Another great counterpunch from ACA management.....
BTW was the judge supposed to deliver some sort of ruling by the end of this week?
JT
ACA Sends Letter to Stockholders
Friday December 12, 12:04 pm ET
Urges Stockholders to Reject Mesa's Unsolicited Takeover Attempt
DULLES, Va., Dec. 12 /PRNewswire-FirstCall/ -- Atlantic Coast Airlines Holdings, Inc. ("ACA") (Nasdaq: ACAI - News) today sent the following letter to stockholders in connection with Mesa Air Group Inc.'s ("Mesa") (Nasdaq: MESA - News) consent solicitation. ACA is not including consent revocation cards with its mailing to stockholders, and indicated that it will not do so until a future mailing.
Mesa announced in October 2003 that it would seek to replace ACA's Board of Directors, and recently filed definitive consent solicitation materials with the Securities and Exchange Commission (SEC). ACA has filed materials with the SEC that explain in detail the reasons for the Board's opposition to Mesa's consent solicitation.
The complete text of the letter to stockholders follows:
December 10, 2003
Dear Atlantic Coast Airlines Stockholder:
We are writing to you because Mesa Air Group, Inc. ("Mesa") has announced its intent to solicit your consent to remove the current members of the Board of Directors of Atlantic Coast Airlines Holdings, Inc. ("ACA") and to replace them with a slate of directors handpicked by Mesa. Your Board believes that Mesa is attempting to take control of your company in order to advance Mesa's interests -- with no regard for the serious harm its actions could cause for ACA and its stockholders.
ACA has a truly unique opportunity to use its position at Washington Dulles International Airport to pursue operations as a low-cost carrier, which is a strategy affirmed by ACA's Board after months of careful comparison to the economics and risks of entering into a new, lower margin contract with United Air Lines, Inc. ("United") as part of United's reorganization in bankruptcy. ACA continues to move forward with its plan to become an independent low fare airline, recently ordering 25 new Airbus A320 family aircraft and unveiling its new name, Independence Air. In contrast, nearly 12 months after United entered bankruptcy, United has not yet presented its bankruptcy court with a plan of reorganization and has stated that it still must resolve five major issues and obtain a federal loan guarantee before it will be able to emerge from bankruptcy.
PROTECT YOUR INVESTMENT: DO NOT LET MESA TAKE OVER YOUR COMPANY
DO NOT SIGN ANY WHITE CONSENT CARD SENT TO YOU BY MESA
Mesa has indicated that it will soon start to solicit consents to elect its hand-picked slate of nominees to ACA's Board and that it intends to commence an exchange offer to acquire ACA in a stock-for-stock deal. You should understand that, even if Mesa commences an exchange offer for ACA, Mesa will be under no obligation to complete that offer unless a long list of conditions is satisfied.
Mesa is dependent on companies that are competitors of ACA's Independence Air, and Mesa's directors and officers have a fiduciary responsibility to act in the best interests of Mesa stockholders, not you. Your Board believes that Mesa's consent solicitation asking you to replace the ACA Board is designed primarily to benefit Mesa.
In fact, on November 12, 2003, Mesa and United announced a non-binding memorandum of understanding ("MOU") that proposes new, less favorable terms for ACA to operate as a regional feeder for United. In the MOU, United agreed to increase the fees it pays to Mesa if Mesa's nominees are elected to ACA's Board and approve the terms of the MOU, regardless of whether Mesa ever seeks an acquisition of ACA. Mesa's MOU with United would reward Mesa stockholders, not ACA's stockholders, for the value inherent in ACA.
Although Mesa attempts to portray itself as a concerned ACA stockholder whose interests are aligned with yours, we believe that the MOU gives rise to a significant conflict of interest for Mesa that you should keep in mind when considering Mesa's proposals. Specifically, we believe that Mesa stands to gain far more in direct benefits from the deal that it has negotiated for itself with United than it does from its holdings in ACA.
The ACA Board believes that the only certain outcome from the election of Mesa's hand-picked nominees is that ACA would be under the control of directors whose objectivity is questionable, who have no experience in managing your company and who would have little or no leverage in negotiating with United.
