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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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. ________)
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/ / Definitive Proxy Statement
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/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
EXCEL INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
MMI INVESTMENTS, L.L.C.
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(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
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/X/ No fee required.
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PRELIMINARY COPY
SUBJECT TO COMPLETION--NOVEMBER 30, 1998
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
EXCEL INDUSTRIES, INC.
---------------
PRELIMINARY PROXY STATEMENT
OF
MMI INVESTMENTS, L.L.C.
---------------
MMI Investments, L.L.C. ("MMI Investments" or "we") is furnishing this
Preliminary Proxy Statement (this "Proxy Statement") in connection with the
possible solicitation of proxies for use at the 1999 Annual Meeting of
Shareholders of Excel Industries, Inc., an Indiana corporation ("Excel"), and
at any adjournments or postponements thereof (the "1999 Annual Meeting").
As described in more detail below, Excel has publicly announced that it
has engaged Morgan Stanley Dean Witter & Co. ("Morgan Stanley") to work with
Excel to evaluate "potential acquisitions, a recapitalization, financings, a
merger of equals and other special corporate transactions" with the goal of
enhancing "shareholder value." This announcement followed the submission by
us to Excel of a shareholder proposal (the "Shareholder Value Proposal") for
inclusion in Excel's proxy statement relating to the 1999 Annual Meeting,
which Shareholder Value Proposal requests that the Board of Directors of
Excel seek the prompt sale of Excel to a third party on terms that will
maximize shareholder value through a competitive auction process to be
conducted by a recognized investment banking firm. We believe Excel's
carefully worded announcement offers a series of illusory alternatives to the
only course of action available to Excel that is likely to increase
shareholder value substantially, I.E. the prompt sale of Excel upon
completion of a competitive auction process. This suggests to us that
Excel's entire process of considering "strategic alternatives" may also be
illusory.
We therefore have reluctantly concluded that we need to participate
actively in Excel's process of considering such strategic alternatives, by
communicating directly with shareholders of Excel through meetings in person
and/or by telephone. Accordingly, we are filing this Proxy Statement in
order to assure that we will be able to communicate directly with our fellow
Excel shareholders during the term of this process. Depending on the results
of Excel's consideration of strategic alternatives and our discussions with
other Excel shareholders, we reserve the right to solicit proxies or consents
at the 1999 Annual Meeting or otherwise with respect to one or more
proposals, including the Shareholder Value Proposal and/or a proposal to
elect to the Board of Directors of Excel one or more individuals not
currently on such Board of Directors. Alternatively, we may determine not to
pursue the Shareholder Value Proposal or any other proposal and may withdraw
this Proxy Statement.
Copies of this Proxy Statement will be furnished from time to time to
holders of shares of common stock, without par value, of Excel ("Common
Shares"), with whom we communicate directly in person and/or by telephone in
connection with the matters described herein. We will furnish this Proxy
Statement, upon request, to any other Excel shareholder without charge. If
we determine to solicit proxies for use at the 1999 Annual Meeting, we intend
to amend this Proxy Statement and to furnish such amended Proxy Statement in
definitive form, together with a form of proxy, to Excel shareholders.
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If you wish to communicate with MMI Investments concerning Excel and the
matters discussed in this Proxy Statement, executives of Millbrook Capital
Management Inc. ("Millbrook"), the manager of MMI Investments, can be reached
at 212.586.4333.
MMI Investments is the beneficial owner of 404,600 Common Shares.
As of the date of this Proxy Statement, Excel has not announced the
date, time or place of the 1999 Annual Meeting or fixed the date for the
determination of shareholders of record entitled to vote at the 1999 Annual
Meeting. The By-laws of Excel state that its Annual Meeting of Shareholders
will be held on the third Thursday in April in each year, which would make
the meeting date April 15, 1999. During the past five years, Excel has held
its annual meeting of shareholders in late April or early May.
It is expected that this Proxy Statement will first be furnished to Excel
shareholders on or about [ ], 1998.
IMPORTANT: MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
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BACKGROUND
BACKGROUND OF OUR INVESTMENT AND VIEWS CONCERNING EXCEL. MMI
Investments is a private investment firm with investments in publicly traded
securities and private companies. We first acquired Common Shares of Excel
in June 1997, almost 15 months ago. We have acquired Common Shares of Excel
over time because we believed that the trading prices for the Common Shares
have not adequately reflected the potential value of Excel's underlying
operations and assets. However, since our initial acquisition of Common
Shares, we have become increasingly pessimistic concerning whether it is
possible for Excel to unlock this potential value as an independent company
and under existing management.
In an effort to allay our concerns, we met with members of management of
Excel on October 13, 1998, and we have since had a number of additional
telephone conversations with members of management. We initiated these
discussions in order to, among other things, learn more about Excel's
operations, discuss management's strategic business plan, and inquire about
management's views concerning the best way to maximize shareholder value,
including through the possible sale of Excel. During the course of these
discussions, we have asked Mr. James O. Futterknecht, Jr., Excel's Chief
Executive Officer, whether he believed the Board of Directors of Excel would
consider initiating an auction process for Excel. Mr. Futterknecht indicated
that he did not believe that this was the right way for Excel to proceed.
Because we believe that there are compelling reasons why Excel's Board of
Directors should consider the sale of Excel now (see "Reasons for the
Shareholder Value Proposal" below), and because we believe that Excel's
shareholders, the true owners of the company, should have a voice in such a
fundamentally important decision, we decided to submit to Excel a proposal to
enable Excel shareholders to make known their views. We trust that Excel's
Board of Directors will respect and act in accordance with the views of its
shareholders on this issue of fundamental importance.
