ADW Capital Seeks Immediate Sale of PAR Technology

NEW YORK, Oct. 30, 2018 /PRNewswire/ --

Dear Board and Management of PAR Technology Corporation (NYSE: PAR),

Nineteen days have passed since this Board of Directors received our letter expressing concerns regarding the direction of the Company. We urged this Board to explore strategic alternatives and publicly announce its intent to do so. Given we own 10.3% of this Company we are extremely disappointed this Board has yet to issue a response – but not surprised.

Based on the recent S-3 shelf filling, we have concluded that this Board must take immediate steps to proceed with an outright sale of the entire Company immediately and PUBLICLY DISCLOSE ITS INTENTIONS THROUGH ISSUING A PRESS RELEASE. Should this Board neglect such action, management's pattern of gross incompetence could expose the Company to a potential tidal wave of shareholder litigation and additional value destruction.

The failure to respond to our letter shows the noncommittal nature of this Board of Directors, management and the Sammon family – and their intention to avoid any opportunity to sell the Company. The reality is, any normal public company would immediately issue a response to shareholder communications, acknowledging its agreement that the Company is undervalued and its commitment to closing the glaring valuation gap. Instead, the Company went quiet for over fifteen days and compounded the mistake by making a shelf filling – giving the impression to the public that it believes the assets within PAR are fairly valued. It is unacceptable for this Board to keep "a foot in both camps". In fact, pursuing the offering would be a clear indication that this Board is unwilling to take the necessary steps to maximize shareholder value – adding to its track record of failures and strategic blunders.

It appears blindingly obvious to us that this management team and Board of Directors remains beholden to a sentimental agenda that makes no sense from a financial and strategic point of view. We believe that drawing down upon this S-3 shelf filling would be a blatant act of fiscal irresponsibility and reckless behavior. Diluting shareholders at the current market valuation of ~$300mm would be extraordinarily dilutive considering the legacy assets within PAR are worth in excess of the current market cap, ascribing NEGATIVE value to Brink, its burgeoning SaaS business that can be worth many billions of dollars over time.

The assets within PAR are about as undervalued as can be. As stated in our previous letter, we believe that by capitalizing on the payments opportunity and achieving management's near-term installed unit objectives, Brink can generate in excess of $200mm in EBITDA by 2020. This asset alone can be worth over $2 to $4 Billion exiting 2020. Furthermore, the enormous potential of the legacy assets within PAR is irrefutable. These assets generated over $18mm in EBITDA in 2005 AND we believe they can generate over $20mm today if managed efficiently. Should this Board be willing to dilute shareholders at this nonsensical valuation it would demonstrate a continuation of this Company's focus on irrational "empire building".

A close look at the Company's history displays the profile of a nepotistic corporate culture and complete disregard for shareholder value. In fact, we believe John Sammon will attempt to install his daughter, Karen Sammon as CEO of the Company once the SEC investigation closes and use cash from the shelf filing to begin a senseless acquisition spree and misallocation to fitness clubs, losses and other corporate excess rather than focusing on generating shareholder value. While we applaud Karen Sammon for her strong work ethic and identifying and purchasing Brink, we believe her severe lack of qualifications and inexperience to take on the CEO role would only further compound the mismanagement of PAR and its burgeoning SaaS business.

It is disheartening to see a continuation of John Sammon's legacy of poor performance and mismanagement. The enormous value within PAR is undeniable. Clearly, the market must be assigning a "Sammon family discount" given the family's total disregard for minority shareholders. In the course of our investigation, we were amused to discover that Mr. Sammon is often referred to as "Dr. Sammon" – admittedly, one must wonder if Mr. Sammon has spent the last 30+ years writing his PhD dissertation on "how to destroy shareholder value". We estimate that if "Dr. Sammon" had sold his PAR stock in 1982 when the Company went public and simply invested in the S&P, he would be worth over $5.5bn. How can we trust someone to make a decision about minority shareholder wealth when he clearly does not care about creating wealth for himself or has awful track record of doing so?

We believe that if corporate overhead was right-sized and certain assets were restructured, the Company could be generating well in excess of $20mm+ of EBITDA today. The hiring of unqualified family members, exuberant compensation, on-site family-run fitness centers and other fiscally irresponsible decisions have masked the massive cash-flow potential of the Company and have been a distraction. To add insult to shareholder injury, we were appalled to discover that over ten years ago we heard Dr. Sammon received a verbal $400mm buyout offer from a prominent private equity firm and failed to explore further. Ever since, EBITDA has gone from $18mm+ per year to negative and the stock is down materially – these strategic blunders must end now.

The reality is, this management team has suffocated the assets for too long. There are no more excuses for the Company to remain complicit with the status quo – customers, employees and all other stakeholders deserve better and would be in much better hands under different ownership.

Fortunately, notwithstanding chronic mismanagement and strategic blunders, PAR today has incredibly coveted and strategic assets. In fact, we have spoken to several of PAR's competitors and we can confirm their desire to acquire the entire Company should it be put up for sale. A press release indicating the Company's intention to pursue strategic alternatives would invite a whole new universe of potential buyers that wouldn't otherwise know it's up for sale. A public statement also indicates that a historically insular and cavalier company is willing "to cross the rubicon" and take all available steps to maximize shareholder value.

A properly managed sale process can offer a recovery of substantial value for all shareholders and would offer some redemption for the decades of mismanagement and negligence of the minority shareholder. Also, a sale of the company prevents putting intensely dilutive capital in the hands of people who have little to no experience operating a successful business or allocating capital.

We would like to remind the Board of its fiduciary duties to represent the financial interest of ALL PAR shareholders as opposed to the sentimental interests of the Sammon family. Anything less than finally creating substantial value for PAR shareholders, rather than continually paying lip service to it while acting otherwise, is completely unacceptable.                             

We strongly oppose any capital raise that can come in conjunction with this recent S-3 filling and we plan on holding this Board of Directors accountable for any further value destruction resulting from inaction on the matter of a sale of the entire Company immediately.

Sincerely,

Adam D. Wyden

Managing Member of the General Partner, 
ADW Capital Partners, L.P.

Cautionary Statement Regarding Forward-Looking Statements:

The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

SOURCE ADW Capital Partners, L.P.

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