Ampex investor will not support debt restructuring if it dilutes shareholder value

By Lisa Kerner

Charlotte, N.C., Dec. 7 - ValueVest High Concentration Master Fund, Ltd., in a Dec. 6 letter to Ampex Corp.'s board, said any restructuring of the company that dilutes shareholder equity would be a breach of the board's fiduciary duty.

The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

ValueVest said it does support a "reasonable restructuring" that enables Ampex to improve its operations and increases the commercialization of its intellectual property assets.

Ampex and Hillside Capital Inc. are continuing to discuss the possible restructuring of the company's debt to Hillside, the filing stated.

Should the restructuring take place, Ampex will owe Hillside about $14.2 million over the next two years. Meanwhile, the company has the current ability to raise $70 million to $80 million in "commercially sensible transactions" that could close in a few months, according to ValueVest.

"This arithmetic completely ignores the substantial value that we continue to believe the company can and should generate through additional licenses and other monetizations of its intellectual property assets," ValueVest said in its letter.

ValueVest said Ampex has ample resources to raise funds to meet its obligations "without compromising its as yet untapped potential to generate shareholder value by monetizing its intellectual property assets beyond its existing licenses."

The investor said it would use "all available legal avenues and remedies to prevent any dilutive restructuring of the Hillside debt."

ValueVest owns 524,336 shares, or 13.4%, of the Redwood City, Calif., technology licensing company.

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