Adaptec shareholder Steel Partners fires back at legacy directors

By Lisa Kerner

Charlotte, N.C., Oct. 1 - Steel Partners II, LP told fellow Adaptec, Inc. shareholders it is "time to set the record straight" regarding statements made by the company's legacy directors.

According to Steel Partners' lengthy open letter to shareholders on Thursday, Adaptec's directors are trying to distract shareholders from the directors' "record of failure and massive destruction of stockholder value" with "misleading propaganda, half-truths and disinformation."

Steel Partners said that since Subramanian Sundaresh became chief executive officer of Adaptec in November 2005, the company has recorded total operating losses of approximately $270.9 million and net revenue has fallen about 70% to approximately $114.8 million since fiscal year 2006.

On Tuesday, Adaptec asked shareholders not to respond to Steel Partners' consent solicitation and to mark the "Yes, Revoke My Consent" boxes on the gold consent revocation card.

Adaptec said Steel Partners is seeking to remove Sundaresh from the board of directors in order to control the seven-member board without paying a premium to other stockholders, a claim Steel Partners denied.

Steel Partners also denied Adaptec's claim that its efforts to turn the company around are gaining traction and said it fears that the legacy directors will allow management to squander Adaptec's cash resources on "ill-conceived business plans."

"If the legacy directors have their way, the Adaptec board will be comprised of three legacy directors that have overseen substantial value destruction, three inexperienced directors that were handpicked by Mr. Sundaresh and just one stockholder representative," Steel Partners said in its letter to shareholders.

Steel Partners has an approximately 10% interest in Adaptec, a Milpitas, Calif., data storage company, the company said.

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