Open Letter to Exela Technologies, Inc. fellow Shareholders

Actions by Exela Senior Management and Board Indicate a Disregard for Shareholder Value, Possible Corporate Governance Failures, and Possible Breaches of Fiduciary Duties to the Shareholders of the Company 

Shareholder Action is Required Immediately to Hold the Board and Company Management Accountable and Prevent Further Value Destruction

Shareholder Representation on the Board and Corporate Governance Changes Are Needed Immediately

BEVERLY HILLS, Calif., Nov. 7, 2022 /PRNewswire/ -- Today, X, LLC released the following open letter to shareholders of Exela Technologies, Inc. (NASDAQ: XELA, XELAP, CFFE)

Dear Fellow Exela Shareholders:

I have invested in Exela's common stock intermittently over the last year, including the purchase of 4.9% of the company's outstanding public float in September and October. Each time we bought, we believed the stock was undervalued but each time the stock continued to lose value. I have recently attempted to talk to Exela's senior management about a plan and a path forward that I believe would create shareholder value. To date, I have been totally ignored; the company's leadership will apparently   not speak to one of its largest shareholders.

We believe what happening in the Exela Boardroom is highly questionable and deserving of scrutiny. In over 30 years investing in and managing public companies, including as a CEO, I have rarely seen a situation such as the one at Exela, where the Board and senior management has shown such disregard to their shareholders, even as their mismanagement has seriously damaged shareholder value. In my opinion, their actions have been, at least, grossly negligent and may well cause the company to lose its valuable listing on the NASDAQ Stock Market.

We have recently sent a letter to the company that reads, in part, as follows:

On October 20, X, LLC's special counsel sent correspondence to an attorney purporting to represent Exela, in which a request was made to initiate a substantive dialogue between us and the Company. That request has thus far been ignored. Regardless, X, LLC has many questions about the Company's current operations and its recent decision-making process(es). We would like to know more about the following actions and events:

• The restatement in 2020 of Exela's audited financial statements for the fiscal years ended December 31, 2018, and December 31, 2017, and the related restatement of the Company's financial statement for the nine months ended September 30, 2019.
• The highly-dilutive issuance of an extraordinary amount of Common Stock in an approximate 18-month period, as demonstrated by the Company's own public disclosure: in its annual report on Form 10-K for the fiscal year ended December 31, 2020, Exela stated that there were 58,968,599 shares of Common Stock outstanding and in its quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2022, filed after giving effect to a 1-for 20 reverse stock split in July 2022, the Company reported that there were 64,967,633 shares of Common Stock outstanding;
• The creation and issuance of an entirely new class of non-voting 6.00% Series B cumulative convertible perpetual preferred stock, $0.0001 par value per share (the "Series B Preferred Stock"), the related exchange offer with holders of the Common Stock, and the subsequent issuance of "tandem preferred stock" to holders of the Series B Preferred Stock, which confers a super-voting right that can only be exercised by voting with the holders of the Common Stock voting as single class and appears to have no purpose other than partially disenfranchising holders of Common Stock;
• The recent departures of two members of the Company's senior management team, Ronald Cogburn, former chief executive officer, and Suresh Yanamanni, former president, neither of whom appears to have been replaced, creating a severe leadership vacuum at the Company during a critical period.
• The cybersecurity breach the Company experienced in June 2022, which reportedly necessitated taking significant components of the Company's operational and information technology systems offline for an extended period and, among other things, resulted in the Company's failure to timely file its quarterly report on Form 10-Q for the period ended June 30, 2022; and
• Exela's recently-announced decision to merge its European subsidiary, XBP Europe, Ltd., into a special purpose acquisition company and the arrangements involving Exela management in connection therewith.

In addition, we would like to learn a great deal more about oversight and management of the Company's day-to-day operations, which in recent years have resulted in massive net losses, as reflected in the Company's public filings with the Securities & Exchange Commission, and the destruction of approximately 99% of shareholder value over the last twelve months.

Even a cursory review of the publicly available information concerning the topics mentioned above raises serious questions about potential mismanagement, waste, diversion of corporate opportunities and lack of due care and fealty to stockholders on the part of the directors.

See full letter at xelashareholder.com

XELA is in Crisis

Exela's common stock has lost over 99% of its value in a short period of time, and the company recently disclosed that Nasdaq is taking steps to delist XELA. The company's management continues to make highly questionable decisions, such as the ones we have identified above- most notably, diluting the common stock at an incredible pace, creating a class of preferred stock that pays a hefty dividend and carries with it a super-voting right, and allowing management and the Board to exchange their common shares for those preferred shares. Meanwhile, executive compensation continues to be uncommonly high.

