FORT LAUDERDALE, Fla., Jan. 16 /PRNewswire-FirstCall/ -- Parlux
Fragrances, Inc.'s ("Parlux") (Nasdaq: PARL) Board of Directors today sent
the following open letter to Parlux stockholders in connection with Glenn
H. Nussdorf's consent solicitation urging them not to support his
proposals:
January 16, 2007
Dear Fellow Parlux Stockholder:
As you may be aware, Glenn H. Nussdorf has filed preliminary consent
solicitation materials with the Securities and Exchange Commission (SEC)
in an effort to remove without cause all members of your duly-elected
Board of Directors, all of whom were just elected at our last annual
meeting in October. Mr. Nussdorf intends to install his hand-picked
nominees, including himself and a number of his business associates, on
your Board. If successful, Mr. Nussdorf would take control of your
Company without paying you any control premium for your shares. We
believe that his actions would significantly jeopardize the value of your
investment in Parlux.
There is absolutely no reason for stockholders to act hastily. Parlux
has generated an approximate 29% and 55% compound annual return to
stockholders, over the last three and four year periods, respectively.
While the Company has been working through some challenges over the past
several months, we are optimistic in our core brand portfolio's growth
prospects. Don't let Mr. Nussdorf disrupt our progress -- we urge you NOT
to support his proposals and NOT to sign the white consent card.
WHO IS GLENN NUSSDORF?
Mr. Nussdorf is no professional shareholder activist looking out for
the interests of fellow stockholders. In fact, Mr. Nussdorf is a major
player in the fragrance industry and his attempt to wrestle away control
of Parlux seems to be uniquely self-serving:
- Mr. Nussdorf and his brother Stephen Nussdorf currently own an
aggregate 45% of E Com Ventures, Inc.,(ECMV), the publicly-
traded holding company for Perfumania and perfumania.com, a specialty
retailer of fragrances and a wholesale supplier to other retailers. In
November 2006, Mr. Nussdorf and his brother disclosed their intention to
increase their ownership of ECMV to 80.90% through a non-cash merger
with Model Reorg, Inc., another entity owned entirely by the Nussdorf
family.
- Mr. Nussdorf is the Chief Executive Officer of Quality King
Distributors, Inc., a private company that distributes pharmaceuticals,
health and beauty care products and fragrances to drug store and grocery
chains, grocery distributors and wholesale clubs throughout the United
States. Quality King is wholly-owned by Mr. Nussdorf and his family and
has extensive business relationships with ECMV and its subsidiaries.
Quality King is a direct competitor of Parlux in certain segments of the
fragrance market.
- Perfumania purchases a large portion of its inventory from Parlux.
According to ECMV's most recent 10-Q filed with the SEC, ECMV and
Perfumania are dependent upon extended payment terms from Parlux and
others for much of their liquidity during the year. We believe that
controlling the Board of a major source of liquidity to ECMV would be
beneficial to Mr. Nussdorf's other interests and potentially detrimental
to the interests of Parlux's stockholders.
- In May 2003, Mr. Nussdorf, his family members and a member of Parlux's
senior management sought to acquire Parlux in a transaction valued at
approximately $40 million. However, after considerable due diligence
and gaining important knowledge regarding Parlux's operations, Mr.
Nussdorf was unable to secure the necessary financing. For the reasons
stated below, Mr. Nussdorf similarly now may not have adequate financial
resources to make a bona fide proposal to purchase the Company.
DON'T LET MR. NUSSDORF SEIZE CONTROL OF YOUR COMPANY
WITHOUT BUYING YOUR SHARES
We believe Mr. Nussdorf's conduct to date demonstrates that his
proposed consent solicitation is nothing more than a blatant attempt to
steal control of Parlux without compensating you -- the true owners of the
Company. Additionally, should he gain control, we believe that Mr.
Nussdorf will be in a position to undertake initiatives that will benefit
him and his affiliates at the expense of all other Parlux stockholders.
For almost three months, Mr. Nussdorf has been saying that he is
"exploring the possibility of making an acquisition proposal for Parlux,"
yet he is seeking to gain operating control of Parlux with only a modest
investment in your Company. As mentioned above, Mr. Nussdorf tried to buy
Parlux once before and could not come up with adequate financing. Now he
is attempting to take control of your company without paying stockholders
a single cent. We urge stockholders to ask themselves, if Mr. Nussdorf
was serious about maximizing long-term value for all Parlux stockholders,
why isn't he willing to pay you a control premium for control of your
Company?
Further, we believe that if Mr. Nussdorf intends to make a proposal to
acquire Parlux, the interests of Parlux stockholders are best served if
that proposal is considered by your current Board of Directors, a majority
of whom are independent, rather than his own hand-picked nominees, all but
one of whom are business associates of Mr. Nussdorf or his affiliates.
In fact, we believe Mr. Nussdorf may not have the financial resources
to make a bona fide proposal to purchase the Company. In 2003, Mr.
Nussdorf was forced to withdraw an approximately $40 million acquisition
proposal for Parlux because he was unable to obtain adequate financing.
In addition, consider how he financed the purchase of Parlux shares.
Based on Parlux's closing stock price on Friday, January 12, 2007 of $6.14
and Mr. Nussdorf's recent public filings, approximately 44% of his
interest in Parlux (approximately $5.4 million of his total investment,
not including the shares held by his mother) was acquired on margin.
