SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 14)*
ESC Medical Systems Ltd.
(Name of Issuer)
Ordinary Shares, NIS 0.10 par value per Share
(Title of Class of Securities)
M40868107
(CUSIP Number)
Edward Klimerman, Esq.
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
(212) 698-7700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 18, 1999
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
Page 1 of 14 Pages
<PAGE>
This Amendment No. 14 (the "Amendment") amends and supplements the Schedule
13D filed on October 9, 1998, as previously amended and restated by Amendment
No. 1, filed on March 12, 1999 and further amended by Amendment No. 2 filed on
March 23, 1999, Amendment No. 3 filed on March 26, 1999, Amendment No. 4 filed
on April 15, 1999, Amendment No. 5 filed on April 20, 1999, Amendment No. 6
filed on May 11, 1999, Amendment No. 7 filed on May 13, 1999, Amendment No. 8
filed on May 21, 1999, Amendment No. 9 filed on June 2, 1999, Amendment No. 10
filed on June 3, 1999, Amendment No. 11 filed on June 16, 1999, Amendment No. 12
filed on June 17, 1999 and Amendment No. 13 filed on June 18, 1999 (the
"Schedule 13D"), on behalf of Mr. Arie Genger ("Genger"), TPR Investment
Associates, Inc., a Delaware corporation ("TPR"), TPR's subsidiary,
Trans-Resources, Inc., a Delaware corporation ("TRI"), TRI's indirect
subsidiary, Haifa Chemicals Holdings Ltd., a company incorporated in the State
of Israel ("HCH"; Genger and said corporations, all of which are directly or
indirectly controlled by Genger, being collectively called the "TRI Entities"),
and Mr. Thomas G. Hardy ("Hardy"; Hardy and the TRI Entities being collectively
called the "Reporting Persons") with respect to the Ordinary Shares, par value
NIS 0.10 per share (the "Shares"), of ESC Medical Systems Ltd., a company
incorporated in the State of Israel (the "Company"). The Reporting Persons are
filing this Amendment to update the information with respect to the Reporting
Persons' purposes and intentions with respect to the Shares.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended and supplemented as follows:
On June 17, 1999, Messrs. Genger and Barnard J. Gottstein ("Gottstein")
issued a press release responding to the Company's continued misstatements. In
order to dispel any notion that they are seeking control of the Company, Messrs.
Genger and Gottstein further reiterated their commitment to use their voting
power to support an independent Board with a majority of the Board at all times
consisting of individuals who have no present or prior business affiliation with
either of them. A copy of the press release is attached hereto as Exhibit 32 and
is incorporated herein by reference.
On June 18, 1999, Messrs. Genger and Gottstein issued a press release
responding to the Company's misleading press release issued on June 18 about the
Israeli court's ruling with respect to three motions filed by Messrs. Genger and
Gottstein's Israeli counsel. Contrary to the Company's press release, the court
in Israel has set a hearing date for Tuesday, June 22, 1999 on two of the three
motions filed against the Company by Messrs. Genger and Gottstein. The hearing
date on the third motion has yet to be set. A copy of Messrs. Genger and
Gottstein's press release is attached hereto as Exhibit 33 and is incorporated
herein by reference.
Other than as described above and as previously described in the Schedule
13D, the Reporting Persons do not have any present plans or proposals which
relate to or would result in (although they reserve the right to develop such
plans or proposals) any transaction, change or event specified in clauses (a)
through (j) of Item 4 of the form of Schedule 13D.
Page 2 of 14 Pages
<PAGE>
Item 7. Material to be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby amended to add the following exhibit:
Exhibit 32: Press Release dated June 17, 1999.
Exhibit 33: Press Release dated June 18, 1999.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 18, 1999
/s/ Arie Genger
---------------------------------------------
Arie Genger
TPR INVESTMENT ASSOCIATES, INC.
By: /s/ Arie Genger
----------------------------------------
Arie Genger, President
TRANS-RESOURCES, INC.
By: /s/ Arie Genger
----------------------------------------
Arie Genger, Chairman of the Board
HAIFA CHEMICALS HOLDINGS LTD.(1)
By: /s/ Arie Genger
----------------------------------------
Arie Genger
/s/ Thomas G. Hardy
--------------------------------------------
Thomas G. Hardy
- --------
(1) Pursuant to power of attorney
Page 3 of 14 Pages
<PAGE>
EXHIBIT INDEX
Exhibit
Number Title Page
------ ----- ----
32 Press Release dated June 17, 1999 5
33 Press Release dated June 18, 1999 13
Page 4 of 14 Pages
Exhibit 32
GENGER AND GOTTSTEIN RESPOND TO
ESC MEDICAL MAILING
Eckhouse "Compromise" Is No Compromise At All
June 17, 1999, New York, New York - - Arie Genger and Barnard Gottstein,
two of the largest shareholders of ESC Medical System, Ltd., (Nasdq: ESCMF) with
over 17% of the shares outstanding, today issued the following statement in
response to the continued misstatements by ESC Chairman, Shimon Eckhouse,
designed to mask the real issues and instead further entrench his management:
"We believe it is critical to the investment value of all ESC shareholders
that a new independent Board of Directors be elected to lead ESC back to
profitability and to restore the confidence of the medical community, employees
and the financial community in ESC. In response to shareholder questions about
our intentions, we have publicly committed in our SEC filings and published news
advertisements in Israel to use our voting power to support an independent Board
with a majority of the Board of ESC at all times consisting of individuals who
have no present or prior business affiliation with either of us. This should
dispel any notion that we are seeking control of ESC.
