Letter Expresses Several Significant Concerns
and Recommends That Further Investigation is Warranted
Urges Assertio Stockholders to Vote Against
All Directors at Upcoming Annual Meeting in Order to Either
Pressure Current Board to Accept New Stockholder-Recommended
Directors or Force Resignations of Significant Portion
of Board Pursuant to Bylaws
NEW
YORK, May 17, 2024 /PRNewswire/ -- The Buxton
Helmsley Group, Inc. (together with certain of its affiliates,
"BHG" or "we"), a New York
City-based investment fund manager that holds a significant
interest in the common stock shares of Assertio Holdings, Inc.
("Assertio" or the "Company") (NASDAQ: ASRT), today released a
letter from Rumbi B. Petrozzello, a Certified Public Accountant and
Certified Fraud Examiner who previously served as
President of the New York State
Society of CPAs. In the letter, Ms. Petrozello attests to
disclosure failures and deficiencies by Assertio's Board of
Directors, and expresses several significant concerns. She
recommends that further investigation is warranted, but that it
should only be conducted by parties not connected to or selected by
Assertio's Board and management.
Buxton Helmsley released the
letter in conjunction with its campaign to urge Assertio
stockholders to vote "against" all of the Company's director
nominees at the Company's upcoming 2024 annual meeting of
stockholders on May 23, 2024 (the
"Annual Meeting"). BHG strongly believes that significant change to
the Assertio board of directors (the "Board") is necessary in order
to bring about new oversight and reinstate stockholder-like
judgment in the Boardroom. Any stockholders who have already cast
their ballots should immediately call their broker to change their
ballot to reflect a vote "against" all Assertio
directors.
In addition, Assertio stockholders are urged to communicate
their support of BHG's campaign and opposition to the present
Assertio Board via a news release or private letter to the
Board. Letters to the Board may be sent to
investors@assertiotx.com, with a copy to BHG at
asrt@buxtonhelmsley.com.
The full text of the letter is below:
May 15, 2024
c/o Mr. Alexander E. Parker
The Buxton Helmsley Group, Inc.
1185 Avenue of the Americas, Floor 3
New York, N.Y.
10036-2600
Re: Preliminary Report of Opinions – Assertio Holdings,
Inc. ("Assertio" or the "Company")
Dear Mr. Parker,
At your request, I am providing a preliminary report of opinions
after analyzing the various public disclosures filed by Assertio
with the U.S. Securities and Exchange Commission (the
"SEC"), in conjunction with other publicly available data
and materials discovered through the process. I am also
issuing this report after reviewing certain private letters
exchanged between The Buxton Helmsley Group, Inc. ("BHG")
and Assertio.
It should also be noted that I have informally agreed to
potentially serve as a director of Assertio, given my expertise and
concerns related to the Company's disclosures. I further
understand that BHG has proposed my directorship at Assertio (with
BHG indicating it is likely to conduct a solicitation of
stockholders to forcibly effectuate my directorship, if
required). I remain amenable to serving as a director of
Assertio and believe investors would be greatly benefited by such
qualified oversight.
I. QUALIFICATIONS TO GIVE OPINION.
In relation to my qualifications for providing such an opinion
regarding the financial reporting and related disclosures filed by
Assertio, I would like to provide some context. From a
credential perspective, I am a Certified Public Accountant licensed
in both the State of New York and
the Commonwealth of Massachusetts. However, what sets me
apart is my additional qualifications of not only being Certified
in Financial Forensics, but also my standing as a Certified
Fraud Examiner, which brings a unique perspective to
my analysis; more particularly, a distinctive ability to detect
irregularities in disclosures. From an experience
perspective, I began my career at the "big four" public accounting
firms PricewaterhouseCoopers and Deloitte Touche Tohmatsu
Limited. I also have extensive experience serving in
internal, corporate finance positions, including having spent seven
years as the Controller of a real estate investment company, where
I oversaw the financials of funds holding over $500 million in assets. Presently, I am a
Principal of Rock Consulting, LLC, which provides services related
to forensic accounting, including litigation support around
accounting and securities fraud claims. Beyond
serving as a member of the Litigation Services Committee of the
New York State Society of
Certified Public Accountants (NYSSCPA), I also later served as
organization-wide President of the NYSSCPA.
II. OPINION OF PRIVATE CORRESPONDENCE BETWEEN BHG AND
ASSERTIO.
