DEFA14A: Proxy Advisory Firm Backs Current Board in Shareholder Dispute

Institutional Shareholder Services (ISS) has recommended Sonim Technologies stockholders vote for the company's nominees, rejecting an unsolicited acquisition attempt by Orbic North America, LLC.

Summary

• Institutional Shareholder Services (ISS) recommended Sonim stockholders vote FOR four of the Company's nominees on the WHITE proxy card ahead of the Annual Meeting of Stockholders on July 18, 2025.
• ISS determined that Orbic North America, LLC (Orbic) failed to make a compelling case for change and found the Sonim Board's response to Orbic appropriate.
• ISS highlighted concerns with Orbic's approach, including demanding leadership resignation, presenting incomplete offers, and taking months to provide a financing commitment.
• Orbic's most recent offer was described as 'strained by contingencies' and containing 'ambiguities about valuation,' expiring less than a week after presentation.
• Sonim's Board stated Orbic's proposal was 'unfunded and baseless hype with no substance,' asserting that Orbic's 'financing Commitment Letter' was not a true commitment but an attempt to raise money.

Sentiment

Score: 8

Explanation: The document conveys a strong positive sentiment for Sonim's current management and board, as a key independent proxy advisor (ISS) has recommended shareholders vote in favor of their nominees and against the dissident shareholder's proposals, validating the board's actions and concerns regarding the unsolicited offer.

Positives

• ISS, a global leader in independent shareholder meeting research, recommended voting FOR Sonim's nominees, validating the current board's position.
• ISS found Orbic's case for change uncompelling and their offers incomplete and contingent, supporting Sonim's resistance to the unsolicited acquisition.
• The recommendation supports the current management and strategic direction against a hostile takeover attempt, potentially reducing uncertainty.

Negatives

• Orbic's unsolicited acquisition proposals created a proxy contest and ongoing uncertainty for Sonim.
• Orbic's offers were deemed incomplete, contingent, and lacking clear valuation, indicating a lack of seriousness or capability.
• Orbic's 'financing Commitment Letter' was criticized as not a true commitment but merely an attempt to raise funds, casting doubt on their financial backing.
• The ongoing dispute likely consumed management time and resources that could have been directed elsewhere.

Risks

• The ability to meet expectations regarding the timing and completion of any proposed transaction.
• The possibility that a letter of intent (LOI) will not result in a definitive agreement.
• The possibility that the conditions to the closing of a proposed transaction are not satisfied, including required approvals or stockholder non-approval.
• The occurrence of any event, change, or other circumstances that could result in a definitive agreement being terminated or a proposed transaction not being completed.
• The risk that an LOI may be terminated in circumstances that require Sonim to pay a termination fee.
• Potential litigation relating to a proposed transaction.
• Adverse effects on the market price of Sonim's common stock due to a proposed transaction and its announcement.
• The risk that the current board of directors of Sonim loses the proxy contest and the new directors' slate determines to terminate a proposed transaction.
• Risks related to the possible failure of Sonim to achieve earn-out.
• The effect of the announcement of a proposed transaction on Sonim's ability to retain key personnel and maintain relationships with customers and business partners.
• The risk of unexpected costs or expenses resulting from a proposed transaction and LOI.

Future Outlook

Forward-looking statements relate to the outcome of negotiations with Orbic, the search for strategic alternatives by the Special Committee, Sonim's ability to enter strategic transactions with potential counterparties, perceived benefits of the strategic alternatives favored by Sonim's board of directors, and the Special Committee's assessments in connection with the search for strategic alternatives. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to vary materially.

Management Comments

• The Sonim Board is delighted that ISS has recommended stockholders to vote for our nominees at next weeks Annual Meeting.
• We are particularly pleased that ISS also saw through Orbics distractions and tactics.
• As we have maintained, Orbics unfunded and baseless proposal amounts to nothing more than hype with no substance.
• After months of requests, Orbic has shown zero evidence of the proof of readily available and unconditional funds.
• Orbics financing Commitment Letter is in fact not a commitment to finance. It is a commitment to attempt to raise money without an obligation to do so. It is not proof of funds or an approved credit facility or lender.
• Their third party lender categorizes itself as a placement agent that will solicit debt financing after due diligence.
• We urge all Sonim stockholders to join ISS in seeing through Orbics tactics and protect their investment.

Industry Context

This announcement highlights a common scenario in corporate governance where activist shareholders attempt to gain control or influence through proxy contests, and independent proxy advisory firms like ISS play a crucial role in guiding institutional investors' votes. It reflects the ongoing tension between incumbent boards and dissident shareholders, particularly concerning unsolicited acquisition proposals and the scrutiny of financing commitments in M&A attempts within the rugged mobile solutions sector.

Corporate Governance

Stakeholder Impact

• Shareholders are urged to vote for current nominees, which the board believes will protect their investment from what it deems an 'unfunded and baseless proposal.' The outcome of the proxy contest will directly impact shareholder representation and the company's strategic direction.
• Current management and employees receive validation of their strategy and leadership, potentially reducing uncertainty related to a hostile takeover attempt.
• Customers and business partners may benefit from increased stability in leadership, which could help maintain existing relationships, although the ongoing dispute might have caused some initial uncertainty.

Next Steps

• Sonim's Annual Meeting of Stockholders is scheduled for July 18, 2025, where stockholders will vote on nominees.
• Sonim urges all stockholders to vote FOR the Company's nominees on the WHITE proxy card.
• The Special Committee continues its search for strategic alternatives and potential strategic transactions with counterparties.
• Sonim plans to file a proxy statement relating to a special meeting of its stockholders for a proposed transaction and may file other related documents with the SEC.

Key Dates

Recommendation

Keywords

Sonim Technologies, NASDAQ: SONM, ISS, Institutional Shareholder Services, Orbic North America, Proxy Statement, Shareholder Meeting, Corporate Governance, Rugged Mobile Solutions, Acquisition Proposal, Takeover Attempt, Proxy Contest, Shareholder Vote, Board Recommendation