SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
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MEDICAL IMAGING CENTERS OF AMERICA, INC.
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(Name of Registrant as Specified in Charter)
STEEL PARTNERS COMMITTEE
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(Name of Person(s) filing Proxy Statement)
Payment of filing fee (check the appropriate box):
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STEEL PARTNERS II, L.L.P.
750 Lexington Avenue
27th Floor
New York, New York 10022
February 20, 1996
DEAR FELLOW SHAREHOLDER:
As the largest shareholder in Medical Imaging Centers of America, Inc., we
are writing to you on the eve of the Special Meeting of shareholders that we
have called for February 26, 1996. In its most recent letter, the management
of MICA has urged shareholders to take a "close look" at our record with other
public companies. We agree because our record, we believe, is superior to
MICA's current board's record.
STEEL PARTNERS' TRACK RECORD
In an effort to distract from its own poor performance, MICA's current
Board has misled shareholders with rhetoric and outright falsehoods concerning
Steel's track record. MICA's president, Bob Muehlberg, has apparently advised
one publication that Steel Partners has "a history of raiding small publicly
held companies like ours and then selling off its assets without giving the
other shareholders anything."*
Steel Partners has not "raided" any companies, nor has it ever "stripped
out" assets of any companies.
Steel Partners is committed to building through its investments and has
only supported sales of under performing assets, with the proceeds being
re-deployed to enhance shareholder value.
MICA reports that two companies brought suit against Steel for allegedly
filing false and misleading Schedule 13D's.
MICA fails to disclose that both companies have withdrawn all claims and
in one case, did so to avoid Steel's pending motion to dismiss its
frivolous charges.
MICA's current Board also suggests that Steel lacks "fiduciary
responsibility" to MICA's shareholders.
Again, a falsehood. If elected, Steel Partners' nominees will have full
fiduciary responsibilities to MICA's shareholders -- and every incentive
to see Steel's substantial investment in MICA grow and prosper along with
your investment.
We encourage you to again read the information we've provided on Gateway
Industries and Alpha Technologies, which is reprinted on page 3 of this
letter. Remember, prior to Steel Partners' investment, both of these companies
experienced extremely undervalued stock. Under Steel Partners' guidance both
companies stock returned to profitability.
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* Medical Imaging News, dated February 9, 1996, page 2 of 6, quoted without
permission.
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THE MICA BOARD'S TRACK RECORD
The present Board, by contrast, has not even been able to comply with its
own rules on corporate governance. In February 1995, MICA's Board adopted 14
rules for corporate governance -- and then consistently violated key rules.
Rule No. 9, for example, provides that directors are required to own at
least 1,000 MICA shares within one year of election. Three of the present
directors (Ms. Sunseri, Dr. Burnett and Dr. Ricci) violated this rule when
re-elected to office in August 1995 and continue to violate the rule today.
None of them own as much as 1,000 shares of MICA stock. Do you want directors
of this caliber to govern your investment?
Rule No. 10 states: "Outside directors will hold the majority of Board
positions." The current Board promptly violated this rule at last year's
annual meeting and when Steel started its proxy fight, outside directors held
one of four Board positions. All of Steel's nominees are outside directors.
Rule No. 5 provides: "The Audit and Compensation Committee will consist
entirely of independent directors." When Steel started its proxy fight, the
Compensation Committee consisted of one inside director (Dr. Burnett) and one
outside director (Dr. Ricci).
MICA'S BOARD WILL NOT EVEN COMPLY
WITH THEIR OWN RULES
Now consider this: The Board plans to spend $500,000 in legal fees,
professional advisors and other costs, all to influence the vote at the
Special Meeting. We ask you: are these Directors protecting your
investment -- or their jobs and perks?
DON'T BE FOOLED BY MICA'S RHETORIC
In its most recent fight letter, MICA had suggested that the company's
CEO, Bob Muehlberg, played a minor role in the disastrous losses suffered by
MICA from 1990 to 1994 purportedly because Mr. Muehlberg was "not named COO
until November 14, 1994."
