UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.2)*
PRG-Schultz International, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class Securities)
69357c107
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(CUSIP Number)
Carlo Cannell
Cannell Capital, LLC, 150 California Street, 5th Floor, San Francisco, CA
94111 (415) 835-8300
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 8, 2005
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See ss.240.13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosure provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a current
valid OMB control number.
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Cannell Capital, LLC
94-3366999
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) OO.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization California...................
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Number of 7. Sole Voting Power 0...............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 7,527,948*....................
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9. Sole Dispositive Power 0............................
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10. Shared Dispositive Power 7,527,948*....................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 7,527,948*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 12.1%
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14............................Type of Reporting Person (See Instructions) IA
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* See Item 5
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
J. Carlo Cannell
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) OO.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization USA..........................
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Number of 7. Sole Voting Power 0 ..............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 7,527,948*...................
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9. Sole Dispositive Power 0............................
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10. Shared Dispositive Power 7,527,948*...................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 7,527,948*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 12.1%
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14........................Type of Reporting Person (See Instructions) IN/HC
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* See Item 5
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
The Cuttyhunk Fund Limited
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) WC.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization Bermuda......................
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Number of 7. Sole Voting Power 0 .............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 1,847,866*......................
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9. Sole Dispositive Power 0 ............................
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10. Shared Dispositive Power 1,847,866*.....................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 1,847,866*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 3.0%
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14.........................Type of Reporting Person (See Instructions) CO
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* See Item 5
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
The Anegada Master Fund Limited
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) WC.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization Cayman Islands...............
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Number of 7. Sole Voting Power 0 ..............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 1,637,358*......................
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9. Sole Dispositive Power 0 ............................
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10. Shared Dispositive Power 1,637,358*......................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 1,637,358*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 2.6%
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14.........................Type of Reporting Person (See Instructions) CO
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* See Item 5
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
GS Cannell Portfolio LLC
98-0232642
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) WC.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization Delaware.....................
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Number of 7. Sole Voting Power 0...............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 1,329,076*......................
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9. Sole Dispositive Power 0 ............................
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10. Shared Dispositive Power 1,329,076*......................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 1,329,076*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 2.1%
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14.........................Type of Reporting Person (See Instructions) OO
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* See Item 5
CUSIP No. 69357c107
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Tonga Partners, L.P.
94-3164039
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X].................................................................
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(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions) WC.................................
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5. Check if Disclosure of Legal Proceeding Is Required Pursuant to Items
2(d) or 2(e)................................................................
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6. Citizenship or Place of Organization Delaware.....................
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Number of 7. Sole Voting Power 0 .............................
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Shares
Beneficially
Owned by
Each
Reporting
Person
With:
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8. Shared Voting Power 2,713,648*....................
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9. Sole Dispositive Power 0............................
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10. Shared Dispositive Power 2,713,648*.....................
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11.Aggregate Amount Beneficially Owned by Each Reporting Person 2,713,648*
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12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13.............Percent of Class Represented by Amount in Row (11) 4.4%
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14.........................Type of Reporting Person (See Instructions) PN
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* See Item 5
Item 1 Security and Issuer
This statement relates to Common Stock ("Common Stock"), issued by
PRG-Schultz International, Inc., a Georgia Corporation (the "Company").
The address of the principal executive offices of PRG-Schultz
International Inc. is 600 Galleria Parkway, Ste 100, Atlanta, Georgia,
30339.
Item 2 Identity and Background
Name: Cannell Capital, LLC ("Adviser")
Place of Organization: California
Principal Business: Investment Adviser
Address: 150 California Street, 5th Floor, San Francisco, CA 94111
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Name: The Cuttyhunk Fund Limited ("Cuttyhunk")
Place of Organization: Bermuda
Principal Business: Investment
Address: 73 Front Street, Hamilton, Bermuda HM 12
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Name: The Anegada Master Fund Limited ("Anegada")
Place of Organization: Cayman Islands
Principal Business: Investment
Address: c/o Praesideo Fund Services, Ltd.
