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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
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ERLY INDUSTRIES INC.
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(Name of Registrant as Specified In Its Charter)
THE POWELL GROUP
FARMERS RICE MILLING COMPANY, INC.
NANETTE N. KELLEY
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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.
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[_] Check box if any part of the fee is offset as provided by Exchange
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[LETTERHEAD OF THE POWELL GROUP]
ERLY INDUSTRIES SHAREHOLDERS - ACT NOW
TO MAXIMIZE THE VALUE OF YOUR INVESTMENT
EVEN IF YOU ALREADY SIGNED A PROXY CARD FOR ERLY INDUSTRIES, YOU STILL HAVE TIME
TO MAKE AN INFORMED DECISION. REMEMBER, ONLY YOUR LATEST DATED PROXY COUNTS!
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September 5, 1997
Dear Fellow ERLY Industries Shareholder:
I am Nanette Kelley, President of The Powell Group, and we are seeking your
support to replace the Board of Directors of ERLY Industries, Inc. at ERLY's
Annual Meeting of shareholders to be held on September 26. We are one of ERLY
Industries' largest shareholders with ownership of 188,333 shares, or
approximately 3.6% of the Company's outstanding common stock. WE STRONGLY
BELIEVE THAT THE BOARD OF DIRECTORS AND MANAGEMENT OF ERLY ARE ENTRENCHED AND
INEFFECTIVE AND MUST BE REPLACED WITH A NEW BOARD AND SENIOR MANAGEMENT
DEDICATED TO INCREASING THE VALUE OF YOUR INVESTMENT IN ERLY.
Accordingly, we have commenced a proxy solicitation to replace ERLY's
current Board of Directors with The Powell Group's highly-qualified and
experienced nominees -- directors who will be committed to representing
effectively your interests and the interests of all ERLY shareholders. To
succeed, however, we need your support regardless of the size of your investment
in ERLY. WE URGE YOU TO SUPPORT OUR EFFORTS TO MAXIMIZE ERLY SHAREHOLDER VALUE
BY SIGNING, DATING, AND PROMPTLY MAILING YOUR BLUE PROXY CARD.
TAKE A CLOSER LOOK AT ERLY'S
RECORD
Notwithstanding what many observers believe is the greatest bull market in
U.S. history, your ERLY investment has, in our opinion, woefully under performed
the stock market. On August 31, 1987, your ERLY stock traded at $7.016 per share
(as adjusted for stock dividends). Ten years later (by anyone's standards, a
true measure of long-term performance) on August 29, 1997, your ERLY stock was
traded at $8.875 per share. During the same time period, the return of S&P Food
Products Companies has increased approximately 244% and the return of the S&P
500 has increased approximately 173% while ERLY's stock price has increased only
26.5%. Take a closer look at ERLY's performance -- YOU TOO BE THE JUDGE OF
ERLY'S BOARD AND MANAGEMENT.
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YOUR ERLY STOCK PRICE HAS REMAINED BASICALLY FLAT OVER A DECADE!
MURPHY'S LAW = DISMAL PERFORMANCE
ERLY's dismal stock price performance, in our view, is directly
attributable to the lack of effective leadership of both its Board of Directors
and senior management, led by longtime Chief Executive Officer Gerald D. Murphy,
and his son Douglas A. Murphy. Unfortunately, ERLY shareholders have firsthand
experience with Murphy's law, having watched the value of their investment
languish as well as never having received a cash dividend. Here are some of the
reasons why your stock price has trailed the market, and why you need to act to
replace ERLY's Board of Directors and management. TAKE A CLOSER LOOK AT
"MURPHY'S LAW":
. FAILED DIVERSIFICATION ATTEMPTS: ERLY has suffered through three (3) failed
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diversification attempts in the juice, wine and finance business. This has
depleted your Company's treasury of cash and diluted your investment in ERLY.
It has resulted in a $44 Million net operating loss carry-forward;
. LIQUIDITY CRISIS: ERLY was wounded by a liquidity crisis in 1993 which
brought it, and your investment, to the brink of bankruptcy;
. A DEFAULT ON ITS PUBLIC DEBT: ERLY defaulted on its public debt at maturity in
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1993, thereby severely damaging its reputation in the credit markets and its
ability to access credit at competitive rates;
. COMMON STOCK DELISTED: ERLY's shareholders suffered when ERLY's common stock
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was delisted from NASDAQ for almost a full year.
