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Wegener Corporation
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(Name of Registrant as specified in its charter)
Henry Partners, L.P., Matthew Partners, L.P., Henry Investment Trust, L.P.,
Canine Partners, LLC
David W. Wright and Jeffrey J. Haas
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(Name of person(s) filing proxy statement if other than the Registrant)
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Page 1 of 6
HENRY PARTNERS, L.P.
THIS YEAR YOU ACTUALLY HAVE A CHOICE!
YOU CAN ELECT TWO NEW DIRECTORS
AT THE WEGENER 2006 ANNUAL MEETING
December 29, 2005
Dear Fellow Wegener Corporation Stockholder:
We are Henry Partners, L.P and Matthew Partners, L.P., collectively one of the
largest stockholders of Wegener Corporation. We own 1,000,000 shares, or 7.9% of
Wegener common stock. In contrast, the non-management members of the Wegener
Board collectively own approximately 5,000 shares, or less than 1/10 of 1% of
Wegener's outstanding common stock. We began purchasing shares of Wegener more
than two and a half years ago and have been significant owners ever since. While
we are convinced that Wegener has the potential to be a profitable company, we
believe that it has dramatically underperformed. This has occurred under what we
believe is the lackluster oversight and leadership of the current board and
existing management.
Henry is seeking two seats on the board of directors. We intend to nominate
David W. Wright and Jeffrey J. Haas, the "Henry Nominees", as Class II directors
at the 2006 Wegener Annual Meeting scheduled for January 31, 2006. The
backgrounds of Mr. Wright and Professor Haas are included in our proxy
statement, which is enclosed with this letter. While two seats will not control
the Board, we are confident that the remaining board members will take seriously
the views expressed by new directors elected by the stockholders. Lend your
support to our effort and help Wegener achieve its full potential.
THE HENRY NOMINEES ARE COMMITTED, SUBJECT TO THEIR FIDUCIARY DUTIES TO WEGENER
AND WEGENER'S STOCKHOLDERS, TO GIVING ALL STOCKHOLDERS OF WEGENER THE
OPPORTUNITY TO ACHIEVE THE MAXIMUM VALUE FOR THEIR SHARES. A VOTE FOR THE HENRY
NOMINEES WILL ENABLE YOU -- AS THE OWNERS OF WEGENER -- TO SEND A MESSAGE TO THE
WEGENER BOARD THAT IT IS TIME FOR A CHANGE AND THAT YOU ARE SEEKING TO MAXIMIZE
THE VALUE OF YOUR SHARES.
Page 2 of 6
A BOARD CULTURE RESISTANT TO NEW POINTS OF VIEW
"ABSENT SPECIAL CIRCUMSTANCES, THE INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS
WILL CONTINUE TO NOMINATE QUALIFIED INCUMBENT DIRECTORS WHOM THE INDEPENDENT
DIRECTORS BELIEVE WILL CONTINUE TO MAKE IMPORTANT CONTRIBUTIONS TO THE BOARD OF
DIRECTORS." (Wegener's 2005 and 2006 Proxy Statements; emphasis added.)
We believe this statement by Wegener means that, absent unidentified "special
circumstances," the currently seated Wegener directors intend to continue
re-nominating themselves to the Board. WE BELIEVE THAT WEGENER'S OPERATING
LOSSES IN FIVE OF THE LAST SIX FISCAL YEARS REQUIRE A CHANGE IN BOTH BOARD
COMPOSITION AND DIRECTION. The Wegener Board in its November 17, 2005 letter to
stockholders chided the Henry Nominees stating, "we do not believe the dissident
nominees have the important industry-related experience necessary to make a
meaningful contribution to the overall success of our company."
If Wegener had a track record of profits (instead of losses) or a stock price
indicative of market confidence in the company's future, then perhaps their
reliance on directors with "industry-related experience" would be considered a
success. Unfortunately, as we know as stockholders, Wegener's results continue
to be disappointing. Therefore, instead of simply re-nominating incumbents with
"industry-related experience," we believe this board requires an injection of
NEW directors with NEW ideas.
WHAT WE INTEND TO DO
- Introduce two non-telecommunications industry professionals
into the boardroom who will bring substantial public board
experience, corporate governance expertise and new
perspectives that we believe will enhance the composition and
broaden the deliberations of the Wegener Board.
- Work with existing management to make Wegener a profitable
company and a more attractive investment.
- Focus on moderating losses to prevent the company's debt
position from increasing any more than absolutely necessary in
light of management's announced expectation to borrow against
the company's line of credit to support operations during the
first half of fiscal 2006.
- Propose the implementation of good corporate governance
practices.
- Advocate linking compensation directly to performance.
