SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(AMENDMENT NO.____)*
HEI, Inc.
- -----------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.05 Per Share
- -----------------------------------------------------------------------------
(Title of Class of Securities)
404160103
- -----------------------------------------------------------------------------
(CUSIP Number)
Michael A. King, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
(212) 839-5300
- -----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 4, 1998
- -----------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13D to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
(Continued on following pages)
(Page 1 of 15 Pages)
_____________
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
SCHEDULE 13D
CUSIP NO. 404160103 PAGE 1 OF 1 PAGES
--------- ----- -----
<TABLE>
<CAPTION>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anthony J. Fant
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS* PF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 594,900
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 594,900
PERSON 10 SHARED DISPOSITIVE POWER
WITH -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
594,900
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.6%
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This schedule relates to the common stock, par value $.05 per share
("Shares"), of HEI, Inc. a Minnesota corporation (the "Issuer"). The address
of the principal executive office of the Issuer is P.O. Box 5000, 1495
Steiger Lake Lane, Victoria, MN 55386.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(f) This Schedule 13D is being filed by Anthony J. Fant pursuant to
Rule 13d-1(a) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Mr. Fant's business address is 2154 Highland Avenue,
Birmingham, AL 35205. Mr. Fant's present principal employment is President
and Chief Executive Officer of Fant Broadcasting Company Inc. and affiliated
entities engaged in television and radio broadcasting and other diversified
businesses. Mr. Fant has not, during the last five years, been convicted in
a criminal proceeding and has not, during the last five years, been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which he was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any
violation with respect to such laws. Mr. Fant is a citizen of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Fant has purchased in the aggregate 594,900 Shares for cash in the
amount of approximately $3,430,653, including brokerage commissions. Such
Shares were purchased with personal funds and funds borrowed in a margin
account. A copy of the form of margin agreement pertinent to this filing
on Schedule 13D is attached hereto as Exhibit 1, and incorporated herein by
reference.
ITEM 4. PURPOSE OF TRANSACTION
Mr. Fant acquired the Shares because he believed they were undervalued.
Mr. Fant currently intends to seek to gain control of the Issuer in whatever
manner and through whatever means he may determine to be most effective and
most efficient. In seeking control of the Issuer, Mr. Fant does not wish to
prejudice any third party proposal for any corporate transaction involving
the Issuer.
Mr. Fant currently anticipates that the most desirable means of
gaining control of the Issuer will involve the replacement of some or all
members of the Issuer's Board of Directors. Mr. Fant believes the existing
Board of Directors has failed to take appropriate actions to realize the true
value of the Issuer's business. If successful in gaining control of
the Board, Mr. Fant will evaluate alternative courses of action
with an overriding view toward maximizing shareholder value.
Mr. Fant also intends to reform the manner in which stock
compensation is paid to the Issuer's Board of Directors and senior
management. Specifically, Mr. Fant plans to link stock compensation more
closely to the Issuer's operating results and stock price performance,
avoid the dilutive effects that the current practices can have on
non-management shareholder value, and eliminate certain compensation
arrangements that promote entrenchment of management. Mr. Fant has set
forth these proposals in a letter to the Issuer's Board of Directors
that was delivered earlier today, a copy of which is attached hereto as
Exhibit 2 and incorporated in its entirety herein by reference. At present,
Mr. Fant is not soliciting the support of fellow shareholders for any plans
or proposals and will not do so except in compliance with applicable laws.
Mr. Fant specifically reserves the right to continue to acquire
securities of the Issuer from time to time in the open market or
otherwise and to sell any securities of the Issuer at any time and from time
to time in the open market or otherwise. In addition, subject to applicable
laws, Mr. Fant specifically reserves the right as a shareholder of the Issuer
to discuss with other shareholders of the Issuer matters that may be of
common concern. Mr. Fant specifically has no present intention to pursue,
nor would his purpose in seeking changes on the Issuer's Board of Directors
be to effect, directly or indirectly, a business combination with the Issuer.
No agreements, arrangements or understandings exist between Mr. Fant and
third persons with respect to the foregoing.
Except as set forth in this Item 4, Mr. Fant has no plans or proposals
that relate to or would result in any of the actions specified in clauses (a)
through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Mr. Fant is the beneficial owner of 594,900 shares of Issuer Common
Stock, or approximately 14.6% of Issuer Common Stock based on a total
of 4,068,576 shares of Issuer Common Stock stated to be outstanding as
of December 16, 1997 by Issuer in its Quarterly Report on Form 10-Q,
which was filed with the Securities and Exchange Commission on
January 13, 1998.
