Engine Capital LP, which holds approximately 7.1% of Dye & Durham Limited’s (TSX: DND) outstanding shares, has issued a letter to the company’s Board of Directors expressing concerns about its rising debt and recent acquisitions.
In the letter dated September 11, 2024, Engine Capital criticized Dye & Durham’s Q4 2024 earnings announcement, particularly the acquisition of two companies for C$69.3 million. Engine emphasized that despite assurances from Board Chair Colleen Moorehead that no mergers and acquisitions (M&A) were planned, the company continues to accumulate debt. Engine noted that these acquisitions, although presented with a smaller upfront cost of C$21 million, include C$44 million in deferred payments, further increasing leverage.
Engine expressed frustration that despite continuous feedback from shareholders, dating back to 2022, urging the company to prioritize debt reduction, the Board has ignored these concerns. The letter also highlighted how past actions—such as issuing equity to reduce debt, only to later use proceeds for more acquisitions—have worsened the company’s financial position.
In addition to its financial missteps, Engine raised concerns about Dye & Durham’s unstable management team, citing the recent departure of several key executives. With significant turnover at the top, Engine questioned the wisdom of continuing with acquisitions, no matter how attractive they might seem.
Engine concluded by urging the independent directors to set a date for a Special Meeting so that shareholders can address these issues directly and influence the future direction of the company.
Sincerely,
Arnaud Ajdler
Managing Partner, Engine Capital LP
About Engine Capital
Engine Capital LP is a value-oriented investment firm that engages in active and passive investments in companies undergoing significant change.
