SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20547
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INLAND STEEL INDUSTRIES, INC.
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(Name of Registrant as Specified in its Charter)
GREENWAY PARTNERS, L.P.
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(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
NYFS11...:\92\56392\0003\1915\SCHD247X.13F
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3) Per unit price of 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):
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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.
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PROXY STATEMENT
IN SUPPORT OF SHAREHOLDER PROPOSALS
IN CONNECTION WITH THE
1998 ANNUAL MEETING OF SHAREHOLDERS
OF INLAND STEEL INDUSTRIES, INC.
This Proxy Statement is being furnished to shareholders of Inland Steel
Industries, Inc. ("Inland" or the "Company") in connection with the solicitation
by Greenway Partners, L.P. ("Greenway"), and the other participants described
below under "Certain Information Concerning Greenway and the other Participants
in the Solicitation", who collectively constitute one of the Company's largest
holders of shares of Common Stock, for use at the 1998 Annual Meeting of
shareholders of Inland, which according to Section 2 of Article II of the
Company's By-Laws, shall be held on the fourth Wednesday of May (i.e., May 27,
1998) or such other date as may be determined by the Company's Board of
Directors, and at any adjournment(s) thereof (the "Annual Meeting"). The Company
has not yet announced the time, place or the record date of the Annual Meeting,
but Greenway expects that the Company will provide such information in due
course. Only shareholders of record at the close of business on the record date
will be entitled to notice of and to vote at the Annual Meeting.
NO PROXY CARD FOR USE AT THE ANNUAL MEETING IS INCLUDED WITH THIS PROXY
STATEMENT BUT ONE WILL BE PROVIDED BY GREENWAY AFTER THE COMPANY NOTIFIES
SHAREHOLDERS OF THE RECORD DATE AND MATTERS TO BE VOTED UPON AT THE ANNUAL
MEETING OR AT AN EARLIER DATE IF GREENWAY DEEMS IT APPROPRIATE. ANY PROXY CARD
SO DISTRIBUTED BY GREENWAY WILL BE ACCOMPANIED OR PRECEDED BY A REVISED PROXY
STATEMENT SETTING FORTH THE DATE, TIME AND LOCATION OF THE ANNUAL MEETING AS
ANNOUNCED BY THE COMPANY. Any shareholder who executes and delivers such Proxy
will have the right to revoke it at any time before it is exercised, by filing
with Greenway at 277 Park Avenue, New York, New York 10172 or with the Secretary
of the Company at its principal executive offices at 30 West Monroe Street,
Chicago, Illinois 60603, an instrument revoking it or a duly executed Proxy
bearing a later date, or, by appearing in person and voting at the Annual
Meeting.
This Proxy Statement is first being sent or given to one or more
shareholders on or about March 4, 1998. The Company has reported in the proxy
statement relating to the 1997 Annual Meeting that as of April 2, 1997, the
record date for such meeting, the Company's outstanding voting securities,
together with the vote to which each is entitled, consists of 48,909,052 shares
of common stock (one
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vote per share), 94,202 shares of Series A $2.40 Cumulative Convertible
Preferred Stock (one vote per share), 3,047,033 shares of Series E ESOP
Convertible Preferred Stock (1.25 votes per share), and $100,000,000 principal
amount of the Company's 10.23% Subordinated Voting Notes (30.604 votes per
$1,000 of principal amount). According to the Company's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1997, there were 48,959,768
shares of common stock outstanding on November 6, 1997. All such voting
securities vote together without regard to class on the matters expected to be
voted upon at the Annual Meeting.
RYERSON TULL PROPOSAL
Greenway Partners, L.P., 277 Park Avenue, New York, New York 10172,
beneficial owner of 830,000 shares of Inland Common Stock, has proposed for the
reasons stated below, the adoption of the following resolution (the "Ryerson
Tull Proposal"):
RESOLVED, that it is hereby recommended that the Board of
Directors distribute Inland's ownership of Ryerson Tull to its
shareholders through a spin-off transaction or the issuance of
letter stock.
As more fully discussed below, Ryerson Tull could be spun off by the
Company making a dividend to its shareholders of shares of Ryerson Tull's
capital stock. As a consequence, Ryerson Tull would cease to be a subsidiary of
the Company and the shareholders of the Company at the time of the dividend
would also own the shares of Ryerson Tull. Alternatively, the issuance of letter
stock through a dividend would entail an amendment to the Company's charter to
create a class of stock, commonly known as "letter stock," that would be
designed to reflect the financial performance of Ryerson Tull and would have
such rights and attributes as would be determined by the Company's Board of
Directors. See, "RYERSON TULL PROPOSAL -- Certain Advantages and Disadvantages
of the Ryerson Tull Proposal" below.
Greenway and the other participants described below and their associates
and affiliates own over 4,400,000 shares of Inland, making them one of the
largest stockholders with over 9%. Greenway continues to believe that the stock
market is not yet granting Inland and Ryerson Tull the full benefits of a
separation into two independent companies because Inland still holds
approximately 87% of the economic interest in Ryerson Tull -- the largest metals
service center in the United States.
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Greenway believes value can be created for shareholders if Inland
distributes its ownership of Ryerson Tull to Inland shareholders. Alternatively,
if more advantageous from a tax point of view, Inland could instead distribute
to its shareholders a so-called "letter stock" reflecting Inland's economic
interest in Ryerson Tull's business. Greenway had suggested the use of "letter
stock" last year in answer to management's allegation then that federal income
taxes would increase significantly if Ryerson Tull were spun off and its income
could no longer be offset by Inland's substantial tax loss carryforwards.
Distributing "letter stock", Greenway believes, solves any tax concerns.
Spin-offs have become a much admired and accepted practice which allow
managements to become more focused upon and more accountable for their
respective businesses. Investors, potential capital sources and analysts are
able to price more efficiently the separate businesses.
Companies such as AT&T/Lucent; Pacific Telesis/Air Touch; Sears
Roebuck/Dean Witter Discover; and Santa Fe Energy/Monterey Resources have had an
initial public offering of less than 20% of the economic interest in one of
their separate businesses followed by a spin-off distribution of the remaining
equity interest to their shareholders. Greenway urges Inland to follow this
successful pattern with Ryerson Tull.