Harbour Centre, PO Box 1348, George Town, Grand Cayman, Cayman Islands
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Name: Tonga Partners, L.P. ("Tonga")
Place of Organization: Delaware
Principal Business: Investment
Address: 150 California Street, 5th Floor, San Francisco, CA 94111
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Name: GS Cannell Portfolio LLC ("GSCP")
Place of Organization: Delaware
Principal Business: Investment
Address: 701 Mount Lucas Road, CN 850, Princeton, NJ 08542
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Name: J. Carlo Cannell
Address: 150 California Street, 5th Floor, San Francisco, CA 94111
Criminal Proceedings: None
Applicable Civil, Judicial or Administrative Proceedings: None
Citizenship: United States
J Carlo Cannell is the controlling and managing member of Adviser.
Adviser serves as investment adviser to Cuttyhunk, Anegada, and GSCP.
Adviser is general partner and investment adviser to Tonga.
Item 3 Source and amount of Funds or other Consideration
The aggregate amount of funds used by Cuttyhunk to purchase 1,450,049
shares of Common Stock directly owned by it was approximately $8,250,586
Such amount was dervied from working capital. The 4.75 convertible
subordinated notes were also purchased with working capital.
The aggregate amount of funds used by Anegada to purchase 1,297,216
shares of Common Stock directly owned by it was approximately $6,586,091
Such amount was derived from working capital. The 4.75 convertible
subordinated notes were also purchased with working capital.
The aggregate amount of funds used by GSCP to purchase 1,042,681 shares
of Common Stock directly owned by it was approximately $5,270,258. Such
amount was derived from working capital. The 4.75 convertible
subordinated notes were also purchased with working capital.
The aggregate amount of funds used by Tonga to purchase 2,156,090 shares
of Common Stock directly owned by it was approximately $11,447,555. Such
amount was derived from working capital. The 4.75 convertible
subordinated notes were also purchased with working capital.
Item 4 Purpose of Transaction
On September 8, 2005, the Adviser sent a letter to the Company proposing
to enter into immediate negotiations with the Company's Board of
Directors to acquire all of the outstanding shares of common stock of
the Company. A copy of such letter is attached to this Statement as
Exhibit 99.2 and its contents are incorporated herein by reference.
Subject to availability at prices deemed favorable and in accordance
with applicable laws and regulations, the Reporting Persons may acquire
shares of Common Stock of the Company from time to time in the open
market, in privately negotiated transactions or otherwise. The
Reporting Persons may dispose of shares of Common Stock of the Company
from time to time in the open market, in privately negotiated
transactions or otherwise.
Except as set forth above, the Reporting Persons has no present plans
or intentions that relate to or that would result in any of the
transactions described in clauses (a) through (d) of item 4 of
Schedule 13D.
Item 5 Interest in Securities of the Issuer
(a) As of September 8, 2005, excluding shares of Common Stock that the
Reporting Persons have the right to acquire, the Reporting Persons
directly or indirectly beneficially owned 5,946,036 shares, or 9.5%, of
Common Stock of PRG-Schultz International, Inc. (the approximate number
of the shares of Common Stock owned is based on 62,289,889 shares of
common stock outstanding by PRG-Schultz International, Inc., on
July 31, 2005).
(i) Cuttyhunk owns 1,450,049 shares or 2.3% of the outstanding shares
of Common Stock.
(ii) Anegada owns 1,297,216 shares or 2.1% of the outstanding shares
of Common Stock.
(iii) GSCP owns 1,042,681 shares or 1.7% of the outstanding shares of
Common Stock.
(iv) Tonga owns 2,156,090 shares or 3.5% of the outstanding shares of
Common Stock.
As of September 8, 2005, the Reporting Persons directly or indirectly
benefically owned 1,581,912 shares of Common Stock issuable upon
conversion of the Issuer's 4.75% convertible subordinated notes.
Including such shares, the Reporting Persons are deemed to directly or
indirectly have beneficical ownership of 7,527,948 shares, and the
Issuer is deemed to have 63,887,912 shares issued and outstandinding.
Accordingly, the Reporting Persons are deemed to have benefical
ownership of 12.1% of the Common Stock,as follows:
(i) Cuttyhunk is deemed to have beneficial ownership of 1,847,866
shares, which represents 3.0% on an as converted basis;
(ii) Anegada is deemed to have beneficial ownership of 1,637,358
shares, which represents 2.6% on an as converted basis;
(iii) GSCP is deemed to have beneficial ownership of 1,329,076
shares, which represents 2.1% on an as converted basis;
(iv) Tonga is deemed to have beneficial ownership of 2,713,648
shares, which represents 4.4% on an as converted basis.