After review of the private correspondence between BHG and
Assertio, I did not believe that any of the BHG questions were
answered. Perhaps vagueness was the goal of the Assertio
correspondence; if that is the case, then Assertio's goal was
achieved. For example, in response to BHG asking why
directors and officers had not purchased shares of Assertio,
Assertio responded that the "interests of the Board and management
team are appropriately aligned with the long-term interests of the
Company's stockholders." In addition, although the Assertio
financial statements are audited by an independent registered
public accounting firm, management is responsible for the financial
statements, and it makes one wonder the cause when a company's
Board and management are unwilling to answer (in writing) such
reasonable questions posed by BHG. I believe BHG's questions
around financial statements are warranted under the
circumstances. To be even clearer, I also believe the evasive
nature of Assertio leadership's responses to BHG's reasonable due
diligence questioning underscores the need for investigation by an
unconflicted party not chosen by present leadership. I,
therefore, also believe it is even further irregular that the
Company appears to have rejected BHG's proposal for adding two
truly unconflicted directors with experience so relevant to the
reasonable concerns raised by BHG.
III. CONCERNS AFTER INITIAL ANALYSIS OF
DISCLOSURES.
My primary concerns after reviewing Assertio's disclosures:
- The value of intangible assets was reported to have dropped
precipitously (approximately 75%) in the mere months following the
acquisition of Spectrum Pharmaceuticals. I believe
investigation is warranted by unconflicted parties (not chosen by
Assertio leadership), not only because of the questionable
admission of sudden asset value depreciation, but also given the
Company's claim that impairment of asset value was evidenced due to
the Company's equity market capitalization dropping below the book
value for equity.[1] Under the
circumstances of Assertio's material contingent liability exposure,
it is difficult to fathom that a decline in equity market
capitalization occurred due to asset value depreciation when a
company (like Assertio) has such contingent liability exposure to
interfere with the open market's valuation of net asset equity
(i.e., concerns over the adequacy of insurance policies to cover
possible ultimate liability resulting from asserted claims,
etc.).
- Despite Assertio's reported net loss at the end of 2023,
due to the impairment of intangible assets, Assertio does appear to
have very sufficient cash holdings and also itself claims to be
"well-funded."[2] It is curious that a
company claims to be so "well-funded," has not accrued any
contingent loss reserves related to material contingent
liabilities. Yet the Company has not repurchased any amount
of common stock in the open market, in addition to directors and
officers not purchasing common stock with personal funds for the
past approximately three years. Given the Company's vague
non-response to BHG's inquiry, in addition to the conflicting
statements and actions, I believe further investigation is
warranted by unconflicted parties not connected to or selected by
Assertio's Board and management.
- BHG questioned whether the fair value of the Company's assets
exceeded the book value of assets, since the accrual of value gains
(beyond the present book value) is disallowed under the Generally
Accepted Accounting Principles ("GAAP") codified at ASC 350
and ASC 360. The Company indicated (within its May 6 private response letter to BHG) that the
response to this question posed by BHG is, indeed, material, which
leads me to further question the Company's failure to disclose such
knowledge under Regulation S-X. While GAAP does not allow for
such (post-acquisition) fair value gains of assets to be accrued,
such material positive circumstances not reflected under GAAP
financial reporting are not only material to the Company's
stockholders, but also to other public market participants,
including potential or actual short sellers of Assertio's traded
capital structure interests. I believe it would be a horrific
shock to short sellers of the Company's traded securities for the
Company to later admit GAAP financial reporting was misleading in
the way of not reflecting a higher true, fair value of assets, and
with that knowledge of materially different financial position not
being disclosed alongside the Company's financial statements.
The Company appears to have knowledge of undisclosed positive
financial circumstances (implicated to be material knowledge by the
Company itself), that would be critically concerning. If that
material omission is indeed the case, it begs the question of what
other material knowledge is not being disclosed by Assertio
insiders.
- I believe the Company has not disclosed a number of items
required for a prudent investor to effectively value the Company's
traded securities. Among other perceived disclosure failures,
the largest apparent disclosure failures in the case of Assertio
would surround the Company's contingent liability exposure.
Such information presently not disclosed by Assertio, but required
by investors to effectively value the Company's financial position,
includes: a) disclosure of claims asserted against Assertio,
which were deemed by insurers to fall outside the scope of
coverage; b) collective monetary damages claimed/asserted by
plaintiffs in pending legal matters; and c) details surrounding the
Company's applicable insurance limits. This information could
shed light on the Company's full circumstances of financial
position, and it is in my opinion highly inappropriate that
Assertio's insiders are able to transact (or refrain from
transacting) in the Company's traded securities with the benefit of
such knowledge, while public shareholders are left to transact in
the Company's securities without such material information.