. BURDENED WITH EXCESSIVE AND EXPENSIVE DEBT: ERLY's balance sheet reflects the
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Company's continuing problems. ERLY is now heavily leveraged and burdened
(through its 81% owned subsidiary) with very expensive mortgage notes (these
notes cost nearly 15% in annual interest payments) and ERLY suffers from a
total debt to equity ratio of 6:1;
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. LACK OF DIRECTOR INDEPENDENCE: ERLY's five-man Board is dominated by insiders
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-- three of whom are company employees, and a fourth member who is a paid
consultant to ERLY -- resulting in a Board effectively controlled by Gerald
Murphy. In our view, the Murphy-dominated Board is not accountable to all ERLY
shareholders; and
. REDUCTION IN SHAREHOLDER RIGHTS: ERLY's Board is attempting to take action to
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reduce shareholder rights. Incredible as it may seem, Murphy is asking
shareholders to remove two time-honored shareholder rights -- cumulative
voting and the ability to act by written consent procedure. We believe these
proposals clearly show Murphy's intention to entrench himself and strike a
final blow to the principles of shareholder democracy at ERLY Industries.
We believe that the dismal performance of ERLY and your investment reflects
a total lack of commitment and ability of ERLY's Board and senior management to
act in the best interests of shareholders and to take steps necessary to enhance
shareholder value. The time for change is now. Gerald Murphy and his family
have been running your Company for over 20 years and shareholders, other than
the Murphys, have very little to show for it. It's time to put an end to
Murphy's law -- the future of your investment may depend on it. SUPPORT OUR
EFFORTS BY SIGNING, DATING AND PROMPTLY MAILING YOUR BLUE PROXY CARD.
THE POWELL GROUP AND ITS PLAN
The Powell Group is a diversified holding company based in Baton Rouge,
Louisiana with a 102 year record of success. With operating interests in rice
milling and farming and rice hull-fired power generation, to name but a few. The
Powell Group offers ERLY shareholders management expertise, a well-conceived
business plan which we believe will reverse ERLY's poor performance and a
commitment to enhancing shareholder value.
THE POWELL GROUP'S BUSINESS PLAN TO ENHANCE SHAREHOLDER VALUE IS PROPOSED
TO SOLVE THE THREE MAJOR CRISES FACING YOUR COMPANY: CAPITAL, CASH AND
CONFIDENCE. We believe that adoption of our plan will quickly restore ERLY's
balance sheet and improve profitability. Indeed, we believe ERLY's core business
holds great promise and can achieve exemplary standards of performance through
professional, competent management. MOST IMPORTANT, HOWEVER, OUR PLAN IS
DESIGNED TO ENHANCE VALUE FOR ALL ERLY SHAREHOLDERS. PLEASE TAKE A CAREFUL LOOK
AT OUR PLAN TO RESTORE ERLY:
CAPITAL
INCREASE SHAREHOLDERS' EQUITY. We will immediately adopt a policy of building
shareholder equity. As the first step in executing this policy, we will divest
non-core, under-performing operations to pay down debt, strengthen ERLY's
balance sheet and thereby increase shareholder value.
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REDUCE THE COST OF BORROWED FUNDS. The Company's 81% owned subsidiary, American
Rice, currently pays an effective 15% interest rate on $100 Million of mortgage
notes issued in 1995. By refinancing that debt at 9-10% fixed rates, annual
interest costs will be reduced by almost $5 Million.
ENTER STRATEGIC NEW MARKETS WITH FOOD PRODUCTS. We intend to aggressively enter
new markets with potential for increased profitability. For example, there is an
immediate need to exploit the strategic relationship between rice and olives in
the United States and international markets. Your new management team will focus
on value-added products to increase ERLY's profitability. We also intend to
reduce risks in foreign markets through effective diversification of sales
efforts, thereby spreading sales so that we do not depend upon any single market
for more than 10% of sales.
ACQUIRE DIVERSIFIED STRATEGIC ASSETS. After realizing an acceptable increase in
shareholders' equity and ERLY's profitability, we intend to acquire assets which
integrate vertically into each of ERLY's business lines. Any such acquisitions
will meet our stringent standards, including being immediately added to
earnings.
