NEW YORK -- (BUSINESS WIRE) -- Wynnefield Capital, Inc. today called upon Telos Corp. (OTC: TLSRP) to immediately settle the $150 million liability owed to its Exchangeable Redeemable Preferred Stock (“ERPS”) holders. Wynnefield is a 20-year holder of approximately 12% percent of Telos' ERPS. This liability includes $32 million in principal plus $120 million in dividend arrearages built up over twenty years. If redeemed in full, the ERPS would be worth $47/share, as opposed to the approximately $12/share price at which the security currently trades.
“Telos has used a plethora of excuses and maneuvers over the last two decades to avoid paying its ERPS holders the annual dividends and principal clearly owed to them under the terms governing the covenants that accompanied the original ERPS offering,” said Nelson Obus, President of Wynnefield Capital.
A large majority of the outstanding ERPS are held by long-standing investors who, like Wynnefield, have experienced Telos’ continuing avoidance of its funding obligations. Wynnefield estimates that Telos and its ERPS holders together needlessly have spent over $30 million litigating this liability.
“The ERPS holders are united in their resolve to use all available means to ensure that they receive the full payment to which they are legally entitled and that Telos has allowed to accumulate over the past two decades,” continued Mr. Obus. “Until now, Telos' only action to fulfill its financial obligations to the ERPS holders has consisted of the questionable effort to pick off individual holders at prices far below true value. This action should be stopped and the ERPS should be redeemed at their full price.
“Telos has failed to meet its contractual obligations to establish a sinking fund to redeem the ERPS at par plus accrued dividends over a five-year period. The redemption timeframe has long expired. Telos’ excuses for failing to meet these obligations ring hollow.
“It is both ironic and inappropriate that Telos, which has contributed so much to the security of the citizens of our nation and by extension the perpetuation of the values of trust, independence, integrity, and co-operation that have made our country great, should continually engage in evasive and borderline unethical behavior in regard to settling up with their ERPS creditors,” concluded Mr. Obus.
ABOUT WYNNEFIELD CAPITAL, INC
Wynnefield Capital is a 20-year holder of approximately 12% percent of Telos' ERPS. Established in 1992, Wynnefield Capital, Inc. is a value investor specializing in U.S. small cap situations that have company- or industry-specific catalysts.