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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
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HEI, INC.
(Name of Subject Company)
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HEI, INC.
(Name of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.05 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
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404160103
(CUSIP Number of Class of Securities)
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EUGENE W. COURTNEY
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)
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COPIES TO:
DEANNE M. GRECO
Moss & Barnett, A Professional Association
4800 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4129
(612) 347-0287
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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, as amended (the "Schedule 14D-9"), in response to the Tender
Offer Statement on Schedule 14D-1 filed by Fant Industries Inc., as set forth
below. Capitalized terms used but not defined in this Amendment have the
meanings given them in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4 is hereby amended to add the following:
(a) On July 13, 1998, the Bidder amended its Offer by increasing the amount
to be paid for Shares accepted for payment pursuant to the Offer from $8.00 per
share to $9.00 per share (the "New Price"), as set forth in Amendment No. 24 to
the Bidder's Schedule 14D-1.
HEI's Board of Directors, along with its legal advisers, held a special
meeting on July 16, 1998 to review the New Price and its impact on the Board's
analysis of the Offer. At the meeting, the Board determined that the Offer, as
amended, is not in the best interests of the Company and its shareholders and
renewed its recommendation to the holders of the Shares that they not tender any
of their Shares pursuant to the Offer.
A copy of a letter to the Company's shareholders communicating the Board's
recommendation and a form of press release announcing the recommendation are
filed as Exhibits 8 and 9 hereto, respectively, and are incorporated by
reference herein.
(b) In reaching its conclusions, the Board determined that the Bidder's
amendment of the Offer by announcing the New Price did not alter the Board's
concerns regarding the Offer's coercive structure, highly conditional nature,
the limited number of shares for which the Offer is made, and the possible risks
for holders of Shares not purchased in the Offer. The following summarizes the
Board's concerns, as more fully set forth in the Schedule 14D-9:
(i) The Offer is for only 11.5% of the outstanding Shares, but is
conditioned on both a change in control of the Board and redemption of the
Rights issued under the Company's Rights Plan.
(ii) The value of the remaining Shares (in excess of 70% of the
outstanding Shares) that would not be owned by Mr. Fant after the
consummation of the Offer would in large part be subject to the performance
of Mr. Fant and his chosen directors.
(iii) The future opportunity to sell to Mr. Fant Shares not purchased in
the Offer will be limited, and future sales on the open market may be
adversely affected if the Offer is completed.
(iv) The Offer is highly conditional, and the Bidder has the absolute
right to withdraw the Offer if any of its conditions are not met.
(v) Even if the Offer is completed, Mr. Fant will have purchased Shares
at different prices, enabling him to acquire control of the Company at an
average price per share of $7.20 for less than 30% of the Shares.
(vi) Shareholders may be entitled under federal securities laws to
receive more information about the ownership or control of Shares by
Steichen and its officers and directors before determining whether to tender
their shares in the Offer.
(vii) The timing of the Offer may adversely affect the plans and
prospects of the Company.
FOR ALL OF THE FOREGOING REASONS, THE BOARD DOES NOT BELIEVE THAT THE OFFER,
AS AMENDED, IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND
RECOMMENDS THAT THE HOLDERS OF THE SHARES REJECT THE OFFER AND NOT TENDER ANY OF
THEIR SHARES PURSUANT THERETO.
2
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended to add the following:
Exhibit 8 Letter to Shareholders dated July 17, 1998.
Exhibit 9 Press Release dated July 17, 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.
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<S> <C> <C>
HEI, INC.
By /s/ EUGENE W. COURTNEY
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Eugene W. Courtney,
CHIEF EXECUTIVE OFFICER
</TABLE>
Dated: July 16, 1998
3
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Exhibit 8
Box 5000
1495 Steiger Lake Lane
Victoria, MN 55386
(612) 443-2500
Fax (612) 443-2668
[LOGO]
July 17, 1998
Dear Fellow Shareholder:
There he goes again. Now Anthony J. Fant has raised the purchase price in
his partial tender offer FOR ONLY 11.5% OF HEI'S SHARES from $8 to $9 per share.
We believe this is simply another Fant tactic that draws attention away from the
real issues. Your Board unanimously recommends that you not tender your shares
to Fant. The enclosed amendment to Schedule 14D-9 sets forth our reasons for
that recommendation.
In short, the Board believes that you should focus on the following:
- Fant's amended offer is still for only 11.5% of HEI's shares (not for all
the shares that you might want to sell). What does that mean to you? Based
on Fant's figures, if you tender 100 shares, 68 of those shares would be
sent back to you without any payment (and even more shares would be
returned if more shares are tendered by other shareholders). THE FUTURE
VALUE OF THOSE RETURNED SHARES WOULD DEPEND ON THE RESULTS OF THE
ON-THE-JOB TRAINING OF FANT AND HIS NOMINEES.
- In Fant's July 14 newspaper advertisement, he states that "To take
advantage of this offer, you must tender your shares and return the GREEN
proxy card, if you have not done so already." THAT IS A BLATANTLY
MISLEADING STATEMENT. YOU DON'T NEED TO RETURN THE GREEN CARD TO TENDER
YOUR SHARES. If you tender your shares, you will be treated the same as
all other tendering shareholders, NO MATTER HOW YOU VOTE. In his July 15
letter to shareholders, Fant himself, contrary to his misleading ad,
admits that: "You are not required to vote your proxy card to tender your
shares." We believe that Fant was required to make this admission.
Unfortunately, not all of his misleading statements have been corrected.
