<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
------------------------
HEI, INC.
(Name of Subject Company)
------------------------
HEI, INC.
(Name of Person Filing Statement)
------------------------
COMMON STOCK, PAR VALUE $.05 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
------------------------
404160103
(CUSIP Number of Class of Securities)
------------------------
EUGENE W. COURTNEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HEI, INC.
P.O. BOX 5000
1495 STEIGER LAKE LANE
VICTORIA, MINNESOTA 55386
(612) 443-2500
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person Filing Statement)
------------------------
COPIES TO:
DEANNE M. GRECO
Moss & Barnett,
A Professional Association
4800 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4129
(612) 347-0287
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HEI, Inc. hereby amends and supplements its Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on
March 20, 1998 in response to the Tender Offer Statement on Schedule 14D-1 filed
by Fant Industries Inc., as set forth below.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended to add the following:
Exhibit 6 Letter to Shareholders dated June 10, 1998
Exhibit 7 Press release dated June 10, 1998
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
HEI, INC.
By /s/ EUGENE W. COURTNEY
-----------------------------------------
Eugene W. Courtney,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Dated: June 10, 1998
2
<PAGE>
[LOGO]
AN IMPORTANT MESSAGE FOR HEI SHAREHOLDERS:
- YOUR BOARD IS EXPERIENCED AND REPRESENTS ALL SHAREHOLDERS
- YOUR BOARD IS COMMITTED TO MAXIMIZING VALUE FOR ALL OF YOUR SHARES AND IS
ACTIVELY PURSUING THAT GOAL
- DO NOT JEOPARDIZE OUR PROGRESS BY SUPPORTING FANT'S EFFORTS TO SEIZE
CONTROL OF YOUR COMPANY WITHOUT PAYING A CONTROL PREMIUM FOR ALL OF YOUR
SHARES
- PLEASE SUPPORT YOUR BOARD'S ACTIONS BY SIGNING, DATING AND RETURNING THE
ENCLOSED WHITE PROXY CARD WITH A VOTE AGAINST PROPOSALS 1 AND 3 AND FOR
PROPOSAL 2
June 10, 1998
Dear Fellow Shareholder:
In his continuing quest to seize control of your Company without purchasing
all of your shares, Anthony Fant has now demanded a Special Meeting of
Shareholders for the purposes of: (1) seeking to remove all your current
independent Directors and replace them with his hand-picked nominees and (2)
seeking to eliminate protections currently available to you under the Minnesota
Control Share Acquisition Statute.
YOUR BOARD IS CONVINCED THAT FANT'S PROPOSALS ARE NOT IN THE BEST INTERESTS
OF HEI AND ITS SHAREHOLDERS. THEREFORE, IN ACCORDANCE WITH OUR FIDUCIARY DUTY TO
SERVE THE INTERESTS OF HEI AND ITS SHAREHOLDERS, WE STRONGLY AND UNANIMOUSLY
RECOMMEND A VOTE AGAINST FANT'S PROPOSAL TO REMOVE THE CURRENT INDEPENDENT
DIRECTORS ON THE BOARD (PROPOSAL 1) AND TO REMOVE THE PROTECTIONS PROVIDED TO
YOU UNDER THE MINNESOTA CONTROL SHARE ACQUISITION STATUTE (PROPOSAL 3). WE ALSO
URGE YOU TO SHOW YOUR SUPPORT FOR THE BOARD'S EFFORTS BY VOTING FOR THE ELECTION
OF THE CURRENT DIRECTORS (PROPOSAL 2).
Enclosed with this letter is our proxy statement, which describes the
Board's position in greater detail. Please read it carefully.
YOUR BOARD IS COMMITTED TO INCREASING SHAREHOLDER VALUE. IN ADDITION TO
PURSUING GROWTH THROUGH OPERATIONS, WE HAVE DIRECTED OUR FINANCIAL ADVISER TO
PURSUE ALTERNATIVES TO MAXIMIZE THE VALUE OF ALL OF THE SHARES.
We have achieved substantial growth and improvement of our business
operations over the past several years.