Likewise, the concept of "letter stock" is not new and has been used in
the steel industry by USX Corp. Although USX Corp. remains as one company, its
steel, oil and natural gas businesses trade separately as "letter stocks".
Similarly, the Hughes Electronics business of General Motors trades as a "letter
stock", as did Electronic Data Systems until its full spin-off.
Following the distribution of Ryerson Tull through a spin-off or the
issuance of "letter stock", Greenway believes Ryerson Tull would be a higher
multiple stock than at present that could be used to purchase other metals
service centers or to raise cash in the public market for business expansion.
Greenway also continues to believe some consolidation in the domestic
steel industry is desirable and should occur as is happening among foreign
producers. As a steel producer, Inland ranks only sixth in the nation, with
annual revenues of approximately $2.5 billion. Given Inland's size in the steel
industry, Inland's Board also should consider actively seeking a merger partner.
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Certain Advantages and Disadvantages
of the Ryerson Tull Proposal
GENERALLY
The Ryerson Tull Proposal constitutes a non-binding recommendation
by the Company's shareholders to its Board of Directors; it is merely advisory.
Thus, even if the Ryerson Tull Proposal is passed by the requisite shareholder
vote, there can be no assurance that the Company's Board will consider this
Proposal. Although a vote in favor of Ryerson Tull Proposal may result in the
Board considering ways to enhance shareholder value, the Board should only take
action after a full analysis of the Ryerson Tull Proposal.
In the absence of specific proposal proposed by the Company's Board
of Directors, the Proponents have not undertaken any analysis of the impact of
hypothetical "letter stock" or spin-off transactions on the financial position
of the Company and, therefore, the Proponents have not determined whether such
transactions would have a positive or negative impact on the Company, taken as a
whole, or the separate financial positions of Inland and Ryerson Tull. See
"ANALYSIS OF EFFECTS OF PROPOSALS" for a description of the analysis undertaken
by Greenway of the potential market value of shares of Ryerson Tull on a
stand-alone basis.
Although the Proponents believe that either a "letter stock"
transaction or spin-off would increase shareholder value by enabling Ryerson
Tull stock to trade at prices that more accurately reflect the value of Ryerson
Tull's steel service center business, there can be no assurance that such
enhanced value will be created.
Assuming the Board does consider the Ryerson Tull Proposal, the
Board would have to analyze the respective advantages and disadvantages of a
"letter stock" transaction and a spin-off, including their impact on the
financial positions of the Company and Ryerson Tull. Set forth below are certain
advantages and disadvantages of a possible "letter stock" transaction and
spin-off. It should be noted, however, that the advantages and disadvantages of
the Ryerson Tull Proposal ultimately considered by the Board may differ based on
the actual structure chosen by the Board for a "letter stock" transaction or
spin-off and other factors in existence at the time of such consideration.
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SPIN-OFF
A spin-off would entail the complete separation of Ryerson Tull from
Inland. In a spin-off, the Company would dividend its ownership interest in
Ryerson Tull to the Company's shareholders and, therefore, a spin-off could be
consummated without shareholder approval. Since Ryerson Tull already operates as
a separate publicly traded company, it seems likely that such a distribution may
be effected without a significant restructuring.
Following a spin-off, Inland would no longer own 87% of the
outstanding shares of Ryerson Tull and, accordingly, Ryerson Tull would be an
independent, public company rather than a subsidiary of Inland. As a result,
Inland's consolidated balance sheet may reflect an overall reduction in
consolidated net worth due to the elimination of assets and shareholders' equity
formerly attributable to Ryerson Tull.
As previously stated, no analysis has been undertaken with respect
to the financial position of Ryerson Tull as a stand alone entity. As part of
the Inland consolidated group of companies, Ryerson Tull may be receiving
certain benefits from intracompany business transactions, including financing
arrangements and allocations of debt, overhead, interest, taxes and other
charges, that would no longer be available to a "spun off" Ryerson Tull. In
particular, following a spin-off, Ryerson Tull would no longer be able to
utilize Inland's tax carryforwards of net operating losses and alternative
minimum tax credits to offset its taxable income. Consequently, taxes payable by
a separated Ryerson Tull and Inland may increase. In addition, the Proponents
expect that the Company would be able to structure the spin-off of Ryerson Tull
as a tax-free transaction. However, if the spin-off could not be so structured,
there would be adverse tax consequences to the shareholders and there might be
adverse tax consequences to the Company. Moreover, the spin-off of Ryerson Tull
would have adverse tax consequences to the Company's shareholders and might have
adverse tax consequences to the Company if such spin-off is not consummated on a
tax-free basis. The Proponents are not in a position to definitely determine
whether the spin-off can be accommodated on a tax free basis if such a spin-off
is not consummated on a tax-free basis.
In addition to permitting investors and analysts to separately track
an investment in the businesses of each of Ryerson Tull and Inland, the
Proponents believe that a Ryerson Tull spin-off would serve the additional valid
business purposes of (i) affording the respective management of each of Ryerson
Tull and Inland the opportunity to concentrate their efforts on the separate
businesses of Ryerson Tull and Inland and (ii) putting both Ryerson
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Tull and Inland in better positions to deal with the industry specific trends.
As separate entities, these companies would have the financial and strategic
flexibility, after a spin-off, to engage in mergers, acquisitions and
divestitures without effecting the other entity. As previously stated, the
Proponents strongly believe that Inland as the sixth largest steel manufacturer
in the United States should be seeking to grow through identifying appropriate
merger partners, while Ryerson Tull as the nation's largest metals service
center should be seeking to acquire additional service centers. The Proponents
believe that a spin-off even more so that a "letter stock" transaction would
permit both companies to pursue their respective growth objectives, while at the
same time enhancing shareholder value. The Proponents urge the shareholders to
send a strong message to the Board to consider the Ryerson Tull Proposal.
"LETTER STOCK" TRANSACTION
A "letter stock" transaction differs from a spin-off in that such a
transaction would not entail the distribution of any assets or liabilities of
the Company; the Company and Ryerson Tull would remain a single company for
financial accounting and other purposes.