OUR SHAREHOLDER VALUE PROPOSAL. Following our meeting with Excel
management, on October 30, 1998, we sent to Excel the following proposal that
we intend to present at the 1999 Annual Meeting and that we requested be
included in Excel's proxy statement for the 1999 Annual Meeting:
RESOLVED, that the shareholders of Excel Industries, Inc. request
that the Board of Directors seek the prompt sale of the company to a
third party on terms that will maximize shareholder value through a
competitive auction process to be conducted by a recognized investment
banking firm.
As permitted by the rules of the Securities and Exchange Commission (the
"SEC"), we also included a statement in support of the Shareholder Value
Proposal as follows:
SUPPORTING STATEMENT
We believe that the value that can be achieved for the company's
shareholders through the prompt sale of the company is significantly
greater than the value which can be achieved by remaining an independent
company under existing management.
Three compelling reasons dictate the sale of our company now:
SHAREHOLDER RETURNS. During the longest bull market of the century, the
company has for long periods delivered NEGATIVE returns on shareholders'
investments. The market price of the common stock on October 29, 1998
(the day prior to the date this proposal was submitted) was $14.00, a
24% decline in price per share since December 31, 1993.
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During the same period, the S&P 500 Index has more than doubled. Had
Excel matched the S&P 500, Excel would be worth nearly $43.00 per share
today. We believe the confidence of senior management and Board members
in an investment in the common stock is expressed by their level of
ownership, less than 1%.
COMPANY PERFORMANCE. The company's continued poor operating performance
and management's lack of an effective, focused business strategy suggest
that returns to shareholders will not improve anytime soon. The
company's margins and returns on invested capital are significantly
below industry standards. In addition, the company's efforts in the
seat-track business that it acquired in 1996 have amply demonstrated
management's deficient operational focus, as evidenced by the high
start-up costs at the business' principal manufacturing facility, and
lack of strategic vision, as evidenced by management's failure to
understand the severe pricing pressures on this business.
MARKET POSITION. In our view, the company cannot be a strong and
independent competitor with less than a 1% share of the rapidly
consolidating vehicle parts business. The industry is dominated by
companies with better track records and greater financial resources. We
believe, however, that many of the company's operations are extremely
attractive to larger strategic acquirers, and that, given the company's
poor performance and investors' lack of confidence in management, the
price an acquirer will pay for these operations will far exceed the
company's value in the marketplace during the foreseeable future.
Therefore, a competitive auction for the company will rapidly maximize
shareholder value.
Consistent with state law and the proxy rules, this proposal is merely a
recommendation to the Board and its passage cannot compel action.
However, a substantial shareholder vote in favor should, in our opinion,
be regarded as a mandate to the Board to conduct an auction of the
Company. A proxy card returned without voting instructions or marked
"abstain" may be counted against this proposal. Do not let this happen.
SEND A STRONG MESSAGE TO MANAGEMENT AND THE BOARD. PLEASE VOTE "FOR"
THIS RESOLUTION.
* * * * *
In order to facilitate our communications with our fellow Excel
shareholders, on November 11, 1998, we sent a request pursuant to the Indiana
Business Corporation Law that Excel make available its shareholder list to
our representatives, for inspection and copying.
EXCEL'S SMOKESCREEN ANNOUNCEMENT. On November 18, 1998, only one week
after we requested Excel's shareholder list, Excel issued a press release
announcing that it had engaged Morgan Stanley as its financial advisor to
consider strategic alternatives to benefit Excel and enhance shareholder
value. Mr. Futterknecht, Excel's Chief Executive Officer, is quoted as saying
that "the company will work with Morgan Stanley to evaluate potential
acquisitions, a recapitalization, financings, a merger of equals and other
special corporate transactions." Mr. Futterknecht is further quoted as
saying that "[t]his is a further step to ensure that we do not overlook any
reasonable way to increase benefit to Excel and value to its shareholders."
EXCEL'S REJECTION OF OUR SHAREHOLDER VALUE PROPOSAL. In spite of these
statements, ON THAT VERY SAME DATE, Excel took action with respect to our
Shareholder Value Proposal and request for Excel's shareholder list that
suggest to us that Excel's management would like to overlook the course of
action
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suggested by our Shareholder Value Proposal. In a letter from Mr. Joseph A.
Robinson, the Corporate Secretary of Excel, to us, Excel indicated that Excel
does not believe that the Shareholder Value Proposal is a proper proposal or
one which should be included in Excel's proxy statement for the 1999 Annual
Meeting. Based on such belief, Excel indicated that it did not believe that
our request for a copy of the Excel shareholder list was for a proper
purpose. Therefore, Excel rejected our request. SHAREHOLDERS SHOULD ASK
THEMSELVES IF THESE ACTIONS ARE CONSISTENT WITH EITHER THE PRINCIPLES OF GOOD
CORPORATE GOVERNANCE OR A COMPANY TRULY INTERESTED IN ENHANCING SHAREHOLDER
VALUE.
THE REAL MEANING OF EXCEL'S ANNOUNCEMENT. We believe Excel's press
release contains a significant number of clues that its ballyhooed review of
strategic alternatives is nothing but a smokescreen for further inaction.