- Look to remove the current stockholders' rights plan, which
was adopted without the approval of Wegener's stockholders.
- Reduce any and all unnecessary costs and expenses.
- Propose to rescind Mr. Placek's 2005 stock option grant, which
we believe was excessive.
Page 3 of 6
WHAT'S GONE WRONG AT WEGENER
A CONSISTENT RECORD OF OPERATING LOSSES
Wegener has had operating losses in five of the last six fiscal years. We
believe that ineffective oversight by the Board, failed leadership and poor
management execution are the primary causes of these operating losses. Below are
just a few of the statements made by management concerning projections for
fiscal 2005, none of which came to fruition:
- "Although no assurances may be given and order visibility is
limited, we believe we will record sufficient new orders in
fiscal 2005 to achieve increased revenues and fiscal year
profitability compared to fiscal 2004." (Letter to Wegener
stockholders from Robert A. Placek, undated, that accompanied
the mailing of the fiscal 2004 Annual Report on Form 10K.)
- "However, our review of the balance of fiscal 2005 indicates,
while significant bookings are required for each quarter, we
are still positioned to increase revenues over last year and
return to profitability in this fiscal year." (Wegener press
release dated January 18, 2005 announcing fiscal 2005 first
quarter results.)
- "This continued improvement in our results is exciting, and
while significant bookings are required for the remainder of
this fiscal year, we are still positioned to substantially
increase revenues over last year and maintain profitability
for the fiscal year." (Wegener press release dated March 30,
2005 announcing fiscal 2005-second quarter results.)
In reality, Wegener's operating loss for the fiscal year ended September 2, 2005
was $1.47 million.
It appears to us that the current board has tolerated an executive team that
continues to deliver operating losses, and we believe action is required today
to elect two new members to the Wegener Board who will demand better results
now! IF YOU AGREE WITH US, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED
GREEN PROXY CARD AND VOTE FOR THE HENRY NOMINEES TODAY.
AS A RESULT OF UNMET FORECASTS, WE BELIEVE WEGENER'S OPERATING RESULTS, BALANCE
SHEET TRENDS AND STOCK PERFORMANCE HAVE BEEN DISAPPOINTING AT BEST.
CONSIDER THE FOLLOWING AND DECIDE FOR YOURSELF:
- Wegener's revenues fell from $23.4 million in fiscal 2002 to
$21.9 million in fiscal 2005.
- Wegener's operating profit fell from $1.3 million in fiscal
2002 to an operating loss of $1.5 million in fiscal 2005.
Wegener has reported an operating loss every fiscal year since
fiscal 2002.
- Wegener's stockholders' equity fell from $15.0 million at the
end of fiscal 2002 to $7.9 million at the end of fiscal 2004.
Page 4 of 6
- Wegener's share price fell from $1.70 per share on May 23,
2003, the day after the Wegener Board repeated its opposition
to the Radyne tender offer, to $1.35 per share on December 23,
2005, a decline of 21%. During this same period of time, the
value of the NASDAQ Telecommunications Index, the industry
peer index with which Wegener, according to Wegener's proxy
statements, chooses to compare itself, increased 39%, while
the overall market as measured by the S&P 500 rose 36%!
WE BELIEVE THAT THE CURRENT BOARD HAS SPENT TOO MUCH TIME ENTRENCHING ITSELF...
The stockholders' rights plan, which was adopted without the approval of Wegener
stockholders, is in our view (and contrary to what management says) NOT in the
best interest of Wegener stockholders. The plan was adopted just after
management's rejection of what they called a "grossly inadequate" offer made by
Radyne, despite the fact that the Wegener Board never met with Radyne to discuss
improving the offer. We believe that the stockholders should have the right to
determine if a proposal is adequate or not.
.. . .WHILE ENRICHING ITS CEO WITH A LARGE STOCK OPTION AWARD IN FISCAL 2005
Robert Placek has served as CEO for over 18 years, and his two sons are also
employed by the company. Wegener's compensation committee granted Mr. Placek a
stock option to purchase 153,000 shares of Wegener's common stock at an exercise
price of $1.29 per share. We have provided a detailed description of the
circumstances regarding this stock grant in Henry's proxy materials on pages 9
through 12. Wegener's compensation committee claims that these stock option
grants were "unrelated to management's performance" but rather "rationally"
related to "history." We believe that, for whatever reason these stock options
were granted, Wegener's historical obligation to Mr. Placek was previously
fulfilled and this option grant to Mr. Placek should be rescinded immediately.
We believe that Mr. Placek should no longer be given rights that Wegener's
stockholders do not have, particularly when those rights are "unrelated to
management's performance." We would rather see a sufficient stock option grant
given to senior management as compensation that is directly related to
performance.