DO NOT TRUST MESA TO ACT IN YOUR BEST INTEREST
Mesa's nominees have little experience in the airline industry. None of them has reported owning any ACA stock, but several of them own Mesa stock and/or have business relationships with Mesa, which could impair their ability to objectively evaluate the terms of a proposed combination with Mesa or a relationship with United. The track record of Mesa CEO Jonathan Ornstein and Mesa's own board members demonstrates questionable corporate governance practices that should raise significant concerns for stockholders, including:
* Mr. Ornstein has engaged Mesa in a series of related party
transactions, enriching him, his partners and his associates, that have
been of dubious value to, or have led to significant losses for, Mesa
and its stockholders. For example, Ornstein and two other Mesa
directors who very recently tendered their resignations from Mesa's
board invested in a partnership that profited from Mesa's acquisition
of CCAir, even though CCAir was later shut down, resulting in a multi-
million dollar pretax charge to Mesa.
* In Mesa's proxy statement for its 2003 annual meeting, Mesa disclosed
that seven of the nine directors serving on the Mesa board at that time
had outside business relationships with Mesa, including serving as
executives or directors of companies that have had dealings with and
have received substantial payments from Mesa.
* Mesa directors and executives, including Ornstein, collectively sold
millions of dollars in Mesa stock in the weeks prior to Mesa's
announcement of its unsolicited interest in ACA, precisely when those
directors and executives could reasonably expect that Mesa's share
price would decline and in contrast to their public statements
regarding the benefit of a merger with ACA.
ACA's Board takes its fiduciary duties to its stockholders seriously. Based on a recent evaluation, Institutional Shareholder Services ("ISS"), the nation's leading provider of proxy voting and corporate governance services, awarded ACA a Corporate Governance Quotient Score that rated ACA higher than 99% of the companies in the S&P SmallCap 600 index and higher than 98.8% of the companies in the transportation group.
ANY ACA-MESA COMBINATION WOULD ENTAIL SIGNIFICANT RISK FOR ACA STOCKHOLDERS
Your Board is suspicious of Mesa's highly conditional indication that it may wish to acquire ACA and believes that Mesa has failed to address the many hurdles and risks presented by an ACA-Mesa combination, including:
* The significant conflicts between the labor contracts of Mesa pilots
and ACA pilots, which could lead to labor force disruptions and
increased labor costs.
* Delta Air Lines' right to terminate ACA's Delta Connection agreement.
If Mesa acquires more than 50% of ACA's stock and Delta then terminates
the Delta Connection agreement, ACA will lose its right to require
Delta to assume its leases on the increasingly costly Fairchild 328
Jets used in ACA's Delta Connection program.
* The synergies suggested by Mesa may not materialize. Mesa has failed
to quantify or even reasonably identify the source of any expected
synergies, or to address how Mesa will achieve efficiencies while
adhering to conflicting pilot agreements and operating eight fleet
types.
* Mesa's agreement with United is non-binding and conditioned upon a
number of factors, including United's emergence from bankruptcy.
WE URGE YOU TO REJECT MESA'S SOLICITATION
Your Board opposes Mesa's consent solicitation. Materials filed with the Securities and Exchange Commission that fully explain the reasons for the Board's opposition are being sent to you with this letter.
Protect your investment. Reject Mesa's consent solicitation and
do not sign any white consent card sent to you by Mesa.
We will soon be sending you a GOLD consent revocation card. We urge you not to sign any consent card sent to you by Mesa, and to instead sign, date and mail the GOLD consent revocation card promptly after you receive it.
If you have any questions about the consent solicitation or need additional information, please contact Georgeson Shareholder Communications, Inc. toll free at 1-800-213-0317 or visit ACA's website at www.atlanticcoast.com.
On behalf of the entire ACA Board, I thank you for your continued support. We are committed to working hard on behalf of all our stockholders.
Sincerely,
/s/ Kerry B. Skeen
Kerry B. Skeen
Chairman and Chief Executive Officer
IMPORTANT
WE STRONGLY RECOMMEND THAT YOU REJECT MESA AND ITS EFFORTS TO TAKE
CONTROL OF YOUR COMPANY. PLEASE LOOK FOR ADDITIONAL MATERIALS FROM ACA,
INCLUDING A GOLD CONSENT REVOCATION CARD, WHICH WILL BE MAILED TO YOU
SOON. PLEASE DO NOT SIGN ANY WHITE CONSENT CARD FROM MESA.
