The Surge Components Inc. board of directors in a letter to shareholders Friday fired back at what they called “unqualified” activists waging a campaign to auction off the company in a “fire sale” and oust the company’s co-founders from the board.
The letter from the board of the Deer Park-based company, which supplies electronic components to the energy, automotive and computer industries, comes less than a month before shareholders vote on two of the board’s six seats before the annual shareholder meeting Nov. 22.
The letter, disclosed in a government filing, charged that the activist shareholders, Michael Tofias and Bradley Rexroad, are “ready to exit their positions” and are pushing for a “fire sale” of the company. Tofias and Rexroad “do not understand the complexity of the business” and have no plan beyond selling the company, the board said.
Tofias and Rexroad, who held more than 20 percent of outstanding shares as of the end of September, are seeking election to board seats currently held by chief executive, president and chief financial officer Ira Levy and vice president Steven Lubman. They have been executives and directors since the company’s inception in November 1981.
The activists, who formed a group called Concerned Stockholders of Surge Components Inc., also are urging shareholders to defeat a board proposal for a shareholder rights plan that they describe as a “poison pill.” The proposal would complicate a hostile takeover of the company.
The board’s letter also took issue with the Concerned Stockholders’ view of Surge’s stock performance.
The activists said that in the 20 years preceding Aug. 26, the company’s stock price declined by 85 percent compared to a 375 percent gain by the Standard & Poor’s 500.
By contrast, the Surge board said that since “the industrywide downturn receded in 2008,” Surge shares have increased 1,313 percent, outperforming the S&P 500.
Shares of Surge fell almost 4 percent to close at $1 in over-the-counter trading Friday.
Concerned Stockholders did not respond to requests for comment.