FrontFour Capital Sends Letter To OM Group Concerning Chronic Underperformance

(RTTNews) - FrontFour Capital Group LLC, a significant shareholder of OM Group, Inc. (OMG), with ownership, together with its affiliates, of over 5% of the company's outstanding shares, has delivered a letter to Joseph Scaminace, OMG's Chairman of the Board and CEO, expressing serious concerns with the Company's performance and destruction of shareholder value.

FrontFour Capital said it has discussed in the letter the clear trend of missed financial targets by OMG as evidenced by the material downward revision of EBITDA guidance twice during 2014 along with the reduction in long term revenue growth expectations.

OMG has generated poor returns on capital while unfortunately continuing to pursue an M&A strategy that has destroyed significant value.  Additionally, OMG has a bloated cost structure, and is significantly overcapitalized given the company's net cash position and the excess cash trapped within working capital, the company said.

FrontFour Capital also believes these cumulative factors have caused the company's shares to significantly underperform both the broader equity markets and its peer group over a sustained period of time.

FrontFour Capital believes OMG is deeply undervalued and a clear path to value creation exists through a cost-cutting opportunity of at least $50 million, the release of $30 million in working capital and a $250 million stock buyback.