(b) Mr. Fant has sole power to vote or direct the vote and dispose or direct
the disposition of 594,900 shares of Issuer Common Stock.
(c) Transactions in the Shares effected by Mr. Fant during the past sixty
(60) days are described in Schedule A attached hereto and incorporated
herein by reference. All such transactions were effected in the open
market on the Nasdaq National Market, except as otherwise noted in
Schedule A.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The Reporting Person does not have any contract, arrangement,
understanding or relationship with any other person with respect to any
security of Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit No. Description
- ----------- -----------
1 Form of margin agreement.
2 Letter from Mr. Fant to the Issuer's Board of Directors, dated
February 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.
Date: February 17, 1998
By:/s/ Anthony J. Fant
---------------------------------
Anthony J. Fant
SCHEDULE A
Schedule of Transactions in the Shares
<TABLE>
<CAPTION> No. of Shares
Name Date Purchased Price Per Share/1/
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Anthony J. Fant 12/19/97 10,000 4.7500
12/22/97 2,100 4.6250
12/23/97 1,200 4.6875
12/23/97 3,000 4.6875
12/23/97 7,500 4.6875
12/23/97 10,000 4.6875
12/29/97 2,000 4.6250
12/29/97 3,000 4.6250
01/02/98 18,500 4.7500
01/16/98 10,000 5.0000
01/21/98 4,500 4.8750
01/27/98 10,000 4.8750
01/27/98 3,000 4.8750
02/04/98 6,000 4.8750
02/04/98 5,000 4.8750
02/04/98 5,000 4.8750
02/05/98 10,000 5.1875
02/05/98 8,000 5.1875
02/05/98 4,000 5.1250
02/05/98 2,500 5.0000
02/05/98 2,000 5.1875
02/06/98 40,000 5.3750
02/06/98 2,000 5.1875
02/09/98 25,000 5.5625
02/09/98 25,000 5.4375
02/09/98 10,000 5.8750
02/09/98 10,000 5.8125
02/09/98 2,000 5.3750
02/10/98 20,000 5.8750
02/11/98 15,000 5.8125
02/11/98 7,000 5.8125
02/12/98 20,000 6.7500
02/12/98 3,500 6.7500
02/12/98 1,000 6.6875
02/12/98 2,000 6.6875
02/12/98 2,000 6.6250
02/12/98 5,000 6.7500
02/12/98 25,000 6.6875
02/12/98 20,000 6.3125
02/13/98 2,000 6.6250
02/13/98 2,000 6.5000
02/13/98 10,000 6.5625
02/13/98 10,000 6.5625
02/13/98 25,000 7.1250
02/13/98 5,800 7.1250
02/17/98 30,000 7.4375
02/17/98 30,000 7.5625
</TABLE>
- -------------------------
/1/ Does not include brokerage commission.
EXHIBIT 1
SECURITIES ACCOUNT MARGIN AGREEMENT
CONSENT TO LOAN OF SECURITIES:
In consideration of the acceptance by J.C. Bradford & Co. ("Bradford") of the
account(s) in which the undersigned applicants(s) (all such signatories
hereto, whether acting in their individual or representative capacities, are
referred to in this Agreement as "you") have an interest, alone or with
others, which you have opened or open in the future, with Bradford for the
purchase and sale of securities, or commodities you agree as follows:
1. RULES AND REGULATIONS: All transactions for your account shall be
subject to the then applicable constitution, rules, regulations, customs
and usages of the exchange or market and its clearing house, if any,
where executed by Bradford or its agents; and, where applicable, the
Securities Exchange Act of 1934, as amended; the Commodity Exchange Act,
as amended; the rules and regulations of the Securities and Exchange
Commission, the Board of Governors of the Federal Reserve System and the
Commodity Futures Trading Commission.
2. WAIVER: You agree that no provision of this Agreement shall be waived,
altered, modified or amended unless committed to in writing and signed
by a partner of Bradford. No waiver of any provision of this Agreement
shall be deemed a waiver of any other provision, nor a continuing waiver
of the provision(s) so waived.
3. SEVERABILITY: If any provision of this Agreement is held to be invalid,
void or unenforceable by reason of any law, rule, administrative order
or judicial decision, that determination shall not affect the validity
of the remaining provisions of this Agreement.