To implement a "letter stock" transaction, separate classes of
common stock of the Company would have to be created -- a class representing the
performance of Inland's integrated steel manufacturing business and another
class representing the performance of Ryerson Tull's metal service center
business. The exact characteristics of these dual classes of common stock would
be proposed by the Company's Board of Directors by way of a charter amendment
that must be approved by the Company's shareholders. Following such shareholder
approval, the new class of Ryerson Tull "letter stock" would be distributed by
way of a dividend to the Company's shareholders.
The charter amendment would set forth the respective preferences and
rights of each class of common stock, including their respective voting,
dividend and liquidation rights. The interests of each class of common stock may
be significantly impacted by these preferences and rights. For example, since
dividends generally are paid at the Board's discretion out of assets of the
Company legally available therefor, it may be possible for the Board to create
dividend rights that favor a particular class of common stock or for the Board
to determine to pay dividends to only one class of common stock. Likewise, even
if all holders of common stock have the right to vote together as a
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group on most matters, if one class of common stock has a greater number of
votes, that class may have voting control.
Thus, the existence of separate classes of common stock within a
single company will likely give rise to occasions where the interests of the
different classes diverge or conflict and may result in a complex capital
structure that is difficult for investors and analysts to understand. Moreover,
there is a lack of legal precedent delineating the fiduciary duties of a Board
of Directors of a company having a dual-class common stock structure. Following
the establishment of the dual classes, management may have the ability to make
certain allocation decisions, without shareholder approval, that may have a
differential impact on the two classes of common stock. For example, the
allocation of debt, corporate overhead, interest and taxes between two business
"groups" may have significant impact on their respective financial statements
and may effect the respective market prices of the separate classes of common
stock. Despite the preparation of separate financial statements for each
business group, the Company's consolidated financial condition will continue to
impact the funds legally available for payment of dividends and, accordingly,
effect the respective market prices of the separate classes of common stock.
Although there can be no assurance as to the tax-free nature of a
"letter stock" transaction, "letter stock" transactions have been structured in
the past specifically to avoid the recognition of any income, gain or loss by
the shareholders upon the redesignation of their shares.
A "letter stock" transaction will enable the Company to continue
doing business as a consolidated group. The continuation of Ryerson Tull as a
subsidiary of Inland would permit the continuation of any synergies and cost
savings inherent in the combined operation, including any related tax benefits.
Specifically, Ryerson Tull could continue utilizing Inland's net operating
losses to offset its taxable income. By providing investors with separate
classes of common stock intended to reflect the separate performances of
Inland's steel manufacturing business and Ryerson Tull's metals service center
business, a "letter stock" transaction would allow investors and analysts to
gain a better understanding of each business and enable investors to invest in
either or both securities depending on their investment objectives. The
Proponents believe that such a separation of securities should result in greater
market recognition of the value of each of these businesses while enabling the
Company to preserve the operational and financial benefits currently enjoyed by
the consolidated group composed of Inland and Ryerson Tull.
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* * *
Greenway recommends that the shareholders vote FOR the adoption of the
Ryerson Tull Proposal.
POISON PILL PROPOSAL
Greenway proposes, for the reasons stated below, the adoption by the
shareholders of the following resolution (the "Poison Pill Proposal"):
RESOLVED, that it is hereby recommended that the Board of
Directors terminate the Rights Agreement dated November 25, 1997 and
redeem the rights distributed thereunder unless the Rights Agreement is
approved by the affirmative vote of a majority of the shareholders at a
special meeting of the shareholders to be called by the Board for such
purpose, and that this policy of shareholder approval apply to all "rights
plans" considered at any time by the Board.
The Company's Board of Directors has determined, without seeking
shareholder approval, to renew a rights plan scheduled to expire on December 17,
1997 by approving a new Rights Agreement dated November 25, 1997 (the "Renewed
Rights Agreement"), and distributing rights thereunder to the shareholders on
November 25, 1997. The Company has stated that the Renewed Rights Agreement
would cause substantial dilution to a person or group that attempts to acquire
the Company on terms not approved by the Company's Board of Directors.
Greenway believes that these devices, often called "poison pills",
serve to insulate management from direct shareholder accountability. Indeed, the
Company's actions in instituting the Renewed Rights Agreement without a vote of
its shareholders demonstrates such insulation. This resolution merely asks that
when the Company seeks to "protect" its shareholders through a "rights plan"
that it first asks its shareholders opinion.
Certain Advantages and Disadvantages
of the Poison Pill Proposal
Like the Ryerson Tull Proposal, the Poison Pill Proposal is
non-binding on the Company's Board of Directors; and, even if it is adopted by
the shareholders, the Board would have no obligation to take any action.
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It has been established under Delaware law that a board of directors
may generally adopt a rights plan without shareholder approval and, since the
1980's, many companies have in fact put rights plans in place without
shareholder approval. Poison pills are considered extremely potent corporate
takeover defense mechanisms. It is possible that should the Company's Board
adopt the Poison Pill Proposal, the Board's ability to adopt a poison pill to
fend off hostile takeovers may be impeded due to the constraints on the adoption
of rights plans imposed by the Poison Pill Proposal. Proponents of poison pills
assert that rights plans enable the board to respond in an orderly manner to
unsolicited bids by providing sufficient time to carefully evaluate the fairness
of an unsolicited offer and the credibility of the bidder, and thereby giving
the board the flexibility to explore alternative strategies for maximizing
stockholder value. They also assert that rights plans provide incentives for a
potential acquirer to negotiate in good faith with the board, and that such
negotiations are likely to maximize value for shareholders by soliciting the
highest possible price from the bidder.
In recent years, shareholders have increasingly taken steps to
oppose the unilateral adoption of rights plans by management. According to a
1997 report by the Investor Responsibility Research Center ("IRRC"), shareholder
proponents submitted 27 anti-pill proposals to 26 companies in 1996. According
to a 1997 report of the IRRC, in 1996, proposals to redeem or permit shareholder
voting on poison pills were passed at six companies: Baker Hughes, Fleming, Rite
Aid, Rowan, SuperValu and Weyerhaueser. Shareholders have opposed poison pills
on the grounds that poison pills force potential investors to negotiate
potential acquisitions with management, instead of making their offer directly
to the shareholders. Shareholder proponents further assert that poison pills can
pose such an obstacle to a takeover that management becomes entrenched. The
Proponents believe that such entrenchment and the lack of accountability that
results may adversely affect shareholder value.
