Fairholme and St. Joe (JOE) Directors’ Fight Goes Public

This week  Bruce Berkowitz resigned from St Joe’s (JOE) board, saying the board is so entrenched that it can’t do the right thing for the shareholders. Berkowitz’s St Joe investment totals nearly 30% of the company. On Wednesday Fairholme filed a DFAN14A nominating Brice Berkowitz, Charlie Fernandez, Governer Charles J. Crist, and Howard S. Frank to the company’s board. Fairholme also disclosed the following exchange of words with JOE’s board:

FAIRHOLME (FAIRX) Bruce Berkowitz

On February 16, 2011, Fairholme Funds, Inc., on behalf of its series The Fairholme Fund, issued the following material to members of the media:

Andy Dietderich, principal outside counsel to Fairholme Funds, said “The Company did not read Fairholme’s release. A take-over? How can you take over a company by asking the other shareholders to choose directors? That’s the opposite of a take-over. Fairholme Funds has absolutely no intention of taking over anything. We are giving the company back to all its shareholders. It’s a dividend of governance.”

Charlie Fernandez said through a representative: “The St. Joe board is picking and choosing from what Bruce and I said on the board. If the board really wants to lift confidentiality restrictions relating to their board meetings, Bruce and I would be delighted and will give the public a full report of what we learned.”

“In the meantime, Bruce and I can’t talk about what happened at the St. Joe board. We are bound by confidentiality. All I can say is that it does not take six weeks to know a board is so entrenched it can’t do the right thing.”

Bruce Berkowitz said through a representative: “I met Charlie Crist for the first time two weeks ago. He is completely independent of Fairholme and has not provided any services to Fairholme or St. Joe. He is simply a great director. We are looking to our shareholders to propose five more. We want St. Joe to have a fantastic Board, with a full majority independent of management or Fairholme.”

“This is not about strategic alternatives. This is about who is running the company. The board is hiding behind a false sale process. The business plan is broke. No one will buy it until it is fixed. I’m surprised Morgan Stanley is playing along. The only purpose of this exercise is to entrench the board. Is Morgan Stanley not collecting fees for that? No counterparty will take this board or management seriously. They have no mandate and must go.”

“What really concerns me is that the desperate board might do something stupid with the shareholders’ company. There are actions that they could take to harm the business that do not require shareholder approval.”

“We support the analysis of strategic alternatives, but only after the business plan is fixed and the company is in the hands of its shareholders.”

“The worst thing is that the board is spending shareholder money to protect itself from shareholders. It’s unconscionable. Directors should think for shareholders, not themselves.”

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