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Shareholders to Nominate Five Directors to White Electronics Designs Board, Shareholder Group Says

^{Published on 2008-12-11 08:39:08 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Shareholders of White Electronic Designs Corporation (NASDAQ: WEDC) holding approximately 9.9% of the company's outstanding common stock, today announced that they have formed a group to nominate five director candidates for election at the Company's 2008 Annual Meeting of Shareholders. The Group of WEDC Shareholders (or the Shareholder Group) includes Wynnefield Capital, Inc. and its affiliates (the company's third-largest shareholder with approximately 6.3% of the outstanding common shares), and Caiman Partners L.P. and its affiliates (an investor holding approximately 3.6% of the outstanding common shares). The Company's current Board owns less than 3.5% of the voting common shares.

"It is unfortunate that this has become necessary because the current Board is either unwilling or incapable of acting in the best interests of all shareholders. Initiatives by the current Board over the past years have consistently diminished value for shareholders. As long-term shareholders, we have encouraged the Board to conduct its strategic review transparently, but they didn't even disclose or respond to a recent all-cash, fully-financed offer to acquire the Company at a substantial premium. Nor did they respond to a request to fill the Board vacancy by appointing a shareholder possessing both operational and capital markets experience. Thus, reluctantly and only as a last resort, we will put forth a slate of director-nominees with deep operational industry and capital markets experience, as well as a steadfast commitment to preserve and protect value for shareholders," said the Shareholder Group in a statement.

The five director candidates and their biographical information are included as Exhibit 1 to the Group's 13D filing with the U.S. Securities and Exchange Commission (SEC). Full text of the Group's Form 13D filing is available on the SEC's Internet website at [ www.sec.gov ].

Under the current Board, WEDC's common stock has significantly underperformed both its industry peers and the broader market – falling by 76.4% from its five-year high on September 16, 2003, compared to a 62.9% INCREASE in the S&P Aerospace & Defense index and a 16.7% fall in the NASDAQ Composite index.

Meanwhile, the Company has conducted a flawed, time-consuming and failed sales process that excluded many logical strategic buyers at a time when defense-oriented companies like WEDC have received substantial acquisition premiums. That process began in the spring of 2008 under the Company's former CEO Hamid Shokragozar, who resigned in August. The Board did not even form its special committee to review strategic alternatives until that time, according to the Company's August 28, 2008 press release. In September 2008, Kahn Capital Management LLC (KCM) made an all-cash, fully-financed offer to acquire the Company at a purchase price of $6.05 per share – a premium of approximately 28% over its closing price of the prior day. Neither the Board nor its special committee ever responded to KCM's offer or publicly disclosed the offer in an effort to elicit other offers. On November 26, 2008, after two months of silence from the Board and its special committee, KCM's offer, which represented a premium of approximately 70% to the stock's closing price that day, was withdrawn.

Over the past two months, Wynnefield has repeatedly called for the Board to protect shareholders from another failed strategic evaluation process, including the following specific measures: public disclosure of a specific deadline for completion of the analysis by the Board's strategic review committee; disclosure of the committee's recommendations to the Board and shareholders; and postponement of the expensive and distracting CEO search process until completion of the review.

Following Mr. Shokragozar's resignation from the Board, Mr. Brian Kahn of KCM wrote to the Board seeking an appointment as a director to fill the vacancy. Mr. Kahn has extensive and successful experience in capital transactions, electronics, contract manufacturing and defense businesses, and is a significant shareholder of the Company. In response, Wynnefield independently endorsed his appointment to the Board and as a member of the strategic committee in the belief that Mr. Kahn would provide outside shareholders a voice on the Board and facilitate efforts to enhance shareholder value. Those recommendations have largely been ignored by the Board.

The Company has not yet announced the date of its 2008 Annual Meeting.

ABOUT THE GROUP OF WEDC SHAREHOLDERS:

The Group of WEDC Shareholders (or the Shareholder Group) includes Wynnefield Capital, Inc. and its affiliates, and Caiman Partners L.P. and its affiliates. Wynnefield is a long-term shareholder in White Electronics, holding approximately 6.3% of the Company's outstanding common stock, is currently the Company's third-largest shareholder. Established in 1992, Wynnefield Capital, Inc. (WCI) is a value investor specializing in U.S. small cap situations that have company- or industry-specific catalysts. Caiman and its affiliates hold approximately 3.6% of the Company's common shares. Founded in 2003, Caiman focuses on public and private market investments in the consumer, manufacturing, and defense industries.