NTN Buzztime
(AMEX:NTN) shares moved up $0.08, or 9.28%, to $0.94 today after Trinad
Capital disclosed a 6.6% stake and expressed its concern about the
company's future. The activist hedge fund demanded that the chairman of
the board be removed, new members be installed and strategic
alternatives be explored. Shareholders clearly applauded this move with
the stock rising nearly ten percent.
NTN Buzztime provides both
entertainment and hospitality services to bars and restaurants. The
company's main products include the interactive video games that allow
competition between bars and restaurants throughout the United States.
Buzztime also develops guest and server paging systems to enhance
customer service at bars and restaurants. The company's stock has
declined over 30 percent so far this year amid weaker than expected
earnings and profitability forecasts.
Trinad is extremely
concerned about several recent changes that the board made to the
company's bylaws that appear to entrench current management and board
members while impairing shareholder value. Among other things, the
bylaws now prohibit shareholders from calling a special meeting and
imposed advance notice requirements for shareholders wishing to
nominate new members to the board! Obviously, these provisions would
need to be removed in order to open the doors to any potential
strategic transaction to unlock shareholder value.
Fundamentally,
the company has been struggling with worsening margins yet has managed
to increase its cash substantially. This leaves the door open to an
internal move like a share buyback or special dividend or external
acquisition where the buyer could utilize the cash to collateralize a
loan in a leveraged buyout. Clearly, the company is concerned about
this cash as it could be the reason for the new borderline poison pill
requirements imposed on shareholders wishing to take action.
Regardless, this is certainly a great
company to watch!
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