The Proponents believe that it is essential to prevent such
entrenchment and that shareholders be given an opportunity to determine whether
a poison pill is the best and most appropriate mechanism for defending the
Company against hostile bids. Poison pills insulate management from the threat
of a change of control. They provide a target's board with veto power over
takeover bids, even when shareholders believe that such bids are in their best
interests. A management group that is responsive to its shareholders and,
accordingly, is seeking to foster corporate growth and shareholder value may be
the most effective tool in fighting off abusive takeover bids. Although since
the initial
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adoption of poison pills in the 1980's there have been several studies of poison
pills, there is a lack of consensus that rights plans are effective in obtaining
maximum value for shareholders. The Proponents have been trying for more than a
year to compel management to consider the Ryerson Tull Proposal or other means
of enhancing shareholder value. The Proponents believe that the Board's
unilateral adoption of the Renewed Rights Agreement is a further demonstration
of its unwillingness to be responsive to its shareholders. The shareholders as
the owners of the Company should have the right to consider whether a rights
plan is appropriate for this Company and the adoption of the Poison Pill
Proposal would send a message to the Board that the shareholders oppose their
unilateral adoption of the Renewed Rights Agreement.
* * *
Greenway recommends that the shareholders vote FOR the adoption of the
Poison Pill Proposal.
NATURE OF PROPOSALS
As stated above, both the Ryerson Tull Proposal and the Poison Pill
Proposal are non-binding recommendations; even if the shareholders adopt these
proposals, the Company's Board of Directors would not be required to take the
recommended actions.
VOTE REQUIRED
Approval of each of the proposals requires the affirmative vote of a
majority of the votes of the voting securities of the Company present in person
or represented by proxy and entitled to vote thereon at the Annual Meeting.
Votes that are withheld will have the effect of votes against these proposals,
while broker non-votes will not affect the outcome.
CERTAIN INFORMATION CONCERNING GREENWAY
AND THE OTHER PARTICIPANTS IN THE SOLICITATION
Information concerning Greenway, Alfred D. Kingsley and Gary K.
Duberstein, who are each "participants in the solicitation" as defined in the
proxy rules promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, and their affiliates and
associates, is set forth on Appendix A hereto.
Greenway, Alfred D. Kingsley and Gary K. Duberstein, and each of their
affiliates and associates, intend to vote their shares of
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Inland Common Stock in accordance with the recommendations of Greenway set forth
herein.
PRIOR PROPOSALS MADE BY GREENWAY
Pursuant to Rule 14a-8 of the Exchange Act, a proposal by Greenway
recommending the spin-off of Ryerson Tull was included in the Company's Proxy
Statement delivered to shareholders in connection with the Company's 1997 annual
meeting. That proposal was not passed and was opposed by the Company's
management on the grounds that a spin-off of Ryerson Tull would increase
Ryerson's federal income taxes, because its income could not be offset by the
Company's tax carryforwards of net operating losses and alternative minimum tax
credits.
In response to management's tax concerns, Greenway suggested the "letter
stock" approach in lieu of effecting a spin-off. As more fully discussed above,
under the letter stock approach, the Company would distribute a "lettered stock"
to shareholders which would be designed to reflect the financial performance of
Ryerson Tull, while permitting Ryerson Tull to remain a member of the Company's
consolidated group for tax and other purposes. However, Greenway continues to
also support a spin-off on the grounds that any diminution of the tax benefits
available to Ryerson Tull upon a spin-off are offset by the value to the
shareholders of the distribution of Ryerson Tull to them as a stand-alone
entity.
CERTAIN INTERESTS IN THE PROPOSALS AND
WITH RESPECT TO SECURITIES OF THE ISSUER
To the knowledge of Greenway, neither Greenway nor any other Participant
nor any of their associates, or controlling persons thereof, have any direct or
indirect economic or other interests in the proposals which differ in any way
from the other shareholders of the Company. To the best of the knowledge of
Greenway, there are no contracts, arrangements, understandings or relationships
(any of the foregoing persons legal or otherwise) among Greenway, any other
Participant or their respective associates or controlling persons or between
Greenway or any of the foregoing persons with respect to any securities of the
Company except as follows: As described in Appendix A hereto, the respective
partnership agreements of Greenway and Greentree Partners, L.P. ("Greentree"),
an affiliate of Greenway, each contains provisions whereby its general partners
(i.e., Greenhouse Partners, L.P. in the case of Greenway and Greenhut, L.L.C. in
the case of Greentree, each affiliates of Greenway) will receive annually a
certain percentage of realized and unrealized profits, if any, derived from the
partnership's investments. The agreements governing Greensea
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Offshore, L.P. ("Greensea"), an affiliate of Greenway, provide that Greenhut
Overseas, L.L.C., an affiliate of Greenway that acts as its investment general
partner, will receive annually a certain percentage of realized and unrealized
profits, if any, derived from Greensea's investments. Greenbelt Corp., an
affiliate of Greenway, also receives annually a certain percentage of realized
and unrealized profits, if any, resulting from the investments in each of its
managed accounts.
