three-year business plan or "road map" to demonstrate how the status quo strategy will lead to improved financial performance and a higher share price;

• Hold management accountable; and

• Review strategic alternatives with a Wall Street investment bank.

Should Mac-Gray fail to respond to Fairview Capital by the time the company's first-quarter results are announced, the investor said it would seek answers in person at the annual meeting of stockholders.

Mac-Gray is a Waltham, Mass.-based laundry facilities management contractor.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.