BTW was the judge supposed to deliver some sort of ruling by the end of this week?
JT
ACA Sends Letter to Stockholders
Friday December 12, 12:04 pm ET
Urges Stockholders to Reject Mesa's Unsolicited Takeover Attempt
DULLES, Va., Dec. 12 /PRNewswire-FirstCall/ -- Atlantic Coast Airlines Holdings, Inc. ("ACA") (Nasdaq: ACAI - News) today sent the following letter to stockholders in connection with Mesa Air Group Inc.'s ("Mesa") (Nasdaq: MESA - News) consent solicitation. ACA is not including consent revocation cards with its mailing to stockholders, and indicated that it will not do so until a future mailing.
Mesa announced in October 2003 that it would seek to replace ACA's Board of Directors, and recently filed definitive consent solicitation materials with the Securities and Exchange Commission (SEC). ACA has filed materials with the SEC that explain in detail the reasons for the Board's opposition to Mesa's consent solicitation.
The complete text of the letter to stockholders follows:
December 10, 2003
Dear Atlantic Coast Airlines Stockholder:
We are writing to you because Mesa Air Group, Inc. ("Mesa") has announced its intent to solicit your consent to remove the current members of the Board of Directors of Atlantic Coast Airlines Holdings, Inc. ("ACA") and to replace them with a slate of directors handpicked by Mesa. Your Board believes that Mesa is attempting to take control of your company in order to advance Mesa's interests -- with no regard for the serious harm its actions could cause for ACA and its stockholders.
ACA has a truly unique opportunity to use its position at Washington Dulles International Airport to pursue operations as a low-cost carrier, which is a strategy affirmed by ACA's Board after months of careful comparison to the economics and risks of entering into a new, lower margin contract with United Air Lines, Inc. ("United") as part of United's reorganization in bankruptcy. ACA continues to move forward with its plan to become an independent low fare airline, recently ordering 25 new Airbus A320 family aircraft and unveiling its new name, Independence Air. In contrast, nearly 12 months after United entered bankruptcy, United has not yet presented its bankruptcy court with a plan of reorganization and has stated that it still must resolve five major issues and obtain a federal loan guarantee before it will be able to emerge from bankruptcy.
PROTECT YOUR INVESTMENT: DO NOT LET MESA TAKE OVER YOUR COMPANY
DO NOT SIGN ANY WHITE CONSENT CARD SENT TO YOU BY MESA
Mesa has indicated that it will soon start to solicit consents to elect its hand-picked slate of nominees to ACA's Board and that it intends to commence an exchange offer to acquire ACA in a stock-for-stock deal. You should understand that, even if Mesa commences an exchange offer for ACA, Mesa will be under no obligation to complete that offer unless a long list of conditions is satisfied.
Mesa is dependent on companies that are competitors of ACA's Independence Air, and Mesa's directors and officers have a fiduciary responsibility to act in the best interests of Mesa stockholders, not you. Your Board believes that Mesa's consent solicitation asking you to replace the ACA Board is designed primarily to benefit Mesa.
In fact, on November 12, 2003, Mesa and United announced a non-binding memorandum of understanding ("MOU") that proposes new, less favorable terms for ACA to operate as a regional feeder for United. In the MOU, United agreed to increase the fees it pays to Mesa if Mesa's nominees are elected to ACA's Board and approve the terms of the MOU, regardless of whether Mesa ever seeks an acquisition of ACA. Mesa's MOU with United would reward Mesa stockholders, not ACA's stockholders, for the value inherent in ACA.
Although Mesa attempts to portray itself as a concerned ACA stockholder whose interests are aligned with yours, we believe that the MOU gives rise to a significant conflict of interest for Mesa that you should keep in mind when considering Mesa's proposals. Specifically, we believe that Mesa stands to gain far more in direct benefits from the deal that it has negotiated for itself with United than it does from its holdings in ACA.
The ACA Board believes that the only certain outcome from the election of Mesa's hand-picked nominees is that ACA would be under the control of directors whose objectivity is questionable, who have no experience in managing your company and who would have little or no leverage in negotiating with United.