ANALYSIS OF EFFECTS OF PROPOSALS
In connection with the Ryerson Tull proposal, Greenway has undertaken an
analysis of the potential market value of shares of Ryerson Tull's stock if
Ryerson Tull were a separate, stand-alone public company, based upon a review of
the market value for publicly traded shares of Ryerson Tull's "peer group" as
identified in Ryerson Tull's Proxy Statement relating to its 1997 annual
shareholders' meeting. Such analysis indicates that, as of January 30, 1998, the
six publicly traded companies identified as being members of such peer group
were valued at an average of approximately 22.1021 times their respective
earnings per share for the most recently completed 12 month period reported by
each of such companies and, if the companies with the highest and lowest
price/earnings multiples in such peer group were excluded, the remaining four
companies were valued at an average of 17.435 times their respective earnings
per share for each period. Based on such a price/earnings multiples, Ryerson
Tull, on a stand alone basis, would have a market value of either $35.36 per
share or $27.90 per share, respectively, based upon Ryerson Tull's 1997 earnings
of $1.60 per share. (Greenway notes that the closing price of Ryerson Tull stock
on January 30, 1998 was $13.38 per share on volume of 6,200, which lower price
Greenway attributes to the fact that only 13% of Ryerson Tull's stock is
publicly traded and therefore the trading volume is extremely thin). If the
Company distributed its Ryerson Tull shares to the Company's shareholders, each
shareholder would receive approximately 0.7 share of Ryerson Tull common stock
for each share of the Company's common stock held by such shareholder. Such 0.7
share of Ryerson Tull common stock would, based upon the above noted
price/earnings multiples, have a value of either $24.75 or $19.53, respectively,
which alone either exceeds or approximates the closing price of the Company's
common stock of $19.93 per share on January 30, 1998. Since the Company,
separate and apart from Ryerson Tull, has been profitable, earning $54.8 million
(or $1.12 per share) in 1997, the combined market value of the shares of the
Company and of a separate Ryerson Tull based upon price/earnings multiples
should be well in excess of the current market value of the Company's common
stock. The market price of a company may depend upon numerous factors in
addition to
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price/earnings ratios and there can be no assurance that, following a spin-off
or the creation of letter stock, the combined market value of the Company and
Ryerson Tull, as separate entities, would exceed the market value of the Company
and Ryerson Tull, as one entity.
No analysis has been undertaken relating to the effect of the "poison
pill" on the Company's stock or how the "poison pill" may affect the likelihood
of the Company receiving merger offers or other acquisition proposals.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of March 31, 1997, based solely on
information contained in the Company's proxy statement in connection with its
1996 annual meeting of shareholders, the Company and Ryerson Tull equity
securities beneficially owned (as that term is defined by the Securities and
Exchange Commission) by all directors of the Company, the other named executive
officers of the Company, and the directors and executive officers of the Company
as a group, in each case with sole voting and investment power except as
indicated. The Company Common Stock includes preferred stock purchase rights
distributed in 1987 to holders of the Company Common Stock. The shares of Series
E ESOP Preferred Stock shown as beneficially owned by the executive officers are
held for their respective accounts in the Inland Steel Industries Thrift Plan
and could be converted upon retirement or other termination of employment into
an equal number of shares of Common Stock of the Company (subject to adjustment
in certain events). Excluded from the number of shares of Series E ESOP
Preferred Stock as beneficially owned are allocated shares of Series E ESOP
Preferred Stock that the ESOP Trustee is required to vote or dispose of in the
manner nd proportion in which allocated shares are directed to be voted or
disposed of. Ryerson Tull Class A Common Stock also includes preferred stock
purchase rights.
15
<PAGE>
SERIES RYERSON
COMPANY E ESOP TULL CLASS
COMMON PREFERRED COMMON A
STOCK(/1/) STOCK (/2/) STOCK (/3/)
---------- ----------- -----------
DIRECTORS:
A. Robert Abboud 6,546 -- 1,000
Robert J. Darnall 300,124 2,070 11,754
James W. Cozad 2,046 -- --
James A. Henderson 2,546 -- 2,212(/4/)
Robert B. McKersie 1,303 -- 500
Leo F. Mullin 1,000 -- --
Donald S. Perkins 4,046 -- 6,212(/4/)
Jean-Pierre Rosso 1,061 -- 3,424
Joshua I. Smith 1,546 -- --
Nancy H. Teeters 1,846 -- 150
Arnold R. Weber 1,646 -- 1,000
NAMED EXECUTIVE
OFFICERS:
Neil S. Novich 130 459 95,615
Dale E. Wiersbe 74,925 1,455 1,000
Judd R. Cool 125,670 88 1,500
H. William Howard 93,176 78 1,000
ALL DIRECTORS AND
EXECUTIVE OFFICERS AS
A GROUP 760,814 8,937 133,896
- ---------------------------
1. Excludes shares of Common Stock into which Series E ESOP Convertible
Preferred Stock may be converted. No director or named executive officer
of the Company individually owns 1% or more of the outstanding Common
Stock of the Company; all directors and executive officers of the Company
as a group own 1.6% of the outstanding common stock of the Company.
Includes shares held jointly with other persons, as follows -- Dr.
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McKersie-200, Mr. Darnall--290, Mr. Wiersbe--212, and all directors and
executive officers as a group--2,704; shares which the following have the
right to acquire under options exercisable within 60 days after April 2,
1997 -- Mr. Darnall- -221,000, Mr. Cool--101,880, Mr. Howard--83,880, Mr.
Wiersbe-- 67,520, and all executive officers as a group--591,005; and
shares held under restricted stock awards as follows -- Mr.
Darnall--15,000, Mr. Cool--4,800, Mr. Howard--4,800, Mr. Wiersbe--3,600
and all executive officers as a group--38,200.
2. Each director and named executive officer individually owns and all
directors and executive officers as a group collectively own less than 1%
of the Series E ESOP Preferred Stock of the Company.
3. No director or named executive officer of the Company individually owns
1% or more of the outstanding Class A common stock of Ryerson Tull. All
directors and executive officers of the Company as a group own 2.5% of the
outstanding Class A Common Stock of Ryerson Tull. Includes 2,400 shares of
Ryerson Tull Class A Common Stock held directly or indirectly by family
members of an executive officer, for which beneficial ownership is
disclaimed; shares which the following have the right to acquire under
options exercisable within 60 days after April 2, 1997 -- Mr.
Novich--75,359, and all executive officers of the Company as a
group--75,359; and shares held under restricted stock awards as follows --
Mr. Darnall-3,654, Mr. Novich-18,156, and all executive officers as a
group-51,617.
4. Includes 1,212 restricted shares of Ryerson Tull Class A Common Stock
payable under the terms of the Ryerson Tull Directors' Compensation Plan,
the receipt of which has been deferred.
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, based solely on information contained in
the Company's proxy statement relating to the 1997 annual meeting of
shareholders except as otherwise noted below, the only holders known to Greenway
to own beneficially more than 5% of the Company's Common Stock, Series E ESOP
Preferred Stock, and 10.23% Subordinated Voting Notes.
NUMBER OF
SHARES OR
AMOUNT OF PERCENT
NAME AND ADDRESS SECURITIES OF
OF BENEFICIAL OWNER OWNED CLASS
------------------- ----- -----
COMMON STOCK:
Barclays Global Investors, 2,875,700(/1/) 5.88%
N.A.