For one, we have been informed that Morgan Stanley was working with Excel for
over a year prior to Excel's announcement, although the wording of the press
release cleverly suggests that their relationship is of more recent origin.
Why should Excel's shareholders believe that this old consulting arrangement
will lead to fresh action now?
More importantly, we believe Excel's enumerated strategic alternatives
are at best illusory and at worst self-destructive. You should carefully
consider the following:
- POTENTIAL ACQUISITIONS? Excel's track record with acquisitions as
discussed below (see "Reasons for the Shareholder Value Proposal --
Excel's Poor Performance") raises numerous questions about the
viability of this "strategic alternative." With what currency
would Excel pay for such acquisitions? By using Excel's depressed
stock, management would in all likelihood dilute existing
shareholders. Borrowing (assuming Excel could arrange financing in
the current market) would increase Excel's already considerable
debt load. Would these costs be justified in light of the expected
returns? To incur the risks inherent in an acquisition strategy
financed by cheap stock and/or an increased debt load, shareholders
would require supreme confidence in the ability of management to
find appropriate acquisition candidates, negotiate favorable terms,
and successfully integrate and develop the acquired businesses.
The current management team's history with acquisitions, as
described below, gives us no confidence whatsoever. Finally, even
if this were a strategy that could be executed, is the strategy
likely to maximize shareholder value? As we outline below under
"Reasons for the Shareholder Value Proposal -- Changes in the Global
Marketplace," the vehicle parts business has been rapidly
consolidating in the 1990s and is increasingly dominated by
companies with better track records and greater financial resources
than Excel. AS AN ACQUIRER, EXCEL SEEMS TO US TO BE A "DOLLAR
SHORT AND A DAY LATE."
- A RECAPITALIZATION? In such a transaction, Excel would borrow
additional money to buy back Common Shares or pay an extraordinary
dividend. Given Excel's existing balance sheet, we do not think
Excel could arrange the financing for a meaningful
recapitalization. Even if Excel could arrange financing, the
likely result would be to impair Excel's balance sheet and to
shrink a "small cap" company into a "micro cap" company that is
unlikely to be covered by investment analysts. RECAPITALIZATIONS
OF COMPANIES LIKE EXCEL ARE QUICK FIXES THAT DO NOT ADDRESS
FUNDAMENTAL ISSUES AND OFTEN LEAVE THE COMPANIES THAT ATTEMPT THEM
IN MORE DESPERATE STRAITS.
- FINANCINGS? What does Excel need to finance, other than another
ill-conceived acquisition or a quick-fix recapitalization? And
even if a new financing might for some reason be justified, the
debt markets are now largely closed to companies like
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Excel and the issuance of new equity would only dilute existing
shareholders at depressed prices.
- MERGER OF EQUALS? The universe of Excel's equals in the vehicle
parts industry seems to us to be a pitifully limited one,
consisting of at best one or two companies facing many of the same
challenges as Excel. Even if a deal could be struck with one of
these companies, the resulting entity would still be a tiny player
in the worldwide vehicle parts industry and would still suffer from
the problems we identify below under "Reasons for the Shareholder
Value Proposal -- Changes in the Global Marketplace."
- OTHER SPECIAL CORPORATE TRANSACTIONS? We do not know what this
phrase means either, but if Excel wants to convey the message that
it will consider a sale to, or merger with, a strategic acquirer,
there are more direct ways of saying it and Excel should do so.
OUR RESPONSE TO EXCEL'S SMOKESCREEN. Based on the foregoing, we have
reluctantly concluded that we need to participate actively in the process of
Excel considering its strategic alternatives, by communicating directly with
shareholders of Excel through meetings in person and/or by telephone. WE ARE
CONVINCED THAT WITHOUT SUCH ACTIVE PARTICIPATION BY US AND OTHER EXCEL
SHAREHOLDERS, EXCEL'S MANAGEMENT WILL CONTINUE TO IGNORE THE ONLY ALTERNATIVE
THAT WE BELIEVE MAKES SENSE FUNDAMENTALLY FOR EXCEL, THE SALE OF EXCEL IN A
CASH TRANSACTION OR THROUGH A STOCK MERGER WITH A LARGER ACQUIRER.
While we do not believe that such participation should be deemed to
constitute a solicitation of proxies or consents under the federal securities
laws, we are filing this Proxy Statement in order to ensure that we will be
able to communicate directly with our fellow Excel shareholders during the
term of this process. Depending on the results of Excel's consideration of
strategic alternatives and our discussions with other Excel shareholders, we
are reserving the right to solicit proxies or consents at the 1999 Annual
Meeting or otherwise with respect to one or more proposals, including the
Shareholder Value Proposal and/or a proposal to elect to the Excel Board of
Directors one or more individuals not currently on such Board.
Alternatively, we may determine not to pursue the Shareholder Value Proposal
or any other proposal and may withdraw this Proxy Statement. Independently,
we intend to pursue with the SEC, and (if necessary) through other legal
means, the inclusion of the Shareholder Value Proposal in Excel's proxy
statement for the 1999 Annual Meeting and our request for Excel's record of
shareholders.