4. SECURITY INTEREST: All monies, securities, commodities or contracts
relating thereto and all other property in any account in which you have
an interest (held either individually, jointly or otherwise) or which
may at any time be in Bradford's possession for any purpose, including
safekeeping, shall be subject to a general lien for the discharge of all
obligations you may have to Bradford, however and whenever arising. All
securities and other property shall be held by Bradford as security for
the payment of all such obligations or indebtedness in any account in
which you may have an interest.
5. LOAN OR PLEDGE OF SECURITIES: All monies, securities and commodities or
contracts relating thereto and all other property which Bradford may at
any time be carrying for you or in which you may have an interest, may
from time to time and without notice be carried in Bradford's general
loans and may be pledged, repledged, hypothecated or rehypothecated,
separately or in common with other securities or any other property for
the sum due Bradford thereon or for a greater sum without retaining in
Bradford's possession and control for delivery a like amount of similar
securities or commodities. Subject to applicable law, Bradford, without
notice to you, may apply and/or transfer any or all monies, securities,
commodities or contracts relating thereto and all other property
interchangeably between accounts or to accounts in which you have an
interest or which are guaranteed by you (except regulated commodity
accounts). Bradford is hereby specifically authorized to transfer to
your cash account on settlement day any excess funds available in any of
your other accounts, including but not limited to any free balances in
any margin account, sufficient to make full payment of cash purchases.
You agree that any debit occurring in any of your accounts may be
transferred at Bradford's option to your margin account. You hereby
authorize Bradford, from time to time, to lend, separately or together
with property of others, to itself or others, any property it may be
carrying for you on margin. This authorization shall apply to all
accounts for you.
6. INTEREST CHARGES: Debit balances in your accounts shall be charged
interest or service charges in accordance with Bradford's policies and
at prevailing rates determined by Bradford.
7. LIQUIDATION: You understand that, notwithstanding a general policy of
giving customers notice of a margin deficiency, Bradford is not
obligated to request additional margin from you in the event your
account falls below minimum maintenance requirements. More importantly,
there may be circumstances where Bradford will liquidate securities
and/or other property in the account without notice to you to ensure
that minimum maintenance requirements are satisfied. Bradford shall have
the right in accordance with its general policies regarding margin
maintenance requirements to require additional collateral or the
liquidation of any securities and other property whenever in its
discretion it considers it necessary for its protection, including in
the event of, but not limited to: Your failure to promptly meet any call
for additional collateral; the filing of a petition in bankruptcy by or
against you; the appointment of a receiver is filed by or against you;
an attachment is levied against any account in which you have an
interest or; your death. In such event, Bradford is authorized to sell
any and all securities and other property in any account of yours,
whether carried individually or jointly with others, to buy all
securities or other property which may be short in such Account(s), to
cancel any open orders and to close any or all outstanding contracts,
all without demand for margin or additional margin, other notice of sale
or purchase, or other notice of advertisement each of which is expressly
waived by you. Any such sales or purchases may be made at Bradford's
discretion on any exchange or other market where such business is
usually transacted or at public auction or private sale, and Bradford
may be the purchaser for its own account. It is understood a prior
demand, or call, or prior notice of the time and place of such sale or
purchase shall not be considered a waiver of Bradford's right to sell or
buy without demand or notice as herein provided.
8. MARGIN: You will at all times maintain positions and margins in your
accounts as Bradford, in its discretion, may from time to time require
and will pay on demand any debit balance owing with respect to such
accounts.
9. GOVERNING LAW: This agreement shall be governed by the laws of the State
of New York, and shall inure to Bradford's successors and assigns, and
shall be binding on you, your heirs, executors, administrators and
assigns.
10. ARBITRATION DISCLOSURES:
- ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
- THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRIAL.
- PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND
DIFFERENT FROM COURT PROCEEDINGS.
- THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS
OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
- THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY.
