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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
Filed by the registrant [_]
Filed by a party other than the registrant [X]
[_] Preliminary proxy statement [_] Confidential, For Use of the
[_] Definitive proxy statement Commission only (as permitted by
[X] Definitive additional materials Rule 14a-6(e)(2))
[_] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
FAMILY STEAK HOUSES OF FLORIDA, INC.
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(Name of Registrant as Specified in Its Charter)
BISCO INDUSTRIES, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on the table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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.
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(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date Filed:
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June 15, 1999
Dear Fellow Shareholders:
The purpose for writing to you today is to again ask for your support to
elect a new Board of Directors for Family Steak Houses of Florida, Inc. You can
be assured that your new Board will focus diligently on increasing shareholder
value and will work hard to not only gain back the 80% loss in the share price
we all have suffered over the past two years, but build upon it in the future by
implementing a new strategic vision for your Company. Your new Board will
represent significant change from the status quo. Our substantial investment in
the Company will ensure you of our commitment and determination to increase
shareholder value as rapidly as possible.
IF YOU HAVE NOT YET RETURNED THE GOLD PROXY CARD WE SENT YOU ON JUNE 11,
1999, PLEASE SIGN, DATE AND RETURN IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
IF YOU HAVE ALREADY RETURNED THE WHITE PROXY CARD SENT TO YOU TO ELECT
MANAGEMENT'S PROPOSED BOARD, THERE IS STILL TIME FOR YOU TO CHANGE YOUR VOTE TO
HELP US INCREASE SHAREHOLDER VALUE SIMPLY BY SIGNING, DATING AND RETURNING THE
ENCLOSED GOLD CARD.
In the proxy statement that management mailed to you there are several
statements regarding our plans and intentions that we believe are inaccurate and
misleading. We would like to take this opportunity to respond to these comments.
Before reading our response below you may want to again review the proxy
statement we sent you on June 11, 1999 which accurately describes our intentions
and plans to enhance shareholder value.
Our Response to Management's Proxy Statement
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We believe our strategic plan to sell the Company's restaurant operations
for as high a price as possible and then reinvest the proceeds in an
acquisition/investment program in the electronic components and fastener
industries is preferable to management's plan to liquidate the Company. We
strongly believe that your best opportunity for an adequate return on your
investment is to support our proposed Board because it is the only plan that
will ensure that your Company will remain in existence after the sale of its
restaurant operations.
There is no guarantee that any eventual sale price of the Company's
restaurant operations will be at a price satisfactory to many shareholders
especially those of you who paid a much higher price for your shares.
Consequently, you might incur a loss if forced to take a cash distribution from
the Company. If our strategy is successful, we believe that it is likely to
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generate interest in the Company, create value for all shareholders and,
consequently, provide the opportunity for a higher share price. Although there
is no assurance that our strategy will be successful, I am committed to its
successful implementation and I am pleased to be able to commit Bisco's
resources to the ongoing building of shareholder value to which all Company
shareholders are entitled. Also, please remember that under our program even if
you decide not to remain a Company shareholder you are always free to sell your
shares on the open market at any time before or after the sale of the restaurant
operations.
Frankly, it is surprising to us why the current Board is so intent on
liquidating the Company following a sale and opposed to our plan to increase
shareholder value. We believe that Bisco has the experience, expertise and
resources for our vision to become a reality and the potential to create a
winning situation for all shareholders who choose to stay with us. Our view is
that it is a much better decision not to liquidate the Company when there is a
realistic opportunity to increase future shareholder value above and beyond what
you would receive if the Company were liquidated.
Management has done a good job of explaining in its proxy statement the
Company's operational plan to close unprofitable restaurants and open new
restaurants with high growth potential. These actions definitely need to be
taken to reverse the Company's losses for over $2,000,000 over the past two
years and I again want to assure you that our new Board will do everything
possible to accelerate this process. We believe that the continued building of a
strong working relationship with the franchisor will result in their ongoing
support and assistance in selection of high growth potential new restaurant
sites for development by the Company. Our objective is to accelerate this
process and establish goals for a higher number of new restaurant openings than
currently planned by management in 1999, 2000 and beyond.
Management made the statement to you in its proxy that "Bisco has not
disclosed its plan for managing the Company if the current management team is
not retained." Please be advised that it is not Bisco's intention to replace the
current management team and although we cannot be certain, we believe the
current management team will not elect to resign since we believe they are
committed to the Company's future success. However, if any senior managers do
decide to resign, Bisco is prepared to act quickly to replace them with
qualified executives. Consequently, Bisco believes there would be no meaningful
disruption to the Company's ongoing operations in the event of any such
resignations.
Also, please keep in mind that the Bisco nominees, if elected, will occupy
only four of the seven Board seats with the three Company nominees receiving the
next highest number of votes also being elected as directors. Although Bisco
cannot be certain that the Company's nominees will continue to serve with the
Bisco nominees on the Board, Bisco intends to encourage them to do so to provide
the Company's shareholders with additional management experience and continuity.
