SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10)(1)
KINARK CORPORATION
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(Name of issuer)
COMMON STOCK, $.10 PAR VALUE
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(Title of class of securities)
494474109
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(CUSIP number)
STEVEN WOLOSKY, ESQUIRE
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
December 1, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
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 10 Pages)
Exhibit Index on Page 8
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(1) 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 disclosures provided in a prior cover page.
The information required on 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 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).
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CUSIP No. 494474109 13D Page 2 of 10 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 442,200
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
442,200
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
442,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.52%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 494474109 13D Page 3 of 10 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARREN LICHTENSTEIN
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 ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 442,250
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
- 0 -
9 SOLE DISPOSITIVE POWER
442,250
10 SHARED DISPOSITIVE POWER
- 0 -
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
442,250
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.52%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 494474109 13D Page 4 of 10 Pages
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This constitutes Amendment No. 10 ("Amendment No. 10") to Schedule 13D
filed by the undersigned on March 25, 1995 (the "Schedule 13D"). Except as
specifically amended by this Amendment No. 10, the Schedule 13D, as amended,
remains in full force and effect. Defined terms shall have the meaning specified
in the Schedule 13D, except as otherwise provided herein.
Item 3 is amended to read in its entirety as follows:
Item 3. Source and Amount of Funds or Other Consideration.
The aggregate purchase price of the 442,200 Shares owned by
Steel Partners II is $1,465,975. The Shares owned by Steel Partners II were
acquired with partnership funds.
The aggregate purchase price for the 50 Shares purchased by
Mr. Lichtenstein is $250, and came from his personal funds.
Item 4 is hereby amended to add the following:
Item 4. Purpose of Transaction.
On December 1, 1998, the Reporting Persons sent a letter to
the Issuer's Board of Directors, in which, among other things, the Reporting
Persons questioned Issuer's poor operating performance and lagging stock price
since its 1992 high (-78.1%), stating, among other concerns, the Reporting
Persons' strong belief that the Issuer must take steps to pursue certain
strategic business initiatives to enhance shareholder value, including the sale
of certain underperforming assets or the sale of the Issuer as a whole. The
description of the letter does not purport to be complete, and is qualified in
its entirety by reference to the Letter, which is filed as Exhibit 1 to this
Amendment No. 10 to Schedule 13D.
Depending upon such factors as the Reporting Person considers
relevant from time to time, the Reporting Person may seek further contact with
the Issuer, the Issuer's representatives and other persons interested in the
Issuer, for the purpose of discussing the letter. Depending upon the Issuer's
response to the letter, if any, the results of further contact with the Issuer,
if any, market considerations and other factors as the Reporting Person
considers relevant from time to time, the Reporting Person may consider
additional courses of action with respect to the Issuer, including acquiring
additional Shares or other securities of the Issuer in the open market, in
privately negotiated transactions or through a tender offer or otherwise, or
selling Shares in the open market or otherwise, on such terms and at such times
as the Reporting Persons may deem advisable. The Reporting Persons may also
propose that the Issuer retain an investment banker to solicit offers for a
transaction whereby all or a portion
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CUSIP No. 494474109 13D Page 5 of 10 Pages
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of the Issuer be sold. In connection therewith, the Reporting Persons may seek
to participate in such transaction or seek to acquire control of the Issuer in a
negotiated transaction or otherwise. Should the Reporting Persons believe that
the Issuer's Shares continue to be undervalued, the Reporting Persons also may
seek in the future to have one or more of its representatives appointed to the
Board of Directors of the Issuer, by agreement with the Issuer or otherwise,
including by running its own slate of nominees at an annual or special meeting
of the Issuer. The Reporting Persons may in the future propose other matters for
consideration and approval by the Issuer's stockholders or the Board of
Directors, through a solicitation of proxies, consent solicitation or otherwise,
but has not identified such matters at this date. Although the foregoing
activities represent the range of activities within the current contemplation of
the Reporting Person, it should be noted that the activities within such
contemplated range are subject to change at any time.
Items 5(a) and (c) are amended to read in their entirety as follows:
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of Shares of Common Stock
reported owned by each person named herein is based upon 6,778,345 Shares
outstanding, which is the total number of Shares of Common Stock outstanding as
reported in the Company's Form 10-Q for the quarter ended September 30, 1998.
As of the close of business on December 1, 1998, Steel Partners II
beneficially owned 442,200 Shares of Common Stock, constituting approximately
6.52% of the Shares outstanding. Mr. Lichtenstein beneficially owned 442,250
Shares, representing approximately 6.52% of the Shares outstanding. Mr.
Lichtenstein has sole voting and dispositive power with respect to the 50 Shares
owned by him and the 442,200 Shares owned by Steel Partners II by virtue of his
authority to vote and dispose of such Shares.
(c) Schedule A annexed hereto lists all transactions in the
Issuer's Common Stock in the last sixty days by the Reporting Persons.
Item 7 is amended to read as follows:
Item 7. Material to be Filed as Exhibits.
