Icahn slams AmTrust go-private voting process

AmTrust Financial Services has informed shareholders that "a representative of the company will count the votes and act as an inspector of election" at the company's special meeting next week, which means that the company will act as judge and jury of the shareholder vote on June 4, according to activist investor Carl Icahn.

Generally, especially in contested elections, and because we believe most boards are interested in holding a fair vote, an independent inspector of elections is engaged to tabulate the vote, Icahn noted.

AmTrust wants stockholders to vote "FOR" the company's merger agreement at the special meeting. This would allow Stone Point Capital, the Karfunkel Family, and AmTrust CEO Barry Zyskind to acquire AmTrust equity for $13.50 per share in a transaction valued at approximately $2.7 billion with a view of taking AmTrust private. Evergreen Parent, an entity formed by private equity funds managed by Stone Point Capital would acquire the approximately 45 percent of the company's issued and outstanding common shares that the Karfunkel-Zyskind family and certain of its affiliates and related parties do not presently own or control.

Icahn is seeking support among shareholders to vote against the going private transaction at the “rock bottom price of $13.50 per share”.

Icahn also criticises the fact that a family member, Yehuda Neuberger, appears to sit on the board of directors of the parent of American Stock Transfer & Trust Company, the company's transfer agent who he believes will also be involved in counting the votes.

“Because the Zyskind/Karfunkel families are so obviously conflicted and determined to acquire our shares for less than fair value, it is hardly surprising that they are doing everything they can to take the company private at the low-ball price of $13.50,” Icahn said.

“How can the independent directors, who owe a fiduciary duty of loyalty to all shareholders and in this merger are supposedly acting as the representatives of us, the public shareholders, allow the company to count its own votes?,” he asked.

“Even among dictators, it is only the most corrupt and totalitarian that insist on counting the votes themselves and in private,” Icahn noted.

Furthermore, the "majority of the minority vote" requires the affirmative vote of a majority of the "public shareholders,” Icahn said. Supposedly excluded from the shares that constitute the "public shareholders" are the rollover shareholders, their immediate family members, and trusts or other entities affiliated with the rollover shareholders. However, Icahn is “very concerned that various trusts, charitable organizations and other "non-immediate" family members (such as aunts, uncles, cousins, nephews and nieces) may be included in the majority of the minority vote.

“Millions of AmTrust shares are held within a complex web of interconnected family members, charitable organizations and trusts – many of whom do not expressly appear to be excluded from the public shareholder vote. Whether the company -- when it is counting the votes in private and without any independent oversight -- will exclude these shares from the majority of the minority vote is unclear, at best,” Icahn noted.

The billionaire investor has asked the company and the company's lawyers to clarify which shares constitute the "public shareholders." He called shareholders to request a fair vote by demanding that AmTrust immediately and publicly clarify whether any trusts, charitable organizations or aunts, uncles, cousins, nieces or nephews will be included in the public shareholder vote, by calling the company, at (212) 220-7120.

Activist investor Icahn has filed a lawsuit against AmTrust and the family that controls the company, accusing them of trying to take the insurer private at the wrong time and at the wrong price. Icahn reportedly argued that the going-private deal unfairly benefits the controlling Karfunkel family at the expense of public stockholders.

Icahn describes the deal to take AmTrust private is an “opportunistic ploy to take out the minority shareholders at an extremely cheap price ahead of a period of earnings recovery”.

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