Ancora Sends Letter to Board of Directors of Avon Protection PLC to Urge an Immediate Review of Strategic Alternatives

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Jun 20, 2023, 02:00 ET

LONDON, June 20, 2023 /PRNewswire/ -- Ancora Alternatives LLC (together with its affiliates, "Ancora" or "we"), the third largest shareholder of Avon Protection PLC (LSE: AVON) ("AVON" or the "Company"), owning approximately 5.1% of the Company's outstanding stock, has today issued the following letter to the Company's Board of Directors to urge an immediate review of strategic alternatives:

June 20, 2023

Avon Protection PLC
Hampton Park West
Semington Road
Melksham Wiltshire
SN12 6NB

The Board of Directors of Avon Protection PLC,

Letter to urge an immediate review of strategic alternatives

70% decline in share price in three years
Significant loss of shareholder value and long-term underperformance
Urgent action critical to protect against uncertain future of the business
Review of strategic options recommended

Ancora Alternatives LLC (together with its affiliates, "Ancora" or "we") is the third largest shareholder of Avon Protection PLC (LSE: AVON) ("AVON" or the "Company"), owning approximately 5.1% of the Company's outstanding stock. Ancora has a long and successful track record of creating value for its portfolio companies through a hands-on investing approach, with the ultimate goal of creating value for the benefit of all stockholders.

Significant loss of shareholder value and continued underperformance

We originally invested in AVON because of the Company's range of market-leading products in respiratory and head protection – vital equipment that protects military and first responder personnel – as well as the robust industry tailwinds for these types of products. We consider AVON's strong relationships with the US Department of Defense ("DoD"), the NATO Support and Procurement Agency ("NSPA"), and the global first responder agencies give the Company a substantial competitive advantage.

However, despite AVON's strong market position, enviable product suite and world class customer roster, the Company has lost more than 70% of its equity value over the last 36 months.

AVON has also significantly underperformed the FTSE 250 along with its Aerospace and Defense peers over the same period, as shown in the Total Shareholder Returns table below:

AVON Total Shareholder Return (TSR)
AVON vs.	YTD	1 Year	2 Year	3 Year
FTSE 250	-16.9 %	-6.1 %	-49.4 %	-78.2 %
A&D Peer Avg.⁽¹⁾	-21.7 %	-22.0 %	-71.0 %	-113.8 %
Source: FactSet as of 6/16/ 2023

Insufficient urgency taken by the Board to address AVON's underperformance

Since becoming a shareholder in AVON, Ancora has engaged in a private dialogue with AVON's Board of Directors (the "Board"), as well as holding multiple meetings with Board Chair Bruce Thompson, to discuss AVON's underperformance, business strategy, historical missteps, executive leadership, governance, and potential avenues to maximize value.

We have intentionally kept our communications private in an effort to maintain a constructive relationship with the Board while AVON's executive leadership transition unfolded.

However, due to the Board's clear failure to date to address our concerns over the future of the Company and the material risks (operational and execution) it faces, we have concluded that we have no alternative other than to express our views publicly.

The Company's half-year earnings, published 23 May 2023, have only heightened our trepidation that AVON's business model is no longer suitable for a standalone public entity. The results merely served to validate our conviction that AVON would be better positioned for long-term success as part of a larger organization that can capitalize on AVON's market-leading positions in the respiratory and head protection industries.

We acknowledge CEO Jos Sclater has started to lay the groundwork to improve accountability, revenue growth, margins, and free cash flow since his appointment to the role, but we estimate there are still meaningful execution risks that could impede value creation as AVON's business is restructured over the next several years. Considering the path to restoring AVON's credibility and public market valuation is long, arduous, and fraught with risk, we believe urgent action is required to secure value for shareholders.

Review of strategic options recommended to secure future of the business

In conclusion, we believe the Board should immediately commence a full and fair strategic alternatives review to maximize value and, critically, prevent further losses for shareholders, which have been significant already. The outcome of this review should be considered, on a risk-adjusted basis, alongside the Board's turnaround plan.

We believe there would be multiple potential strategic acquirers for AVON who would be willing to pay a meaningful premium to the current share price while also presenting a compelling transaction structure that would allow AVON's shareholders to participate if a combination were to be consummated.

Summary and next steps – urgent action advised

As long-term shareholders, we are highly concerned with the sheer magnitude of value destruction that has unfolded under the incumbent Board's stewardship. We believe that the Board, as a matter of urgency, should retain a leading investment bank to commence a review of strategic alternatives in order to maximize shareholder value.

We look forward to your engagement on these matters and your commencement of the necessary course of action.

Sincerely,

Frederick DiSanto James M. Chadwick
Chief Executive Officer and Executive Chairman President and Portfolio Manager
Ancora Holdings Group, LLC Ancora Alternatives LLC

Ancora is publishing this letter solely for the information of other shareholders in AVON. This letter is not an offer to, or solicitation of, any potential clients or investors for the provision by Ancora of investment management, advisory or any other comparable or related services. This letter is provided merely for general informational purposes and is not intended to be, nor should it be construed as (i) investment, financial, tax or legal advice, or (ii) a recommendation to buy, sell or hold any security or other investment, or to pursue any investment style or strategy. Neither the information nor any opinion contained in this letter constitutes an inducement or offer to purchase or sell or a solicitation of an offer to purchase or sell any securities or other investments in AVON or any other company or an offer to arrange any transaction, or to enter into legal relations.

No representation is made as to the accuracy or completeness of any information contained herein, and the recipient accepts all risk in relying on this information for any purpose whatsoever. Without prejudice to the foregoing, any views expressed herein are the opinions of Ancora as of the date on which this letter has been prepared and are subject to change at any time without notice. Ancora does not undertake to update this information. Any forward-looking statements herein are inherently subject to material business, economic and competitive risks and uncertainties which are beyond Ancora's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Nothing in this letter should be relied upon as a promise or representation as to the future.

About Ancora

Ancora Alternatives LLC is the alternative asset management RIA of Ancora Holdings Group, LLC. Founded in 2003, Ancora Holdings Group, LLC offers integrated investment advisory, wealth management and retirement plan services to individuals and institutions across the United States. The firm's comprehensive service offering is complemented by a dedicated team that has the breadth of expertise and operational structure of a global institution, with the responsiveness and flexibility of a boutique firm. For more information about Ancora, please visit https://ancora.net.

Enquiries

Greenbrook
Matthew Goodman / Sofia Newitt
+44 (0)207 952 2000
[email protected]

¹Aerospace and Defense Peers include: CDRE, MSA, BOS-CA, AJRD, AVAV, BAB-LON, BA-LON, BWXT, CHG-LON, CW, DCO, GD, HEI, HXL, HWM, HII, KTOS, LHX, LDOS, LMT, MRCY, MOG.A, NOC, PSN, RADA, RTX, TXT, TDG, TGI

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SOURCE Ancora Alternatives LLC