Pirate renews call for sale, reduces its own holdings

NORWALK, Conn.--Thomas Hudson, manager of hedge fund Pirate Capital, last week stepped up the pressure on Brink's chief executive officer Michael Dan to do a tax-free split up, while at the same time Hudson sold roughly half of his Brink's shares. Pirate previously owned 8.5 percent of Brink's shares; it now owns 4.5 percent or 2,186,238 shares. According to an Aug. 8 13D filing, Pirate sold 1,992,992 shares and made a distribution to shareholders. Hudson declined to comment on his reason for selling these shares. Hudson, who joined the Brink's board of directors last winter and has repeatedly called for a split-up of Brink's two divisions [cash handling and Brink's Home Security], on Aug. 7 sent a letter to Michael Dan reiterating this demand. He cited a survey by D.F. King & Co [commissioned by Pirate for roughly $25,000, Hudson said] of Brink's 100 largest shareholders, a majority of whom favor a tax-free split. During an Aug. 2 conference call, Dan said the company had hired advisors and undertaken a review of its strategic alternatives and concluded that the company should stay its current course. "I can assure you that our strategic review has and will continue to be a rigorous one. While we remain open to reevaluating our strategic alternatives in the future--particularly in response to significant changes in opportunities and markets--we believe our current strategy is in the best interest of the company and all of its shareholders and we are excited about moving forward in our continuing efforts to build shareholder value," Dan said. Hudson in the letter called on Dan to release advisor analyses in a public filing; suggested that shareholders would likely vote Dan off the board of directors at its 2008 annual meeting if Dan did not change his mind about the tax-free spin off; and wrote that a sale, as opposed to a tax-free split-up of the company, would be lucrative for Dan personally. He even suggested that Dan was spending too much time playing golf and traveling. Brink's spokesman Ed Cunningham said that Dan has not yet responded to the letter. Regarding the release of advisor analyses, on Aug. 14 Hudson said, "Michael was a little arrogant [during the question and answer period of the Aug. 2 call] when he said, 'You don't live in our house.' This suggests he has more information [than the rest of us]. If that's the case, let's share that information." Asked about the golfing comments in the letter, Hudson said he was talking about the golf outing at the annual corporate meeting in May. "I think they should lengthen the time of the meeting and eliminate the golf outing. There's no need for it. It's a throw-back to the '60s." As far as voting Dan off the board, Dan is one of four directors who will be up for re-election in May 2008. Hudson cannot run an alternate slate of directors himself, but he noted that another major shareholder, MMI or Steel Partners for example, may run a slate, and Hudson said he would have "every intention of voting for an alternate slate of reasonable candidates." Hudson said "there is no question" that the company will be split-up and this will be good for Brink's Home Security. "It will allow the company to have a real focus and there will be different ways of incentivizing management to run that business."