45 Fremont Street
San Francisco, CA 94105
FMR Corp. 5,967,417(/2/) 12.19%
82 Devonshire Street
Boston, MA 02109
Alfred D. Kingsley 4,482,100(/3/) 9.2%
277 Park Avenue
New York, New York 10172
LaSalle National Bank 3,910,500(/4/) 7.99%
135 South LaSalle Street
Chicago, IL 60674
Northern Trust Corporation 3,970,135(/5/) 8.11%
50 South LaSalle Street
Chicago, IL 60675
SERIES E ESOP PREFERRED
STOCK:
LaSalle National Bank 3,080,790(/4/) 100%
10.23% SUBORDINATED VOTING
NOTES:
NS Finance III, Inc. 100,000,000(/7/) 100%
c/o Nippon Steel U.S.A.,
Inc.
10 East 50th Street, 29th
Fl.
New York, New York 10022
- ---------------------
17
<PAGE>
1. Barclays Global Investors, N.A., filing on behalf of itself and Barclays
Global Investors, Ltd., Barclays Trust and Banking Company (Japan) Ltd.,
Barclays Bank PLC, and Barclays Global Fund Advisors, reported sole voting
power as to 2,619,004 shares, sole dispositive power as to 2,853,940
shares and shared dispositive power as to 21,760 shares.
2. FMR Corp., on behalf of itself, Edward C. Johnson 3rd, Abigail P. Johnson
and Fidelity Management & Research Company reported aggregate sole voting
power as to 168,230 shares of common stock and sole dispositive power as
to 5,967,417 shares as of February 28, 1997.
3. Mr. Kingsley, filing Amendment No. 3 to Schedule 13D as of December 24,
1997, on behalf of himself and for a group including Gary K. Duberstein,
Greenway Partners, L.P., Greenbelt Corp., Greenhouse Partners, L.P.,
Greenhut, L.L.C., Greenhut Overseas L.L.C., Greensea Offshore, L.P., and
Greentree Partners, L.P., reported sole voting and dispositive power as to
28,000 shares and shared voting and dispositive power as to 4,482,100
shares.
4. LaSalle National Bank, as successor to LaSalle National Trust, N.A.,
Trustee of the Inland Steel Industries Thrift Plan (the "Plan") and
Trustee of the ESOP Trust within such Plan, reported shared voting power
as to 3,910,500 shares of common stock, sole dispositive power as to
3,080,790 shares of common stock and shared dispositive power as to
829,710 shares (including 3,080,790 shares issuable upon conversion of the
Series E ESOP shares and 829,710 shares of common stock held by the
Trustee in agency and fiduciary capacities unrelated to the ESOP Trust on
behalf of participants in the Plan). The Trustee expressly disclaims
beneficial ownership of all such Plan securities. As of December 31, 1996,
the outstanding shares of Series E ESOP Preferred Stock represented
approximately 6.89% of the voting power of the Company's outstanding
voting securities.
5. Northern Trust Corporation, reporting on behalf of itself and its
subsidiaries The Northern Trust Company, Norther Trust Bank of California,
N.A. and Northern Trust Bank of Florida N.A. reported sole voting power as
to 56,250 shares of common stock, shared voting power as to 3,911,385
shares, sole dispositive power as to 58,580 shares of common stock and
shared dispositive power as to 3,909,685 shares. The Northern Trust
Company held 3,657,585 shares as of April 2, 1997, as Trustee of the
Inland Steel Industries Pension Trust.
6. NS Finance III, Inc., is an indirect wholly owned subsidiary of Nippon
Steel Corporation ("NSC"). NS Finance III, Inc. has agreed that it will be
deemed to be present for quorum purposes at all stockholder meetings. As
of April 2, 1997,
18
<PAGE>
the outstanding principal amount of the Company's 10.23% Subordinated
Voting Notes represented approximately 5.5% of the voting power of the
Company's outstanding voting securities. In addition, as of April 2, 1997,
NS Finance III, Inc. owned 352,400 shares, or approximately 0.7% of the
outstanding shares, of common stock of the Company. The 10.23%
Subordinated Voting Notes are required to be repaid in 1999 and cannot be
prepaid. See "Certain Relationships and Related Transactions" below.
No persons were known to the Company to be the beneficial owners of
more than 5% of the outstanding shares of Series A $2.40 Cumulative Convertible
Preferred Stock. Holders of such preferred stock vote together with the holders
of the common stock, the Series E ESOP Preferred Stock, and the 10.23%
Subordinated Voting Notes as a single class on each matter being submitted to
the holders of the Company's voting securities.
PROXY SOLICITATION; EXPENSES
Proxies may be solicited by Greenway, partners and employees of Greenway,
and by the other Participants by mail, telephone, telecopier, the Internet and
personal solicitation. Regular employees of Greenway and its affiliates may be
used to solicit proxies and, if used, will not receive additional compensation
for such efforts. Banks, brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward the solicitation material of Greenway
to their customers for whom they hold shares, and Greenway will reimburse them
for their reasonable out-of-pocket expenses.
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and related materials, and the cost of soliciting proxies for
the proposals endorsed by Greenway, will be borne by Greenway. Greenway
estimates such expenses to be $75,000 (including professional fees and expenses,
but excluding any costs represented by salaries and wages of regular employees
of Greenway and its affiliates). The total expenditures to date have been
approximately $15,000, paid by Greenway. Greenway does not intend to seek
reimbursement from Inland for Greenway's expenses.
SHAREHOLDERS' PROPOSALS IN COMPANY'S PROXY STATEMENT
Pursuant to Rule 14a-8(a)(3)(i) under the Exchange Act any proposal by a
shareholder at the Annual Meeting to be included in the Company's proxy
Statement must be received in writing at the Company's principal executive
offices not less than 120 calendar days in advance of the date of the Company's
proxy statement
19
<PAGE>
released to security holders in connection with its 1997 Annual Meeting of
Shareholders. Accordingly, any such shareholder proposal should have been so
received by the Company no later than October 28, 1997.
Dated: March 3, 1998
Sincerely,
Your Fellow Shareholders
Greenway Partners, L.P.
Alfred D. Kingsley
Gary K. Duberstein
20
<PAGE>
APPENDIX A
Information is being given herein for Greenway Partners, L.P.
