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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:
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[ ] 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 Pursuant to Rule 14a-11(c) or Rule 14a-12
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BIRMINGHAM STEEL CORPORATION
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(Name of Registrant as Specified In Its Charter)
THE UNITED COMPANY SHAREHOLDER GROUP
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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.
(1) Title of each class of securities to which transaction applies:
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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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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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 was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THE UNITED COMPANY SHAREHOLDER GROUP
1005 GLENWAY AVENUE
BRISTOL, VIRGINIA 24201
Dear Fellow Shareholder:
The United Company Shareholder Group (the "United Group") is concerned
about certain statements made in recent letters sent to you by the current
management of Birmingham Steel Corporation ("BIR"). A summary of some of current
management's disconcerting statements, positions and tactics is as follows:
1. UNITED GROUP'S PLANS FOR SBQ OPERATIONS. The directors and current
management of BIR have misled you as to the United Group's true plans for BIR's
SBQ assets. Bob Garvey and current management assert that the United Group
intends to keep the SBQ assets. The United Group has never planned to keep the
SBQ assets indefinitely at any cost. On page 7 of our proxy statement we stated,
"The [United] Group believes that John Correnti and his management team need to
be installed immediately to restore the operation of the SBQ business and
thereby increase the market value of the SBQ assets so that a sale of such
assets would bring an acceptable price." We further stated on page 10 of our
proxy statement that the United Group needs to solve the problems at the Memphis
facility so that "either it will become a substantial contribution to the
Company's profitability or can be sold at a price that will provide the Company
a fair value." IT HAS NEVER BEEN OUR INTENTION TO ABSOLUTELY KEEP THE SBQ
ASSETS. THE ISSUE OF THIS PROXY FIGHT IS NOT WHETHER TO KEEP OR SELL THE SBQ
ASSETS, RATHER, IT IS A PROXY CONTEST FOCUSING ON THE COMPETENCY OF THE CURRENT
DIRECTORS AND MANAGEMENT OF BIR.
2. FAILURE TO TAKE RESPONSIBILITY. Bob Garvey and the directors of BIR
continue to accept no responsibility for the current state of the SBQ
operations, but rather, blame Jim Todd, who retired from his management duties
with BIR almost FOUR years ago. The following quote from an October 29, 1999
article in American Metal Market shows Mr. Garvey's latest attempt to disclaim
responsibility for the problems of BIR: "Several times during the interview,
Garvey asserted that he did not learn of Birmingham Steel's problems early in
his administration, so pursuing takeovers at Laclede Steel and Atlantic Steel
did not distract him from focusing on what needed to be done at Birmingham. He
said that Birmingham Steel's detailed financial records were not disclosed to
him when he took command. Only later did he learn of the "dysfunctional
management" that had prevailed. . ."(1) As concerned shareholders, Mr. Garvey's
lack of attention is surprising! CAN YOU AFFORD A CEO WHO PLACES BLAME ON OTHERS
AND TAKES NO RESPONSIBILITY FOR THE COMPANY'S PERFORMANCE UNDER HIS TENURE?
3. CURRENT MANAGEMENT'S FAILURE TO UNDERSTAND THE SBQ BUSINESS. The
United Group believes the real reason the SBQ assets have lost money is because
current management cannot properly run the SBQ operations. For example, the
Memphis plant is in its 25th month of start-up operations. Mr. Garvey even
admitted in BIR's 1998 Annual Report that, "The management team responsible for
start-up operations [at Memphis] was unable to successfully implement the
initial start-up plan." The fact is, under Mr. Garvey's leadership, the SBQ
operations have incurred significant losses because of management's inability to
properly run the SBQ assets at acceptable operating levels. Even more
discomforting and baffling is Mr. Garvey's recent statement that BIR may enter
"the low-end SBQ market." Given his track record, do you as a shareholder want
Mr. Garvey leading BIR into another SBQ venture?
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(1) Permission to use this quotation was neither sought nor granted.
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4. PERSONAL ATTACKS. In a dire attempt to retain control of your company,
current management and directors have resorted to personal attacks against John
Correnti and Jim Todd, two highly respected leaders in the steel industry who
have both previously been awarded the coveted "Steelmaker of the Year" honor by
New Steel Magazine. Mr. Correnti and Mr. Todd believe their records speak for
themselves.