REASONS FOR THE SHAREHOLDER VALUE PROPOSAL
To understand why we intend to present the Shareholder Value Proposal at
the 1999 Annual Meeting, take a close look at Excel's recent record:
EXCEL'S POOR PERFORMANCE
During 1996, Excel's management, confronting the specter of a declining
business that could not deliver either shareholder value (see "Excel's
Inadequate Return to Shareholders" below) or industry group-adequate returns
on such financial benchmarks as invested capital and assets, embarked on an
ill-considered acquisition and business diversification strategy. Since
then, Excel's history is a tale of questionable management decisions and even
more severely impaired financial performance. In 1996, Excel acquired Atwood
Industries, principally a manufacturer of seat systems for the automotive
industry. From the beginning, the combined Excel/Atwood enterprise was not a
match made in heaven. As Excel's Chairman Mr. Futterknecht has admitted, "[i]n
completing the acquisition of Atwood Industries, the
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issues we had to address were excess capacity, manufacturing inefficiency and
supply base management." However, a flawed acquisition strategy was made
worse by a flawed business plan for Atwood.
With the Atwood acquisition serving as a springboard, Excel's
management determined that it could play the role of a consolidator in the
seat track system business and made a large financial commitment to that
business. By the end of the third quarter of 1997, the results of this
flawed strategy began to surface. For the third quarter, Excel reported
lower sales and earnings due to, among other things, "costs in starting up
several complex new programs and introducing new product technology in the
seat track area." What was this "new" product technology being developed by
Excel? It was power seat track systems, a mature technology for most
competitors in the seat track business, except, apparently, the seat track
business that Excel had acquired as part of Atwood.
By the time Excel reported its 1997 financial results, the impact on
those results of Excel's flawed business strategy were becoming more evident.
Excel noted that it had not reached its profit goal primarily because of the
costs to assimilate Atwood and new program launches.
By June 1998, Excel's management could no longer disguise the details of
the debacle that was unfolding. It reported lower than anticipated earnings
for the second quarter because of "continuing excessive launch costs" at its
principal seat track manufacturing facility. These excessive costs continued
despite Excel spending approximately $4 million in 1996 in unexpected
engineering costs to solve technical problems on new seat track programs. On
top of these problems, Excel's management now discovered that there was a
lack of profitability in seat track products. In Mr. Futterknecht's own
words, "... in the past year our customers have also become competitors by
acquiring other suppliers to increase their in-house seat-track capabilities,
and we have been unable to establish pricing levels that reflect appropriate
return on our investment capital."
Shareholders continue to bear the cost of Excel management's
misadventures in the seat track business. Management recently indicated that
this business would continue to lose money during the first half of 1999.
Excel's stated strategic alternatives potentially include more
acquisitions and other transactions (such as heavily leveraging Excel) that,
at a minimum, would require great management skill to ensure Excel's
successful future. Based on Excel's past track record, should investors
believe that management is up to these tasks? The evidence set forth below
suggests they do not.
EXCEL'S INADEQUATE RETURN TO SHAREHOLDERS
As noted in our Supporting Statement, during the longest bull market of
the century, Excel has for long periods delivered NEGATIVE returns on
shareholders' investments. The market price of the Common Shares on October
29, 1998 (the day prior to the date on which the Shareholder Value Proposal
was submitted to Excel) was $14.00, representing a 24% decline in price per
share since December 31, 1993. During the same period, the S&P 500 Index has
more than doubled. HAD EXCEL MATCHED THE S&P 500, EXCEL WOULD BE WORTH
NEARLY $43.00 PER SHARE TODAY.
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The following graph, which compares the percentage change in the
cumulative total returns on the Common Shares of Excel, the Standard & Poor's
500 Index and the Standard & Poor's Manufacturing (diversified industries)
Index ("S&P MAND") for the period beginning on December 31, 1993 through
October 30, 1998, illustrates the point:
STOCK PERFORMANCE SINCE DECEMBER 1993
Cumulative Total Return Based on Initial Investment of $100 on December 31,
1993,
Assuming Reinvestment of Any Dividends
[GRAPHIC]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 10/30/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Excel $100 $ 78 $ 80 $ 98 $110 $ 88
S&P 500 100 101 139 170 227 260
S&P MAND 100 103 145 194 266 288
</TABLE>
While the stock price of Excel has risen somewhat in the wake of Excel's
November 18 announcement, we believe this phenomenon is short-term,
especially if Excel undertakes one of its stated strategic alternatives.
HASN'T THIS BLEEDING OF SHAREHOLDER VALUE GONE ON LONG ENOUGH?
What's more, did you know that senior management and members of the
Board appear to have "voted with their feet" on the Common Shares as an
investment? As a group, they own less than 1% of the Common Shares and have
shown little appetite for purchasing additional Common Shares in recent years
in spite of their historically low price. ASK YOURSELF IF THEIR INTERESTS
ARE TRULY ALIGNED WITH YOURS.
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What do independent financial analysts who follow Excel think of
management's plans? McDonald & Co.'s analyst Greg Kagay rates the shares a
2-buy based on "the potential for asset re-alignment," but notes that "[s]hort
of any admiration from other companies, we would advise caution on
[Excel's]shares."(1) Bear, Stearns analyst Eric Goldstein says that he
continues to believe the best way for Excel to create value for its
shareholders would be to sell out to a global system integrator.(2)
In sum, it does not appear that investors or even management itself is
buying into management's professed solutions for Excel's problems. We
believe that there are fundamental reasons for this and they relate not only
to Excel's past performance but also the changing realities of the global
marketplace for automotive parts.
CHANGES IN THE GLOBAL MARKETPLACE
The vehicle parts industry has been rapidly consolidating in the 1990s.
