EXHIBIT 1
Sent via Facsimile
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Xx. Xxxxxx Xxxxxxxx
Chairman of the Board of Directors
Penn Treaty American Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
October 29, 2007
Dear Xx. Xxxxxxxx:
This letter is a follow-up to correspondence dated June 8, 2007, between
Monarch Activist Partners (Monarch) and the management and Board of Penn
Treaty American Corp. ("PTA") regarding PTA's inability to file on a timely
basis its Form 10-K for the year ended December 31, 2006. We notified the
Board at that time that we would make our displeasure public if the situation
was not rectified within a reasonable period of time.
Due to continued delays in filing the company's GAAP financials, as well as
the recently announced restatement of prior earnings, we believe it is time
for Penn Treaty's Board of Directors to immediately hire an investment banker
to explore strategic alternatives, including the potential sale of the
company.
Xxxxxxx believes PTA shares are worth north of $10 per share (applying a
conservative 1.0x book value multiple- which would be closer to $11+ based on
an improving book value in 2007) and the only near term way for shareholders
to receive fair value is through the sale of the company. In conversations
with other PTA shareholders as well as professionals in the industry, we
believe that since the company is current in its statutory filings (including
the 2006 Statutory Audit signed off on by XXX Xxxxxxx), a sale of the company
would not be dependent upon the GAAP financials.
We believe PTA's Directors are in breach of their fiduciary responsibility by
letting the financial reporting issues persist indefinitely without pursuing
strategic alternatives. If PTA does not hire an investment banking firm to
pursue alternatives and add shareholder representatives to the board
immediately we intend to take action to unseat the board in the next
shareholders' meeting. We do not make these threats lightly and regret the
board has put its investors in this situation.
Additionally, with the recent resignation of Chairman Xxxx Xxxxxx, a vacancy
exists on the company's board. This vacancy should be filled by a shareholder
of the company and the board should be reconstituted with shareholder friendly
Directors.
Sincerely,
Xxxxx Xxxxxxxx
Managing Partner, Monarch Activist Partners
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated as of October 29, 2007
XXXXXXXX CAPITAL MANAGEMENT LLC
By:
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Xxxxx X. Xxxxxxxx, Manager
MONARCH ACTIVIST PARTNERS LP
By: Xxxxxxxx Capital Management LLC,
its General Partner
By:
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Xxxxx X. Xxxxxxxx, Manager
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