Privet Fund Management and UPG Enterprises comment on Synalloy’s alarming and irresponsible strategic review announcement


ATLANTA–(BUSINESS WIRE)–Privet Fund Management LLC (together with its affiliates, “Privet”) and UPG Enterprises LLC (together with its affiliates, “UPG” and collectively with Privet, the “Shareholder Group” or “we” or “we” ), who collectively own approximately 24.8% of the outstanding common shares of Synalloy Corporation (NASDAQ: SYNL) (“Synalloy” or the “Company”), today issued the statement below in response to the request of the April 2n/a press release issued by the Company’s Board of Directors (the “Board”) which announced a possible future review of strategic alternatives and misinterpreted a settlement proposal previously shared with the shareholder group.

“As evidenced by Synalloy’s long-term underperformance and track record of dismal execution across its business lines, the case for meaningful change at the top of the company has been around for years – and we believe that they are even more urgent today. Synalloy’s reckless decision to announce a hypothetical future review of strategic alternatives at the height of coronavirus-induced volatility reinforces the urgent need to replenish the board with qualified individuals who have demonstrated expertise in operations, l capital allocation, strategic oversight and corporate governance. We wonder why a group of directors supposedly focused on creating shareholder value would announce now that it’s fine may be sell the business to a future point. We also believe that these same Board members demonstrated their incompetence and inability to evaluate strategic alternatives the last time they evaluated external offers. We are now forced to conclude that this “announcement” is nothing more than a blocking tactic intended to entrench the directors and management team in place and completely mask nearly a decade of poor performance by hiding behind the current market uncertainty.

We also believe shareholders should be aware that Synalloy is blatantly misrepresenting its recent “settlement proposal.” When we engaged with Synalloy last month, we made it clear that any acceptable settlement must include the removal of Craig Bram as CEO and a reconstitution of the board. The subsequent proposal shared by Synalloy’s attorney not only failed to meet these basic requirements, but included non-standard conditions (e.g., no nominee affiliated with the shareholder group allowed to sit on the board) and a long standstill clause that would have entrenched the underperforming management team. and six outgoing directors for several years. This insulting offer, clearly in bad faith, did not include any mention of Mr. Bram, calling into question the loyalty of the board to him or to the shareholders. If Synalloy management couldn’t deliver anything resembling a decent performance over the past decade, during one of the biggest bull markets in history, why should shareholders trust the same group to to create value during the uncertain times ahead?

We also want to take this opportunity to set the record straight in light of Synalloy’s repeated baseless accusations by stating: Privet and UPG are not looking to acquire the company. We are fully focused on upgrading Synalloy’s Board of Directors and implementing a superior operating strategy and revitalized corporate culture that can deliver long-term sustainable value. It seems that realizing there is no defense for Mr. Bram’s failures and the many shortcomings of the board, Synalloy is trying to undermine our campaign to unlock the value trapped in its chronically underperforming assets. by undertaking a series of hollow and irrational actions that clearly run counter to the best interests of shareholders.

Privet and UPG – which have each invested their own capital to acquire approximately 25% of the Company’s shares – are fully aligned with shareholders. We believe in the potential of Synalloy and what the company can become. Fortunately, our nominees bring a wealth of experience and relevant skills well beyond the capabilities of the current board, which includes only one member serving on the board of another public company. The five-member slate we have appointed to the eight-member Board of Directors has a strong vision for value creation focused on improving operational execution, improving sales and channel efficiencies supply chain, increasing management-level accountability and increasing returns on invested capital. Unlike incumbents, we believe our candidates are truly equipped to execute a strategic vision and create lasting value.

Synalloy’s latest transparent effort to distract from the real issues at hand with a hypothetical half-baked scenario in the midst of a global pandemic is unacceptable to us and should be unacceptable to all shareholders. During an uncertain time for society and the broader economy, we believe the board’s ridiculous attempts to prioritize self-preservation and maintain the status quo at all costs provide further evidence that meaningful change is desperately needed at Synalloy.

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CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

Privet Fund LP, together with the other participants named herein (collectively, the “Shareholder Group”), has filed a preliminary proxy statement and a WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly qualified directors at the 2020 annual meeting of shareholders of Synalloy Corporation (the “Company”).

THE SHAREHOLDER GROUP STRONGLY RECOMMENDS ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER SOLICITATION MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. THESE PROXY MATERIALS WILL BE AVAILABLE FREE OF CHARGE ON THE SEC’S WEBSITE AT HTTPS://SEC.GOV. IN ADDITION, PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT FREE OF CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY LAWYER.

Participants in the proxy solicitation are expected to be Privet Fund LP (“Privet Fund”), Privet Fund Management LLC (“Privet Fund Management”), Ryan Levenson, UPG Enterprises LLC (“UPG Enterprises”), Paul Douglass, Christopher Hutter, Andee Harris, Aldo Mazzaferro, Benjamin Rosenzweig, and John P. Schauerman.

As of the date hereof, Privet Fund is the direct beneficial owner of 1,535,507 common shares. Privet Fund Management, as general partner and investment manager of Privet Fund, can be considered the beneficial owner of the 1,535,507 Common Shares beneficially owned by Privet Fund. Mr. Levenson, as Managing Member of Privet Fund Management, may be deemed to be the beneficial owner of the 1,535,507 Common Shares beneficially owned by Privet Fund. As of the date hereof, UPG Enterprises is the direct beneficial owner of 723,401 common shares. MM. Douglass and Hutter, each as a manager of UPG Enterprises, may be deemed to be the beneficial owners of the 723,401 common shares beneficially owned by UPG Enterprises. As of the date hereof, Ms. Harris and Messrs. Mazzaferro, Rosenzweig and Schauerman do not beneficially own any Common Shares.

About Privet Fund Management LLC

Privet Fund Management LLC is a private investment firm focused on investing and partnering with small capitalization companies. The company has flexible long-term capital with the ability to make investments at all levels of the capital structure. Privet was founded in 2007 and is based in Atlanta, GA.

About UPG Enterprises LLC

UPG Enterprises LLC is an operator of a diverse set of industrial businesses focused on metals, manufacturing, distribution and logistics. Our success continues to be driven from within, starting with our dedicated employees who work with a sense of urgency, commitment to customers, and flexibility to do the right thing on the spot without question. With 25 locations across North America, its operations continue to grow with the intention of building a business based on culture, respect and growth. Founded by two families with multi-generational experience in various industries, UPG prides itself on having a long-term approach to business, an entrepreneurial spirit and great teams that represent its family of companies. To learn more, visit www.upgllc.com.

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