SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
THE EASTERN COMPANY
(Name of Registrant as Specified in Its Charter)
MMI INVESTMENTS, L.L.C.
(Name of Person(s) Filing Proxy Statement)
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MILLBROOK CAPITAL MANAGEMENT
RECEIVES INDEPENDENT VOTE OF CONFIDENCE
Millbrook, N.Y. -- March 18, 1997 -- Millbrook Capital Management Inc.
("MCM") today announced that its MMI Investments, L.L.C. has received strong
independent support for its platform of maximizing shareholder value for The
Eastern Company (AMEX: EML) shareholders.
Institutional Shareholder Services Inc. ("ISS"), the nation's leading
proxy advisor to institutional investors, has issued a report recommending that
its clients reject The Eastern Company's incumbent slate of directors and
instead vote in favor of MMI Investments, L.L.C.'s slate of directors. The
conclusion of ISS' report reads as follows:
"ISS believes that adequate time has passed for Eastern's strategic
plan to yield demonstrated improvement in shareholder value -- and it has failed
to do so. Particularly noteworthy is the fact that Mr. Ohnell suggested selling
the company six years ago because of poor performance and was rebuffed in
anticipation of the benefits to be reaped by the strategic plan. Eastern
management defends the company's uninspired performance by its claim of running
a conservative operation, yet conservative has come to mean the status quo of
poor performance.
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"We therefore conclude that a board shakeup is needed. Although the
dissidents will only have three out of nine board seats, we believe they have
relevant expertise to contribute to the company in M&A, manufacturing and
business, and will serve to put pressure on the board to act on shareholders'
behalf. As shareholders themselves, they are open to selling the company to
another buyer in an open competition at the highest price. Management has been
alarmist at the notion of a highly leveraged transaction and the lack of
strategic fit between Mr. Scherer's buying company and Eastern. However, if MMI
completes its offer, the risk of future operations would be borne by MMI and not
Eastern's shareholders, who will have received cash for their shares. While
shareholders are giving up the company's dependable dividend stream (3.41
percent dividend yield), they could be earning a higher return on virtually any
other investment, including low-risk Treasury securities. In the absence of a
sale, the dissidents have put forth a sound action plan to improve Eastern's
performance, addressing expenditures, customer service, new product lines,
acquisitions and management incentives. It is much like the strategic plan
Eastern is said to be following, but MMI's approach is likely to be far more
aggressive.
"ISS also reverses its position from its original analysis regarding
the shareholder proposal. In view of the
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contested board, we believe it would be worthwhile to utilize an outside
financial advisor -- even DLJ, which MMI is willing to consider -- to seek
offers to purchase the company. Soliciting bids will not force a sale of
Eastern, as the dissidents will not have control of the board and management has
a poison pill at is disposal. Neither is an active solicitation likely to
attract 'bottom feeders' because MMI, through its offer, has already set a
$15.00 per share floor. Because Eastern's share price has risen 18 percent in
recent months as a result of MMI's offer, it is reasonable to expect that any
bids from other potential acquirers would be higher priced. Indeed some market
analysts and institutional investors have indicated in press that MMI's offer is
fair and that Eastern management has ignored shareholder value too long."
MCM, based in Millbrook, NY, is an investment firm owned by John S.
Dyson. MCM is also the manager of MMI Investments, L.L.C. that beneficially owns
178,400 shares, or 6.61% of the common stock of The Eastern Company. MCM
specializes in the acquisition and management of middle market companies. Until
recently, Mr. Dyson served as Deputy Mayor for Finance and Economic Development
of New York City.
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For more information contact:
Investor Contact: Media Contact:
John Nesbett Andy Lavin
Lippert/Heilshorn & Associate A. Lavin Communications
212-838-3777 212-354-2266
