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DICKSTEIN PARTNERS INC.
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Mark Dickstein
President
ANNUAL MEETING ON AUGUST 31 - VOTE YOUR BLUE PROXY CARD TODAY
August 22, 1995
Dear Marietta Shareholder:
In nine days, the shareholders of Marietta Corporation will
be afforded their first opportunity in 17 months to vote for
directors of their company. The choice between our slate and the
incumbents' is stark. Our slate offers you the dual platform of:
. Affording those shareholders who wish to sell their
shares in the near term the opportunity to do so
through a "Dutch auction" tender offer for between 57%
and 64% of Marietta's shares not owned by us at a
price between $8.00 and $9.00 per share.
. Aggressively addressing the very operational problems
that have arisen under the incumbent directors'
stewardship. Remember that, even before taking into
account non-recurring professional fee items, the
Company's operating income for the first nine months
of this year has declined by 95% over last year's
results.
HARD QUESTIONS FOR THE INCUMBENTS
The existing Board's track record raises many questions
that their election rhetoric does not answer:
Managing the Company: The existing Board wants yet
another term to improve the Company's operating performance. But
ask yourself this:
. Why should you entrust that task to directors who have
presided over one of the worst years in the Company's
history?
. If the incumbents have such a great operating plan, why
have they only recently started to implement it? What
were they waiting for? And if the plan is so good, why
are operating results getting worse rather than better?
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Despite its own dismal track record, the existing Board
challenges the ability of our nominees to ensure that Marietta's
operational problems are fixed. Remember that our original
intent was to own Marietta and operate it for ourselves. We, our
management consultants and our accountants, have pored over the
Company -- toured its facilities, met its management, scrutinized
its nonpublic operating data. There is an obvious and urgent
need and ability for Marietta to cut costs, match its
manufacturing capacity to realistic production plans, reduce
working capital, and improve margins. We believe that we can
obtain improved profitability from virtually every aspect of
Marietta's existing operations -- even before taking into account
growth opportunities.
Selling the Company: The incumbents ask you to re-
elect them with the hope that they can contract to sell the
Company by September 30, 1995. But ask yourself this:
. The incumbents have failed for the last seven months to
sell the Company. Why would you believe that they
would be able to do so now, in the midst of a dismal
year?
. The incumbents consider excessive the debt that would
be required to repurchase half the Company's shares at
$9.00 per share. How, then, can they in good faith
hold out the possibility that they will be able to sell
the Company to a buyer who could finance the purchase
of all the shares, presumably at a higher price?
In the unlikely event that a qualified buyer at an acceptable
price emerges, our nominees would enthusiastically support the
sale of the Company.
Value of Your Stock: More than anything else, ask
yourself this: What will happen to the value of your investment
if the incumbents are re-elected and the Company is not promptly
sold? We believe that, absent a stock repurchase program and a
change in the directors, the fundamental company weaknesses that
have depressed the market value of your shares will continue.
THE INCUMBENTS' FLAWED ATTACK
The existing Board's August 17 letter to you levels
numerous, flawed attacks against Dickstein Partners:
Financing: The incumbents claim that we have not
obtained a financing commitment for the proposed tender offer.
In fact, we have obtained a commitment letter from a major
lending institution, The CIT Group/Business Credit, Inc., for a
five-year $27 million financing-far more than is needed to
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finance a $16 million tender offer. (We will furnish you upon
request a copy of the CIT commitment letter, which sets forth
its terms and conditions.)
Increasing Dickstein Partners' Ownership: The
incumbents claim that the tender offer will allow us to increase
our percentage ownership of the Company. What the incumbents
neglect to point out is that the proposed tender offer will allow
each shareholder to choose between increasing its percentage
ownership of the Company or selling its shares. Share for share,
Dickstein Partners will be treated no differently than other
shareholders who choose not to sell.
Subject to Change: The incumbents complain that the
tender offer we have proposed is subject to change based upon
conditions at the time. We do not suggest that the offer will be
pursued even if some unexpected disaster befalls the Company.
However, having conducted an extensive review of the Company's
nonpublic information, we are confident that the tender offer we
have proposed will be consummated expeditiously by the new Board.
Over-Leverage: The incumbents claim that the debt
required to finance the proposed self-tender will "jeopardize or
reduce the value of [the remaining] shares of Marietta common
stock." This nay-saying simply shows the existing Board's lack
of confidence in its own ability to operate the business. The
modest additional debt that we propose entails, in our view,
conservative leverage than can be readily serviced by the
Company, and we will not be selling any of our shares.
Expenses: The incumbent directors complain about our
intention to seek reimbursement of our out-of-pocket expenses if
we prevail in the election contest. Yet the incumbents' expenses
are being paid by the Company whether or not they are re-elected.
Further, our expenses are dwarfed by the Company's own. The $1.5
million minimum fee to which the Company's investment banker,
Goldman Sachs, will be entitled whether or not a transaction
occurs, is single-handedly more than twice all our expenses
combined.
WE AGREE: IT IS A MATTER OF TRUST
We agree with the existing Board about one thing:
Shareholders should decide whom they can trust to run their
company.
The incumbents offer little about their slate. What
have they done to inspire any confidence in themselves, after
years of turmoil and disappointing results?
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Eager to deflect scrutiny of themselves, the
incumbents attempt to draw a flawed connection to our recent
experience with Hills Stores Company. The Marietta situation is
fundamentally different: We have already had complete access to
Marietta's confidential business information, and we have
obtained a commitment letter from a major lender that will allow
Marietta to expeditiously make the proposed tender offer.
What Marietta's present directors criticize us for is
withdrawing our own acquisition proposal for Hills after new,
material facts came to light -- a meaningful downturn in
operating income, which was not disclosed by the incumbent board,
$32 million of "golden-parachute" payments ($12 million more than
expected), and deplorable "scorched earth" tactics by the
outgoing directors costing Hills millions of additional dollars.
We believe Hills' shareholders were correct in
replacing by a three-to-one margin an arrogant and unresponsive
board with our slate.
PROTECTING MINORITY SHAREHOLDERS
Marietta's existing directors complain about "turning
control" of the Company over to us. As disclosed in our proxy
materials, our slate includes well-qualified independent
directors.
Majority of the Minority Voting: If our slate wins, we
are willing to commit to the following so long as representatives
of Dickstein Partners remain on Marietta's Board: If a
shareholder vote is required for any transaction directly or
indirectly between Marietta (or its subsidiaries) and Dickstein
Partners (or its managed funds), Dickstein Partners will not
permit that transaction to occur unless it has also been approved
by a majority of the "non-Dickstein" shareholders voting on the
matter -- shareholders other than Dickstein Partners and its
affiliates.
Additional Directors: Finally, if our slate is
elected, we would support the prompt expansion of Marietta's
Board to include two qualified representatives of shareholders
unaffiliated with ourselves.
WE NEED YOUR SUPPORT
This election is critical. No matter how many shares
you own, we urge you to sign, date and return your BLUE proxy
card today in the enclosed envelope.
Do not submit the incumbents' white proxy card. If you
have already done so, you may revoke it by signing, dating and
mailing Dickstein Partners' BLUE proxy card in the enclosed
envelope.
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Thank you for your support.
Sincerely,
/s/ Mark Dickstein
Mark Dickstein
If you have questions or need assistance in voting,
please contact:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 969-5500 (call collect)
or
Call Toll-Free 800-322-2885
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