sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant: /x/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
SL INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
THE RORID COMMITTEE
STEEL PARTNERS II, L.P.
WARREN G. LICHTENSTEIN
NEWCASTLE PARTNERS, L.P.
MARK E. SCHWARZ
GLEN KASSAN
JAMES R. HENDERSON
STEVEN WOLOSKY
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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/ / Fee paid previously with preliminary materials:
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EXPLANATORY NOTE
The RORID Committee (the "Committee") is filing definitive
additional materials contained in this Schedule 14A with the Securities and
Exchange Commission in connection with a solicitation of proxies in support of
the election of the Committee's nominees to the Board of Directors of SL
Industries, Inc. ("SL") at the Annual Meeting of Stockholders scheduled to be
held on January 22, 2002.
TABLE OF CONTENTS
Open letter from the Committee to SL stockholders
superseding and replacing open letter mailed to
stockholders on or about December 21, 2001...............................Item 1
PowerPoint presentation to SL stockholders superseding
and replacing PowerPoint presentation mailed to
stockholders on or about December 21, 2001...............................Item 2
ITEM 1
AN IMPORTANT MESSAGE TO STOCKHOLDERS
FROM
THE RORID COMMITTEE
(RESPONSIBLE OWNERS REPLACING INCUMBENT DIRECTORS)
- - - - -
Dear Fellow Stockholders:
We are the owners of 850,800 shares of SL Industries, Inc. ("SL"). We believe
that the full value of our investment will never be realized under the
leadership of the existing Board and management. We are offering stockholders
the opportunity to vote for a slate of nominees committed to maximizing the
value of SL for all stockholders, as described in our proxy statement, at the
annual meeting of stockholders scheduled to be held on January 22, 2002.
WE BELIEVE THAT INCUMBENT DIRECTORS OF SL HAVE AN UNACCEPTABLE MANAGEMENT
RECORD, AS EVIDENCED BY THE FOLLOWING:
o Following the fiscal year ended July 31, 1999, the Board changed SL's
fiscal year-end from July 31 to December 31. We question whether this
change in fiscal year served any business purpose, or if it served to
obfuscate financial reporting and confuse the comparisons of SL's financial
performance with prior periods by creating a 5-month "stub" period.
o Since the beginning of the 5-month "stub" period, SL has reported a
staggering $18.6 million in restructuring charges through the quarter ended
September 30, 2001. Additional restructuring charges of $1.2 million are
projected for the quarter ending December 31, 2001, for a total of $19.8
million in charges. The $19.8 million in charges exceeds total cumulative
net profits reported by SL since July 31, 1990.
o CEO Owen Farren stated in SL's 1999 annual report that "we believe that SL
Industries' common stock represents an outstanding investment opportunity."
Since then, SL's share price dropped from $12.75 to recent prices of around
$6 - a decline of over 50%.
WE BELIEVE THAT THE INCUMBENT DIRECTORS HAVE AN UNACCEPTABLE CORPORATE
GOVERNANCE RECORD, AS EVIDENCED BY THE FOLLOWING:
o Prior to the Annual Meeting scheduled to be held on January 22, 2002, the
incumbent directors had not scheduled an annual meeting of stockholders for
close to two years.
We question whether this annual meeting was only scheduled as a result of
our legal action against SL, and why no meeting had been held in the past
two years in violation of New Jersey law, New York Stock Exchange
rules and standard corporate practice.
o In 1997, the Board eliminated cumulative voting for the election of
directors. Cumulative voting is a mechanism which can allow minority
stockholders to elect one or more directors. We believe the elimination of
cumulative voting had the effect of reducing minority stockholder rights.