- The Company's performance has been very successful under current
management, resulting in increases in net equity from $1.1 million in
fiscal 1990 to $17.5 million at May 30, 1998, in annual revenues from $8.5
million in fiscal 1990 to $31 million in fiscal 1997 and in annual pre-tax
earnings from $100,000 in fiscal 1991 to amounts ranging between $2 and $4
million in each of fiscal 1992 through 1997. Revenues for the first nine
months of fiscal 1998 (ending May 30, 1998) were $14.7 million and pre-tax
earnings for that period were $647,000 (negatively affected by $274,000 of
expenses incurred in response to Fant's quest for control). Fant's
repeated assertions that average annual earnings have declined
dramatically during the past five years are astonishing in view of this
performance.
- When the motives for increasing the price of his already oversubscribed
partial tender offer were questioned by a highly reputable local
securities analyst, Fant responded with a personal attack on the analyst's
motivation. This behavior, combined with Fant's repeated maligning of
HEI's management and performance record, could damage HEI's ongoing
reputation and its relationship with securities analysts and brokers,
should Fant succeed in his takeover attempt.
- THE ADDITIONAL COST TO FANT OF HIS "INCREASED" OFFER IS ACTUALLY LESS THAN
HIS ANTICIPATED EXPENSES OF HIS CONTROL ATTEMPT--EXPENSES THAT HE WILL
CAUSE HEI (AND THEREFORE YOU, INDIRECTLY AS AN HEI SHAREHOLDER) TO PAY IF
HE TAKES CONTROL. Those expenses include the numerous expensive ads and
repeated telephone calls that you have been badgered with. HE SAYS THESE
COSTS, TOGETHER WITH ALL OF HIS PROXY SOLICITATION EXPENSES, ARE EXPECTED
TO EXCEED $500,000.
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July 17,1998
Page 2
- Why is Fant persisting with his disturbing tactics? WE BELIEVE THAT HE IS
FOCUSED ON HEI'S $13 MILLION CASH RESERVE, OVER WHICH HE HOPES TO ACQUIRE
CONTROL BY PAYING LESS THAN $8.7 MILLION.
If Fant is willing to use such tactics and spend so much money, he
apparently believes the stock is worth much more than he is paying for it. If
so, why would you sell any shares to him? Do you believe that he will run the
Company better than existing management? What do you know about him? Consider
his tactics. Consider his background and experience. After doing so, we are
confident that you will support your current board of directors by voting
AGAINST Fant's proposals (Proposals 1 and 3) by signing, dating and returning
the enclosed WHITE proxy card in the postage-paid envelope provided.
REMEMBER, 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 WITHOUT AFFECTING THE VALIDITY OF YOUR TENDER.
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
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Exhibit 9
NEWS RELEASE
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[LOGO]
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P. O. Box 5000
Victoria, Minnesota 55386
(612) 443-2500
www.heii.com
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CONTACT: Eugene W. Courtney, C.E.O. FOR IMMEDIATE RELEASE
HEI SAYS THAT BIDDER'S INCREASED OFFER PRICE
IS AN ATTEMPT TO BUY VOTES
VICTORIA, MN (July 17, 1998) HEI, Inc. today filed an amended Schedule 14D-9
with the Securities and Exchange Commission containing its response to the
announcement by Fant Industries Inc., wholly owned by Anthony J. Fant, that Fant
is raising the purchase price in his offer to purchase 11.5% of HEI's
outstanding shares from $8 to $9 per share. The HEI Board determined that Fant's
offer, as modified, and quest for control of HEI are not in the best interests
of HEI or its shareholders and renewed its recommendation that shareholders not
tender into the partial offer.
Eugene W. Courtney, HEI's Chief Executive Officer and a director, commented:
"This latest tactic appears to the Board to be merely an attempt to buy the
votes of shareholders who are not satisfied with Fant's sketchy disclosures
about his past and vague promises for the future. Fant's amended offer really
has nothing to do with acquiring more shares--based on Fant's recent figures, an
HEI shareholder who tendered 100 shares would get 68 of those shares sent back
without any payment whatsoever. The Board is deeply concerned that Fant
continues to be unwilling to pay a control premium for all shares.
"Despite the distraction caused by Fant's tactics and frivolous litigation,
HEI's Board, management, and other employees are committed to the company's
future growth and diversification. We continue to urge shareholders to vote
against Fant's proposals at the Special Shareholders Meeting on August 4, 1998."
HEI IS A MINNESOTA-BASED COMPANY SPECIALIZING IN THE DESIGN AND MANUFACTURE OF
HIGH PERFORMANCE ULTRAMINIATURE MICROELECTRONIC DEVICES AND HIGH TECHNOLOGY
PRODUCTS INCORPORATING THOSE DEVICES. THE COMPANY'S STOCK TRADES ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL HEII.
FORWARD LOOKING INFORMATION
INFORMATION IN THIS NEWS RELEASE WHICH IS NOT HISTORICAL INCLUDES
FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ALL OF SUCH FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INCLUDING, WITHOUT LIMITATION,
ADVERSE BUSINESS OR MARKET CONDITIONS, THE ABILITY OF HEI TO SECURE AND SATISFY
CUSTOMERS, THE AVAILABILITY AND COST OF MATERIALS FROM HEI'S SUPPLIERS, ADVERSE
COMPETITIVE DEVELOPMENTS, CHANGE IN OR CANCELLATION OF CUSTOMER REQUIREMENTS,
AND OTHER RISKS DETAILED FROM TIME TO TIME IN HEI'S SEC FILINGS.
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