Avalon Correctional drops consent solicitation against Providence Service

By Lisa Kerner

Charlotte, N.C., March 3 - Providence Service Corp. said Avalon Correctional Services, Inc. has dropped its "disruptive and distracting" consent solicitation against the company.

"We are delighted that Avalon and its controlling stockholder, Donald E. Smith, have finally recognized that continuing their consent solicitation is not in the best interests of ALL Providence stockholders," Providence chairman and chief executive officer Fletcher McCusker said in a company news release.

As previously reported, the Providence Committee for Accountability, which includes Avalon, said it was withdrawing its stockholder consent solicitation after Providence's board of directors unanimously approved changes to the company's bylaws.

Providence's board approved specific corporate governance enhancements including bylaw amendments that adopt and implement a majority standard for the election of directors in uncontested elections, make it easier for stockholders to call a special meeting of stockholders and make it easier for stockholders to nominate candidates for election at the company's annual meetings, a prior company news release said.

Avalon wanted to change Providence's bylaws to prevent the company from, among other thing, obtaining background information on board candidates, Providence said.

Providence previously denied Avalon's request to inspect and copy some of the company's books and records and accused Avalon of conducting a "fishing expedition."

According to McCusker, Providence refused to be bullied into acceding to the demands of one dissident shareholder group.

"Given Don Smith's record of operating Avalon like it was his personal property and his very public record of taking actions, such as voluntarily delisting from Nasdaq and terminating the registration of Avalon's shares, so as to cease being required to comply with the corporate governance and public disclosure requirements imposed by Nasdaq and the SEC, we are confident that our stockholders would have been quick to seriously question his commitment to corporate governance issues and wonder whether this consent solicitation was not being driven by some ulterior motive," McCusker said in Tuesday's release.

Avalon said it also wanted Providence to eliminate the poison pill, staggered board and golden parachutes as well as separate the chief executive officer position from the chairman of the board position.

Oklahoma City-based Avalon owns and operates private community correctional facilities and correctional programming.

Providence is a Tucson-based provider of home- and community-based social services to government-sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.