According to a global study by PricewaterhouseCoopers, in 1990 there were
more than 3,000 tier-one companies in business. Six years later, the number
was down to 1,500 and the PricewaterhouseCoopers study suggests that the
number will further decrease to approximately 350 by the year 2000.(3) We
believe this consolidation is the result of several factors, namely (i)
suppliers seeking to gain market share through acquisitions during a period
of relatively flat sales in North America, (ii) intense cost pressure from
automakers forcing smaller, more inefficient suppliers out of business, and
(iii) automakers demanding their suppliers provide more complex
subassemblies, or modules, instead of supplying simple components that the
automakers then assemble, thus forcing suppliers to acquire technology and
other capabilities that are both costly and technologically risky for the
supplier to develop independently.
In our view, Excel cannot be a strong independent competitor in a
consolidating vehicle parts industry with its current market share.
Furthermore, management has not offered a viable strategy to increase Excel's
market share through internal growth, and we have seen the results of
management's recent attempt to increase market share through acquisitions.
See "Excel's Poor Performance" above. The vehicle parts industry is, and
will continue to be, dominated by companies with better track records and
greater financial resources than Excel. As a result, we believe Excel will
continue to be confronted with fierce competition from companies with far
superior cost structures that can effectively compete in
- ---------------
(1) Gregory L. Kagay, McDonald & Company, Excel -- EXC: Reports 2Q98
Operating Results, July 16, 1998. Permission to quote or use this
report as proxy soliciting material has not been sought or obtained from
either Mr. Kagay or McDonald & Company Securities, Inc. The use of such
quotation does not imply Mr. Kagay's or McDonald & Company's endorsement
of MMI Investments or its positions.
(2) Eric Goldstein, Bear, Stearns & Co. Inc., Excel Industries (EXC -- $13
9/16) - Attractive Estimates Reduced After Conversation with Mgmt,
September 24, 1998. Permission to quote or use this report as proxy
soliciting material has not been sought or obtained from either Mr.
Goldstein or Bear, Stearns & Co. Inc. The use of material from such
report does not imply Mr. Goldstein's or Bear, Stearns's endorsement of
MMI Investments or its positions.
(3) Mike Pettapiece, GOOD NEWS, BAD NEWS FOR AUTO PARTS INDUSTRY, THE LONDON
FREE PRESS, September 26, 1998, at D10 (CITING the PricewaterhouseCoopers
global study). Permission to use material from that article as proxy
soliciting material has not been sought or obtained from any of
PricewaterhouseCoopers, the author or the publication. The use of
material from that article does not imply PricewaterhouseCoopers', Mr.
Pettapiece's or such publication's endorsement of MMI Investments or its
positions.
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an environment of intense cost pressures and lower margin businesses. Our
fear is that Excel, with its current position in the industry and no real
prospects for growth, is not equipped to handle that competition. The end
result, we believe, will be further deterioration of Excel's core businesses
at the expense of its shareholders. In addition, as we discussed above, none
of the "strategic alternatives" mentioned in Excel's November 18 announcement
appears to fundamentally improve Excel's ability to compete in the global
marketplace, and some of the alternatives being considered may actually
impair such ability.
However, we believe that many of Excel's operations are currently
extremely attractive to larger strategic acquirers, and that the price an
acquirer will pay for those operations will far exceed Excel's value in the
marketplace during the foreseeable future. We are not alone in our beliefs.
In the report of Bear Stearns analyst Eric Goldstein dated July 17, 1998, he
states that "the major risk is that management will continue to sit back and
do nothing while [Excel's]core businesses deteriorate. . . We continue to
believe [Excel's] shareholders would be better off if management simply
attempted to sell or merge the company with another supplier."(4)
A COMPETITIVE AUCTION IS THE ONLY VIABLE MEANS TO MAXIMIZE SHAREHOLDER
VALUE IN OUR VIEW. NOW IS THE TIME FOR EXCEL'S BOARD OF DIRECTORS TO ACT,
BEFORE IT IS TOO LATE.
THERE IS A SOLUTION
Excel shareholders have suffered with negative returns for too long. In
our view, the best way for shareholders to obtain the full value of their
shareholdings is for the Board of Directors to retain a recognized investment
banking firm that is completely independent of Excel's management and to
charge such firm with the responsibility of objectively determining the value
of Excel's businesses and then conducting a competitive auction process
involving qualified prospective purchasers that may be interested in Excel as
a whole or in certain of its businesses. Experience has shown that such an
approach is likely to yield the highest value to shareholders.
IF YOU SHARE OUR VIEWS, WE URGE YOU TO SUPPORT OUR SHAREHOLDER VALUE
PROPOSAL. VOICE YOUR SUPPORT BY EITHER WRITING OR CALLING MR. FUTTERKNECHT
AND THE OTHER MEMBERS OF EXCEL'S BOARD OF DIRECTORS. LET THEM KNOW YOU ARE
LOOKING FOR REAL SOLUTIONS, NOT ILLUSORY STRATEGIC ALTERNATIVES. LET THEM
KNOW THAT YOU WANT THEM TO TAKE ACTION TO ENHANCE THE VALUE OF YOUR
INVESTMENT IN EXCEL.