WE BELIEVE THAT THE INCUMBENT DIRECTORS HAVE NOT PROVIDED AN ADEQUATE LEVEL OF
CORPORATE OVERSIGHT, AS EVIDENCED BY THE FOLLOWING:
The Board of Directors of a public company is charged with overseeing the
management of the company on behalf of the stockholders. Yet despite SL's
significant losses, the SL Board has recently awarded management lucrative
"golden parachutes." What were the compelling business reasons for awarding
"golden parachutes" to management of a company with results as poor as SL?
o Since we announced that we would challenge SL's incumbent directors with
our slate of nominees, certain SL executives entered into "change in
control" agreements with SL under which they would be entitled to
significant payments (over $1.1 million in the case of CEO Owen Farren and
over $360,000 in the case of Vice President David Nuzzo) and other benefits
if the executives are terminated following a change in control of SL. We
believe that the change in control agreements are unwarranted and a waste
of corporate assets in view of SL's stock price and operating performance,
as described in our proxy statement.
o Management has spent over $30 million in cash on acquisitions since 1998,
as disclosed in SL's public filings. In making such acquisitions, we
estimate that SL has increased its long-term debt from $833,000 to over $40
million, substantially increasing the financial risk to SL stockholders.
o We believe that SL is in a financially distressed state,
o management has discontinued SL's quarterly dividend - a dividend that
has been paid for years, as discussed in SL's public filings; and
o SL's auditors have indicated that they might have to modify their
report with respect to SL's ability to continue as a "going concern",
as disclosed in SL's public filings.
The directors and executive officers own outright in the aggregate less than 1%
of the outstanding shares of SL. We believe that the lack of significant actual
ownership of SL shares by the incumbent SL Board and management may contribute
to the SL Board's and management's lack of commitment to maximizing the value of
the SL shares.
As the second largest stockholder of SL, The RORID Committee believes that its
interests are clearly aligned with yours. We urge you to support our efforts by
signing, dating and returning your GOLD proxy card today. If you have already
voted for the incumbent management slate you have every right to change your
vote by signing and returning a later dated GOLD proxy. If you have any
questions or require any assistance with your vote, please contact Innisfree M&A
Incorporated, which is assisting us, at the address and toll-free numbers set
forth in the enclosed Proxy Statement.
THIS LETTER SUPERSEDES AND REPLACES THE LETTER TO STOCKHOLDERS PREVIOUSLY
DELIVERED TO STOCKHOLDERS ON OR ABOUT DECEMBER 21, 2001.
Thank you for your support,
Warren G. Lichtenstein
On behalf of The RORID Committee
Item 2
THIS PRESENTATION SUPERSEDES AND REPLACES THE PRESENTATION
PREVIOUSLY DELIVERED ON OR ABOUT DECEMBER 21, 2001
THE RORID COMMITTEE
"RESPONSIBLE OWNERS REPLACING INCUMBENT DIRECTORS"
THE RORID COMMITTEE
o The second largest stockholder of SL Industries.
o Believes that SL's historical financial and stock price performance has
significantly trailed its peer group.
o Has nominated its slate of directors in opposition to the SL Board.
o Elections for the Board will be held at the annual meeting of stockholders
on January 22, 2002.
THE RORID COMMITTEE
o The Committee, along with all of the participants in the solicitation, are
the beneficial owners of 850,800 shares (14.9%).
o The Committee is committed to maximizing shareholder value through a sale
of the company or other strategic alternatives.
NOMINEES FOR DIRECTOR
o Warren G. Lichtenstein
o Mark E. Schwarz
o James R. Henderson
o Glen Kassan
o Steve Wolosky
OUR NOMINEES
o Are committed to maximizing shareholder value through a sale of the company
or other strategic alternatives.
o Will constitute a majority of the current eight-member board if elected.
SL'S LAGGING SHARE PRICE
o We believe that SL's share price has lagged its peer group over the past
several years.
o During the period from July 31, 1995 through December 31, 2000, SL's stock
price performance has lagged its peer group index by 201% with cumulative
total returns for the S&P Electrical Equipment group index of approximately
308% compared to cumulative total returns for SL's shares of approximately
107%.
