Improve Calamos

An Introductory Message from ACR Alpine Capital Research (ACR).

January 10, 2012

Dear Fellow Shareholders:

ACR is a significant shareholder in Calamos Asset Management, Inc (“Calamos” or the “Company”) (NASDAQ: CLMS) and we are frustrated with the poor capital allocation decisions the Calamos Board is making on behalf of its shareholders. ACR believes that the Calamos Board is leaving approximately $6.35 in non-core per share shareholder value unrealized (approximately 54% of the end of day 01-09-2012 share price). Not only has the Board failed to distribute this non-core value to its rightful owners (i.e., the public shareholders) the Board also continues to place a significant portion of this value at risk of confiscation by insiders.

The large size of the non-core asset value in relation to the CLMS share price ($6.35 vs. $11.77) and the ability of insiders to confiscate a significant part of this non-core shareholder value greatly concern us. Over the past months, ACR has attempted to engage the Calamos Board in a constructive dialogue regarding the distribution of the Company’s non-core assets in order to rectify these concerns.

Specifically, ACR has requested the Board:

  1. Immediately distribute the $53.9 million Calamos Asset Management, Inc (CAM) cash balance – which is 100% attributable to the public shareholders and 0% attributable to the Calamos Family Partners, Inc and John P. Calamos, Sr. (“insiders”) – in the form of a special dividend. ACR estimates this to be approximately $2.50 per share.
  2. Publicly announce that the monetization of CAM’s Deferred Tax Asset (DTA) –subject to the same conflict-ridden ownership structure as the cash balance in proposal #1 – will continue and that the cash monetized from this strategy will be distributed as a special dividend to shareholders when available.  ACR estimates this to be approximately $0.40 per year for a present value of approximately $2.15 per share.
  3. Perform a strategic review of the capital required to seed new investment vehicles and use the remainder of the Calamos Investments LLC “investment portfolio” of approximately $360 million to pay down debt and distribute the remaining excess capital to shareholders in the form of a special dividend.  ACR estimates this to be approximately $1.70 per share.

To date the Calamos Board has been entirely dismissive of ACR’s attempts to improve the Company. The Board’s dismissive responses have raised significant red flags, and we are increasingly uncomfortable with the company’s direction. The 01-09-2012 downgrade of CLMS shares by a well known brokerage house and the subsequent significant sell-off in the market price show that the market is also quickly losing confidence in Calamos.

We believe it is time to expand the breadth of the debate about Calamos and we have therefore made our most recent letter to the Calamos Board and the Board’s response public. Copies of the letters can be found at the links provided on this website (http://www.improvecalamos.com).

We urge shareholders and interested parties to read the posted material. We are hopeful that with increased public scrutiny, the Calamos Board will take its fiduciary responsibilities more seriously and work towards value realization for all shareholders.

Sincerely,

ACR Alpine Capital Research

 

 

About ACR Alpine Capital Research: ACR is a division of Alpine Investment Management, LLC, an asset management firm whose mission is to protect and maximize its clients’ purchasing power through excellence in fundamental valuation and advice. For more information, please visit www.acr-invest.com.