11. ARBITRATION: I AGREE, AND BY CARRYING AN ACCOUNT FOR ME, BRADFORD
AGREES, THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN US CONCERNING ANY
TRANSACTION WHETHER CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY
OTHER AGREEMENT BETWEEN US, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT
TO THE DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION
UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE ARBITRATION AND
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, BEFORE THE NEW YORK STOCK
EXCHANGE, INC. OR AN ARBITRATION FACILITY PROVIDED BY ANY OTHER EXCHANGE
OF WHICH BRADFORD IS A MEMBER, OR THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. AND IN ACCORDANCE WITH THE ARBITRATION RULES PERTAINING TO
THE SELECTED ORGANIZATION. I MAY ELECT IN THE FIRST INSTANCE WHETHER
ARBITRATION SHALL BE BY AN EXCHANGE OR SELF-REGULATORY ORGANIZATION OF
WHICH THE BROKER IS A MEMBER, BUT IF I FAIL TO MAKE SUCH ELECTION BY
REGISTERED LETTER OR TELEGRAM ADDRESSED TO BRADFORD AT ITS MAIN OFFICE,
BEFORE THE EXPIRATION OF FIVE (5) DAYS AFTER RECEIPT OF A WRITTEN
REQUEST FROM BRADFORD TO MAKE SUCH ELECTION, THEN BRADFORD SHALL MAKE
SUCH ELECTION. THE AWARD OF THE ARBITRATORS, OR OF THE MAJORITY OF THEM,
SHALL BE FINAL, AND JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN
ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION.
12. SALE ORDERS/DELIVERIES: You agree that when placing a sell order, all
"short" sale orders shall be designated as "short" and all "long" sale
orders shall be designated as "long". You represent that any sell order
which you designate as "long" shall be for securities then owned by you
and if such securities are not then deliverable from your account, that
you will deliver them on or before settlement date. In the case of the
sale of any security, commodity or other property by Bradford at your
direction, Bradford's inability to deliver the same to the purchaser by
reason of your failure to supply Bradford therewith, you authorize
Bradford to borrow such security, commodity or other property necessary
to make delivery thereof and you agree to be responsible for any loss
which Bradford may sustain thereby and any premiums which it may be
required to pay thereon and for any additional loss which it may sustain
by reason of its inability to borrow the security, commodity or other
property sold on your behalf.
13. BROKER: You understand that in all transactions between you and
Bradford, Bradford shall be acting as broker for you except when
Bradford discloses to you that, with respect to such transaction, it is
acting as dealers for its account or as broker for some other person.
14. COMMUNICATIONS: Confirmations of transactions and statements of your
account shall be conclusive if not objected to in writing to Bradford
within 5 days and 10 days respectively after transmitted to you by mail
or otherwise. Communications may be sent to you at the address shown on
Bradford's records for your account or at such other address as you may
hereafter provide to Bradford in writing. All communications sent,
whether by mail, telegraph, messenger or otherwise will be deemed given,
whether actually received or not.
15. REPRESENTATIONS: You represent that you are of legal age, are not an
employee or member of any exchange or a member firm or any corporation
of which any exchange owns a majority interest or the NASD or of a bank,
trust company, insurance company or other employer engaged in the
business of a broker-dealer and that you will promptly notify Bradford
if you become so employed. You further represent that, unless otherwise
disclosed to Bradford in writing, no one except you has an interest in
the account or accounts maintained with Bradford in your name.
16. AGREEMENT CONTAINS ENTIRE UNDERSTANDING/ASSIGNMENT: This Agreement
contains the entire understanding between you and Bradford concerning
the subject matter of this Agreement. You may not assign the rights and
obligations hereunder without first obtaining the prior written consent
of Bradford.
BY SIGNING THIS AGREEMENT YOU ACKNOWLEDGE THAT:
1. THE SECURITIES IN YOUR MARGIN ACCOUNT MAY BE LOANED TO BRADFORD OR
LOANED OUT TO OTHERS; AND
2. THAT YOU HAVE RECEIVED A COPY OF THIS AGREEMENT; AND
3. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH
11.
MARGIN INTEREST RATES
We are furnishing the following information in order that you may be informed
of the terms and conditions governing our charges for credit extended to or
maintained for you.
1. CASH ACCOUNTS: Generally, interest is not charged on debit balances in
cash accounts, unless there is also a margin debit balance in your
account, in which case interest is charged on the total debit balance.
However, interest may also be charged on cash account debit balances in
unusual circumstances, such as: a prepayment (payment prior to
settlement date) of the proceeds of a sale, in which case there would be
interest charged for the number of days of early payment; a late payment
(after settlement date) for securities purchased; or a debit balance
arising from a sell-out or buy-in following a customer's failure to pay
for securities purchased or to deliver securities sold.
2. RATE: The annual rate of charge will be determined in accordance with
the following:
AVERAGE DEBIT BALANCE MAXIMUM CREDIT RATE
Less than $25,000 Base Rate + 1.75%
$ 25,000 - $ 49,999 Base Rate + 1.50%
$ 50,000 - $ 99,999 Base Rate + 1.00%
$100,000 - $499,999 Base Rate + .50%
Over $500,000 Base Rate + .25%
Our Base Rate will generally be Prime Rate as quoted in the Wall Street
Journal. When your interest rate is to be increased for any reason,
other than to adjust to changes in the base rate, at least 30 days prior
written notice will be given.