CORPORATE GOVERNANCE MUST CONFORM WITH TODAY'S BEST PRACTICES
We believe that the potential to enhance stockholder value begins with good
corporate governance. Wegener's Board and management team have been dragging
their feet when it has come to implementing the most basic of good corporate
governance practices.
- Management refuses to hold quarterly earnings conference
calls.
- Wegener's Board approved a stockholders' rights plan (poison
pill) without stockholder approval.
- Wegener has a staggered board of directors that perpetuates
entrenchment.
- Wegener's by-laws require the affirmative vote of at least 80%
of the company's voting securities in order for the
stockholders to call a special meeting; we view this as an
unreasonably high hurdle that effectively disenfranchises
stockholders.
Page 5 of 6
- The roles of Wegener's chairman of the board and chief
executive officer are not separate.
- Three of the Board's seven current members work for Wegener.
In our view, this represents an unacceptably high proportion
of management directors.
- There is little or no stock ownership by non-management
directors. In fact, three of the four non-management directors
have no stock ownership in Wegener and the fourth
non-management director owns only 5,000 shares of Wegener.
- There is no separate nominating committee to determine who new
director nominees will be. Instead, the sitting directors have
repeatedly and publicly committed to re-nominate themselves.
MANAGEMENT HAS SHOWN THEY CANNOT GET THE JOB DONE!
IT IS TIME FOR NEW IDEAS!
PLEASE HELP US IN OUR ATTEMPT TO MAKE THE MOST OF WEGENER. WE CANNOT DO IT
WITHOUT YOUR SUPPORT.
YOUR VOTE IS IMPORTANT IN DETERMINING THE FUTURE DIRECTION OF WEGENER. WE
RECOMMEND THAT ALL WEGENER STOCKHOLDERS VOTE "FOR" HENRY'S SLATE OF TWO HIGHLY
QUALIFIED DIRECTORS, WHO ARE COMMITTED TO RESTORING VALUE AT WEGENER, ON THE
GREEN PROXY CARD.
DO NOT SIGN ANY WHITE CARDS IF YOU WANT TO VOTE FOR THE HENRY NOMINEES. If in
fact you return a signed white proxy card, even if you vote against Wegener's
nominees, it will cancel votes on any GREEN card you may have returned
previously. Voting against the Wegener nominees on the white card is not the
same as voting for the Henry Nominees, which must be done on the GREEN proxy
card. If you have any questions about voting your proxy or need additional
information, please contact MacKenzie Partners, Inc., which is assisting Henry
Partners, L.P. in the solicitation of proxies, at (800) 322-2885 or (212)
929-5500.
VOTE FOR THE HENRY NOMINEES ON
THE ENCLOSED GREEN PROXY CARD PLEASE
SIGN, DATE AND RETURN THE ENCLOSED GREEN PROXY CARD TODAY!
LET'S RESTORE STOCKHOLDER VALUE AT WEGENER!
ON BEHALF OF HENRY PARTNERS, L.P.,
[GRAPHIC OMITTED]
DAVID W. WRIGHT
Page 6 of 6
IN CONNECTION WITH WEGENER'S UPCOMING 2006 ANNUAL MEETING, HENRY
PARTNERS, L.P. HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
CIRCULATING A PROXY STATEMENT. WEGENER'S STOCKHOLDERS ARE URGED TO READ THE
PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION. STOCKHOLDERS MAY
OBTAIN A FREE COPY OF THE PROXY STATEMENT AND OTHER MATERIAL AND ANY OTHER
DOCUMENTS THAT MAY BE FILED BY HENRY WITH THE SEC IN CONNECTION WITH THE 2006
ANNUAL MEETING AT THE SEC'S WEB SITE AT WWW.SEC.GOV. WEGENER STOCKHOLDERS MAY
ALSO OBTAIN FREE COPIES OF THE PROXY STATEMENT AND OTHER DOCUMENTS FILED BY
HENRY IN CONNECTION WITH THE 2006 ANNUAL MEETING, INCLUDING INFORMATION ABOUT
THE IDENTITY OF THE PARTICIPANTS IN THE SOLICITATION, WHO MAY BE DEEMED TO
INCLUDE, IN ADDITION TO HENRY, MATTHEW PARTNERS, L.P., HENRY INVESTMENT TRUST,
L.P., CANINE PARTNERS, LLC, DAVID W. WRIGHT AND JEFFREY J. HAAS, AND A
DESCRIPTION OF THEIR HOLDINGS IN WEGENER STOCK, BY DIRECTING A REQUEST TO:
[GRAPHIC OMITTED]
105 Madison Avenue
New York, NY 10016
proxy@mackenziepartners.com
Call collect: (212) 929-5500
OR TOLL-FREE: (800) 322-2885