(b) The responses of the Reporting Persons to Items 7 through 11 of the
portions of the cover page of this Schedule D which relate to beneficial
ownership of shares of the Common Stock are incorporated herein by
reference.
(c) A list of transactions during the past 60 days.
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Party Date Amount Price per Where & How
Bought Share Effected
(Sold)
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ANEGADA 7/7/2005 74,100 2.82 Open Market
ANEGADA (Cvt. Bond) 7/8/2005 20,258 7.74 Open Market
ANEGADA 7/11/2005 2,061 2.86 Open Market
ANEGADA 7/12/2005 18,372 2.90 Open Market
ANEGADA 7/13/2005 8,177 2.85 Open Market
ANEGADA 7/14/2005 15,467 2.87 Open Market
ANEGADA 7/15/2005 5,770 2.86 Open Market
ANEGADA 7/18/2005 19,427 2.85 Open Market
ANEGADA 7/19/2005 7,050 2.85 Open Market
ANEGADA 7/20/2005 5,312 2.86 Open Market
CUTTYHUNK 7/7/2005 70,649 2.82 Open Market
CUTTYHUNK (Cvt. Bond) 7/8/2005 21,680 7.74 Open Market
CUTTYHUNK 7/11/2005 1,500 2.86 Open Market
CUTTYHUNK 7/12/2005 13,500 2.90 Open Market
CUTTYHUNK 7/13/2005 5,900 2.85 Open Market
CUTTYHUNK 7/14/2005 11,400 2.87 Open Market
CUTTYHUNK 7/15/2005 4,300 2.86 Open Market
CUTTYHUNK 7/18/2005 14,300 2.85 Open Market
CUTTYHUNK 7/19/2005 5,100 2.85 Open Market
CUTTYHUNK 7/20/2005 4,000 2.86 Open Market
GSCP 7/7/2005 61,800 2.82 Open Market
GSCP (Cvt. Bond) 7/8/2005 15,801 7.74 Open Market
GSCP 7/11/2005 1,100 2.86 Open Market
GSCP 7/12/2005 9,900 2.90 Open Market
GSCP 7/13/2005 4,300 2.85 Open Market
GSCP 7/14/2005 8,300 2.87 Open Market
GSCP 7/15/2005 3,100 2.86 Open Market
GSCP 7/18/2005 10,500 2.85 Open Market
GSCP 7/19/2005 3,800 2.85 Open Market
GSCP 7/20/2005 2,900 2.86 Open Market
TONGA 7/5/2005 100 2.76 Open Market
TONGA 7/7/2005 211,000 2.82 Open Market
TONGA 7/8/2005 100 2.76 Open Market
TONGA (Cvt. Bond) 7/8/2005 38,385 7.74 Open Market
TONGA 7/11/2005 3,000 2.86 Open Market
TONGA 7/12/2005 28,300 2.90 Open Market
TONGA 7/13/2005 12,400 2.85 Open Market
TONGA 7/14/2005 23,900 2.87 Open Market
TONGA 7/15/2005 8,900 2.86 Open Market
TONGA 7/18/2005 29,900 2.85 Open Market
TONGA 7/19/2005 10,700 2.85 Open Market
TONGA 7/20/2005 8,300 2.86 Open Market
(d-e) Not Applicable
Item 6 Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
J. Carlo Cannell controls and manages the Adviser who makes voting and
dispositive decisions for Cuttyhunk, Anegada, GS Cannell, and Tonga.
Item 7 Material to Be Filed as Exhibits
The following is added to Item 7 of the Schedule 13D:
Exhibit 99.2. Letter from Cannell Capital, LLC to PRG-Schultz
International, Inc. Dated September 8, 2005
CANNELL CAPITAL LLC
150 California Street
San Francisco, Calif. 94111
_________
Tel (415) 835-8300 Fax (443) 606-0067
info@cannellcap.com
September 8, 2005
PRG Schultz International, Inc.
600 Galleria Parkway, Suite 100
Atlanta, GA 30339
Attn: David A. Cole, Chairman
Dear David:
I am writing further to my letter of July 28, 2005 in which Cannell
Capital, LLC ("Cannell Capital") offered to acquire all of the outstanding
shares of common stock of PRG Schultz International, Ltd. (the "Company")
that it does not already own at a price of $3.43 per share in cash (the
"Offer").
