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Letter to the editor

Stem-cell company in fight to retain board

Cryo-Cell moves to weaken investor dissent.

By KRIS HUNDLEY
Published June 12, 2007

With a major shareholder faction threatening to oust its board of directors, Cryo-Cell International Inc. has gone on the offensive.

Last week the Oldsmar stem-cell storage company said it was postponing its annual meeting until July 16 and expanding its board to six members.

And in an effort to undercut the opposition, Cryo-Cell has invited one dissident shareholder to fill the new director's position.

Andrew J. Filipowski, a 57-year-old investor from Winston-Salem, N.C., who controls about 6 percent of Cryo-Cell's stock, agreed to support management in exchange for nomination to the board.

But David I. Portnoy, a Bal Harbour investor who controls more than 13 percent of Cryo-Cell's shares, thinks he may still have enough support to pull off a coup. Portnoy is urging investors to support a slate of nominees, including himself, to spark change at the 18-year-old company.

Cryo-Cell freezes and stores umbilical cord stem cells for clients for potential future use. For the fiscal year that ended Nov. 30, the company reported a loss of $2.8-million on sales of $17.2-million.

Over the past 52 weeks, the company's stock has ranged from a low of $1.97 to a high of $2.85. It closed Monday at $2.16, unchanged.

Mercedes Walton, Cryo-Cell's chairwoman and chief executive, said the postponement of the annual meeting, originally set for June 28, was intended to give shareholders time to "conscientiously consider" competing proposals.

Portnoy, who was composing a "fight letter" to Cryo-Cell shareholders on Monday, said his slate of candidates is getting "a tremendous outpouring of support."

"We want to cut skyrocketing expenses, grow revenues, increase profits and increase the stock price, " he said.

Portnoy, 44, has been lobbying for change - and a seat on Cryo-Cell's board - for more than two years. In January, he wrote to the board, complaining about excessive management compensation.

Last year, Walton received $384, 650 in salary and bonus.

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

Fast Facts:

A Cyro-Cell divided

Cryo-Cell International Inc., an Oldsmar stem-cell storage company, is under fire from shareholders angered by executive pay, continuing losses and dismal stock performance. A major investor has proposed replacing the entire board of directors.

The response: Cryo-Cell has postponed its annual meeting and added one board seat in an effort to undercut the opposition.

What's next: Shareholders will vote a white ballot to support management or a gold ballot to support the opposition. Votes must be submitted before or during the annual meeting July 16.

[Last modified June 11, 2007, 23:25:22]