Meruelo Urges Digital Generation To Take Actions To Improve Co.'s Performance

(RTTNews) - Alex Meruelo, Meruelo Investment Partners LLC said it strongly urged the Board of directors of Digital Generation, Inc. (DGIT) to take further actions to improve the performance of the Company through changes to the composition of the Board, and to implement further corporate governance changes.

Alex Meruelo, Meruelo Investment Partners LLC together with related entities or "Meruelo" are the largest stockholders of DG with beneficial ownership exceeding 14%.

Pushed by previous actions, two independent directors were added at the 2012 annual stockholders meeting. And, as a result of our continued pressure, the Board now proposes to institute an independent chair, and a delayed process to declassify the Board over a two year period following the 2013 annual meeting, Meruelo said.

However, Meruelo said it does not believe that these steps are enough to address the urgent problems which significantly disadvantage DG's performance.

Meruelo believes that the composition of the Board continues to be a primary cause of DG's underperformance. Certain members of the Board were responsible for approving excessive compensation for DG's executive chair, and adopting a poorly run strategic review process that disrupted DG's business and operations.

Meruelo said, in the face of further downward pressures on the stock price, that it recently increased its ownership to help support the stock, and requested that the Board enable it to increase ownership by another 10%, while maintaining full rights as a stockholder. Despite Meruelo's willingness to agree to a support agreement that would have protected stockholders, the Board rejected this request.

Meruelo said it supports the Board in pushing the executive chair to voluntarily resign in all employment capacities, effective immediately. Meruelo noted that it fully supports the chief executive officer and the management team as they execute on strategies that will significantly improve DG and stockholder value.

"With further changes to the Board, Meruelo is confident that DG's performance will improve significantly. DG's management can then be free to take appropriate actions to improve DG's performance and position DG to maximize value for all stockholders whether through organic growth, a sale of the Company or other strategic alternatives," Meruelo said.

Meruelo added that it is considering all of its options to ensure that the actions it suggests are taken, including but not limited to nominating independent directors for election to the Board, and other corporate governance changes.