Providence Service wants Avalon Correctional to end proxy battle

By Lisa Kerner

Charlotte, N.C., May 8 - Providence Service Corp. said it filed its spring 2009 investor presentation with the Securities and Exchange Commission ahead of chief executive officer Fletcher Jay McCusker's planned visits with stockholders over the next few weeks.

"As the financial results we announced earlier this week for our first quarter show, we have made significant and substantial progress and are starting to benefit from many of the actions we have implemented to enhance Providence's prospects and profitability," McCusker said in a company news release.

McCusker said he plans to detail in his meetings with stockholders how a dissident group's actions have the potential to jeopardize Providence's momentum and success.

As previously reported, Avalon Correctional Services, Inc. and its controlling stockholder, Donald C. Smith, want Providence shareholders to elect Michael C. Bradley Jr. and retired U.S. Navy captain Brian T. Costello to Providence's board of directors at the company's annual meeting on June 15.

Providence is asking shareholders to re-elect McCusker and Kristi L. Meints, chairperson of the board's audit committee.

According to Providence, the dissident group has no relevant experience in the social services industry and its members are all affiliates of Avalon, which operates private correctional facilities for governmental payers in three states.

Avalon has "a history of challenging relationships with government payers," Providence said.

Providence said Smith voluntarily delisted Avalon from the Nasdaq Stock Market in 2005 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 Providence stockholders for the dissident group to end their proxy contest at the earliest possible time so that we can move beyond this unnecessary and costly distraction and return our complete attention to delivering on Providence's very significant potential and enhancing value for all Providence stockholders," McCusker said.

Providence is a Tucson-based provider of home- and community-based social services to government-sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.

Oklahoma City-based Avalon owns and operates private community correctional facilities and correctional programming.

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