DO NOT TRUST MESA TO ACT IN YOUR BEST INTEREST
Mesa's nominees have little experience in the airline industry. None of them has reported owning any ACA stock, but several of them own Mesa stock and/or have business relationships with Mesa, which could impair their ability to objectively evaluate the terms of a proposed combination with Mesa or a relationship with United. The track record of Mesa CEO Jonathan Ornstein and Mesa's own board members demonstrates questionable corporate governance practices that should raise significant concerns for stockholders, including:
* Mr. Ornstein has engaged Mesa in a series of related party
transactions, enriching him, his partners and his associates, that have
been of dubious value to, or have led to significant losses for, Mesa
and its stockholders. For example, Ornstein and two other Mesa
directors who very recently tendered their resignations from Mesa's
board invested in a partnership that profited from Mesa's acquisition
of CCAir, even though CCAir was later shut down, resulting in a multi-
million dollar pretax charge to Mesa.
* In Mesa's proxy statement for its 2003 annual meeting, Mesa disclosed
that seven of the nine directors serving on the Mesa board at that time
had outside business relationships with Mesa, including serving as
executives or directors of companies that have had dealings with and
have received substantial payments from Mesa.
* Mesa directors and executives, including Ornstein, collectively sold
millions of dollars in Mesa stock in the weeks prior to Mesa's
announcement of its unsolicited interest in ACA, precisely when those
directors and executives could reasonably expect that Mesa's share
price would decline and in contrast to their public statements
regarding the benefit of a merger with ACA.
ACA's Board takes its fiduciary duties to its stockholders seriously. Based on a recent evaluation, Institutional Shareholder Services ("ISS"), the nation's leading provider of proxy voting and corporate governance services, awarded ACA a Corporate Governance Quotient Score that rated ACA higher than 99% of the companies in the S&P SmallCap 600 index and higher than 98.8% of the companies in the transportation group.
ANY ACA-MESA COMBINATION WOULD ENTAIL SIGNIFICANT RISK FOR ACA STOCKHOLDERS
Your Board is suspicious of Mesa's highly conditional indication that it may wish to acquire ACA and believes that Mesa has failed to address the many hurdles and risks presented by an ACA-Mesa combination, including:
* The significant conflicts between the labor contracts of Mesa pilots
and ACA pilots, which could lead to labor force disruptions and
increased labor costs.
* Delta Air Lines' right to terminate ACA's Delta Connection agreement.
If Mesa acquires more than 50% of ACA's stock and Delta then terminates
the Delta Connection agreement, ACA will lose its right to require
Delta to assume its leases on the increasingly costly Fairchild 328
Jets used in ACA's Delta Connection program.
* The synergies suggested by Mesa may not materialize. Mesa has failed
to quantify or even reasonably identify the source of any expected
synergies, or to address how Mesa will achieve efficiencies while
adhering to conflicting pilot agreements and operating eight fleet
types.
* Mesa's agreement with United is non-binding and conditioned upon a
number of factors, including United's emergence from bankruptcy.
WE URGE YOU TO REJECT MESA'S SOLICITATION
Your Board opposes Mesa's consent solicitation. Materials filed with the Securities and Exchange Commission that fully explain the reasons for the Board's opposition are being sent to you with this letter.
Protect your investment. Reject Mesa's consent solicitation and
do not sign any white consent card sent to you by Mesa.
We will soon be sending you a GOLD consent revocation card. We urge you not to sign any consent card sent to you by Mesa, and to instead sign, date and mail the GOLD consent revocation card promptly after you receive it.
If you have any questions about the consent solicitation or need additional information, please contact Georgeson Shareholder Communications, Inc. toll free at 1-800-213-0317 or visit ACA's website at www.atlanticcoast.com.
On behalf of the entire ACA Board, I thank you for your continued support. We are committed to working hard on behalf of all our stockholders.
Sincerely,
/s/ Kerry B. Skeen
Kerry B. Skeen
Chairman and Chief Executive Officer
IMPORTANT
WE STRONGLY RECOMMEND THAT YOU REJECT MESA AND ITS EFFORTS TO TAKE
CONTROL OF YOUR COMPANY. PLEASE LOOK FOR ADDITIONAL MATERIALS FROM ACA,
INCLUDING A GOLD CONSENT REVOCATION CARD, WHICH WILL BE MAILED TO YOU
SOON. PLEASE DO NOT SIGN ANY WHITE CONSENT CARD FROM MESA.
