Just as the two other sides were girding for a bloody fight over three board seats in a court-ordered June 17 MiMedx stockholder meeting, ousted 79-year old CEO/board chairman Parker Petit on May 21 filed a new proxy statement seeking to force a second election for another three seats in July, potentially giving him a majority on the board.
We’d previously reported that Petit was running with two mates for three board of directors’ seats which were to have been elected in the delayed 2018 meeting.
His new filing proposed to force the company to hold a July 25 election of three more board members, and to repeal every board decision from October 3, 2018 through then. October 3 was the date on which the board approved new bylaws to fight off a takeover—a move which some say was principally aimed at him.
A document at his personal website indicates that he believes his old boys’ network will put him back in the chairman’s seat:
“[M]any of the larger shareholders of MiMedx are individuals that have known each other for almost ten years…[and] have brought numerous other shareholders to the Company…approximately 50% of our shareholders fall into that category. In addition, there is an investment firm, Okumus Management, that owns approximately 10% of the Company…I expect that as many as 70% of the shareholders will reject the Company’s candidates and vote instead for alternative candidates nominated by shareholders [and] install some new executive managers…”
The stockholder meeting or meetings are only the beginning of a perilous future for MiMedx. Five potentially big events await.
But First, To Recap
Initially, former MiMedx employees had alleged that the company was engaged in channel stuffing of its amniotic tissue derived allografts. A group of Wall Street’s short sellers used those allegations and documents from the subsequent lawsuit to attack MiMedx stock. But when the company’s board of directors looked into the allegations, they announced the following shocking decisions:
- They directed their auditors to restate six years of financial statements because, in their own words, those statements were inaccurate and could not be relied upon by investors. Here’s a link to the SEC filing.
- According to MiMedx board, the financial statements were wrong because of certain sales and distribution practices at two distributors and MiMedx’s inadequate internal accounting practices and controls.
- MiMedx’s Chief Financial Officer, Michael Senken, was fired on June 6, 2018.
- At the board’s insistence, MiMedx’s Chief Executive Officer, Pete Petit, resigned effective June 30, 2018.
- At the board’s insistence, MiMedx’s President and Chief Operating Officer, Bill Taylor, resigned effective June 30, 2018.
Short selling investors, notably Viceroy Research, Aurelias Value and Citron Research, alleged that MiMedx was being investigated by federal law enforcement agencies and had lied to shareholders.
Before his forced resignation, MiMedx’s disputatious CEO Pete Petit engaged in hand-to-hand combat with the short sellers, refuting their allegations and initiating legal action against some of the more vocal and public short sellers.
Channel stuffing, which is a major accounting and legal “no-no”, is where a company books inventory sitting at its distributors as sales—when they are not. It’s a form of fraud.
MiMedx, under its former CEO Pete Petit, adamantly maintained that none of these allegations were true.
In February, however, the company announced that it was indeed under investigation by the U.S. Department of Justice.
Then MiMedx announced that it was unable to file either its 2017 or its Q1 2018 financial results in a timely manner with the SEC.
MiMedx’s market value collapsed from $1.9 billion before February 2017 to $910 million before the audit committee announcement on June 6, ,2018. Today the company’s market value is around $350 million.
