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DELCATH SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
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[GRAPHIC OMITTED]
Company Contact: Investor Contacts:
Delcath Systems, Inc. Todd Fromer / Garth Russell
M. S. Koly, Chief Executive Officer KCSA Worldwide
203-323-8668 (212) 896-1215 / (212) 896-1250
www.delcath.com tfromer@kcsa.com / grussell@kcsa.com
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Media Contact:
Lewis Goldberg
KCSA Worldwide
(212) 896-1216
lgoldberg@kcsa.com FOR IMMEDIATE RELEASE
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Delcath Systems Issues Letter to Shareholders
STAMFORD, Conn., August 14, 2006 -- Delcath Systems, Inc. (NASDAQ: DCTH) today
issued the following letter to its shareholders.
DON'T BE FOOLED BY LADDCAP - HERE ARE IMPORTANT FACTS
THAT LADDCAP HAS NOT TOLD YOU
Dear fellow Delcath Shareholder:
On August 10, 2006, Laddcap Value Partners LP mailed a letter to Delcath
shareholders that purports to express "shock" and "outrage" at Delcath's efforts
to expose the misrepresentations and omissions made by Laddcap in its
solicitation materials provided to Delcath shareholders. Do not be fooled by
Laddcap's latest diatribe - the one and only reason Delcath has filed suit
against Laddcap is to ensure that Delcath's shareholders can decide on the
future of their Company based on full and accurate information. Delcath fully
supports shareholder democracy, but Delcath believes that shareholders should
have full and complete information before considering Laddcap's proposal to
remove your Board of Directors.
Delcath, of all companies, has tremendous admiration for individuals
battling cancer, and it is these very people that are the drive behind Delcath's
research and development. Delcath is dedicated to the development of treatments
for cancer as well as the patients who are stricken with cancer.
In contrast, Laddcap has resorted in its letter to the most cynical of
tactics. In an attempt to obfuscate its failure to disclose the personal
bankruptcy of one its nominees, Paul William Frederick Nicholls, Laddcap claims
that Mr. Nicholls' cancer caused his personal bankruptcy filing in 2002. Nothing
could be further from the truth. As Mr. Nicholls' own bankruptcy petition makes
clear, the debt he amassed was on credit cards, including credit cards issued by
luxury retailers such as Bloomingdale's, Bergdorf Goodman and Macy's, not on
health care. There were no medical bills, no hospital bills and no doctor bills
in his bankruptcy filing.
Laddcap's contention that Mr. Nicholls had to file for bankruptcy because
"he could not maintain employment while he battled Stage 4 Multiple Myeloma"
also could not be more disingenuous. About a month before his bankruptcy filing
in October 2002, Mr. Nicholls ran a New York Road Runner's Club 10K race (one of
at least 19 road races Mr. Nicholls finished that year) at a brisk pace of 7
minutes 37 seconds per mile. Mr. Nicholls' lack of financial responsibility, not
his cancer, caused his personal bankruptcy. Moreover, it is important to put Mr.
Nicholls' "personal" bankruptcy in perspective - at the same time he filed for
bankruptcy to avoid paying his credit card debts, Mr. Nicholls was living in a
Manhattan apartment building appraised at over $3 million that was owned in his
wife's name. In his bankruptcy petition, Mr. Nicholls listed "rent" as an
expense. But what Mr. Nicholls did not disclose to the bankruptcy court is that
the "rent" he was paying was to his wife.
Lest there be any doubt about the misleading nature of Laddcap's
solicitation materials, compare Laddcap's two disclosures regarding Mr.
Nicholls. In its August 1, 2006 preliminary consent solicitation statement filed
with the U.S. Securities and Exchange Commission, Laddcap represented that
"since September 2000, Mr. Nicholls has been a self-employed Business
Development Director consulting with a number of large international
organizations." However, after being confronted with Mr. Nicholls' personal
bankruptcy in 2002, Laddcap reverses course in its August 10, 2006 letter and
claims that Mr. Nicholls could not work prior to his bankruptcy filing in 2002
because he was fighting cancer. Ask yourself why Laddcap would make such wholly
contradictory statements. Laddcap's attempt to exploit Mr. Nicholls' cancer to
divert attention from its failure to disclose Mr. Nicholls' personal bankruptcy
trivializes the very serious fight that all cancer patients face.