VOTING PROCEDURES
The Common Shares are the only shares of capital stock of Excel entitled
to notice of, and to vote at, the 1999 Annual Meeting. Every holder of Common
Shares is entitled to one (1) vote for each Common Share held. In accordance
with Excel's By-laws, at the 1999 Annual Meeting, the holders of a majority
of the Common Shares issued and outstanding and entitled to vote thereto,
present in person or represented by proxy, shall be required for the purpose
of a quorum. For the Shareholder Value Proposal to be adopted at the 1999
Annual Meeting if a quorum is present, it will be necessary that the
Shareholder
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(4) Eric Goldstein, Bear, Stearns & Co. Inc. Equity Research, Excel
Industries (EXC -- 13 3/4) -- Attractive HI at 3.4 x 1999 EBITDA --
Pressure on Management Intensifies, July 17, 1998. Permission to quote
or use this report as proxy soliciting material has not been sought or
obtained from either Mr. Goldstein or Bear, Stearns & Co. Inc. The use
of such quotation does not imply Mr. Goldstein's or Bear, Stearns's
endorsement of MMI Investments or its positions.
10
<PAGE>
Value Proposal receive more votes favoring the Shareholder Value Proposal
than votes are cast opposing the Shareholder Value Proposal.
Abstentions and broker non-votes are not votes cast and, therefore, will
not be counted in determining voting results, although abstentions and broker
non-votes will be counted in the determination of a quorum. Inspectors of
election that are appointed by the Board of Directors or, if no such
appointment if made, by the presiding officer of Excel at the 1999 Annual
Meeting, will tabulate the votes cast.
Only holders of record as of the close of business on the record date
(to be set by Excel) will be entitled to vote. If you are a shareholder of
record on the record date, you will retain your voting rights for the 1999
Annual Meeting even if you sell such shares after the record date.
Accordingly, it is important that you vote the shares you own on the record
date or grant a proxy to vote such shares, even if you sell such shares after
the record date.
If any of your Common Shares are held in the name of a brokerage firm or
bank, only it can vote such Common Shares and only upon receipt of your
specific instructions. Accordingly, please contact the person responsible for
your account concerning the voting of your Common Shares.
You will not be eligible to vote at the 1999 Annual Meeting for the
Shareholder Value Proposal unless you are present in person or you have
provided a proxy. If you sign and return a proxy and change your mind, you
can always revoke the proxy by sending new written instructions, with a later
date, to Excel or by attending the meeting and voting in person.
IMPORTANT: MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
SOLICITATION OF PROXIES
If MMI Investments determines to solicit proxies for use at the 1999
Annual Meeting, such proxies may be solicited by mail, courier service,
advertisement, telephone, telecopier or other electronic means, and in
person. Solicitations may be made by managers, officers and other employees
of MMI Investments, none of whom will receive additional compensation for
such solicitations. MMI Investments may request banks, brokerage firms, and
other custodians, nominees, and fiduciaries to forward all of the
solicitation materials to the beneficial owners of the shares they hold of
record. If MMI Investments determines to solicit proxies for use at the 1999
Annual Meeting, MMI Investments will reimburse these record holders for
customary clerical and mailing expenses incurred by them in forwarding these
materials to their customers.
MMI Investments has retained D.F. King & Co., Inc. ("D.F. King") for
solicitation and advisory services in connection with the solicitation of
proxies at an estimated fee of $[ ], together with reimbursement for its
reasonable out-of-pocket expenses. MMI Investments has also agreed to
indemnify D.F. King against certain liabilities and expenses, including
liabilities and expenses under the federal securities laws. D.F. King has
informed MMI Investments that if MMI Investments determines to solicit
proxies for use at the 1999 Annual Meeting, D.F. King anticipates that it
would employ up to approximately [ ] persons to solicit proxies for use at
the 1999 Annual Meeting.
MMI Investments will pay all expenses associated with any solicitation
of proxies by MMI Investments in connection with the 1999 Annual Meeting. At
present, MMI Investments does not intend to seek reimbursement for such
expenses from Excel or any other party or parties. MMI Investments
11
<PAGE>
estimates that, if it determines to solicit proxies for use at the 1999
Annual Meeting, the costs incidental to such solicitation, including
expenditures for advertising, printing, postage, legal and related expenses
would be approximately $[ ]. Total costs incurred to the date of this
Proxy Statement by MMI Investments have been approximately $[ ].
CERTAIN INFORMATION ABOUT EXCEL
Excel is an Indiana corporation with its principal executive office
located at 1120 North Main Street, Elkhart, Indiana 46514. The telephone
number of Excel is 219.264.2131.
Excel is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
SEC. Reports, registration statements, proxy statements, and other
information filed by Excel with the SEC can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices, Judiciary Plaza, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Room 1024, 7 World Trade Center, New
York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Documents filed electronically
by Excel are also available at the SEC's Web site (http://www.sec.gov).
Schedule III sets forth certain information obtained from documents
filed with the SEC with respect to Excel concerning the ownership of Common
Shares by directors and executive officers of Excel and by other persons who
own more than five percent of the outstanding Common Shares.
SHAREHOLDER PROPOSALS FOR THE 1999 AND 2000 ANNUAL MEETINGS
Excel's Notice of Annual Meeting and Proxy Statement relating to its
1998 Annual Meeting of Shareholders indicates that any shareholder proposal
to be considered for inclusion in the proxy statement to be distributed by
Excel in connection with the 1999 Annual Meeting must have been received by
Excel not later than November 12, 1998.
A shareholder proposal to be presented at, and considered for inclusion
in the proxy statement of Excel relating to, the Annual Meeting of
Shareholders of Excel to be held in the year 2000 must be received at Excel's
principal executive offices not less than 120 calendar days in advance of the
date of Excel's proxy statement released to shareholders in connection with
the 1999 Annual Meeting.
