SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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14a-6(e)(2))
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[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
THE EASTERN COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
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The Eastern Company IMMEDIATELY
112 Bridge Street
P.O. Box 460 Arthur Crozier
Naugatuck, CT 06770 Georgeson & Company
(212) 440-9861
AN OPEN LETTER TO JOHN DYSON
FROM THE DIRECTORS OF THE EASTERN COMPANY
March 19, 1997
Mr. John Dyson
RR 1
Box 167D
Wing Road
Millbrook, NY 12545
Dear Mr. Dyson:
We, all of the Directors of The Eastern Company, strongly believe the proxy
fight you and your affiliates, MMI Investments, L.L.C. and Millbrook Capital
Management Inc., are waging in furtherance of your hostile, highly leveraged
offer for the Company is harmful to the Company and its shareholders. FOR THE
REASONS STATED BELOW, WE ARE URGING ALL OUR SHAREHOLDERS TO REJECT YOUR CAMPAIGN
BY SIGNING AND RETURNING A WHITE PROXY CARD WITH A VOTE IN FAVOR OF MANAGEMENT.
EASTERN'S FINANCIAL STRENGTH AND THE VALUE
IT WILL PRODUCE BELONG TO
ALL THE SHAREHOLDERS, NOT JUST TO YOU
We have worked hard to build a strong financial base from which to create
long-term value for our shareholders. WE BELIEVE THAT YOU ARE TRYING TO USE THAT
STRENGTH, WHICH RIGHTFULLY BELONGS TO ALL SHAREHOLDERS, TO SUPPORT YOUR HIGHLY
LEVERAGED OFFER AND THEREBY DEPRIVE THE SHAREHOLDERS OF THE VALUE THAT STRENGTH
WILL PRODUCE.
We know how you and your family made your millions: by buying companies and
selling them at a profit. We do not believe that you should profit at the
expense of our other shareholders.
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Eastern is now poised to increase shareholder value through future growth. Our
financial strength permits us to continue our program of strategic acquisitions.
Since 1994, we have made a number of such acquisitions: Prestolock (1994),
Precision Components (1995) and certain assets of Excel Mining Systems (1996).
Further, we are also continuing our new product design efforts.
These efforts are now paying off. Despite the anticipated downturn in the first
quarter of 1996, normal operating profits increased dramatically over the rest
of the year. We fully expect this trend to continue. Indeed, operating profits
for the first two months of 1997 are ahead of target.
Your campaign ignores these facts. We do not want shareholders misled into
thinking that Eastern does not have a bright future. Clay Lifflander, another of
the Dyson/MMI would-be directors, knows that the opposite is true: HE SAID THAT
"EASTERN IS A WONDERFUL COMPANY WITH FOUR TO FIVE BUSINESSES IN NICHE
MANUFACTURING MARKETS, ALL WITH HIGH GROWTH MARGINS," AND BRAGGED ABOUT YOUR $15
PER SHARE LEVERAGED BUYOUT PROPOSAL, "HOW OFTEN DO YOU FIND A DEAL LIKE THAT?"
YOUR COSTLY, DISRUPTIVE AND
SELF-INTERESTED CAMPAIGN IS, IN OUR VIEW,
HARMFUL TO THE LONG-TERM INTERESTS OF THE SHAREHOLDERS
YOUR COSTLY AND DISRUPTIVE EFFORTS HAVE, IN OUR VIEW, BEEN HARMFUL TO THE
LONG-TERM INTERESTS OF THE SHAREHOLDERS. You have not withdrawn your offer,
which we believe would shortchange Eastern's shareholders. Further, you and your
other nominees appear to have a substantial conflict of interest. If elected,
won't you have a STRONG SELF-INTEREST IN SELLING THE COMPANY TO YOURSELVES AT
THE CHEAPEST POSSIBLE PRICE?
THE SHAREHOLDERS' INVESTMENT IS NOT
A PLAYTHING FOR YOU TO "HAVE A LOT OF FUN WITH"
If, on the other hand, you are not seeking election to further your purchase of
the Company, we fail to see what you will accomplish other than disruption and
distraction. HOW ARE YOUR THREE NOMINEES QUALIFIED TO SERVE AS DIRECTORS OF THE
EASTERN COMPANY?
You are a millionaire financier and winery owner who dabbles in politics, most
recently as a Deputy Mayor of New York City. WE HAVE TO QUESTION YOUR COMMITMENT
TO THE SERIOUS BUSINESS OF SERVING THE LONG-TERM INTERESTS OF EASTERN'S
SHAREHOLDERS. WHEN EASTERN'S DIRECTORS, AFTER CAREFUL CONSIDERATION, REJECTED
YOUR LEVERAGED BUYOUT PROPOSAL, YOU SAID: "I THINK WE'RE GOING TO HAVE A LOT OF
FUN WITH THIS."
Your fellow nominee, Clay Lifflander, 34 year-old president of your investment
vehicle, appears to have no relevant manufacturing experience.
Your other nominee, George Shearer, is the president of a portfolio company you
intended to use to acquire Eastern, even though it has only 1/4 of Eastern's net
worth. That company makes flexible shaft products -- a product line entirely
unrelated to Eastern's businesses.
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AS WE TOLD YOU LAST SUMMER, WE BELIEVE YOUR HOSTILE OFFER IS NOT IN THE BEST
INTERESTS OF THE COMPANY, ITS SHAREHOLDERS, EMPLOYEES, CUSTOMERS, CREDITORS,
SUPPLIERS OR THE COMMUNITIES IN WHICH WE HAVE FACILITIES. OUR BELIEF IS THE SAME
CONCERNING YOUR PROXY FIGHT.
This letter is a summary of the reasons why we strongly urge our shareholders to
defeat the costly, disruptive and self-interested proxy fight you started, by
signing, dating and returning a WHITE proxy card.
Very truly yours,
THE BOARD OF DIRECTORS OF THE EASTERN COMPANY
John W. Everets Charles W. Henry
Chairman of H.P.S.C. Inc. Partner
Boston, MA Kernan & Henry
(Financial Services) Waterbury, CT
Ole K. Imset Leonard F. Leganza
Director of Manufacturing, Financial and Business Consultant
Allen Bradley, Rockwell International Farmington, CT
Manchester, NH
Russell G. McMillen David C. Robinson
Chairman of the Company President of The Robinson Company
(Until April 24, 1996) Waterbury, CT
Stedman G. Sweet Donald S. Tuttle, III
President and Chief Executive Officer Account Executive and Vice President
of the Company Paine Webber
Middlebury, CT
Donald E. Whitmore, Jr.
Vice President, Treasurer
and Secretary of the Company
