Voce Capital to Continue Monitoring Harmonic Inc.

Adoption of Several of Voce’s Proposals Sufficient Progress – For Now

SAN FRANCISCO--()--Voce Capital Management LLC (“Voce”) announced today that it continues to monitor events at Harmonic Inc. (“Harmonic”) (Nasdaq:HLIT), which recently enacted some of the capital allocation and corporate governance changes sought by Voce.

After months of quiet but inconclusive dialog with Harmonic, on February 22, 2013 Voce sent a public letter to the Board, calling for it to “return a substantial amount of capital to shareholders – a minimum of $100 million – through a tender offer that significantly reduces shares outstanding,” and to pursue Board reform to address corporate governance deficiencies. In the face of the Company’s continued inaction, on Friday April 19 Voce nominated three distinguished candidates for election to Harmonic’s Board at the 2013 annual meeting. The nomination notice identified the directors which Voce intended to remove, including Harmonic’s entrenched Chairman. The next business day (April 22), Harmonic made two major announcements, despite the fact that its earnings call was scheduled for the following day (April 23): the commencement of a $100 million Dutch auction tender offer and the sudden resignation of its Chairman.

Voce argued in its February 22 letter that in addition to retiring a significant number of the Company’s outstanding shares a “large tender also signals real confidence to the market, which will support the stock and lend credence to management’s stated opinions about the Company’s future growth potential.” Harmonic’s stock has appreciated nearly 20% since the tender was announced, and recently made a series of new 52-week highs.

J. Daniel Plants, Voce’s Managing Partner, said, “Harmonic’s grudging acceptance of our proposals – including the sale of the access business, a large tender offer and the beginnings of board reform – has, as expected, begun to unlock shareholder value. While much work remains for Harmonic to do on all fronts, this marks at least some progress.” Voce has therefore decided it need not pursue a proxy contest at the upcoming annual meeting.

Mr. Plants continued: “We rejected recent proposals by the Company to enter into a settlement in exchange for Harmonic’s public acknowledgement of our contributions. Such a confirmation by Harmonic would not only be superfluous – the chronology speaks for itself – but we did not want to restrict our ability to seek further changes for the benefit of all shareholders should the Company revert to its previous ways. Harmonic has promised investors much better results in the second half of 2013; should that not materialize more significant changes may lie in store.”

About Voce Capital Management

Voce Capital Management LLC is an employee-owned investment manager and the adviser to Voce Catalyst Partners LP, a private investment partnership.

Contacts

Voce Capital Management LLC
J. Daniel Plants, 415-489-2601
Managing Partner

Release Summary

Voce Capital announces that it continues to monitor events at Harmonic Inc., which recently enacted some of the capital allocation and corporate governance changes sought by Voce.

Contacts

Voce Capital Management LLC
J. Daniel Plants, 415-489-2601
Managing Partner