INFORMATION ABOUT MMI INVESTMENTS
MMI Investments is a Delaware limited liability company with its
executive offices at RR1, Box 167D, Wing Road, Millbrook, New York 12545. If
you wish to communicate with MMI Investments concerning Excel and the matters
discussed in this Proxy Statement, executives of Millbrook, the manager of
MMI Investments, can be reached at 212.586.4333. Schedule I sets forth
certain information about MMI Investments, Millbrook and certain other
persons who may communicate with shareholders of Excel Industries, Inc. in
the manner contemplated by this Proxy Statement. Schedule II sets forth
certain information relating to (i) the beneficial ownership of securities of
Excel by MMI Investments and certain of the other persons identified on
Schedule I and (ii) certain transactions in such securities by such persons.
12
<PAGE>
ADDITIONAL INFORMATION
MMI Investments assumes no responsibility for the accuracy or
completeness of any information contained herein which is based on, or
incorporated by reference to, filings of Excel with the SEC.
Questions, or requests for additional copies of this Proxy Statement,
should be directed to:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE:
1-800-290-6424
13
<PAGE>
SCHEDULE I
INFORMATION CONCERNING CERTAIN PERSONS
The following organizations and persons intend to communicate with
shareholders of Excel Industries, Inc. in the manner contemplated by this
Proxy Statement:
A. MMI INVESTMENTS, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY
Business Address: RR 1, Box 167D, Wing Road, Millbrook, New York 12545
Principal Business: Investing in securities
B. MILLBROOK CAPITAL MANAGEMENT INC., A NEW YORK CORPORATION
Business Address: RR 1, Box 167D, Wing Road, Millbrook, New York 12545
Principal Business: Managing investments in publicly traded securities and
in private companies
C. DIRECTOR AND EXECUTIVE OFFICERS OF MILLBROOK CAPITAL MANAGEMENT, INC.
<TABLE>
<CAPTION>
Name Present Office with Millbrook
- ---- -----------------------------
<S> <C>
John S. Dyson Director and Chairman
Clay B. Lifflander President
Alan Rivera Chief Financial Officer
</TABLE>
The principal business address of each such person is RR 1, Box 167D, Wing
Road, Millbrook, New York 12545. Each such person's employment by Millbrook
Capital Management, Inc. represents such person's principal occupation or
employment.
The inclusion of information with respect to the foregoing persons in this
Schedule I does not constitute an admission that any of such persons is
involved in a "solicitation" (within the meaning of Rule 14a-1 under the
Securities Exchange Act of 1934, as amended) or is a "participant" (within
the meaning of Item 4 of Schedule 14A under the Securities Exchange Act of
1934, as amended) in any such "solicitation."
I-1
<PAGE>
SCHEDULE II
SHARES BENEFICIALLY OWNED BY MMI INVESTMENTS, L.L.C. AND
MILLBROOK CAPITAL MANAGEMENT INC. AND OTHER PERSONS
SCHEDULE OF
PURCHASES OF COMMON SHARES OF EXCEL INDUSTRIES, INC.
BY MMI INVESTMENTS, L.L.C.
<TABLE>
<CAPTION>
Date Shares Price Per Share
---- ------ ---------------
<S> <C> <C>
June 18, 1997 500 $ 18.50
June 19, 1997 4,600 19.17
June 20, 1997 18,300 19.39
June 23, 1997 3,400 19.39
June 24, 1997 5,600 19.74
June 25, 1997 17,600 20.00
September 4, 1997 25,000 19.00
July 31, 1998 23,800 13.22
August 3, 1998 15,800 13.24
August 4, 1998 6,900 13.37
August 11, 1998 5,000 13.50
August 18, 1998 4,500 13.89
August 17, 1998 7,100 14.11
August 26, 1998 11,900 13.38
August 31, 1998 7,500 12.49
September 1, 1998 32,500 12.50
September 1, 1998 2,500 12.50
September 2, 1998 21,900 12.50
September 4, 1998 5,000 12.75
September 8, 1998 10,000 13.13
September 9, 1998 70,000 12.88
September 10, 1998 30,000 12.88
September 11, 1998 22,500 12.64
September 15, 1998 30,000 12.88
September 17, 1998 12,000 12.89
September 22, 1998 4,500 13.33
September 23, 1998 1,000 13.09
October 1, 1998 1,700 12.14
October 2, 1998 2,000 12.30
October 5, 1998 500 11.88
October 13, 1998 1,000 12.25
</TABLE>
II-1
<PAGE>
In connection with the above-referenced transactions, MMI Investments,
L.L.C. used (i) available cash and (ii) the proceeds of approximately $1.1
million principal amount of margin loans to make these purchases. These
margin loans were obtained from one broker under customary terms and
conditions. Approximately [$ ] principal amount of such margin loans
remain outstanding as of the date of this Proxy Statement.
By virtue of being the sole manager of MMI Investments, L.L.C., Millbrook
Capital Management Inc. may be deemed to be the beneficial owner of the
404,600 Common Shares of Excel Industries, L.L.C. owned by MMI Investments,
L.L.C. By virtue of being the sole shareholder and director of, and an
executive officer of, Millbrook Capital Management Inc., Mr. John S. Dyson
may be deemed to be the beneficial owner of the 404,600 Common Shares of
Excel Industries, Inc. owned by MMI Investments, L.L.C. By virtue of being
executive officers of Millbrook Capital Management Inc., Messrs. Clay B.