PAY DIVIDENDS. Acknowledging that the shareholders deserve a cash return on
their investment, as soon as practicable in light of the company's current
financial situation, we will adopt a policy regarding distribution of earnings
on an annual basis. Eventually, our goal is to pay quarterly dividends to
shareholders.
CASH
IMPROVE ERLY'S RELATIONSHIPS WITH SUPPLIERS TO REDUCE RAW SUPPLY COSTS. ERLY's
current financial situation restricts its ability to pay for supplies at time
of purchase, thereby increasing ERLY's costs. We will improve payment times to
suppliers and thereby reduce purchasing costs.
REDUCE OVERHEAD COSTS. For example, ERLY presently pays in excess of $1 Million
annually in unnecessary occupancy costs. Savings will be achieved by closing
unnecessary offices (including the Company's high-priced, penthouse office in
Los Angeles), and moving company offices to less expensive space.
REDUCE OPERATIONAL COSTS. We intend to adopt disciplined management practices
and thoroughly examine budgets and budgeting practices for opportunities to
reduce expenditures throughout the company.
RESOLVE OUTSTANDING, EXTRAORDINARY LITIGATION. ERLY's exposure from
extraordinary litigation is enormous and needs to be reduced. We will use our
management skills and best efforts to resolve such litigation, to the extent
such measures are possible.
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CONFIDENCE
RESTORE CONFIDENCE WITH THE FINANCIAL COMMUNITY. We will launch a public
relations campaign for the investment community, announcing and explaining the
significant changes at ERLY. Our focus will be to restore confidence in the
company and its new management and board of directors in an effort to increase
the marketability of ERLY stock. We believe these efforts will increase
shareholder value.
RESTORE CONFIDENCE WITH ITS SHAREHOLDERS. We will enact a plan of regular and
open communications with all ERLY shareholders. Shareholder participation will
be encouraged and we will provide opportunities regularly for shareholders to
meet with members of their board of directors and management.
The Powell Group is offering ERLY shareholders a new, highly qualified and
experienced Board of Directors and management team which will bring to ERLY a
comprehensive and workable business plan, and significant management experience
in the rice business, which contributed over 80% of ERLY's revenues for the
fiscal year ended March 31, 1997. Further, the new Board and management team
will be governed by a set of values that include honesty, forthrightness,
integrity and a strong commitment to improve shareholder value. We urge you to
review our proxy statement for more information on The Powell Group and its
nominees. THEN, SIGN, DATE AND MAIL YOUR BLUE PROXY CARD.
IT'S TIME FOR A CHANGE
On August 15, ERLY announced 1st Quarter operating results--a loss of
$4,700,000--underscoring the need for immediate change. It's time for a new
Board of Directors and management who will work for your interests and who are
dedicated to maximizing the value of your investment. We urge you to support our
efforts to replace the Board of Directors and management, to protect valuable
shareholder rights and to enhance the value of your investment in ERLY. PLEASE
SIGN, DATE AND PROMPTLY MAIL YOUR BLUE PROXY CARD SUPPORTING THE POWELL GROUP'S
NOMINEES AND OPPOSING MANAGEMENT'S PROPOSAL TO ELIMINATE CUMULATIVE VOTING AND
THE RIGHT OF SHAREHOLDERS TO ACT BY WRITTEN CONSENT. YOUR VOTE IS IMPORTANT, SO
PLEASE ACT TODAY.
If you have any questions, please call us collect at (504) 922-4663. You
may also call D.F. King & Co., Inc., which is assisting us, at the toll free
number provided below.
We are committed to acting in the best interests of all ERLY shareholders
and to seeing the value of our investment--and yours--enhanced. Thank you for
your support.
Sincerely,
/s/ Nanette N. Kelley
Nanette N. Kelley
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IMPORTANT
* Be sure to sign, date and mail your BLUE proxy card. We urge you not to
sign any card which is sent to you by ERLY Industries. REMEMBER, EACH
PROPERLY EXECUTED CARD YOU SUBMIT REVOKES ALL PRIOR CARDS.
* If any of your shares are held in the name of a bank, broker or other
nominee, please contact the party responsible for your account and direct
him/her to vote on the BLUE proxy card. You should also return your BLUE
proxy by mail once received.
* If you have any questions or need assistance in voting your shares, please
contact:
D.F. KING & CO., INC.
1-800-290-6430
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