Imation and Clinton Group Intend to Nominate Controlling Slate at Arlington Asset Investment

Arlington Asset Investment Corp. (AI) has received a notice from Imation Corp. acting in concert with a fund affiliated with Clinton Group, Inc., of its intent to nominate a controlling slate of six candidates to stand for election to the company’s eight-member board of directors at the 2016 annual meeting of shareholders.

The Imation Group has represented to the company that it collectively owned less than 0.1% of Arlington’s outstanding common shares at the time that it submitted its notice (10,000 shares of class A common stock owned by Imation and 1,000 shares of class A common stock owned by the Clinton Group), all of which have been acquired since the beginning of March 2016.

The company also announced that it has filed its preliminary proxy statement and related proxy materials for the 2016 annual meeting of shareholders with the SEC recommending that shareholders vote for all of Arlington’s highly qualified director nominees on the white proxy card.

The Arlington nominees on the white proxy card are: Eric F. Billings, J. Rock Tonkel, Jr., Daniel J. Altobello, Daniel E. Berce, David W. Faeder, Peter A. Gallagher, Ralph S. Michael, III and Anthony P. Nader, III.

Arlington issued the following statement:
The Arlington board of directors and management team are focused on creating value for all Arlington shareholders and welcome the constructive ideas and input of shareholders toward advancing that goal.

We believe that shareholders should be very concerned that the Imation Group, which collectively owns less than 0.1% of the company’s shares and only very recently purchased its shares, took this aggressive action prior to ever engaging in any discussions with Arlington. Since Arlington values having an open dialogue with all of its shareholders, we promptly engaged the Imation Group following receipt of their notice – however, to date, the Imation Group has refused to disclose their strategic plan for the company, if any.

According to its public filings, Imation is an IT storage and data security company. In 2015, the Clinton Group won a proxy fight at Imation. Since joining the board on May 20, 2015, Imation’s stock has lost nearly 72% of its value. Imation now trades at just $1.30 with a market capitalization of approximately $48 million as of the close of trading on April 7, 2016, down from a stock price of $4.59 and market capitalization of approximately $196 million on the date that Clinton Group won its proxy contest.

After the Clinton Group’s nominees took control of the board of Imation, the Clinton Group engaged in what we perceive to be questionable self-dealing transactions with Imation, including an agreement for Imation to invest $20 million of Imation’s cash into hedge funds managed by the Clinton Group. As part of that deal, Imation agreed to pay Clinton Group an incentive fee equal to 25% of the investment return, payable in the form of additional Imation shares, to be valued at $1.00 per share, below the current market value of Imation stock. The risks of turning over control of Arlington to the Imation Group’s nominees speak for themselves.
 
We believe that Arlington’s director nominees offer the right balance of experience, skills, leadership and diversity of perspectives to provide expert and independent oversight of the company’s business and strategy.

We look forward to engaging with all of our shareholders and will continue to make decisions and take actions that are in the best interests of the company and our shareholders.

Arlington noted that, once its preliminary proxy is declared definitive by the SEC, the company will mail the definitive proxy statement and related materials, including a white proxy card, to all Arlington shareholders seeking election of all of the Arlington nominees: Eric F. Billings, J. Rock Tonkel, Jr., Daniel J. Altobello, Daniel E. Berce, David W. Faeder, Peter A. Gallagher, Ralph S. Michael, III and Anthony P. Nader, III.