Lifflander and Alan Rivera may be deemed to be beneficial owners of the
404,600 Common Shares of Excel Industries, Inc. owned by MMI Investments,
L.L.C. Except for the Common Shares owned by MMI Investments, L.L.C., such
persons beneficially own no Common Shares of Excel Industries, Inc.
II-2
<PAGE>
SCHEDULE III
BENEFICIAL OWNERSHIP OF EXCEL COMMON SHARES
The following information is derived from publicly available information
on file with the SEC, and sets forth (i) the number of Common Shares
beneficially owned, as of February 13, 1998, by the directors and executive
officers of Excel Industries, Inc. and (ii) the number of Common Shares
beneficially owned by persons known to MMI Investments to beneficially own,
as of November 23, 1998, 5% or more of the outstanding Common Shares:
<TABLE>
<CAPTION>
Number of
Name of Shares
Beneficial Owner Owned(1)
---------------- ---------
<S> <C>
James O. Futterknecht, Jr.(2) . . . . . . . . . . . . . 43,454
Joseph A. Robinson(3) . . . . . . . . . . . . . . . . . 9,708
John G. Keane(4). . . . . . . . . . . . . . . . . . . . 6,003
Richard A. Place(5) . . . . . . . . . . . . . . . . . . 5,000
James K. Sommer(6). . . . . . . . . . . . . . . . . . . 8,501
Ralph R. Whitney, Jr.(7). . . . . . . . . . . . . . . . 24,000
Louis R. Csokasy(8) . . . . . . . . . . . . . . . . . . 16,218
Robert A. Pickering . . . . . . . . . . . . . . . . . . 0
Terrance L. Lindberg(9) . . . . . . . . . . . . . . . . 8,115
All directors and executive officers as a group,
including those named above (12 persons)(10) . . . 145,010
CIGNA Corporation(11)
One Liberty Place
Philadelphia, Pennsylvania 19192 . . . . . . . . . 1,109,932
Dimensional Fund Advisors Inc. (12)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 . . . . . . . . . . 654,859
Mellon Bank Corporation(13)
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258 . . . . . . . . . . 708,509
</TABLE>
- ---------------
(1) Excel director and executive officer beneficial ownership information is
taken from Excel's proxy statement dated March 10, 1998 relating to the
1998 Annual Meeting of Shareholders. Unless otherwise indicated, each
person in the table has sole voting and sole dispositive power over the
shares beneficially owned by that person.
(2) Includes 10,000 shares subject to an option held by the person.
(3) Includes 1,208 shares held for the person's account in the Excel
Industries, Inc. Employee Stock Purchase Plan and 3,250 shares subject
to an option held by the person.
III-1
<PAGE>
(4) Includes 4,000 shares subject to an option held by the person.
(5) Includes 1,000 shares held by a trust, with respect to which the person
has the voting and dispositive power, and 4,000 shares subject to an
option held by the person.
(6) Includes 4,000 shares subject to an option held by the person.
(7) Includes 4,000 shares subject to an option held by the person.
(8) Includes 5,500 shares subject to an option held by the person.
(9) Includes 5,500 shares subject to an option held by the person.
(10) Includes shares owned by spouses, whether or not beneficial ownership is
disclaimed, and 58,000 shares subject to options held by directors and
executive officers.
(11) Based on Schedule 13G filed with the SEC on February 12, 1998 filed by
CIGNA Corporation as the ultimate parent company of certain wholly-owned
subsidiaries, reporting information as of December 12, 1997. The
Schedule 13G reported that (a) Connecticut General Life Insurance
Company was the direct beneficial owner of 515,578 shares, (b) Life
Insurance Company of North America was the direct beneficial owner of
85,929 shares, (c) CIGNA Investment Advisory Company, Inc., an
investment adviser, was the indirect beneficial owner (through
performance of investment management activities) of shares owned by
Connecticut General Life Insurance Company and Life Insurance Company of
North America, (d) CIGNA Investments, Inc., was the indirect beneficial
owner, through performance of investment management activities, of
508,425 shares beneficially owned by CIGNA Mezzanine Partners II, L.P.,
and (e) CIGNA Corporation may be deemed to have shared voting and
dispositive power over the all of shares reported.
(12) Based on Schedule 13G filed with the SEC on February 10, 1998, reporting
information as of December 12, 1997. Dimensional Fund Advisers Inc.
stated in the Schedule 13G that it had sole voting power over 421,859
shares and sole dispositive power over 654,859 shares (including 92,400
shares owned by DFA Investment Dimensions Group Inc. and 131,600 shares
owned by The DFA Investment Trust Company, for which persons who were
officers of Dimensional Fund Advisers Inc. also serve as officers).
(13) Based on Schedule 13G filed with the SEC on January 26, 1998 filed by
Mellon Bank Corporation and certain of its direct and indirect
subsidiaries, reporting information as of December 12, 1997. The
Schedule 13G stated that Mellon Bank Corporation has sole voting power
over 627,009 shares (including shares held of record by Mellon Bank,
N.A. as trustee of the employee benefit plan of Excel Industries, Inc.
which have not been allocated to the individual accounts of employee
participants in the plan), sole dispositive power over 663,409 shares
and shared dispositive power over 45,100 shares.
- ---------------
Although MMI Investments does not have any information that would
indicate that any information contained in this Schedule III, which has
been taken from documents on file with the SEC, is inaccurate or
incomplete, MMI Investments assumes no responsibility for the accuracy
or completeness of such information.
III-2
