SCHEDULE 14A INFORMATION
Securities Exchange Act of 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Columbus McKinnon Corporation
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(Exact Name as Specified In its Charter)
The Columbus McKinnon Shareholders Committee
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: (1)
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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METROPOLITAN CAPITAL ADVISORS, INC.
660 MADISON AVENUE
NEW YORK, NEW YORK 10021
May 5, 1999
Mr. Timothy Tevens
Chief Executive Officer
Mr. Robert Montgomery, Jr.
Executive Vice President/Chief Financial Officer
Columbus McKinnon Corporation
140 John James Audubon Parkway
Amherst, NY 14228
Dear Tim and Bob:
As you know, Bedford Falls Investors, L.P. ("Bedford Falls") has been a
significant shareholder of Columbus McKinnon ("Columbus") since shortly after
the company's initial public offering three years ago. During that time my
colleagues and I have often met with you to discuss the company's business
strategy and ways of realizing greater value for shareholders. After much
waiting, the continued underperformance of Columbus's share price has eliminated
our remaining confidence in the board's current strategy. As a result, we and
others have decided to nominate an alternate slate of directors at the next
shareholder meeting. Let me explain the reasons for our decision in more detail.
At the outset, let me make clear that we recognize that operationally the
company has performed well. In fact, the investment community is also aware of
your operational strength and value, and is expecting even better performance to
come. Notwithstanding this, the company's stock has languished and has
underperformed broad stock market indices over any meaningful time frame, and
continues to do so even today. Despite this poor record, the current board of
directors has steadfastly refused to consider a sale of the company as a means
of maximizing shareholder value. This dismissive attitude towards the interests
of the public shareholders does nothing to attract new holders.
Several of our contacts with the company serve to demonstrate the reasons for
our conclusion:
- At a July 9, 1997, meeting, Rob Lietzow and I encouraged Bob
and then Chief executive Officer, Herb Ladds, Jr., to consider
a sale of the company as the most effective mechanism for
maximizing shareholder value. We discussed that such a sale
would provide shareholders with a substantial premium to the
then market price of $20 per share. The company's response was
that there were too many exciting opportunities available to
the company and a sale would "leave too much money on the
table". We took your representations at face value and awaited
the results of your strategic plan. So far, they have been
very disappointing. Over the nearly two years since that
meeting, Columbus's share price has appreciated by 5.0%. Over
the last twelve months, Columbus's share price has declined by
approximately 28.2%. Over comparable periods, the S&P 500
Index has appreciated by 46.8% and 19.4%, respectively.
- More recently, in March 1999, we met at the Schroder Wertheim
Industrial Conference, shortly after Columbus had completed
its acquisition of GL International. You described the
acquisition as being difficult and time consuming to
structure. In fact you had to overcome a highly levered
balance sheet making debt financing difficult, while at the
same time you were unable to use company stock as currency as
it was (and still is) so undervalued. This combined burden of
high leverage and low stock price will continue to retard the
company's ability to grow through
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meaningful acquisitions, as it is likely future acquisitions
will be equally difficult to consummate. As a result, I
reiterated that a sale of the company would be the better
route to maximize value for shareholders. Though you have
expressed that management's priority is to grow the business,
we believe that both the shareholder's goals and your own are
met by a sale that returns significant value to shareholders,
and at the same time provides management with new access to
expansion capital and financing.
In response, you described your own plan to address these
obstacles by attaining share price appreciation through
presenting at investment conferences and obtaining analyst buy
recommendations- the same plan that you have followed for
three years. To the best of our knowledge, this year you have
presented at a number of different investment forums, and four
research reports have been published about Columbus. Still,
despite rallies in the market, and in the industrial sector in
particular, the stock has shown no signs of being able to
sustain any significant appreciation and is trading at under
six times the $3.50 per share of cash earnings projected for
the current fiscal year. It is time for the board to
recognize, as we have, that your efforts to market the
company's stock as a means of surfacing shareholder value have
failed. Your repeated unwillingness to look to alternative
means of enhancing value speaks volumes about management's
view of outside shareholders.
- As we have become more concerned about the disappointing
performance of Columbus's share price, we began ourselves to
explore and evaluate alternatives for value maximization.
