Indaba Capital Management L.P. (together with its affiliates, “Indaba” or “we”), which is the largest independent shareholder of MDC Partners Inc. (NASDAQ: MDCA) (“MDC” or the “Company”), today issued the below open letter to Chairman and Chief Executive Officer Mark Penn following several unsuccessful attempts to open up a productive, private dialogue regarding the prospective merger with Stagwell Media LP (“Stagwell”).

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June 28, 2021

MDC Partners Inc.
Attn: Chairman and Chief Executive Officer Mark Penn
One World Trade Center, Floor 65
New York, NY 10007

Dear Mr. Penn,

The silence is deafening. You have declined to engage with us since March, when we told you Indaba could not support the merger based on the initial terms Stagwell proposed.

Since that time, Indaba – MDC’s largest independent shareholder – has consistently conveyed its willingness to support a fair and reasonable transaction with Stagwell. Indaba has also repeatedly stated its desire to work towards a mutually-agreeable compromise and ultimately sign a voting agreement. Despite our serious concerns about the apparent conflicts and flaws associated with the merger agreement, we have made several subsequent attempts to discuss the transaction with you. It was ultimately your seemingly dismissive and obstinate posture that forced us to go public with our decision to vote against the transaction on its initial terms.

Instead of speaking with us at any point over the past three months, you have spent an inestimable amount of time trying to execute a divide-and-conquer strategy with the very shareholders to whom you owe fiduciary duties. This gives us – and presumably many other shareholders – a great deal of concern about how you would treat minority investors once a potential deal is completed.

It strikes us as a corporate governance worst practice for you to be dismissing and ignoring our good faith efforts to open up a constructive dialogue. We expect other large shareholders and independent proxy advisory firms will look quite unfavorably upon the decision to continue to stiff-arm us while the Special Committee presumably pursues another fairness opinion that supports Stagwell’s latest insufficient offer.

Rather than waste more resources and time having the Special Committee secure a new fairness opinion related to a revised offer that we suspect lacks widespread shareholder support, why not engage with the holder of approximately 15% of the vote required to approve the proposed transaction? You have already acknowledged the inadequacy of Stagwell’s initial offers by providing two incremental bumps. We have, in turn, expressed a willingness to reach a middle ground. We are still interested in speaking with you and will not let our egos stand in the way of reaching a sensible agreement.

But if you opt to continue ignoring us and remain committed to Stagwell’s unattractive and unfair offer, we will be compelled to continue opposing the deal and vote against the merger. We are very comfortable with MDC remaining an independent entity, building on recent momentum and pursuing growth as the industry continues to spring back from the pandemic. While our preference is to see an equitable deal come to fruition, we believe a standalone MDC is a superior alternative to a conflict-ridden land grab.

At this point, Mr. Penn, you are the sole impediment to a successful transaction. MDC’s shareholders are well aware that you are entitled to 75% of the carried interest at Stagwell and its investment in MDC. We are at the table. Please put your personal economic interests aside and join us to move forward together and get this merger done.

Sincerely,

Derek Schrier
Managing Partner
Indaba Capital Management, L.P.

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About Indaba Capital

Indaba was founded in 2010 to invest in corporate equity and debt. Based in San Francisco, Indaba currently has more than $1.5 billion in assets under management. Learn more at www.IndabaCapital.com.

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