However, through November 1994, Mr. Muehlberg has been with the Company
for 11 years and prior to November 1994 was Executive Vice President for
MICA, and the number two executive in charge of the company.
It is preposterous for him to suggest that he was not involved in
management of MICA during this period of severe financial loss.
MICA also contends that it did not pay director Keith Burnett or his
radiology group "any amount in 1995," except for his service as a director.
MICA's own proxy reports that Dr. Burnett is "a principal and officer of
Magnetic Imaging Medical Group ("MIMG")" and that pursuant to certain
management agreements between MIMG and four MICA diagnostic medical
centers, MIMG "collected" approximately $1.2 million in 1995.
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MICA claims that recent amendments to the employment agreements for Mr.
Muehlberg and Ms. Sunseri "did not add any new severance payments" to their
contracts.
But before these "amendments", if the shareholders exercised their right
to remove the current Board, Mr. Muehlberg and Ms. Sunseri were not
entitled to "golden parachute" payments. The new amendments place a tax
on shareholders for exercising their right to remove the Board.
Now both employees may resign and walk away with "golden parachute"
payments. We consider this change the addition of "new severance
payments."
We save for last the current Board's most desperate and outrageous
claim -- the contention that "a vote for Steel could effectively force MICA
into default under the terms of its debenture. . . ."
We have carefully reviewed with our attorneys all public information
available on this debenture. We are confident that neither the language,
nor intent, of the debenture was to frustrate shareholders from
exercising their right to elect new directors. We therefore believe that
bondholders have no right to seek prepayment if the Board is removed.
Moreover, Steel believes, between the cash on hand and funds available
through new lines of credit, MICA could satisfy any prepayment
obligation.
The question the shareholders should ask is simply: Do you want to keep in
office directors who negotiate debt agreements in the hope of permanently
securing their posts, irrespective of shareholder wishes or poor performance?
MORE ON STEEL PARTNERS' TRACK RECORD
We also urge you to consider the tangible results in increased share value
our effort and commitment have brought to companies such as Alpha Technologies
and Gateway Industries.
Alpha Technologies Group, Inc. -- formerly Synercom Technology -- was a
money-losing software company with a $1.50 stock price before we were
involved. Following our purchase in 1992 and 1993 of 13% of the Company,
we were offered three of the six Board seats.
Since that time, Alpha Technologies has been transformed into a growing,
profitable electronic components manufacturer. The stock is currently
trading at about $7 -- a gain of over 350%.
Steel Partners purchased Gateway Industries Inc. common stock in early
1994 after it had been losing money and had agreed to sell off its last
significant businesses. Having joined the Board we worked to develop a
plan to redeploy the proceeds from the sale of its businesses to enhance
shareholder value.
In November 1995, we announced the purchase of Marsel Mirror & Glass
Products Inc. Today Steel Partners owns 32% of Gateway whose stock price
has increased from a 12 month low of $3.375 to its current price of
$7.50.
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Of course, we can't guarantee similar results for shareholders of MICA,
but our 19.9% stake means that we, like you, have a sizable investment to
protect. We can guarantee that we will take all appropriate steps to maximize
the value of our mutual investment in the Company for the benefit of all
shareholders.
VOTE YOUR BLUE PROXY CARD TODAY !
The Special Meeting of Shareholders is only a few days away! Vote for
directors who share your interest in seeing the value of MICA shares grow.
Please mark sign, date and return the Committee's BLUE proxy card today. If
you have any questions or comments, please call the Committee directly at
(212) 446-5217 or MacKenzie Partners, Inc., which is assisting the Committee
with this transaction, toll free at (800) 322-2885. We would be pleased to
discuss with you our plans for the Company.
Registered shareholders may return proxy cards directly to MacKenzie
Partners, Inc. via facsimile to (212) 929-0308. Shareholders who hold shares
in Street name may call MacKenzie Partners, Inc. for assistance in voting
their shares.
We appreciate your consideration of our slate and plans for MICA.
On behalf of the Steel Partners Committee,
Sincerely,
/s/ WARREN LICHTENSTEIN
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WARREN LICHTENSTEIN
If you have questions or need assistance in voting your shares 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
