Benzinga | Sep 20, 2021 06:33AM EDT

Rocky Mountain Chocolate Factory Addresses AB Value's Misleading Claims In Letter To Stockholders

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) (the "Company" or "RMCF"), one of North America's largest retailers, franchisers and manufacturers of premium, handcrafted chocolates and confections, today announced that its Board of Directors has sent a letter to stockholders addressing the misleading claims presented by AB Value Management LLC ("AB Value"). The Board's letter reiterated its view that its nominees possess the right skills and experience to support the Company's refreshed growth strategy to drive value for all stockholders.

The RMCF Board urges stockholders to protect the value of their investment by voting FOR all of the Company's nominees on the WHITE proxy card ahead of the Company's 2021 Annual Meeting of Stockholders (the "Annual Meeting"), currently scheduled for October 6, 2021.

The full text of the letter is copied below:

September 20, 2021

Dear fellow Rocky Mountain Chocolate Factory stockholders,

Thank you for your ongoing support of Rocky Mountain Chocolate Factory ("RMCF" or the "Company"). It is our privilege to serve you as Board members, where we are guided every day by our shared commitment to support the Company's growth and enhance long-term value for ALL of our Company's stockholders.

We are pleased to report that that the Company continues to take decisive action to execute its refreshed strategy focused on long-term growth, innovation and delighting customers with premium handmade chocolates and confections. We are navigating the ongoing challenges caused by the pandemic with discipline and focus. Our balance sheet is healthy, our business is delivering strong free cash flow and sales at our stores continue to improve, with most locations operating at or above pre-pandemic revenues.

This an exciting time at RMCF and we are well positioned for long-term growth as we transform our business. We are confident that you, our valued stockholders, will benefit from all that the Board and management are working to accomplish.

As sitting RMCF Board members, we strongly recommend that you vote FOR all Board members nominated by the Company for election at the upcoming Annual Meeting of Stockholders (the "Annual Meeting"), on October 6, 2021.

VOTE THE WHITE PROXY CARD TODAY FOR ALL

OF RMCF'S STRONG DIRECTOR NOMINEES

As you may know, one of the Company's stockholders, AB Value Management LLC ("AB Value") has nominated five candidates for election to the Board. We are disappointed that AB Value has chosen the route of a distracting and expensive contest instead of productive and reasonable engagement.

We are especially concerned that AB Value has refused multiple generous settlement proposals over the last several weeks. It is the view of your Board that this is not how responsible Board members, with a fiduciary duty to you and your best interest, should behave. AB Value's obstinance is costing stockholders. You deserve better.

DO NOT BE MISLED BY AB VALUE'S INACCURATE CLAIMS AND SLANTED INFORMATION

Your Board remains steadfast in our commitment to act in the best interest of ALL stockholders. We feel a duty to inform stockholders of what we believe are misleading claims, inaccurate representations and slanted information in AB Value's public statements.

* AB Value claims that the Company has not negotiated in good faith. This is false. RMCF's Board has engaged in substantial, good-faith dialogue with AB Value for more than two years. We have made every reasonable effort to avoid a disruptive and unnecessary proxy contest. In fact, the Special Committee of the RMCF Board has offered multiple generous settlement proposals in recent weeks, including an offer to cover a substantial portion of the costs AB Value has incurred in its campaign. Yet AB Value continues to refuse to substantively engage with these proposals. AB Value's most recent settlement offer sought majority control of the Board, an unworkable proposition, especially considering the lack of any long-term strategy or any control premium proposed. This is not in stockholders' best interest.

* AB Value claims the Company has rushed its Board nomination process. This is false. The Board has undertaken a thorough and diligent process to identify several new, highly qualified independent directors. The Board formed a Special Committee specifically to oversee this process and engaged a respected, independent search firm to conduct a nationwide search. Also, at the request of AB Value, the Special Committee seriously considered two of its candidates, Mark Riegel and Sandra Taylor, and Mr. Riegel was among the finalists considered. Ultimately, the Special Committee recommended, and the Board selected, two nominees that we believed to be more qualified and better suited to the Board's long-term needs.

* AB Value claims the Company's Board nominees are not qualified. This is false. The Board's nominees bring a broad, diverse and relevant skill set to the Board, specifically suited to support the Company's refreshed growth and transformation strategy. The Company's Board nominees have diverse perspectives, public company experience and strong backgrounds in e-commerce, product innovation, supply chain management, franchising, digital marketing and corporate strategy. Our two new director candidates, Elisabeth Charles and Gabriel Arreaga, will help accelerate the growth-oriented strategy, digital-centered expansion opportunities and customer-centric approach that we believe can deliver meaningful value to stockholders.

* AB Value suggests that the RMCF slate of nominees lacks insight from stockholders. This is false. The Board nominated a nominee from large and constructive stockholder Global Value Investment Corp. (GVIC), Jeffrey R. Geygan, to its slate of director nominees because it believes that Mr. Geygan's experience will be helpful to the Company. The Board values perspective and ideas from all stockholders.

* AB Value claims it is acting in the best interest of all RMCF stockholders. This is false. Stockholders deserve better than an antagonistic public campaign that is unnecessarily expensive, distracting and counterproductive. AB Value's underlying objective - to gain attention and public credit - has come at great cost to our stockholders. AB Value's repeated dismissal of generous settlement proposals show, in our collective view, an action driven by self-interest and not stockholders' best interest.

* AB Value claims that the RMCF Board has "changed its opinion of Mr. Berger" as a director. This is correct, and with good reason. Mr. Berger has been a sitting director of RMCF since January 2020 and has had numerous opportunities since joining the Board to offer constructive input. Yet he has failed to offer any ideas or proposals regarding the Company's strategy. Stockholders should ask why that might be. In addition, we believe that Mr. Berger's track record at Cosi, Inc. should give stockholders serious concerns. At Cosi, Mr. Berger took control of the company, appointed himself as chief executive despite his lack of relevant expertise or industry experience and oversaw the closure of dozens of locations and a bankruptcy filing, the company's second in five years.

VOTE THE WHITE PROXY CARD TODAY FOR ALL OF THE BOARD'S NOMINEES

I am confident that the slate of directors nominated by the Company will constitute a diverse and skilled Board, committed to supporting the Company's transformation strategy. We are eager to continue building on this Company's 40-year legacy to serve you, our valued stockholders. Thank you for your investment in Rocky Mountain Chocolate Factory.

Sincerely,

/s/ Rahul Mewawalla