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  "documentTitle": "Dye & Durham Limited (DND)",
  "authorId": "27_Engine_Capital",
  "authorName": "Arnaud Ajdler",
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  "presentationDate": "2024-04-25 00:00:00",
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  "notes": "This is a page from a shareholder letter by Engine Capital.",
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      "kind": "callout",
      "text": "To maximize the value of Dye & Durham, the Board needs to incentivize management to optimize its return on invested capital, focus on organic growth and consider acquisitions in a measured and disciplined way – instead of trying to hit an arbitrary EBITDA target.",
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      "kind": "list",
      "text": "Mismanaging refinancing the Company’s C$345 million convertible: Despite the Company’s best efforts, this debenture is still outstanding and is now trading close to par.",
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      "kind": "list",
      "text": "Misaligned Incentives: Establishing the wrong long-term operational target for the Company: A framework targeting C$1 billion EBITDA incentivizes acquisitions – even if they don’t create shareholder value.",
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      "text": "Dilutive share issuance: The Board authorized repurchasing 14.7 million shares for an average price of C$15.22 per share in fiscal year 2023... and completed a highly dilutive equity issuance of 11.96 million shares at C$12.10 per share in February 2024.",
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      "text": "Incurring unnecessary costs: A combined C$134 million in “acquisition, restructuring and other costs”2 was incurred in fiscal 2021, 2022 and 2023 - representing almost 15% of the Company’s market capitalization.",
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      "kind": "paragraph",
      "text": "Even when synergies and pricing increases are taken into account, the multiples paid for acquisitions are still well above Dye & Durham’s current multiple.",
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      "kind": "paragraph",
      "text": "While we still hope to reach a constructive resolution with the Board, we are increasingly concerned the Board may resort to scorched-earth tactics, including pursuing frivolous legal actions against Engine and other shareholders.",
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      "text": "The Board should proceed with caution, as it would be a grave mistake if the Company took steps to disenfranchise its shareholders. Boards that pursue frivolous legal actions against their own shareholders do so at their own peril.",
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      "text": "2 Acquisition, restructuring and other costs related to professional fees and integration costs incurred in connection with acquisition, divesture, listing and reorganization-related expenses.",
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