("Greenway"), Alfred D. Kingsley and Gary K. Duberstein, who are each a
"participant in a solicitation" as defined under the proxy rules, and for
Greentree Partners, L.P. ("Greentree"), Greenhouse Partners, L.P.
("Greenhouse"), Greenhut, L.L.C. ("Greenhut"), Greenbelt Corp. ("Greenbelt"),
Greensea Offshore, L.P. ("Greensea"), Greenhut Overseas, L.L.C. ("Greenhut
Overseas"), which are each "associates" (as defined under the proxy rules) of
Messrs. Kingsley and Duberstein (collectively, the "Reporting Persons"). Each of
Greenway, Greentree and Greenhouse is a Delaware limited partnership. Each of
Greenhut and Greenhut Overseas is a Delaware limited liability company.
Greenbelt is a Delaware corporation. Greensea is an exempted limited partnership
formed under the laws of the Cayman Islands. The principal business of Greenway,
Greentree and Greensea is investing in securities. The principal business of
Greenhouse is being the general partner of Greenway. The principal business of
Greenhut is being the general partner of Greentree. The principal business of
Greenhut Overseas is being the investment general partner of Greensea. The
principal business of Greenbelt is managing a small number of accounts
containing securities for which Greenbelt has voting and dispositive power, and,
consequently, is the beneficial owner. The present principal occupation of each
of Messrs. Kingsley and Duberstein is serving as the general partners of
Greenhouse and members of both Greenhut and Greenhut Overseas. In addition, Mr.
Kingsley is senior managing director, and Mr. Duberstein is managing director,
of both Greenway and Greentree. Also, Mr. Kingsley is president, and Mr.
Duberstein is vice president, secretary and treasurer of Greenbelt. The business
address of each of the Reporting Persons (other than Greensea) is 277 Park
Avenue, 27th Floor, New York, New York 10172. The business address of Greensea
is P.O. Box 1561, Mary Street, Grand Cayman, Cayman Island, British West Indies.
21
<PAGE>
The Reporting Persons may be deemed to have direct beneficial
ownership of Inland Common Stock ("Shares") as follows:
APPROXIMATE
MARGIN
NAME NUMBER OF SHARES INDEBTEDNESS
---- ---------------- ------------
Greenway 830,000 $5,300,000
Greentree 325,000 $2,800,000
Greenbelt 2,799,100 $16,700,000
Greensea 500,000 $4,600,000
Alfred D. Kingsley 28,000 $200,000
The Shares were purchased in accounts which hold other securities
and may have been subject to ordinary course margin indebtedness from
time-to-time. The approximate amount of margin indebtedness attributable to the
Shares as of December 23, 1997 is estimated in the table above.
Greenhouse, as the general partner of Greenway, may be deemed to own
beneficially (as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) Shares which Greenway may be deemed to possess direct
beneficial ownership. Each of Messrs. Kingsley and Duberstein, as general
partners of Greenhouse, may be deemed to beneficially own Shares which
Greenhouse may be deemed to beneficially own. Each of Messrs. Kingsley and
Duberstein disclaim beneficial ownership of such Shares for all other purposes.
Greenhut, as the general partner of Greentree, may be deemed to own
beneficially (as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) Shares which Greenway may be deemed to possess direct
beneficial ownership. Each of Messrs. Kingsley and Duberstein, as members of
Greenhut, may be deemed to beneficially own Shares which Greenhut may be deemed
to beneficially own. Each of Messrs. Kingsley and Duberstein disclaim beneficial
ownership of such Shares for all other purposes.
Greenhut Overseas, as the investment general partner of Greensea,
may be deemed to own beneficially (as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934) Shares which Greensea may be deemed to
possess direct beneficial ownership. Each of Messrs. Kingsley and Duberstein, as
members of Greenhut Overseas, may be deemed to beneficially own Shares which
Greenhut Overseas may be deemed to beneficially own. Each of
22
<PAGE>
Messrs. Kingsley and Duberstein disclaim beneficial ownership of such Shares
for all other purposes.
Greenbelt has direct beneficial ownership of the Shares in the
accounts which it manages. In addition, Greenbelt is the investment advisor for
Greenland Investment Company Limited, a Cayman Islands company ("Greenland"). In
such capacity, Greenbelt has the right to vote and direct the disposition of the
519,100 Shares held by Greenland and, consequently, has direct beneficial
ownership of such Shares. Substantially all of the equity interests in Greenland
are owned by Strategic Investment Partners Limited ("SIPL"). Because SIPL has
the right to elect to terminate its investment in Greenland upon less than 60
days' notice and, upon such termination, all securities held by Greenland would
be sold by Greenland or, with SIPL's consent, distributed to SIPL in kind, SIPL
could be deemed to be the beneficial owner of the Shares held by Greenland.
Information concerning SIPL and the identity and background of certain
individuals and entities related thereto is set forth below. Each of Messrs.
Kingsley and Duberstein, as executive officers and directors of Greenbelt, may
be deemed to beneficially own Shares which Greenbelt beneficially owns. Each of
Messrs. Kingsley and Duberstein disclaim beneficial ownership of such Shares for
all other purposes.
To the best of the knowledge of the Reporting Persons, they have not
been within the past year a party to any contract, arrangements or understanding
with any person with respect to any securities of the Company, including but not
limited to joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profits, division of losses or profits,
or the giving or withholding of proxies, except as follows: The respective
partnership agreements of Greenway and Greentree each contains provisions
whereby its general partner (i.e., Greenhouse in the case of Greenway and
Greenhut in the case of Greentree) will receive annually a certain percentage of
realized and unrealized profits, if any, derived from the partnership's
investments. The agreements governing Greensea provide that Greenhut Overseas,
as investment general partner, will receive annually a certain percentage of
realized and unrealized profits, if any, derived from Greensea's investments.
Greenbelt also receives annually a certain percentage of realized and unrealized
profits, if any, resulting from the investments in each of its managed accounts.
Pursuant to the Articles of Association of Greenland, Greenhut Overseas will
receive annually a certain percentage of realized and unrealized profits, if
any, derived from Greenland's investments.
23
<PAGE>
The Reporting Persons do not own any securities of Inland of record
but not beneficially.