- TOTAL ANNUAL REVENUE HAS INCREASED FROM $8.5 MILLION IN 1990 TO $31
MILLION IN 1997
- DURING THE SAME PERIOD OUR ANNUAL PRE-TAX PROFIT HAS SKYROCKETED FROM A
LOSS OF $800,000 IN 1990 TO A PROFIT OF $4.0 MILLION IN 1997
- SINCE 1991, ANNUAL PRE-TAX PROFITS HAVE CONSISTENTLY EXCEEDED 12-13% OF
REVENUES
- SINCE 1990, BOOK VALUE PER SHARE HAS INCREASED FROM $0.77 AT THE END OF
1990 TO $4.17 AT FEBRUARY 28, 1998
In addition to pursuing continued growth through operations, we have
directed our financial adviser, Piper Jaffray Inc., to explore alternatives to
maximize the value of all shares. THE ELECTION OF FANT'S NOMINEES, HOWEVER,
WOULD JEOPARDIZE THOSE EFFORTS. Although there is no assurance that the pursuit
by Piper Jaffray of such alternatives will result in a transaction that is
preferable to continuing to operate HEI as an
<PAGE>
independent company, your current Board assures you that if we recommend any
alternative that would result in a change of control of HEI, that alternative
will provide a control premium for all shares. We strongly recommend a vote
AGAINST the removal of the current independent Directors (Proposal 1).
WE STRONGLY BELIEVE THAT FANT'S CONTROL OF THE COMPANY WILL NOT MAXIMIZE THE
VALUE OF ALL OF THE SHARES.
Fant states that, upon seizing control, he may buy up to 11.5% of the
outstanding shares pursuant to his conditional offer. Based on the number of
shares that Fant most recently reported as having been tendered, HE WOULD BUY
LESS THAN ONE-THIRD OF EACH SHAREHOLDER'S TENDERED SHARES EVEN IF HE DOES
COMPLETE THE OFFER.
We are concerned about Fant's ability to maximize value in the long run for
the public shareholders who will continue to own more than 70% of the shares
even if the tender offer is completed. Neither Fant nor any of the nominees
listed in his proxy statement appears to have knowledge or experience in the
Company's business, the custom design and manufacture of microelectronic
components, nor has Fant had experience in running a publicly traded company
with its attendant fiduciary duties to public shareholders.
If Fant takes control, your Board is concerned that the future value of the
publicly-held shares, constituting at least 70% of the currently outstanding
shares, will depend upon a board with insufficient experience in this industry
and insufficient independence from Fant to provide any assurance that they can
or will retain or improve the experienced executive talent now in place, or
provide the strategic direction required, for the benefit of HEI and its public
shareholders.
HEI's business is extremely technical and competitive. Fancy buzz words like
"paradigm shifts in leadership" and platitudes are not adequate substitutes for
the hard-earned experience and knowledge necessary for success in the
fast-moving microelectronic components industry.
Your current Board believes that there would be substantial downside
uncertainty in the future under these circumstances and, as a result, strongly
believes that there should not be a change of control in which no opportunity is
given to shareholders to sell all of their shares at a premium.
We strongly recommend a vote AGAINST the removal of the current Directors
(Proposal 1).
DO NOT GIVE UP THE PROTECTIONS THE MINNESOTA LEGISLATURE EXPRESSLY PROVIDED
TO YOU IN THE CONTROL SHARE ACQUISITION STATUTE.
We are also deeply concerned by Fant's efforts to eliminate the protections
afforded shareholders by the Minnesota Legislature in the Minnesota Control
Share Acquisition Statute against just the type of unfair, coercive tactics
involved in Fant's tender offer (Proposal 3).
In adopting the Control Share Acquisition Statute, the Minnesota Legislature
was particularly concerned about open market transactions and partial tender
offers that do not allow all shareholders to sell all their shares at control
premiums. The Control Share Acquisition Statute protects against these abuses by
preventing an acquiring shareholder from voting more than 20% of a company's
outstanding voting shares without the approval, by shareholder vote, of the
shareholders other than the acquiring shareholder and officers of the Company.
These provisions do not prevent a buyer from voting all of the shares acquired
in a merger transaction approved by the Board or acquired in an all cash tender
offer for all shares approved by a committee of disinterested Directors.
Fant does not want you to have these protections or to give you the voting
rights that the Minnesota Legislature gives you under the statute. As your
Directors, we believe these protections are extremely important to you and we
strongly recommend a vote AGAINST removing the protections afforded by the
Minnesota Control Share Acquisition Statute (Proposal 3).
PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE
PAID ENVELOPE PROVIDED WITH A VOTE AGAINST FANT'S PROPOSALS 1 AND 3.
2
<PAGE>
PLEASE SHOW YOUR SUPPORT FOR YOUR BOARD'S EFFORTS TO MAXIMIZE THE VALUE OF
ALL SHARES BY VOTING FOR THE ELECTION OF THE CURRENT DIRECTORS (PROPOSAL 2).
EVEN IF YOU HAVE ALREADY VOTED FOR FANT, YOU HAVE EVERY RIGHT TO CHANGE YOUR
MIND. REMEMBER, ONLY YOUR LATEST DATED, SIGNED PROXY CARD COUNTS. MOREOVER, NO
TENDERED SHARES HAVE BEEN PURCHASED BY FANT AND YOU HAVE EVERY RIGHT TO VOTE ANY
TENDERED SHARES FOR YOUR DIRECTORS AND AGAINST THE FANT PROPOSALS.