The Company has referred BHG to existing disclosures, but I am not
convinced that those disclosures are sufficient.
- My concerns are exacerbated by James L. Tyree's refusal to
stand for reelection to the Assertio Board. I believe Mr.
Tyree's resignation in protest of, as reported by the Company, the
board's decision-making over governance matters may signify
deeper-seeded issues and underscores the need for investigation by
additional parties not connected to or selected by Assertio's Board
or management.
IV. CONCLUSION
After my analysis of Assertio disclosures, it is my opinion that
further investigation is warranted. I believe such an
investigation should only be conducted by parties not connected to
or selected by Assertio's Board and management (or any new
directors that could be proposed by the present Assertio Board),
whether that is BHG's proposed director nominees or another
stockholder. Because the current Board appears unwilling to
transparently answer such reasonable questions by an educated
investor conducting due diligence, it would only be prudent for an
inquiry to be conducted by such independent, qualified parties. A
continued resistance by Asssertio's Board and management to provide
clarity to investors posing reasonable questions has even further
increased the necessity of such investigation.
Very truly yours,
Rumbi B. Petrozzello, CPA/CFF, CFE
-------------------------------------------
Stockholders should refer to Buxton
Helmsley's May 13, 2024 news
release introducing its campaign to urge Assertio stockholders
to immediately cast votes "against" all of Assertio
director nominees at the upcoming May
23, 2024 Annual Meeting. If a stockholder has already
cast their ballot, they should immediately call their broker to
change their ballot to reflect a vote "against" all Assertio
directors.
THE FOREGOING INFORMATION MAY ALSO BE DISSEMINATED TO
STOCKHOLDERS VIA TELEPHONE, AND EMAIL AND SHOULD NOT BE CONSTRUED
AS INVESTMENT ADVICE OR AS A SOLICITATION OF AUTHORITY TO VOTE YOUR
PROXY. THE COST OF DISSEMINATING THE FOREGOING INFORMATION TO
STOCKHOLDERS IS BEING BORNE ENTIRELY BY BHG. PROXY CARDS WILL
NOT BE ACCEPTED BY BHG. PLEASE DO NOT SEND YOUR PROXY TO BHG. TO
VOTE YOUR PROXY, PLEASE FOLLOW THE INSTRUCTIONS ON YOUR PROXY CARD
SENT TO YOU BY ASSERTIO.
About Buxton
Helmsley
The Buxton Helmsley Group, Inc. is a
New York City-based investment
advisory firm and fund manager, engaging both active and passive
investment strategies across a range of asset classes, with a
general focus on opportunities in North
America and Europe. The
investment approach is based on deep fundamental analysis and risk
management, with a focus on ensuring disclosure obligations are
being upheld under applicable accounting standards and securities
laws.
Media Contact:
Public Relations and Corp. Comm.
Tel: +1 (212) 561 - 5540, Option 4
press@buxtonhelmsley.com
Cautionary Statement Regarding Forward-Looking
Statements
This press release does not constitute an offer
to sell or solicitation of an offer to buy any of the securities
described herein inany state to any person. The information herein
contains "forward-looking statements". Specific forward-looking
statements canbe identified by the fact that they do not relate
strictly to historical or current facts and include, without
limitation, words suchas "may," "will," "expects," "believes,"
"anticipates," "plans," "estimates," "projects," "potential,"
"targets," "forecasts," "seeks,""could," "should" or the negative
of such terms or other variations on such terms or comparable
terminology. Similarly,statements that describe our objectives,
plans or goals are forward-looking. Forward-looking statements are
subject to variousrisks and uncertainties and assumptions. There
can be no assurance that any idea or assumption herein is, or will
be proven,correct or that any of the objectives, plans or goals
stated herein will ultimately be undertaken or achieved. If one or
more of such risks or uncertainties materialize, or if BHG's
underlying assumptions prove to be incorrect, the actual results
mayvary materially from outcomes indicated by these statements.
Accordingly, forward-looking statements should not be regardedas a
representation by BHG that the future plans, estimates or
expectations contemplated will ever be achieved.
1See Company's Form 10-K filed with the SEC on
March 11, 2024, and its Form 10-Q
filed with the SEC on November 8,
2023.
2See Company's April
2024 presentation titled "Profitable Growth and Cash Flows
from Commercial Pharmaceutical Assets".
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SOURCE Buxton Helmsley Group, Inc.