5. INSUBSTANTIAL STOCK OWNERSHIP. Mr. Garvey criticizes the United Group
for owning approximately 8% of BIR's common stock. What Mr. Garvey fails to
point out is that BIR's directors and top executives own less than 1% of BIR's
stock, excluding options and restricted shares. Even more disconcerting is the
fact that the only recent purchases of shares in the open market by insiders
have been token purchases by two newly appointed directors and the purchase of
2,000 shares by the Corporate Secretary and 1,000 shares by the General Counsel.
One is left to question if current management has confidence in their own
leadership of the company.
6. INCREASE IN GOLDEN PARACHUTES. After learning of the United Group's
intentions to replace the Board of Directors and Mr. Garvey, current management
amended and restated BIR's Executive Severance Plan on SEPTEMBER 2, 1999, in
order to INCREASE BY 50% THE LUMP SUM CASH PAYMENTS paid to certain executives,
including Mr. Garvey, upon a change of control in the company (including a
successful proxy campaign by the United Group). MR. GARVEY was also awarded
LIFETIME MEDICAL AND HOSPITAL CARE on SEPTEMBER 20, 1999. As shareholders, the
United Group finds this action very disconcerting and the ultimate in
self-serving action.
7. PREVIOUS PERFORMANCE OF BIR. Current management claims that the
performance of BIR's core operations "under current management is demonstrably
better than under Todd's management." The United Group urges you to look at page
14 of BIR's Annual Report. Mr. Todd's last full fiscal year as CEO of BIR was
1995. In 1995, under Mr. Todd's leadership, BIR's income from continuing
operations was $36.9 million compared to $3.3 million in 1999 under Mr. Garvey.
Furthermore, the SBQ operations generated additional net income of $13.7 million
in fiscal 1995. Since that time, under the leadership of Mr. Garvey, the SBQ
operations have lost significant amounts of money. Furthermore, stockholders
equity has decreased from $459.7 million as of June 30, 1995 to $230.7 million
as of June 30, 1999.
8. DEBT INCREASE. Current management claims that BIR's current debt
levels were "caused" by Jim Todd. Again, current management desperately attempts
to deflect responsibility for BIR's massive increase in debt. The fact is UNDER
MR. GARVEY'S LEADERSHIP, BIR's long term debt and capital lease obligations
INCREASED from $314.5 million as of June 30, 1996 to $703 million as of
September 30, 1999.
As you know, current management is attempting to sell BIR's SBQ assets in
what Mr. Garvey has called "the worst industry conditions in over forty years."
The SBQ operations lost approximately $21 million in the first quarter of fiscal
year 2000. Given current industry conditions and the dismal performance of the
SBQ assets under the leadership of current management, the United Group believes
new management familiar with SBQ operations must be installed immediately to
restore BIR's SBQ operations to an acceptable production level and thereby
increase the sales price of the SBQ assets.
Current management has failed to tell you what price they expect to receive
for the SBQ assets in their distressed condition or how the disposal of the
following obligations related to the SBQ assets will affect that price:
- $75 million Leveraged Lease at Memphis
- $26 million in Solid Waste Disposal Revenue Bonds at Memphis
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- $15 million in Solid Waste Disposal Revenue Bonds at Cleveland
- $100 million in capital expenditures (as estimated by current management)
- Commitment to purchase DRI from American Iron Reduction LLC at a contract
price currently $30 over the spot price on the open market
After satisfying these obligations, the United Group questions whether there
will be any proceeds remaining to pay down BIR's revolver debt or senior notes.
We thank you for your attention to these important issues. To vote for the
United Group's director nominees please mark, sign, and date the enclosed BLUE
proxy card and return it in the enclosed postage-paid envelope. If you have
already signed and returned a BLUE proxy card, there is no need to send in the
enclosed proxy unless you subsequently signed a white proxy card sent to you by
the current management of Birmingham Steel. Only your latest dated proxy card
will count. IF YOU HAVE ALREADY RETURNED THE WHITE PROXY CARD SENT TO YOU BY
BIRMINGHAM STEEL, YOU MAY REVOKE THAT PROXY BY SIGNING, DATING AND MAILING A
LATER DATED BLUE PROXY CARD.
