Casella Tells Shareholders Why They Should Reject JCP Plan in Proxy Fight

Casella Waste Systems Inc. has made its case to its shareholders to re-elect its slate of existing directors to its board and prevent a possible takeover, as investor JCP Investment Management LLC wants its two director candidates elected at the Nov. 6 meeting.

Rutland, Vt.-based Casella sent a letter to shareholders asking them to vote for John Casella, William Hulligan and James O’Connor. O’Connor is the former chairman and CEO of Phoenix-based Republic Services Inc. who was appointed to the board in July. Hulligan was appointed in September, and is the former chairman and CEO of Progressive Waste Solutions Ltd., Vaughan, Ontario. John Casella is chairman and CEO of Casella Waste.

JCP has indicated that they intend to conduct a proxy contest and seek the election of two director candidates in opposition to Casella board recommendations, according to a news release.

If the three Casella directors are re-elected, the number on the board would total nine. Seven would be independent and four would have joined the board since 2008.

In its letter, Casella Waste describes the JCP group as led by James Pappas, and that it began accumulating Casella shares in May 2014. Casella identified the other JCP board nominee besides Pappas as Brett Frazier.

“Over the past two and a half years, Casella has achieved significant progress and momentum in executing on its strategy, improving its financial and operating performance and growing stockholder value,” the letter states. “As such, we question the judgment and logic of JCP in forcing upon Casella a costly and distracting proxy contest to replace highly qualified, experienced and valued members of your board with its own candidates without providing stockholders with any credible arguments as to why its candidates, one of whom has no waste management industry experience whatsoever and one of whom has never served on a public company’s board of directors, are more qualified than your board’s nominees to drive further stockholder value creation. We do not believe that JCP has proposed any director candidates who have experiences and competencies that would expand the depth and breadth of your Board. Nor has JCP shared with Casella’s management or your board an alternative strategic plan or any specific ideas for improving Casella’s prospects or enhancing stockholder value.”

Casella Waste also pointed out that its board has taken action to improve operating and financial results, and that it’s improving cash flow and reducing leverage.

Casella Waste said it has attempted “on numerous occasions to constructively and in good faith engage with JCP to avoid a proxy contest.”

Casella revealed JCP’s interest in July, saying then that JCP called for three people it named to be placed on the Casella board. JCP also said it had numerous inquires from potential buyers.

Leone Young in her June Business Insights column said industry analysts have pegged Casella’s valuation on a takeover basis within a wide $5-$10 per share.