The Reporting Persons do not have any arrangement or understanding
with any person with respect to any future transactions to which Inland or any
of its affiliates may be a party.
INFORMATION CONCERNING STRATEGIC INVESTMENT PARTNERS LIMITED. The
information set forth below in this Appendix A was provided to the Reporting
Persons by Strategic Investment Partners Limited ("SIPL"). SIPL and the persons
referred to below in this Appendix A assume no responsibility for any other
information included in this filing. In addition, such persons expressly
disclaim beneficial ownership over all the Shares reported herein.
SIPL is a Cayman Islands corporation jointly owned by Quantum
Industrial Partners LDC ("QIP") and Quasar Strategic Partners LDC ("QSP"). SIPL
has its principal address at Kaya Flamboyan 9, Willemstad, Curacao, Netherlands
Antilles. The principal business of SIPL is investing in securities. Current
information concerning the identity and background of the directors and officers
of SIPL is set forth below.
Current information concerning each of SIPL, QIP and QSP (as well as
any other persons that may be deemed to have investment discretion over
securities held for the account of SIPL, QIP and QSP) is set forth below.
During the past five years, to the best of SIPL's knowledge, no
other person identified in this Appendix B has been (a) convicted in a criminal
proceeding, or (b) a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which it or he has
been subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws, or finding any violation with respect to such laws.
SIPL
The identity and background of the officers and directors of SIPL is
set forth below.
24
<PAGE>
QIP AND QSP
Each of QIP and QSP is a Cayman Islands exempted limited duration
company with its principal address at Kaya Flamboyan 9, Willemstad, Curacao,
Netherlands Antilles. The principal business of QIP and QSP is investing in
securities. Current information concerning the identity and background of the
directors and officers of QIP and QSP is set forth below.
QIH Management Investor, L.P. ("QIHMI"), an investment advisory firm
organized as a Delaware limited partnership, is a minority shareholder of, and
(pursuant to constituent documents of each of QIP and QSP) is vested with
investment discretion with respect to the portfolio assets held for the account
of QIP and QSP. The principal business of QIHMI is to provide management and
advisory services to, and to invest in, QIP and QSP. QIH Management Inc. ("QIH
Management"), a Delaware corporation of which Mr. George Soros is the sole
shareholder, is the sole general partner of QIHMI. The principal business of QIH
Management is to serve as the sole general partner of QIHMI. QIHMI and QIH
Management have their principal offices at 888 Seventh Avenue, 33rd Floor, New
York, New York 10106. QIHMI, by reason of its investment discretion over the
securities owned by QIP and QSP the QIH Management, as the sole general partner
of QIHMI, may each be deemed the beneficial owner of the Shares held for the
account of QIP and QSP for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended.
Mr. Soros has entered into an agreement dated as of January 1, 1997
with Soros Fund Management LLC ("SFM LLC"), a Delaware limited liability company
of which Mr. Soros is Chairman, pursuant to which Mr. Soros has, among other
things, agreed to use his best efforts to cause QIH Management, as the general
partner of QIHMI, to act at the direction of SFM LLC, which agreement to so act
shall terminate upon the earlier of (a) the assignment of SFM LLC of the legal
and beneficial ownership interest in QIH Management and (b) the assignment of
SFM LLC of the general partnership interest in QIHMI.
The business of SFM LLC is managed through a Management Committee
(the "Management Committee") comprised of Mr. Soros, Mr. Stanley Druckenmiller
and Mr. Gary Gladstein. SFM LLC has its principal office at 888 Seventh Avenue,
33rd Floor, New York, New York 10106. Its principal business is to serve,
pursuant to contract, as the principal investment manager to several foreign
investment companies (the "SFM Clients"). Mr. Soros, as Chairman of SFM LLC, has
the ability to direct the investment decisions of SFM LLC and as such may be
deemed to have investment discretion
25
<PAGE>
over the securities held for the accounts of the SFM Clients. Mr. Druckenmiller,
as Lead Portfolio Manager of SFM LLC, has the ability to direct the investment
decisions of SFM LLC and as such may be deemed to have investment discretion
over the securities held for the accounts of the SFM Clients. Set forth below is
a list of the Managing Directors (the executive officers) of SFM LLC.
The principal occupation of Mr. Soros, a United States citizen is
his direction of the activities of SFM LLC, which is carried out in his capacity
as Chairman of SFM LLC at SFM LLC's principal office. The principal occupation
of Mr. Druckenmiller is his position as Lead Portfolio Manager and Managing
Director of SFM LLC, which is carried out at SFM LLC's principal office.
26
<PAGE>
DIRECTORS AND OFFICERS OF QSP
NAME/TITLE PRINCIPAL BUSINESS ADDRESS
CITIZENSHIP OCCUPATION (OR RESIDENCE)
----------- ---------- --------------
Curacao Corporation Managing Director Kaya Flamboyan 9
Company N.V. of Netherlands Willemstad
Managing Director Antilles Curacao,
(Netherlands corporations Netherlands
Antilles) Antilles
Inter Caribbean Administrative Citco Building
Services Limited services Wickhams Cay
Secretary Road Town
(British Virgin Tortola
Island) British Virgin
Islands
To the best of SIPL's knowledge:
(a) None of the above persons holds any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings of relationships with respect to the Shares.
27
<PAGE>
MANAGING DIRECTORS OF SFM LLC
The following is a list of all of the persons (other than Stanley
Druckenmiller) who serve as a Managing Director of SFM LLC:
Scott K.H. Bessent
Walter Burlock
Brian J. Corvese
Jeffrey L. Feinberg
Arminio Fraga
Gary Gladstein
Ron Hiram
Robert K. Jermain
David N. Kowitz
Alexander C. McAree
Paul McNulty
Gabriel S. Nechamkin
Steven Okin
Dale Precoda
Lief D. Rosenblatt
Mark D. Sonnino
Filiberto H. Verticelli
Sean C. Warren
Each of the above-listed persons is a United States citizen whose principal
occupation is serving as Managing Director of SFM LLC, and each has a business
address c/o Soros Fund Management LLC, 888 Seventh Avenue, 33rd Floor, New York,
New York 10106.
To the best of SIPL's knowledge:
(a) None of the above persons holds any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
28