Along with me, Jay Conzen and the other two experienced executives we are
nominating (Stephen Catanzaro and William L. Means), a strong team will be in
place to return the Company to profitability and improve operating performance
of the Company's restaurants.
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We disagree with management's comment to you in their proxy statement that
Bisco's strategy will result in higher costs to the Company. They stated that if
the Bisco slate of directors is elected a "change in control" will occur under
the Company's executive employment agreements and the Company will become
obligated to pay a total of $800,000 in severance to Company executives. These
"golden parachute" contracts are legal obligations entered into prior to our
representation on the Board and we have no choice but to comply with their
terms. However, please note that these obligations are also triggered if the
Company is sold or merged which is the strategy management decided to pursue at
approximately the same time as the golden parachute agreements were executed.
Also, it should be noted that the Board, at any time prior to a change in
control, may in its sole discretion, modify or completely eliminate the golden
parachute payments for the Company's Chief Executive Officer and Chief Financial
Officer, which represents most of the $800,000. In addition, it is very
important to note that in the event of a change in control, payment of the
$800,000 does not occur automatically, but only if the executive chooses to
resign from employment with the Company. Therefore, it would be the decisions of
the executives who are employed under these agreements, and not Bisco, to cause
the Company to incur higher costs.
Regarding management's comment that our plan to reinvest the proceeds from
the sale of the restaurant operations would likely result in higher taxes to the
Company, the question of whether any taxes at all would be payable by the
Company would depend entirely on the selling price and the Company's basis in
any assets sold. Also, management indicated that since their plan would result
in the sale of the Company's shares there would be no tax at the Company level;
however, management did not point out that a potential acquirer may not be
willing to structure a transaction with the Company as a stock purchase.
Consequently, if the Board decided it was in the best interests of the Company's
shareholders to proceed with a potential acquirer and structure the transaction
as an asset sale, there also could be taxes payable at the company level in
which case shareholders would not receive the full purchase price paid by any
such acquirer. We believe our plan gives the individual shareholder the most
flexibility in his or her personal tax planning since the shareholders would not
be forced to recognize a taxable gain or loss on their investment in the
Company.
Management's statement to you that in 1997 the shareholders rejected my
efforts to gain control of the Company needs to be corrected. First of all, what
took place two years ago was that the Board strongly opposed our $4.50 per share
offer to purchase 23.8% of the Company's outstanding shares as being inadequate.
The Board of Directors then adopted a poison pill and other anti-takeover
measures to prevent us from buying more shares. At that time, we then attempted
to obtain shareholder consents to repeal the poison pill. Although we did
receive more shareholder support than the Company received from those
shareholders who voted, not enough shareholders voted to allow us to obtain a
majority of the outstanding shares necessary to repeal the poison pill. We
obtained written consents from the holders of over 60% of the shares of those
shareholders that voted, which represented 45% of the total number of Company
shares outstanding. This level of shareholder support we received clearly was
not a vote of confidence for the Board at that time or a rejection of my efforts
to increase shareholder value.
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Finally, we must also take strong exception to management's comment that
our Board control would jeopardize shareholder value. Through our share
ownership we have over a $1,400,000 financial commitment to the Company's future
success and I want to assure you that we will focus on the single-minded goal of
increasing shareholder value for all of us. Our Board would not make any
decision that would jeopardize or not be in the best interests of shareholder
value and it is certainly our intention to consider all sides of any proposed
action including the respected opinions of all Board members. Through our 20%
ownership, we have a lot of our own hard earned money invested in the Company
including funds of Bisco's employees through the Bisco Profit Sharing Plan. We
are determined to obtain an excellent return on our investment. This is not
intended to be a criticism of the other Board members and we are respectful of
their work ethic, but the fact of the matter is their total ownership of the
Company is only 3.6% (excluding unexercised stock options). Furthermore, almost
all of their shares were acquired through the Company's stock option plan for
directors at an exercise price of $.01. As your elected representatives with a
substantial investment at stake, your new Board will totally share your
objective to increase the value of your investment.
I NEED YOUR VOTES AGAIN SO THAT WE WILL BE SUCCESSFUL IN OBTAINING CONTROL
OF THE BOARD AND BE IN A POSITION TO IMPLEMENT OUR STRATEGIES TO INCREASE
SHAREHOLDER VALUE.
We hope we have set forth to your satisfaction our plans, intentions and
strategies for the Company. If you have any questions please call me or Jay
Conzen at Bisco Industries, Inc. (714) 283-7140.
Thank you again for your consideration. If you have not already done so or
if you now want to change your vote to help us increase shareholder value,
please sign, date and return the enclosed GOLD proxy card in the postage prepaid
envelope.
Sincerely,
/s/ Glen F. Ceiley
Glen F. Ceiley
President and CEO
Bisco Industries, Inc.
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