EXHIBIT 1
Casey Capital, LLC Notifies Essex Rental Corp. Of Intention To Nominate Directors For Election To Board
NEW YORK, April 6, 2015 /PRNewswire/ -- Casey Capital, LLC (together with its affiliates and other participants in its solicitation, "Casey Capital"), beneficial owners of approximately 5.9% of the outstanding shares of common stock of Essex Rental Corp. (NASDAQ: ESSX) ("Essex" or the "Company"), on April 1, 2015 delivered a letter to the Company notifying it of Casey Capital's intention to nominate three directors for election to the Company's Board at the 2015 Annual Meeting of Stockholders. The full text of the letter is included below and appears as an exhibit to Casey Capital's Amendment No. 1 to Schedule 13D as filed with the Securities and Exchange Commission (http://www.sec.gov/Archives/edgar/data/1373988/000089225115000035/0000892251-15-000035-index.htm):
April 1, 2015
Essex Rental Corp.
Board of Directors
1110 Lake Cook Road, Suite 220
Buffalo Grove, Illinois 60089
Gentlemen:
The events that have transpired since the writing of our first letter have led us to conclude that we must take more aggressive action in order to maximize returns to the stockholders of Essex Rental Corp. ("ESSX" or the "Company").
We believe the Company's gross accounting oversights and subsequent poor communication with stockholders continue to demonstrate that the current Board is unable to properly oversee the management of the Company. When combined with the Company's history of underperformance and destruction of stockholder value as described in our first letter, these recent developments clearly illustrate the need for significant change at the Board level.
We are nominating a slate of three nominees for election to the Board at the Company's annual meeting of stockholders. Our nominees offer the operational, financial, and industry experience required to improve stockholder confidence and maximize stockholder returns.
On February 26, 2015, the Company delayed the release of its fourth quarter and year-end operating results, citing its need for more time to evaluate the classification of its revolving credit facilities as current liabilities or long-term obligations under ASC 470-10-45, "Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements and Subjective Acceleration Clauses," notwithstanding that the facilities do not contractually mature within the next twelve months. ASC 470-10-45 provides a clear standard for debt classification as current or long-term where the terms of the debt are similar to those of the Company's facilities. This inaccurate accounting classification is something the Board and its Audit Committee, which consists of Laurence S. Levy, Edward Levy, and Daniel H. Blumenthal, should have recognized and quickly taken action to remediate. Instead, we understand that the Company's independent auditors identified the mistake.
The Company's curt February 26, 2015 press release describing the debt classification issue and the postponement of the earnings release disappointed stockholders and even led some to believe the Company's lenders were forcing the Company's bankruptcy. ESSX's 44% decline on the day of the release and its further deterioration to a record low of $0.64 on March 10, 2015 demonstrated this uncertainty. Despite the dramatic drop in the Company's stock price and the substantial stockholder confusion, there was no response from the Company attempting to clarify the relevant financial reporting issues, nor did the Company then attempt to explain that no lender was responsible for the movement of the credit facilities to short term obligations. The Company took almost three weeks to attempt to clear up some of the confusion surrounding the accounting restatements and then dropped a second financial reporting bombshell.
On March 17, 2015, the Company reported that it intends to amend certain of its previously filed quarterly and annual reports as a result of errors relating to its classification of the revolving credit facilities and errors in its financial statement footnote disclosure relating to segment reporting. As a result of the mistakes that require the restatements, the Company reported that it is unable to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the "2014 Form 10-K"). The Company also reported that its previously issued financial statements for its fiscal year ended December 31, 2013, and its fiscal quarters ended March 31, 2013 and 2014, June 30, 2013 and 2014, and September 30, 2013 and 2014, should not be relied upon due to errors relating to its classification of the revolving credit facilities and errors in its financial statement footnote disclosure relating to segment reporting. The lack of reliance on the Company's previously issued financial statements and the Company's delay in the filing of the 2014 Form 10-K further erode stockholder confidence.
In the month since the publication of our first letter, the Board has not responded to us or our recommendations in any way. This refusal to respond to one of the Company's largest stockholders exemplifies how the Board views the Company as its own insular private entity, rather than a public company accountable to stockholders.
Sincerely,
Kevin M. Casey
Keating Muething & Klekamp is acting as legal advisor to Casey Capital.
About Casey Capital, LLC
Casey Capital is an investment manager based in Sherman, Connecticut, founded in 2002 by Kevin Casey. Casey invests in high quality but underperforming public companies that have multiple levers to unlock shareholder value. The firm seeks to engage with the management, boards, and shareholders of companies in a constructive dialogue in order to enhance shareholder value through improved operational efficiencies, strategic divestitures, capital structure optimization and increased corporate focus.
Cautionary Statement Regarding Opinions and Forward-Looking Statements
Certain information contained herein constitutes "forward-looking statements" with respect to Essex, which can be identified by the use of forward-looking terminology such as "may," "will," "seek," "should," "could," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" or the negatives thereof or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities. Due to various risks, uncertainties and assumptions, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. The opinions of Casey Capital are for general informational purposes only and do not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person, and should not be taken as advice on the merits of any investment decision. This material does not recommend the purchase or sale of any security. Casey Capital reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Casey Capital disclaims any obligation to update the information contained herein. Casey Capital and/or one or more of the funds it manages may purchase additional Essex shares or sell all or a portion of their shares or trade in securities relating to such shares.
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Investor Contact:
Casey Capital, LLC
Kevin Casey
646-825-4630
CASEY CAPITAL, LLC ("CASEY CAPITAL") INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION WITH THE SOLICITATION OF PROXIES FROM STOCKHOLDERS OF ESSEX RENTAL CORP. (THE "COMPANY") IN CONNECTION WITH THE COMPANY'S 2015 ANNUAL MEETING OF STOCKHOLDERS. ALL STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CASEY CAPITAL, KEVIN CASEY AND RELATED PARTICIPANTS IN THE SOLICITATION (COLLECTIVELY, THE "PARTICIPANTS"), WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. WHEN COMPLETED, THE DEFINITIVE PROXY STATEMENT AND AN ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE COMPANY'S STOCKHOLDERS AND ARE, ALONG WITH OTHER RELEVANT DOCUMENTS, AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, D.F. KING & CO., INC., CASEY CAPITAL'S PROXY SOLICITOR, WILL PROVIDE COPIES OF THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD WITHOUT CHARGE UPON REQUEST BY CALLING D.F. KING AT (212) 269-5550 OR TOLL-FREE AT (866) 406-2283.
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR DIRECT OR INDIRECT INTERESTS BY SECURITY HOLDINGS WILL BE CONTAINED IN THE SCHEDULE 14A TO BE FILED BY CASEY CAPITAL WITH THE SEC. THIS DOCUMENT CAN BE OBTAINED FREE OF CHARGE FROM THE SOURCES INDICATED ABOVE.