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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 Section 240.14a-11(c) or Section 240.14a-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.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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.
[_] 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.
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Notes:
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FOR IMMEDIATE RELEASE
[LETTERHEAD OF THE POWELL GROUP]
COMPANY CONTACT:
Nanette Kelley
President
(504) 922-4540
THE POWELL GROUP FILES FIRST AMENDED DERIVATIVE
COMPLAINT AGAINST ENTIRE BOARD OF DIRECTORS
OR ERLY INDUSTRIES INC. (NASDAQ)
BATON ROUGE, LOUISIANA, SEPTEMBER 29, 1997... The Powell
Group, its wholly owned subsidiary Farmers Rice Milling Company and The Powell
Group President Nanette N. Kelley, who together own approximately 3.6% of the
common shares of ERLY INDUSTRIES INC. (NASDAQ:ERLY), Los Angeles, announced
today that they have filed in United States District Court, Central District of
California, a First Amended Derivative Complaint against ERLY, AMERICAN RICE,
INC. (NASDAQ:RICE) (ARI) and ERLY's entire board of directors.
On September 10, 1997, a jury returned verdicts for damages and costs
against Gerald Murphy, chairman and chief executive officer of ERLY, and Douglas
Murphy, chief operating officer and a director of ERLY, for nearly $18 million
in connection with litigation arising from the defendants' personal investment
in a speculative Texas real estate development project. The Murphys had caused
ERLY and ARI to become involved in disputes between the Murphys and their
former partners, and as a result of that involvement, the jury also found ERLY
and ARI jointly and severally liable for a portion of the damages and costs
suffered by the plaintiffs. Ultimately, the verdict could result in an award for
damages and costs against ERLY and ARI of as much as $10 million. As a result,
The Powell Group amended its recently filed lawsuit against Gerald Murphy,
alleging, among other things, breach of fiduciary duty, waste of corporate
assets, and the making of illegal corporate loans, to include all of ERLY's
directors.
"We believe that each ERLY director is accountable for the betrayal of the
company's shareholders for approving corporate funds to defend the Murphys for
civil fraud and conspiracy in the failure of a planned adult housing
development. We believe that the present composition of the ERLY board is
designed to make each director dependent on Gerald and Douglas Murphy. The
Murphys, with the approval of the other board members, have subjected ERLY to
substantial unnecessary damages, legal expenses and costs as a result of their
intentional breach of fiduciary duties," Kelley said
"We believe that the entire ERLY board was fully aware that the Murphy
legal defense was outrageously unfair to ERLY and its shareholders and was being
undertaken to benefit the Murphys personally at company expense. They knew that
it was a waste of corporate assets and would damage ERLY, but went ahead and
approved and acquiesced in this misconduct. They voted unanimously to continue
to advance funds for the Murphy legal defense in the Texas trial and to require
Gerald Murphy to repay no more than half of the total legal bills," she added.
On August 25, 1997, Kelley and The Powell Group filed a Proxy Solicitation
with the Securities and Exchange Commission seeking to elect a new board of
directors of ERLY.
A privately held holding company based in Baton Rouge, Louisiana, the
Powell Group has interests in rice farming, rice milling and storage, rice
hull-to-electricity generation, radio broadcasting, commercial and residential
real estate development and construction, travel management services and timber.
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