<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
DAIRY MART CONVENIENCE STORES. INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
COMPANY PRESS RELEASE
DAIRY MART URGES SHAREHOLDERS TO SUPPORT MANAGEMENT'S
CONTINUING EFFORTS TO MAXIMIZE VALUE
HUDSON, Ohio--(BUSINESS WIRE)--May 19, 2000--Dairy Mart Convenience Stores, Inc.
(AMEX:DMC - NEWS) today urged shareholders to vote in favor of the Company's
current board and management in its continuing efforts to maximize shareholder
value.
"Our efforts are accelerating as we begin reviewing expressions of interest
received from prospective buyers of the Company," said Robert B. Stein, Dairy
Mart Chairman, President and Chief Executive Officer. "Since our board approved
a plan on April 6 to sell 246 stores to improve profitability and reduce debt,
we have received notice of credible interest in the entire chain from a number
of parties."
Stein noted that the plan to sell 246 stores is being put on hold while the
Company reviews the expressions of interest.
As previously announced, the Company has retained Morgan Keegan & Company, Inc.,
investment bankers, to review the expressions of interest and explore all of the
company's options for increasing shareholder value, including a sale.
"Morgan Keegan is actively engaged and pursuing all options on an aggressive
timetable," said Stein. "Further, they are highly incentivized to arrange a sale
and maximize shareholder value." Also today, the Company sent another letter to
major shareholders in its ongoing proxy fight with Frank Colaccino, a former
chief executive officer of Dairy Mart who was fired in 1994.
(NOTE TO EDITORS: full text of the letter follows this press release.)
Dairy Mart Convenience Stores, Inc., was named "Convenience Store Chain of the
Year" in 1999 by Convenience Store Decisions magazine. The company owns and
operates approximately 600 retail stores in seven states in the Midwest and
Southeast. Through consulting and licensing agreements, the Company is also
affiliated with more than 200 stores in Korea and approximately 400 locations in
Malaysia. For more information, visit Dairy Mart's web site at
www.dairymart.com.
Morgan Keegan & Company, Inc., based in Memphis, Tennessee, provides securities
brokerage, investment banking and other financial services through its 45
offices in 13 states. The firm is a subsidiary of Morgan Keegan, Inc., a
financial services holding company listed on the New York Stock Exchange
(symbol:MOR). Morgan Keegan has a dedicated Convenience Store and Retail
Petroleum Group and has recently been involved in many transactions involving
convenience store companies. In addition, Morgan Keegan equity research recently
began covering the convenience store industry and expects to publish a
comprehensive research report this summer. Statements contained in this release
that are not historical facts, including those relating to possible outcomes of
exploring the Company's strategic alternatives, such as a possible sale of the
Company and those relating to the effects of continuing a proxy fight may
constitute forward-looking statements. Factors that could cause actual results
to differ materially from those stated or implied in the forward-looking
statements include competition, general economic conditions, the ability to find
one or more suitable buyers for the stores or the whole Company at acceptable
prices, the ability of such buyers to finance store purchases or the whole
Company, the determination of the board of directors, which may or may not
include a sale of the stores or the whole Company and other factors disclosed in
Dairy Mart's periodic filings with the
<PAGE> 3
Securities and Exchange Commission. The Company assumes no obligation to update
the information contained in this release. Full text of the letter follows:
LET'S SET THE RECORD STRAIGHT:
YOUR BOARD AND MANAGEMENT HAVE BEEN
CREATING VALUE FOR THE BENEFIT OF ALL SHAREHOLDERS
Your vote is important. Please sign, date and return the enclosed WHITE proxy
card today.
Dear Fellow Shareholders:
As the annual meeting approaches, I want to take a final opportunity to remind
you of all that your current board and management have been and are doing to
maximize the value of your investment in Dairy Mart -- value that we expect to
realize in the event of a sale.
WE BELIEVE YOUR INVESTMENT HAS MEANINGFUL VALUE THAT IS NOT YET REFLECTED IN THE
COMPANY'S FINANCIAL STATEMENTS.
