Threatens To Run Alternate Slate Of Directors At Upcoming Annual Meeting

One of the principal shareholders in Colorado-base air ambulance company Air Methods Corp. is threatening to run its own slate of board members at an upcoming annual meeting.

Voce Capital Management LLC owns about 3.1 percent of Air Methods. In a letter sent to Air Methods' Board of Directors, J. Daniel Plants, Chief Investment Officer for Voce Capital Management, said that "urgent change is needed to reverse Air Methods dismal underperformance and to unlock stockholder value."

The letter cites a 24 percent loss in Air Methods' stock in 2016, and says a "deep undervaluation persists, but there’s no reason to expect that will change on its own. Even after its recent bounce off of multi-year lows, Air Methods currently trades for less than seven times EBITDA, and twelve times earnings, based on consensus estimates for 2017 – a significant discount to its intrinsic value. Its stock price volatility was just as high in 2016 as in prior years, despite efforts to dampen it. Air Methods’ shocking short interest, at approximately 30% of its float, hovers near record territory and is a constant reminder of how challenging it will be for the stock to gain any sustained upward traction. Some of the Company’s largest and longest-tenured investors have begun to lose faith, as evidenced by the material reductions in their ownership."

Plants says in the letter that the interests of the board of Air Methods is "misaligned with stockholders", and "The Board has not dealt with us in good faith" and has "no credible plan to create stockholder value."

"The Board’s actions since the entry into the Cooperation Agreement have convinced us that it is either unwilling, or unable, to manage the urgent issues Air Methods now faces. The time for incremental tweaks has long passed, and stockholder patience is exhausted," Plants wrote. "Reactive or ad hoc maneuvers, such as last year’s shotgun acquisition of Tri-State and eleventh hour Board reshuffle, won’t fly this time around. Much more sweeping changes are required, including substantial reform of the Board and strategy, and we intend to pursue them vigorously. Should the Board continue to refuse to work with us, we shall seek to elect new independent Directors at the 2017 annual meeting with the proper incentives, experience and fortitude to confront these challenges and to faithfully represent the stockholders for whom they stand as fiduciary."

(Source: Voce Capital Management news release. Image from file)

FMI: https://vocecapital.com, Letter