Moreover, we have many questions about Exela's recently-announced decision to merge its European subsidiary, XBP Europe, Ltd., into a special purpose acquisition company. Why, at a critical juncture, is Exela's senior management spinning off valuable assets, denying XELA'S current shareholders the ability to profit from them in the future.

The Way Forward

If the company continues on its present course, we know that, in a few months, valuable assets will be merged away, and the stock will likely continue to decline. The company is in immediate need of a strong board and good, thoughtful decision-making that prioritizes shareholder value; a board that understands that it serves on behalf of the shareholders, not itself or senior management; and that can and will stand up to management when necessary. In our opinion, Exela's current Board will not, and cannot, provide the type of strong leadership required at this time. Under the circumstances, we believe Par Chadha, XELA's Chairman, and his subservient Board must be held accountable. It's obvious that the future of Exela and your investment depends on major changes.

Ramy El-Batrawi, Managing Member

YOUR SUPPORT IS IMPORTANT
FIRST, WE NEED YOUR SUPPORT TO
ELECT NEW DIRECTORS TO PROVIDE BOARDROOM OVERSIGHT,

AND

FIX XELA'S BYLAWS TO REMOVE THE SUPER VOTING RIGHTS HELD BY THE PREFERED SHAREHOLDERS AND TO PROVIDE FOR BASIC SHAREHOLDER RIGHTS.

If you have any questions, please contact us and fill out the information on number of shares you own and if you have information that you believe is important, please provide it to us:

Xelashareholder.com

Email: [email protected]

Other Important Disclosure Information

SPECIAL NOTE REGARDING THIS LETTER:

THIS LETTER CONTAINS OUR CURRENT VIEWS ON THE VALUE OF EXELA'S SECURITIES AND CERTAIN ACTIONS THAT EXELA'S BOARD HAS TAKEN. OUR VIEWS ARE BASED ON OUR OWN ANALYSIS OF PUBLICLY AVAILABLE INFORMATION AND ASSUMPTIONS WE BELIEVE TO BE REASONABLE. THERE CAN BE NO ASSURANCE THAT THE INFORMATION WE CONSIDERED AND ANALYZED IS ACCURATE OR COMPLETE. SIMILARLY, THERE CAN BE NO ASSURANCE THAT OUR ASSUMPTIONS ARE CORRECT. EXELA'S ACTUAL PERFORMANCE AND RESULTS MAY DIFFER MATERIALLY FROM OUR ASSUMPTIONS AND ANALYSIS.

WE HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION FROM ANY THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS LETTER. ANY SUCH INFORMATION SHOULD NOT BE VIEWED AS INDICATING THE SUPPORT OF SUCH THIRD PARTY FOR THE VIEWS EXPRESSED HEREIN.

THIS LETTER ALSO REFERENCES THE SIZE OF OUR RESPECTIVE CURRENT HOLDINGS OF EXELA SECURITIES RELATIVE TO OTHER HOLDERS OF SUCH SECURITIES. OUR VIEWS AND OUR HOLDINGS COULD CHANGE AT ANY TIME. WE MAY SELL ANY OR ALL OF OUR HOLDINGS OR INCREASE OUR HOLDINGS BY PURCHASING ADDITIONAL SECURITIES. WE MAY TAKE ANY OF THESE OR OTHER ACTIONS REGARDING EXELA WITHOUT UPDATING THIS LETTER OR PROVIDING ANY NOTICE WHATSOEVER OF ANY SUCH CHANGES (EXCEPT AS OTHERWISE REQUIRED BY LAW).

FORWARD-LOOKING STATEMENTS:

Certain statements contained in this letter are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Forward-looking statements are not guarantees of future performance or activities and are subject to many risks and uncertainties. Due to such risks and uncertainties, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Forward-looking statements can be identified by the use of the future tense or other forward-looking words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "should," "may," "will," "objective," "projection," "forecast," "management believes," "continue," "strategy," "position" or the negative of those terms or other variations of them or by comparable terminology.

Important factors that could cause actual results to differ materially from the expectations set forth in this letter include, among other things, the factors identified in Exela's public filings. Such forward-looking statements should therefore be construed in light of such factors, and the Participants are under no obligation, and expressly disclaim any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE X, LLC