A New Orleans investor group has broken its negotiated peace with Kansas City, Kan.-based Epiq Systems Inc., setting up a potential battle at the company’s next shareholders meeting.
St. Denis J. Villere & Co., which has a long history of investing in Kansas City area companies, cited “chronic under performance” at Epiq Systems for its own actions.
In a filing with the Securities and Exchange Commission, Villere declared those poor results were an “unfortunate yet predictable result of an unchanging composition” board of directors and management at Epiq.
Epiq traditionally has provided software and services to bankruptcy attorneys and has expanded its business of helping legal teams handle large amounts of documents gained in discovery phases of court cases. Its e-discovery business now accounts for two thirds of its revenues.
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Villere, which owns 14 percent of Epiq’s shares, notified the company it will nominate candidates to fill six of the nine seats on its board of directors. Shareholders will vote at the annual meeting, typically held in June. A meeting date has not been set.
In an emailed statement, Epiq said it was unable to discuss the details of the situation but acknowledged the notice.
“We are aware of Villere’s filing and have received their notice of intent to nominate directors to the Epiq Systems board. Epiq Systems welcomes open communications with its shareholders. We will review the notice carefully and consider any validly submitted nominations in due course. Together with our advisers, we continue to explore a range of strategic and financial alternatives to enhance value for all shareholders.”
The company had announced a review of its strategic and financial options in September 2014.
Analyst Peter Heckmann at Avondale Partners LLC in Overland Park, said Villere’s effort likely would receive significant shareholder support.
“With relatively disappointing results over the past several quarters and no material progress on the company’s strategic review after 15 months, we suspect a majority of Epiq’s shareholders would vote for a competitive slate of directors,” Heckmann wrote in a note to clients Monday.
The challenge from Villere follows a tenuous peace of more than a year that had been struck with a November 2014 agreement. Epiq had agreed to add a new director of Villere’s choosing, expanding the board to its nine members.
That new director also would take part in the review of Epiq’s strategic and financial options, which it had said could include acquisitions, sales of businesses and reverting to private ownership.
The review came about amid pressure from Villere and another investor group, P2 Capital Partners. P2 Capital had made “a proposal” to Epiq but was rejected as it failed to “unlock the company’s long-term value, is inadequate from a financial point of view, and is not in the best interest of the company and its shareholders,” according to Epiq.
Epiq also has seen management changes, including the departure of its president Christopher Olofson in May 2014 and chief financial officer in March 2014. Chief executive Tom Olofson, father of Christopher Olofson, has been in that post since July 1988.
Villere said its push to nominate directors comes because Epiq failed to take any “strategic measures” and its stock price “continues to languish.” It seeks a new board in part to hold “management accountable.”
Villere also owns shares of DST Systems Inc., Euronet Worldwide Inc. and H&R Block Inc., according to its report of holdings as of Sept. 30.