There is no need to sign or return a white proxy card if you plan to vote
for the United Group's director nominees. The United Group urges you to discard
any white proxy card you receive. If you have any questions or need assistance
in voting your shares, please call:
ChaseMellon
Toll-Free: (800) 636-8927
Sincerely yours,
The United Company Shareholder Group
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PROXY SOLICITED BY THE UNITED COMPANY
SHAREHOLDER GROUP
BIRMINGHAM STEEL CORPORATION 1999 ANNUAL
MEETING
THIS PROXY IS SOLICITED ON BEHALF OF
THE UNITED COMPANY SHAREHOLDER GROUP (THE
"GROUP") for use at the 1999 Annual
Meeting of Stockholders (the "Annual
Meeting") and/or in connection with a
written consent action conducted by the
Group. The undersigned hereby appoints
John D. Correnti and James A. Todd, Jr.,
and each of them, attorneys and proxies
with full power of substitution, to vote
in the name of and as proxy for the
undersigned at the Annual Meeting, and at
any adjournment thereof, and/or to
execute and submit to Birmingham Steel
Corporation (the "Company") a written
consent on behalf of the undersigned,
according to the number of votes that the
undersigned would be entitled to cast if
personally present on the following
matters.
ANNUAL MEETING
(1) To elect the following nominees as directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified: John D. Correnti; James A. Todd, Jr.; James W. McGlothlin; Donna
M. Alvarado; Robert M. Gerrity; Alvin R. Carpenter; Robert H. Spilman;
Jerry E. Dempsey; and Steven R. Berrard. You may withhold authority to vote
for any one or more of the nominees by writing their name in the space
provided below.
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[ ] FOR all nominees listed above(except as indicated to the [ ] WITHHOLD AUTHORITY to vote for all nominees
contrary below) listed above:
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(2) To approve and ratify the selection of Ernst & Young LLP as the independent
auditors for the Company and its subsidiaries for the fiscal year ending
June 30, 2000.
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[ ] FOR [ ] AGAINST [ ] ABSTAIN
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CONSENT ACTION
(1) To execute a written consent removing the Company's current Board of
Directors: William J. Cabiniss, Jr., C. Stephen Clegg, Alfred C. DeCrane,
Jr., E. Mandell de Windt, Robert A. Garvey, E. Bradley Jones, Robert D.
Kennedy, Richard de J. Osborne, and John H. Roberts. You may withhold
authority to execute and deliver a written consent removing any one or more
of the current Board of Directors by writing their name in the space
provided below.
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[ ] GRANT AUTHORITY to execute and deliver written consent [ ] WITHHOLD AUTHORITY to execute and deliver written
with respect to the removal of the current Board of consent with respect to the removal of the current Board
Directors (except as indicated below) of Directors
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(2) To execute a written consent electing the following persons (the "Group
Nominees") to the Board of Directors to serve until the next Annual Meeting
or until their successors are elected and qualified: John D. Correnti;
James A. Todd, Jr.; James W. McGlothlin; Donna M. Alvarado; Robert M.
Gerrity; Alvin R. Carpenter; Robert H. Spilman; Jerry E. Dempsey; and
Steven R. Berrard. You may withhold authority to execute and deliver
written consent with respect to any one or more of the Group Nominees by
writing their name in the space provided below.
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[ ] GRANT AUTHORITY to execute and deliver written consent [ ] WITHHOLD AUTHORITY to execute and deliver written
with respect to the election of all of the Group consent with respect to the election of the Group
Nominees (except as indicated below) Nominees
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OTHER ITEMS
(1) To consider and take action upon such other matters as may properly come
before the Annual Meeting or adjournments or postponements thereof.
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED FOR ALL
NOMINEES REFERRED TO IN PARAGRAPH (1) UNDER ANNUAL MEETING, FOR THE PROPOSAL
REFERRED TO IN PARAGRAPH (2) UNDER ANNUAL MEETING, AND ON SUCH OTHER MATTERS AS
MAY COME BEFORE THE ANNUAL MEETING AS THE PROXIES DEEM ADVISABLE, AND WILL GIVE
THE PROXIES THE AUTHORITY TO EXECUTE A WRITTEN CONSENT ON YOUR BEHALF REMOVING
AND REPLACING THE CURRENT BOARD OF DIRECTORS WITH THE GROUP NOMINEES.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD TODAY USING THE ENVELOPE
PROVIDED.
The undersigned revokes any prior proxies to vote the shares covered by this
Proxy.
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Signature
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Signature
Date: , 1999
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NOTE: Please sign exactly
as name appears hereon. When
shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
