Reliable Support of Dell Appraisal Rights
Clarifying what is offered
Progress with process
Approaching the deadline for reserving appraisal rights prior to
Dell’s July 18 special meeting, we have been making good progress with
the newly organized Dell Valuation Trust’s administrative management
of shareholder demands
and also with our development of broader plans for support of these
This progress was slowed, however, by the need to address confusion
resulting from my inadequate explanations of the support plans.
Clarifying what is offered
with an apology for the confusion, it must be stated clearly that the
only thing being offered now by the Dell Valuation Trust is a service
to process the formal demand required to reserve a shareholder’s
appraisal rights. My statement last week that the Trust’s processing
of the demand would “make the rights eligible for assignment to the
Trust” was intended to assure Trust recognition of the validity of
those rights for whatever support arrangements might be offered in the
future. Lapsing into patterns of communication common among financial
professionals, I neglected to explicitly state that since no other
arrangements had yet been defined, either for services or for
investment, there was nothing else being offered beyond the specified
inadequacy of my explanation, unfortunately, allowed further confusion
to develop as rumors spread and a blogger reported them without
bothering to investigate.
As we go forward, I encourage you to help prevent similar diversions
by telling me immediately about anything that needs to be clarified.
reason we developed a service supporting the processing of the written
demands required to secure appraisal rights was that we were aware of
the challenges encountered by many investors. In the absence of
standardized procedures, a beneficial shareholder has to find someone
at the account’s broker or custodian who can find out how to deliver
the right form of instructions to the registered stockholder,
Depository Trust Company (“DTC”), for the execution of a letter that
can be delivered to the company. Those with experience allow ten
business days, but consider it risky to count on that.
the circumstances, we met this week with senior management
representatives of DTC’s parent, The Depository Trust & Clearing
Corporation, who have agreed to guide our development of efficient,
reliable arrangements for timely processing of the demand letters. We
are naturally very grateful for their help, and particularly for their
rescheduling of busy people to accommodate the July 18 deadline for
establishing marketability of investor interests in appraisal rights
is simple in theory, doing anything for the first time is necessarily
complicated. And it is naturally important to get it right. This means
that we have been considering a wide range of possible solutions to
virtually every element of it, and we are still refining the design. I
will be continuing to seek your views of what has value to you, but I
will not be able to report what will be offered until I am satisfied
that it is designed as well as it can be, and Bingham McCutcheon is
satisfied with the way it is defined and presented. As someone who has
successfully pioneered capital market innovations before, I know that
this is the way you do it.
those of you who have asked about the risk of establishing
marketability, you should understand that I cannot offer advice. But I
can offer logic. Is there any reason why rights to receive payments
relating to appraisal rights could not be securitized the same way
mortgages are securitized? Or S&L litigation claims? Or pork bellies?
Obviously, none of those templates would be optimal for appraisal
rights, but it is probably safe to assume that there is nothing on
earth (or elsewhere) that can’t be securitized.
those of you who have asked when the rights will be marketable,
everything could fall into place within two or three months but we are
allowing up to six months to get all the pieces together and ready for
participant consideration. We have therefore been developing interim
plans for two things:
the organization of administrative support for the appraisal rights
process independently of any securitization entity, and
the organization of reporting functions to support informed private
trading among qualified institutional buyers.
be reporting more on these interim plans next week.
June 28, 2013
Chairman, The Shareholder Forum
Madison Avenue, New York, New York 10022