SL'S LAGGING SHARE PRICE
o On December 29, 2000, the date on which SL last compared its share price
to its peer group indexes, SL shares closed at $11.44. On December 11,
2001, the share price closed at $6.00 per share, representing a substantial
48% decrease since the beginning of 2001.
CONTINUED LOSSES
According to SL's Form 10-Q for the fiscal quarter ended September 30, 2001:
o SL realized net losses of approximately $7.5 million for the nine month
period ended September 30, 2001.
o SL recorded losses from the restructuring plan of approximately $8.2
million and $4.1 million in the second and third fiscal quarters of 2001,
respectively.
o SL expects to record approximately $1.2 million in losses from the
restructuring plan in the fourth fiscal quarter of 2001.
GOING CONCERN
We are extremely concerned with SL's ability to continue as a going
concern. According to SL's Form 10-Q for the fiscal quarter ended September 30,
2001:
o SL has exhausted the availability of funds under its credit facility with
$38.8 million of principal outstanding, as of September 30, 2001, of the
maximum $40 million availability.
o SL has advised its banks that it was in default of the financial covenants
in its credit facility at September 30, 2001.
o The auditors have advised SL that failure to resolve these matters prior to
the completion of their fiscal year 2001 audit may result in a modification
of their audit report with respect to the company's ability to continue as
a going concern.
REASONS FOR THE SOLICITATION
o We question whether the interests of the SL Board and management are
aligned with the interests of SL stockholders in view of their limited
ownership of securities of SL. According to public filings, the
directors and executive officers own outright in the aggregate less than 1%
of the outstanding shares of SL.
o We believe that the SL Board must promptly explore other alternatives to
maximize stockholder value including a sale of the entire company.
o On November 15, 2001, SL announced that the regular semi-annual cash
dividend payment has been suspended.
CHANGE IN CONTROL AGREEMENTS
o Since we announced that we would challenge SL's incumbent directors with
our slate of nominees, certain SL executives (Owen Farren, David Nuzzo and
Jacob Cherian) entered into "change in control" agreements with SL under
which they would be entitled to significant payments (over $1.1 million in
the case of CEO Owen Farren and over $360,000 in the case of Vice President
David Nuzzo) and other benefits if the executives are terminated following
a change in control of SL.
o Under the agreements, each such officer will be entitled to receive two times
(2.99 times for Mr. Farren) the average of his combined annual salary and
cash bonus for each of the previous three full calendar years and benefits
for up to 24 months (36 months for Mr. Farren) in the event the executive
is terminated within one year following a "change in control."
o We believe the change in control agreements are unwarranted and a waste of
corporate assets in view of SL's stock price and operating performance, as
described in our proxy statement.
SL BOARD'S RESTRUCTURING PLAN
o We believe that the SL Board's restructuring plan is not in the best
interests of the stockholders.
o On March 19, 2001, SL announced that it had engaged Credit Suisse First
Boston (CSFB) to explore a sale of the company.
o In November 2001, SL's Board announced that it did not believe that it was
in the best interests of the stockholders to sell the entire company.
o In November 2001, the Board also announced that it was in the process of
negotiating the sale of two subsidiaries of SL.
THE COMMITTEE'S VIEW ON THE SL BOARD'S RESTRUCTURING PLAN
o We believe that SL should be sold at the current time.
o We are concerned that the potential sale of these two subsidiaries will be
for substantial losses and will not maximize stockholder value for the SL
stockholders.
PROXY VOTE
o Stockholders of record at the close of business on December 5, 2001 are
entitled to vote at the annual meeting.
o Vote for Nominees committed to a sale of the company.
o If elected, our nominees will be subject to fiduciary duties which could
compel them to change their plans with respect to the sale of the company
or other transactions.
o Vote the GOLD Proxy. If you have already sent a WHITE proxy card to the SL
Board, you may revoke that proxy and vote against the election of SL's
nominees by signing, dating and returning the GOLD proxy card. The latest
dated proxy is the only one that counts.
The RORID Committee -- "Responsible Owners Replacing Incumbent Directors"