3. COMPUTATION OF CHARGES: As stated in our margin agreement, our margin
accounts and related finance charges are governed by the laws of the
State of New York. In computing credit charges, balances are calculated
daily for all types of accounts of a customer, except credit balances in
short accounts (Type 5).
In computing credit charges, cash and margin (Type 1 & 2 Daily Balances)
are netted against each other. Each net debit is added to obtain an
aggregate debit for the period. This aggregate is multiplied times the
interest rate and then divided by 360 days to obtain the interest
charges. For those days that have a net credit, this net of cash and
margin accounts is carried over and netted against other accounts
carried for you (other than short accounts). The same method is then
used (adding, multiplying by the rate and dividing by 360).
If you sell short (or short against the box), and the market value of
the security you sold increases above your selling price, the increase
will be charged to your Margin Account (Type 2) with an offsetting
credit to your Short Account (Type 5) and interest will be charged in
the Margin Account on the increase. Conversely, interest is reduced by
any decrease in market value. This is known as "Marking to the Market."
Our interest is calculated and posted on the last business day of the
month with the last day of the period being the previous day. Interest
for December will similarly be calculated and posted on the last working
day of the calendar year. To enable you to confirm the accuracy of the
monthly interest charge as shown on your statement, the following
information will be shown on the statement: the interest rate, the
average balance, the beginning and ending dates of the interest period,
and the ending debit balance.
4. COLLATERAL: Your Customer Agreement with us provides a lien on all
securities which we hold for you to secure the discharge of all your
obligations to us, and gives us the right at any time to require you to
deposit such additional collateral as, in our sole discretion, we
determine is necessary as security for your obligations to us. Without
limiting our aforesaid discretionary authority, we have some general
guidelines which may be changed or discontinued by us at any time. For
instance, if your account should fall below 30% equity at any time, a
call will be sent to you for additional cash or collateral to bring your
equity up to 30%. We may also decline to extend credit on certain
securities because of price, market conditions, concentration; etc.,
which we feel would be both to your interest and the Firm's to be on a
fully paid basis. There may be times also when the firm is extending
credit on particular securities, but due to market or other conditions
may feel it necessary to call on you for sufficient cash or collateral
in the order to make that security fully paid for.
EXHIBIT 2
Anthony J. Fant
2154 Highland Avenue
Birmingham, Alabama 35205
February 17, 1998
To the Board of Directors
c/o Mr. Eugene W. Courtney
HEI, Inc.
1495 Steiger Lake Lane
Victoria, Minnesota 55386
Gentlemen:
I am filing today with the Securities and Exchange Commission a Schedule
13D relating to my beneficial ownership of the Common Stock of HEI, Inc. (the
"Company").
In the Schedule 13D, I disclose my intent to seek to gain control of the
Company's Board of Directors. I have purchased 594,900 shares (approximately
14.6%) of the Company's outstanding Common Stock based on my belief that the
stock has been undervalued. When I began acquiring shares in December, 1997,
the price was $4.50, which I consider to be the stock's undisturbed price.
I have noted a marked decline in the Company's operating results and
stock price since early 1997 and believe that the Board of Directors has
failed to take appropriate actions to realize the Company's true value.
Meanwhile, the directors and top management have continued to reward
themselves with stock compensation that bears no relationship to operating
results or the stock price and is on terms more favorable than those made
available to non-management employees.
Upon gaining control, I intend to evaluate a number of constructive
alternatives with a view toward maximizing value for all shareholders. I
also intend to reform the manner in which stock compensation is paid to
directors and top executives. Specifically, I plan to link stock
compensation more closely to the Company's operating results and stock price
performance, avoid the dilutive effects that current practices can have on
non-management shareholder value, and eliminate certain compensation
arrangements that promote entrenchment of management.
As the Company's single largest shareholder, I trust that you will
respect my interest in leading an honest dialogue concerning the Company's
future direction. Additionally, as I continue taking steps to gain control,
I will expect you to recognize and fulfill your fiduciary duties to all
shareholders and to refrain from taking any action that may adversely affect
our rights as shareholders or impede the maximization of shareholder value.
Please recognize that any additional entrenchment-motivated actions you
might take would result in signficant costs to the Company and would reduce
value for all shareholders.
Very truly yours,
/s/ Anthony J. Fant
----------------------------
Anthony J. Fant