1. Letter dated December 1, 1998 from Steel Partners II,
L.P. to the Board of Directors of the Issuer
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CUSIP No. 494474109 13D Page 6 of 10 Pages
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SCHEDULE A
Transactions in the Shares Within the Past 60 Days
Shares of Common Price Per Date of
Stock Purchased/ Share Purchase/
(Sold) Sale
STEEL PARTNERS II, L.P.
(2,500) 2.34492 11/10/98
(2,500) 2.34492 11/12/98
(500) 2.42990 11/18/98
(700) 2.44991 11/19/98
WARREN LICHTENSTEIN
None.
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CUSIP No. 494474109 13D Page 7 of 10 Pages
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 1, 1998 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.,
General Partner
By: /s/ Warren G. Lichtenstein
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Warren G. Lichtenstein,
Chief Executive Officer
/s/ Warren G. Lichtenstein
---------------------------------
WARREN G. LICHTENSTEIN
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CUSIP No. 494474109 13D Page 8 of 10 Pages
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Exhibit Index
Page
1. Letter dated December 1, 1998 from Steel 9
Partners II L.P., to the Board of Directors
of the Issuer
December 1, 1998
Board of Directors
Kinark Corporation
7060 South Yale
Tulsa, OK 74136-3324
Dear Sirs:
Steel Partners II, L.P. ("Steel Partners" or "Steel") has been a
long-term shareholder of Kinark Corporation ("Kinark" or "the Company") and
currently owns 442,200 shares or 6.52% of the primary shares outstanding.
As an investor that seeks out opportunities in undervalued
securities, Steel Partners has sought, with some success, to find investments
and assist companies and all of their shareholders in realizing significant
value over the long term. Steel continues to believe there is significant value
inherent in Kinark's assets despite dismal operating performance during the
1990's which includes minimal revenue growth and a significant decline in
earnings, resulting in a poorly performing stock.
Kinark shareholders have not been rewarded for their investment in
Kinark during the 1990's. Since reaching a high of $10.88 in the first quarter
of 1992, Kinark's share price has dropped precipitously to its current price of
$2.38. This represents an absolute return of -78.1% to shareowners of Kinark
Corporation. In comparison, the NASDAQ Composite returned 230.8%, the Russell
2000 Index returned 103.2% and the S&P 500 returned 178.8% during the same time
period. Additionally, the current share price represents a -20.7% decline from
the rights offering price of $3.00 in late 1996.
A review of each of Kinark's business lines illustrates why
shareholder value has suffered since the early 1990's.
Galvanizing
In the early 1990's, Kinark earned as much as 26.1% or $4.82 million
on $18.5 million of Galvanizing annual revenue. Since that time, Kinark has
acquired additional Galvanizing assets which doubled revenues to $38.6 million,
however Galvanizing earnings slumped to $2.6 million or 6.9% in 1997.
In the early 1990's, the Company blamed its poor performance in
Galvanizing on a recession; recently it has blamed zinc prices and a competitive
environment. Kinark's
<PAGE>
Galvanizing sales have been relatively flat the past three years, not even
achieving parity with inflation. Meanwhile, some of its Galvanizing competitors
continue to enjoy revenue growth and operating margins greater than 20% compared
to Kinark's dreadful 6.9% margin.
Warehousing
North American Warehousing has been a slow growing business in
recent years and subject to significant business risk in that 55% of its
revenues come from one client. In the third quarter, Kinark lost this account!
Chemical Storage
Lake River Chemical Storage has lost money in two of the last three
years and revenues are down 14.6% and 6.5% through three months and nine months
1998, respectively.
Steel Partners Recommends that Kinark Either Put Itself Up for Sale or Sell
Underperforming Assets
Steel Partners believes that much of Kinark's problems stem from
management's lack of focus on its core Galvanizing business and its continued
investment in its non core assets such as the Chemical Storage and Warehousing
businesses despite poor performance and no apparent competitive advantages in
these businesses. Our concern with the direction of Kinark's business is
heightened by Kinark's recent determination to make a $443,000 investment of an
undisclosed nature. This investment was made despite other available
alternatives to enhancing shareholder value including paying down a portion of
the $9.3 million of Kinark debt or buying back Kinark stock. One can only
ascertain from this investment decision that, despite Kinark's depressed share
price, the Company when given a choice, would rather invest in another Company
than invest in Kinark stock. As a long time shareholder with a sizable stake in
Kinark, we have grave concerns about this decision.
Kinark's precipitous stock price decline to $2.38 from $10.88 in
early 1992 while the broader markets have risen sharply during this time period
is a clear indictment of the Company's poor strategic and operating performance.
As such, Steel Partners strongly urges Kinark to focus on selling off
underperforming assets or looking for a buyer for the entire company so as to
create immediate shareholder value where none has been created since early 1992!
We believe there are a number of logical buyers who undoubtedly would be
interested in buying Kinark.
Sincerely,
Warren G. Lichtenstein
Chairman
