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Tuesday, February 9, 2010

Proxy fight over for USA Technologies

That chant of “U-S-A, U-S-A” coming from Malvern is not for the start of the Winter Olympics on Friday, but the end of a proxy fight.

USA Technologies Inc., bowing to pressure from activist investors, agreed to corporate governance changes and add two directors backed by the dissidents.

Under its agreement with New York investors calling themselves Shareholder Advocates for Value Enhancement, USA Technologies also paid $1.16 million to reimburse the dissident shareholders for their out-of-pocket expenses from the proxy contest.

On Nov. 19, Bradley M. Tirpak, then 40, and Craig W. Thomas, 34, had launched a proxy fight seeking to place three people on USA Technologies’ board.

Their effort had won support from two proxy-advisory firms, which provide recommendations to institutional shareholders on how to vote. Faced with a potential election upset, USA Technologies postponed its Dec. 15 annual meeting until June 15.

Crying foul, SAVE filed a lawsuit against the company in federal court in Philadelphia over the postponement. The agreement reached Feb. 4 ends that litigation and the proxy fight.

The dissidents won two of the nine board seats with USA Technologies appointing Tirpak and the 66-year-old Peter A. Michel, president of iSecureTrac Corp., as directors. Plus, the company agreed to remove an anti-takeover defense by “declassifying” its board. In 2012, all directors will stand for election to one-year terms, rather than staggered terms for its three classes of directors.

USA Technologies won a “standstill” agreement that extends through 2011 and prevents the SAVE group from acquiring more than 10 percent of the outstanding voting shares.

However, calendar is ticking for USA Technologies’ management to show that its systems, which enable people to use credit cards in vending machines or laundries, can turn a profit.

Specifically, the company must post positive earnings before interest, taxes, depreciation and amortization for the quarter ended Dec. 31, 2010, and have at least 100,000 devices connected to its network by year’s end.

If it doesn’t, SAVE can name a third director.

At the end of 2009, USA Technologies said it had connected about 63,000 devices.
Posted by Mike Armstrong @ 11:53 AM  Permalink | File Under: Financial Services | | Technology | 1 comment
Comments   
  • 0 like this / 0 don't   •   Posted 10:05 AM, 02/09/2010
    Everyone in upper management of this company should be in prison for fraud and securities violations.
    — MainLineExRepublican


1 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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