Toward that end, Rob Lietzow and I traveled back to Amherst on
March 17th of this year to discuss a range of specific
alternatives with you. We reported to you that our discussions
with numerous blue-chip financial buyers confirmed the
opportunity to sell the company at a price that would
represent a very substantial premium to the current market
price. Given management's interest and operational ability, I
encouraged you to consider working with one of these, or any
other private equity firm, to develop a plan to sell the
company or take it private. We made it clear that, so long as
fair value was offered, we were prepared to support such a
proposal over others that might not be as attractive to you
and other members of management. Simply put, whether involving
management, a financial buyer or a strategic buyer, any of
such transactions would likely return a large premium to
shareholders. Unfortunately, you rejected this suggestion for
the same reason you rejected a sale of the company two years
ago in July 1997 - not the right time to sell.
- Our information is that not only have you refused to seek a
transaction, but have refused to respond to unsolicited
inquiries to even determine what value is available for
shareholders. In addition to potential financial buyers, we
have also contacted investment bankers and potential strategic
acquirers of Columbus. Based on those conversations, we
confirmed to our satisfaction that if Columbus's Board of
Directors entered upon a value maximization process, a number
of qualified purchasers would be willing to acquire the
company at a price substantially in excess of the current
market price. In doing so we also referred interested parties
to Bear Stearns, the company's investment banker, only to
learn that all such approaches are being rebuffed, apparently
without regard to what offers might be made, and the premiums
that might be available.
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In light of all the above factors and conversations, we have concluded that the
interests of non-management shareholders requires that board control shift to
the public shareholders. Accordingly, it is our current intention to nominate an
alternative slate for a majority or more of the directors for election at the
next annual meeting of shareholders. This slate would be committed to
undertaking a value maximization strategy.
By proposing an alternate slate, we plan to give the shareholders of Columbus
the opportunity to choose which direction to head their company. We expect and
require that incumbent management do nothing that would impede the ability and
timing of the shareholders in making that choice. This includes ensuring that
the annual meeting be held in a timely fashion, with no more restrictions on
shareholders than imposed by the current governing instruments and past
practice.
In addition, we fully expect that the company's ESOP, as required by law and
fiduciary duties imposed by ERISA, will be voted solely with an eye to
maximizing the value of the shares for the benefit of plan participants. As you
know, allowing the current management Trustees to vote such shares or use such
shares to entrench management, is subject to ERISA fiduciary and "prohibited
transaction" provisions and could impose personal liability on ESOP Trustees /
Retirement Committee Members for the losses to the Plan, plus applicable
penalties.
We have attached a copy of our SEC Form 13D filing which reflects our decision.
Please feel free to call me with any questions you might have on our filing or
our decision.
Yours truly,
Jeffrey E. Schwarz
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The Committee is composed of Metropolitan Capital Advisors, Inc., which
beneficially owns 366,800 shares of Columbus McKinnon common stock; Metropolitan
Capital III, Inc., which beneficially owns 240,600 shares; Lakeway Capital
Partners, LLC, which beneficially owns 120,450 shares; Scoggin, Inc., which
beneficially owns 322,500 shares; and Scoggin, LLC, which beneficially owns
153,200 shares. The Committee's collective beneficial ownership, including
shares owned by certain affiliates of Committee members, of approximately
1,245,545 shares, represents about 8.49% of Columbus McKinnon's outstanding
common stock.
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ADDITIONAL PARTICIPANT INFORMATION
In addition to the participants named above, the following individuals
and entities also may be deemed to be participants in the Committee's proxy
solicitation: Bedford Falls Investors, L.P., of which Metropolitan Capital
Advisors, L.P. is the sole general partner, of which Metropolitan Capital
Advisors, Inc. is the sole general partner; Metropolitan Capital Advisors
International Limited, of which Metropolitan Capital Partners III, L.P. is the
investment advisor, of which Metropolitan Capital III, Inc. is the sole general
partner; Jeffrey E. Schwarz and Karen Finerman, as shareholders, directors and
executive officers of Metropolitan Capital Advisors, Inc. and Metropolitan
Capital III, Inc.; Yaupon Partners, L.P. and Yaupon Partners II, L.P., of which
Lakeway Capital Partners, LLC is the sole general partner; Robert F. Lietzow,
Jr., as managing member of Lakeway Capital Partners, LLC; Scoggin Capital
Management, L.P., of which Scoggin, Inc. is the sole general partner; Scoggin
International Fund, Ltd., of which Scoggin, LLC is the investment advisor; and
Curtis Schenker and Craig Effron, as shareholders, directors and executive
officers of Scoggin, Inc. and managing members of Scoggin, LLC.
A further description of the interests held by each of the above-named
participants is contained in the Schedule 13D filed by the Committee and each of
its members on May 6, 1999.