Laddcap's misrepresentations about its director nominees are not limited to
Mr. Nicholls. In its preliminary consent solicitation statement, Laddcap falsely
represents that it is providing "material occupations, positions, offices, or
employment for the past five years of each Nominee." For example, Laddcap wholly
omits that one of its nominees, Fred S. Zeidman, is Chairman of the Board of
Directors of Emerge Capital Corporation. Why? In 2006, Emerge has twice been
forced to admit that it has significant deficiencies in its accounting processes
constituting material weaknesses as defined by the Public Company Accounting
Oversight Board. Those weaknesses resulted in improper accounting for certain
financial transactions and a restatement of financial statements for fiscal
periods in 2004 and 2005. Furthermore, Mr. Zeidman served as a member of the
audit and compensation committees of the board of directors of Seitel
Corporation during the period in which Seitel misstated its earnings for seven
quarters and subsequently filed for bankruptcy. Mr. Zeidman was named in seven
shareholder derivative suits stemming from Seitel's aforementioned earnings
misstatements and eventual bankruptcy.
In its August 10th letter, Laddcap similarly fails to address any of the
omitted information about its other director nominees, including the financial
woes that afflicted the UCLA hospital system during the tenure of Michael Karpf,
M.D., as Vice Provost. Laddcap does not even attempt to explain why it did not
disclose this material information to Delcath's shareholders.
In its latest letter, Laddcap also does not dispute that the two supposedly
"independent" investment banks with "decades of experience" from which Laddcap
obtained a valuation of the Company that was provided to shareholders in June
2006 were neither independent nor experienced. As incredible as it may seem,
neither of these two "investment banks" have ever filed with the SEC any
valuation or fairness opinion for any company prior to their issuing their
valuation opinion of Delcath. Nor does Laddcap dispute in its letter that it
improperly obtained non-public company information and that it has been
collaborating with undisclosed persons, including a broker who was affiliated
with one of the supposedly "independent" investment banks that Laddcap hired to
prepare a valuation of the Company, to force an immediate sale of the Company.
As the foregoing illustrates and as we demonstrated in our letter to
shareholders, dated August 7, 2006, Laddcap's attack on the Company is based on
lies and convenient omissions of important facts. Delcath has brought suit
against Laddcap not to "smother stockholder democracy" as Laddcap would have you
believe, but to ensure that Delcath's shareholders are provided the full and
accurate information to which they are entitled and which is required by the
federal securities laws.
Thank you for your continued support.
/s/ SAMUEL HERSCHKOWITZ
Samuel Herschkowitz, M.D.
Chairman of the Board
This letter contains forward-looking statements, which are subject to
certain risks and uncertainties that can cause actual results to differ
materially from those described. Factors that may cause such differences
include, but are not limited to, uncertainties relating to our ability to
successfully complete Phase III clinical trials and secure regulatory approval
of our current or future drug-delivery system and uncertainties regarding our
ability to obtain financial and other resources for any research, development
and commercialization activities. These factors, and others, are discussed from
time to time in our filings with the Securities and Exchange Commission. You
should not place undue reliance on these forward-looking statements, which speak
only as of the date they are made. We undertake no obligation to publicly update
or revise these forward-looking statements to reflect events or circumstances
after the date they are made.
On August 1, 2006, Laddcap filed a preliminary consent solicitation
statement with the SEC relating to Laddcap's proposal to, among other things,
remove the current Board of Directors and replace them with Laddcap's nominees.
In response, on August 7, 2006, Delcath filed a preliminary consent revocation
statement on Form PREC14A with the SEC (the "Preliminary Consent Revocation
Statement") in opposition to Laddcap's consent solicitation. Delcath
shareholders should read the Preliminary Consent Revocation Statement (including
any amendments or supplements thereto) because it contains additional
information important to the shareholders' interests in Laddcap's consent
solicitation.
The Preliminary Consent Revocation Statement, the definitive consent
revocation materials (when filed) and other public filings made by Delcath with
the SEC are available free of charge at the SEC's website at www.sec.gov.
Delcath also will provide a copy of these materials free of charge upon request
to Delcath Systems, Inc., Attention: M.S. Koly, Chief Executive Officer, (203)
323-8668.
Delcath has engaged MacKenzie Partners, Inc., who may be deemed to be a
participant in the solicitation of Delcath shareholders, to assist in connection
with Delcath's communications with shareholders regarding Laddcap's consent
solicitation. Information regarding the interests of MacKenzie Partners, Inc .is
contained in the Preliminary Consent Revocation Statement (including any
amendments or supplements thereto). In addition, certain of Delcath's
directors, officers and employees may be deemed to be participants in the
solicitation of Delcath's shareholders. Information regarding the names and
interests of these other persons is contained in the Preliminary Consent
Revocation Statement (including any amendments or supplements thereto).
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