Finally, Mr. Nussdorf has disclosed that his hand-picked nominees
intend to appoint him as Chairman of the Board and CEO of Parlux. While
Mr. Nussdorf states his belief that the majority of these nominees will be
independent of Parlux for NASDAQ purposes, ask yourself if you believe
they are independent of Mr. Nussdorf. As noted above, Mr. Nussdorf's own
SEC filings disclose that all but one of his hand-picked nominees are
business associates of Mr. Nussdorf or his affiliates. Does Mr. Nussdorf
really expect you to believe that his slate will exercise any real
independent oversight of his actions?
DON'T GIVE MR. NUSSDORF AND HIS GROUP OF COMPANIES
AN UNFAIR ADVANTAGE OVER OTHER PARLUX CUSTOMERS
TO THE DETRIMENT OF PARLUX STOCKHOLDERS
Should Mr. Nussdorf gain control of Parlux, he will be in a position
to provide his other business ventures with a competitive advantage over
other Parlux customers. Stockholders should be aware that with operating
control of Parlux, Mr. Nussdorf and his affiliates will gain control of
the manufacturing and distribution of perfume products, while also having
a significant interest in Perfumania, one of Parlux's largest customers.
Furthermore, through the Model Reorg-ECMV merger, Mr. Nussdorf is
attempting to consolidate his economic interest in ECMV, the publicly-
traded parent company of Perfumania. We would also remind you that,
regardless of whether the Model Reorg-ECMV merger is approved, he will
have a significantly greater economic interest in ECMV and Perfumania than
he would in Parlux. Ask yourself: Can Mr. Nussdorf and his nominees
effectively represent your interests when the vast majority of his time
and wealth is invested in entities whose interests are not necessarily
aligned with those of Parlux and its stockholders?
PARLUX IS COMMITTED TO ENHANCING VALUE FOR ALL STOCKHOLDERS
Your Board and management are confident that we have the right
strategy in place to create long-term value for all Parlux stockholders.
We are optimistic about our core brand portfolio's growth prospects.
Moreover, we also believe that our present licensors may be reluctant to
renew their licenses to Parlux if Mr. Nussdorf is running the Company.
Our continued commitment to enhancing stockholder value is reflected
in the Board's decision to adopt another common stock buy-back program of
up to ten million shares, subject to price and other limitations. Over
the course of the last ten years, the Company has authorized and
successfully completed numerous common stock buy-back programs, totaling
more than 50% of its outstanding shares. We continue to believe the
repurchase of our stock represents a compelling investment opportunity and
is a prudent use of our capital.
PROTECT YOUR INVESTMENT IN PARLUX, REJECT MR. NUSSDORF'S PROPOSALS
We are confident Parlux stockholders will see Mr. Nussdorf's actions
for what they are -- a transparent attempt to seize control of your
Company in order to further his own private business interests without
properly compensating you for your investment. We urge all Parlux
stockholders NOT to sign any consent card that you may receive from Mr.
Nussdorf. Regardless of the number of shares you own, your support is
important to us.
Thank you.
On behalf of the Board of Directors,
/s/ Ilia Lekach
Ilia Lekach
Chairman and Chief Executive Officer
Parlux Fragrances, Inc.
WE URGE YOU TO DISCARD ANY WHITE CONSENT CARDS
THAT YOU MAY HAVE RECEIVED FROM GLENN H. NUSSDORF
If you have any questions, please call MacKenzie Partners
at the phone numbers listed below.
105 Madison Avenue
New York, NY 10016
proxy@mackenziepartners.com
(212) 929-5500 (call collect)
(800) 322-2885 (toll free)
About Parlux Fragrances, Inc.
Parlux Fragrances, Inc. is a manufacturer and international distributor
of prestige products. It holds licenses for Paris Hilton fragrances,
watches, cosmetics, sunglasses, handbags and other small leather
accessories in addition to licenses to manufacture and distribute the
designer fragrance brands of GUESS?, XOXO, Ocean Pacific (OP), Maria
Sharapova, Andy Roddick, babyGund and Fred Hayman Beverly Hills.
Additional Information
This information is being furnished on behalf of Parlux by its Board of
Directors. Parlux will be sending definitive consent revocation
solicitation materials to shareholders of record on the record date. The
information contained in those materials is important to the interests of
shareholders, including information required to be presented about the
participants in the consent revocation solicitation. You may obtain a copy
of the preliminary consent revocation materials on form PRE14A, filed with
the SEC on January 16, 2007, and the definitive consent revocation
materials, when filed, free of charge at the SEC's website at http://www.sec.gov.
Parlux will also provide you with a copy of these materials without charge
by directing your request to Parlux Fragrances, Inc. Attention: Corporate
Secretary.
Parlux and its directors are participants in a solicitation of proxies
for Parlux's consent revocation solicitation. Information regarding these
participants and their interests is contained in a filing under Rule 14a-12
filed by Parlux with the Securities and Exchange Commission on January 8,
2007.
Certain Information Regarding Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, regarding,
among other things, our plans, strategies and prospects, both business and
financial. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance
or achievements of Parlux or its industry to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. These risks and uncertainties include,
among others, future trends in sales and Parlux's ability to introduce new
products in a cost-effective manner, general economic conditions and
continued compliance with the covenants in our credit facility. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date thereof. Parlux undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
SOURCE Parlux Fragrances, Inc.
 back to top
Related links:
http://www.parlux.com
http://www.prnewswire.com/comp/674987.html/
CONTACT:
Dan Katcher, or Steve Frankel,
+1-212-355-4449, both of Joele Frank, Wilkinson Brimmer Katcher
|