Consider the following: In cleaning up after the Frank Colaccino era, we
significantly downsized the Company, got rid of underperforming stores and
exited the non-core dairy manufacturing and distribution business. We now have a
geographic strength that is strategically important to others.
We have focused our efforts on building a portfolio of quality assets, including
opening 80 new stores over the past five years that are continuing to mature and
hold significant future value. They are among the most attractive assets to
potential buyers.
More recently, two weeks before Colaccino started his proxy fight, your board
approved a sweeping plan to sell or close 246 underperforming stores, improve
profitability and reduce debt. News of that plan helped to generate credible
expressions of interest from potential buyers of Dairy Mart, so we are putting
the store-closing plan on hold.
We retained Morgan Keegan & Company to explore all of the Company's strategic
options, including selling the Company. Morgan Keegan is highly incentivized to
arrange a sale and maximize value. The firm is actively pursuing all avenues and
is on an aggressive schedule for reaching a satisfactory conclusion.
COLACCINO IS DEPICTING DAIRY MART TO SHAREHOLDERS
AND THE OUTSIDE WORLD AS A DISTRESSED COMPANY.
THAT'S SIMPLY NOT TRUE -- AND IT'S A DISSERVICE TO YOU.
Not surprisingly, Colaccino has claimed credit for a $7 stock price and record
sales and EBITDA. In reality, the Company never had record earnings while he was
CEO. Colaccino produced illusionary growth fueled by the rapid acquisition of a
ragtag group of assets. Once the acquisitions stopped, the reality of
Colaccino's "growth" became clear - he left Dairy Mart saddled with $90 million
in debt and hundreds of low-volume, underperforming stores.
2
<PAGE> 4
Sales and EBITDA growth are easily achieved in an acquisition-driven
environment. Although Colaccino increased the number of stores, he was unable to
make meaningful improvement in per-store profitability.
Under the leadership of the current board and management, Dairy Mart has made
significant operational gains.
- (See three accompanying charts.)
- Revenue per store has increased 68% since 1995. Last year alone, we
increased comparable store sales by 11%, continuing three consecutive years as
one of the industry leaders in same-store sales growth. Average gross profit per
store has also improved steadily since 1995, growing 52% over that period of
time. EBITDA (earnings before interest, taxes, depreciation and amortization)
per store has increased 166% since fiscal 1996.
Average gasoline sales per store have increased nearly 40% since 1996 -- to
753,000 gallons.
WE BELIEVE COLACCINO'S INACCURATE PORTRAYAL OF THIS COMPANY IS HARMING THE VALUE
OF YOUR INVESTMENT.
If Colaccino succeeds, the impact on your investment could be devastating.
Whether he claims to want to be CEO or not, consider whether you want to entrust
the future of your Company - and the future of your investment - to a man who
appears more interested in tacking up a "going-out-of-business" sign than in
getting top dollar for your investment. His efforts could:
Trigger change-of-control provisions in the Company's credit agreements and
accelerate repayment of $115 million in debt. Disrupt the Company's vital
relationships with suppliers and vendors.
Devastate employee morale and retention at a critical time for the Company.
Derail the efforts of the current board and management to maximize shareholder
value.
Lead to a "fire sale" of the Company that would certainly fail to achieve
maximum value for your investment in Dairy Mart.
As we enter this critical phase in the history of Dairy Mart, I ask once
again for your support. If you have already voted a WHITE proxy card for the
Company's director slate, thank you. No further action is required.
If you have voted a BLUE proxy card for the Colaccino slate, it is not too late
to change your vote. Please sign, date and return your WHITE proxy card today.
Only the latest dated proxy card will be counted at the annual meeting.
Thank you.
On Behalf of your Board of Directors
Robert B. Stein, Jr.
3
<PAGE> 5
Chairman, President and CEO
May 19, 2000
If you have any questions or need assistance in voting your shares or changing
your vote, please contact:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE: (800) 322-2885
Note: A Photo (of 3 charts) is available at URL:
http://www.businesswire.com/cgi-bin/photo.cgi?pw.051900/bb3
Contact:
MacKenzie Partners, Inc.
Larry Dennedy, 800/322-2885
or
Dix & Eaton Incorporated
Scott Chaikin, 216/241-4615
4