Thank you for your support.
HEI, Inc. Board of Directors
Robert L. Brueck Eugene W. Courtney William R. Franta Frederick M. Zimmerman
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK OR BROKER, ONLY THAT
ORGANIZATION CAN VOTE YOUR SHARES. PLEASE DIRECT THE PERSON RESPONSIBLE FOR
YOUR ACCOUNT TO EXECUTE ON YOUR BEHALF A WHITE PROXY CARD WITH A VOTE AGAINST
PROPOSALS 1 AND 3 AND FOR PROPOSAL 2.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE, PLEASE CONTACT OUR
PROXY SOLICITOR:
INNISFREE M&A INCORPORATED
TOLL FREE--1-888-750-5834
501 MADISON AVENUE
20TH FLOOR
NEW YORK, NY 10022
3
<PAGE>
NEWS RELEASE
- --------------------------------------------------------------------------------
[LOGO]
- --------------------------------------------------------------------------------
P.O. Box 5000
Victoria, Minnesota 55386
(612) 443-2500
www.heii.com
- --------------------------------------------------------------------------------
CONTACT: Eugene W. Courtney, CEO FOR IMMEDIATE RELEASE
HEI DISTRIBUTES PROXY MATERIALS; EXPLORING POSSIBLE "STRATEGIC ALTERNATIVES"
MINNEAPOLIS, Minnesota (June 10, 1998)--HEI, INC. today announced that it is
filing definitive proxy materials with the Securities and Exchange Commission
and is in the process of mailing such materials to shareholders in connection
with a Special Meeting of Shareholders to be held at 10:00 a.m., August 4, 1998
at the University of Minnesota Landscape Arboretum in Carver County. The meeting
is being held at the request of Fant Industries Inc. The Board of Directors
urges shareholders to return the white proxy card included with the proxy
materials and not to return any green cards solicited by Fant.
"Now that we have filed our proxy materials, we are in a position to solicit
proxies from our shareholders," Eugene W. Courtney, CEO of HEI said. "We are
anxious to have a full, fair and adequate discussion with our shareholders
before the August 4 meeting concerning the future direction of the Company and
the Board's continuing efforts to maximize the value of all shares. We urge our
shareholders to review our proxy statement carefully. Mr. Fant, through his
continuing suggestions that the Board accelerate the meeting, apparently does
not want to have a full airing of the issues raised by his efforts to seize
control of the Company without paying a premium for all shares. As a practical
matter, his requested acceleration of the meeting would have required the
Company's Board to hold a meeting before our proxy materials even reached our
shareholders."
The HEI Board also announced that it has engaged Piper Jaffray Inc. to
explore possible strategic alternatives to increase value for all shareholders.
"We are pleased to be working with Piper Jaffray," Mr. Courtney said. "Although
there can be no assurance that pursuit of these alternatives will lead to a
transaction that is preferable to continuing to operate HEI as an independent
company, the Board has instructed Piper Jaffray to pursue such alternatives
diligently."
- --------------------------------------------------------------------------------
HEI IS A MINNESOTA-BASED COMPANY SPECIALIZING IN THE DESIGN AND MANUFACTURE
OF ULTRAMINIATURE MICROELECTRONIC DEVICES AND HIGH TECHNOLOGY PRODUCTS
INCORPORATING THOSE DEVICES. THE COMPANY'S STOCK TRADES ON THE NASDAQ NATIONAL
MARKET UNDER THE SYMBOL HEII.
- --------------------------------------------------------------------------------
PARTICIPANT INFORMATION
The following information is provided pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended, and Rule 14a-11(b)(2) thereto.
Participants in the solicitation are HEI, directors of HEI and certain senior
management. Their beneficial ownership interests in HEI Common Stock are as
follows: Robert L. Brueck, Director, 32,000 shares, including 30,000 shares
subject to options exercisable within 60 days; Eugene W. Courtney, Chief
Executive Officer and Director, 160,547 shares, including 75,000 shares subject
to options exercisable within 60 days; William R. Franta, Director, 45,211
shares, including 40,000 shares subject to options exercisable within 60 days,
Jerald H. Mortenson, Vice President of Finance and Administration, 99,179
shares, including 30,000 shares subject to options exercisable within 60 days;
Donald R. Reynolds, President, no shares; and Frederick M. Zimmerman, Director,
30,900 shares, including 30,000 shares subject to options exercisable within 60
days.