Cannell Capital is perplexed by the Board of Directors' failure to
respond more readily and fairly to our Offer. The Offer provides liquidity to
the Company's stockholders at a substantial premium to both the current and
trailing 20-day average closing price prior to the date of the Offer. The
Offer is not contingent upon third party financing and thus provides the
Board of Directors with certainty. Cannell Capital can consummate the Offer.
Is ignoring our Offer in stockholders' best interests? In ignoring our
offer are you relying on the same analysis that ended your so-called
"evaluation of strategic alternatives" without a sale of the Company earlier
this year?
It's time to come clean with respect to this so-called "evaluation." Is
it true that the Board received robust indications of interest from several
buyers? Did at least one indication of interest come from a very large
financial buyer with significant experience in completing public to private
transactions? How was this offer "evaluated?" Were other indications of
interest similarly kiboshed by the Board before they blossomed into
definitive offers? If so, why? Why did the Board of Directors exclude certain
buyers from the "evaluation?" Was the "evaluation" intended to benefit all
stockholders, or merely two, who are burdened with an $8.72-per-share cost
basis? Did these two parties "hijack" the special committee, holding the vast
majority of stockholders hostage?
We are not alone in our appreciation of realized losses, a coveted
offset to realized gains. We believe that the 43 percent decline in the
Company's stock price from $6.00 on October 21, 2004, when the "evaluation"
of strategic alternatives was announced, to $3.42 on June 7, 2005, when the
"evaluation" was concluded, provides strong evidence that your stockholders
would have done better with a sale of the Company.
Your announcement of August 19, 2005 further illustrates the Board's
poor stewardship of corporate assets and poor record of serving shareholder
interests. Revenue declined by $42.8 million or 21.4 percent in the first six
months of 2005 compared with the first six months of 2003. During that same
period, selling, general and administrative ("SG&A") expenses increased $1.2
million or 2.0 percent. Excluding the $3.9 million in exodus expenses for
Messrs. Cook and Toma, and $0.5 million squandered on the "evaluation", pro
forma SG&A was still $55.8 million(1). That's a pathetic decrease of just $3.2
million or 5.5 percent. Only now are you canceling the corporate aircraft,
trimming executive perks, and cutting back on third party consultants, for
meager annualized savings of $4.5 million.
Please try harder. Do better. Cut deeper. Restore our Company's
profitability.
Cannell Capital is old school as it relates to the duties of a
fiduciary. We remind you that the Board is obligated to act in the best
interests of all stockholders, not just one or two. We believe that the
Board, consistent with its fiduciary responsibility, should re-engage
financial advisors, and perform an evaluation with alacrity, rather than
another "evaluation" humbug. You will discover a transaction which maximizes
shareholder value is at hand. We feel a bird in the hand is worth two in the
bush.
We remain prepared to meet with you, your independent directors, or your
advisors, at your earliest convenience, to discuss the Offer and to complete
our due diligence investigation of the Company.
Please contact Carlo Cannell or Julian Allen at (415) 835-8300 to
discuss the Offer and to schedule a meeting. And please be aware that Cannell
Capital is required to amend its current 13D filing promptly to include this
letter.
Sincerely,
/S/ J. Carlo Cannell
J. Carlo Cannell
Managing Member
Cannell Capital LLC
(1) Instead of subtracting $3.9 million in expenses, we should perhaps add $3.7
million to reflect the true cost of these retirement packages which will cost
your shareholders $7.6 million in cash, starting February 1, 2006.
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: September 12, 2005
J. Carlo Cannell
/s/ J. Carlo Cannell
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J. Carlo Cannell
Cannell Capital, LLC
/s/ J. Carlo Cannell
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J. Carlo Cannell, Managing Member
The Anegada Master Fund, Limited
/s/ J. Carlo Cannell
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J. Carlo Cannell, Managing Member
Cannell Capital, LLC, Investment Adviser
The Cuttyhunk Fund Limited
/s/ J. Carlo Cannell
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J. Carlo Cannell, Managing Member
Cannell Capital, LLC, Investment Adviser
GS Cannell Portfolio LLC
/s/ J. Carlo Cannell
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J. Carlo Cannell, Managing Member
Cannell Capital, LLC, Investment Adviser
Tonga Partners, L.P.
/s/ J. Carlo Cannell
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J. Carlo Cannell, Managing Member
Cannell Capital, LLC, General Partner