"We have also proposed for the new Board's consideration a clear and
substantive two-phase blueprint for restoring ESC's market position and value.
Under this plan the Board would be charged with the key task of promptly
identifying a new CEO with a successful track record in the medical devices
field and proven turnaround expertise.
"In further seeking to cloud the issues, Eckhouse has asked for a
compromise. Eckhouse's idea of a "compromise," however, is no compromise at all.
Rather, Eckhouse seeks to maintain his control position as "ACTIVE" Board
Chairman with a majority of the current directors beholden to him still intact.
In our view, Eckhouse's continued control would seriously hamper the ability of
ESC to recruit a truly qualified CEO to begin the rebuilding process. Only with
a new Board and a dynamic CEO fully in charge of ESC's operations, and not
beholden to Eckhouse or responsible for the failed programs of the past, can
confidence be restored in ESC's most important constituencies, its customers and
the investing public.
Messrs. Genger and Gottstein emphasized, "Eckhouse's true motives are
proven by the extraordinary lengths he has gone to entrench himself and his
beholden directors:
* First his attorneys have told us they will not honor our perfectly legal
blue proxy card;
* Next, we are told Eckhouse intends to use shares repurchased by ESC which
we believe amount to over 10% of ESC's shares outstanding and which have not
been
Page 5 of 14 Pages
<PAGE>
issued to him or any other individual -- to vote in favor of himself and his
designees. Remember - the company used your money, not Eckhouse's, to buy those
shares;
* Finally, Eckhouse has also sought to deny our ability to communicate with
over 4000 individual shareholders by flagrantly disobeying a court order to
share with us a full list of ESC's beneficial shareholders. Instead he used that
same list for his own communications, seriously prejudicing our ability to
communicate on an equal footing with beneficial holders of ESC shares -- AS
REQUIRED BY A COURT ORDER!! If he can't be trusted to comply with a court order,
how can you trust him to run your company?
Messrs. Genger and Gottstein concluded, "Eckhouse has continually failed to
deliver on his promises. The financial losses at ESC continue. We believe that
the Gottstein/Genger Blueprint to Restore Shareholder Value Program outlined in
our prior mailings, implemented by an outstanding CEO, with proper oversight and
governance by a truly experienced and independent Board, is the best and only
means for restoring value at ESC.
"Our interest is the same as all other ESC stockholders -- to restore value
to ESC. Remember we own over 17% of the Company. Eckhouse has failed for three
consecutive quarters. He does not deserve another chance and we cannot afford
it."
The full text of our latest letter to shareholders dated June 15, 1999
follows:
Page 6 of 14 Pages
<PAGE>
WE HAVE ALL LOST MORE THAN ENOUGH
WE MAY NEVER HAVE A SECOND CHANCE TO SAVE ESC
VOTE YOUR ENCLOSED NEW BLUE PROXY TODAY!
June 15, 1999
Dear Fellow ESC Shareholder:
In a little more than one week the combined Extraordinary and Annual General
Meeting of Shareholders of ESC Medical Systems Ltd. will be held on Wednesday,
June 23, 1999 at 10:00 A.M. in New York City.
We believe it is critical to the value of all our investments in ESC Medical to
elect a new independent Board of Directors to lead ESC back to profitability and
to restore the confidence of doctors and the medical community, employees,
shareholders and financial analysts.
* The new board must have a majority of its members who are not beholden to
Shimon Eckhouse or responsible for the failed programs of the past.
* We cannot afford to have Eckhouse and his Board mismanage ESC for another
year.
* This may be your one and only chance to salvage your investment in ESC.
* Please join with us to elect a new Board of Directors by signing, dating
and returning promptly the enclosed BLUE proxy.
* Since Telephone and Internet voting are presently NOT available because of
the competing slates of directors, please ACT PROMPTLY!
In an attempt to win at any cost, Eckhouse's lawyers have told us they intend to
challenge the validity of the BLUE proxies sent to you earlier. These proxies
contained proposals that Eckhouse's management decided to abandon after we had
already mailed to most ESC shareholders. Unfortunately, the original yellow
proxies we also asked you to sign for the Extraordinary Meeting will not insure
our simultaneous success at the Annual Meeting.
While we believe the previously signed BLUE proxies are PERFECTLY LEGAL - DON'T
let them attempt to DISENFRANCHISE YOU from voting. Please sign the NEW BLUE
proxy today!
Page 7 of 14 Pages
<PAGE>
DON'T MISS YOUR LAST CHANCE TO VOTE
TO SAVE YOUR INVESTMENT IN ESC MEDICAL!
REMEMBER, we were forced to start this proxy campaign after numerous frustrating
efforts to get the ESC Board and management to focus on enhancing the Company's
financial performance and increasing the price of ESC's shares. Even though we
together own ESC's largest block of stock - more than 4.3 million shares or 17%
of ESC's outstanding stock - our constructive advice and offers of assistance
were rejected.
VOTE YOUR NEW BLUE PROXY TO REPLACE THE OLD BOARD
VOTE FOR OUR BLUEPRINT TO RESTORE VALUE FOR SHAREHOLDERS
The new independent Board of Directors proposed by us is composed of highly
qualified and experienced professionals well prepared to turn ESC around. They
are committed to putting ESC on the right track to profitability and to
restoring shareholder value. If you elect the new Board, they will have the
mandate to initiate a plan that will address each of the critical business
elements within ESC. Tell them you want steps taken to best assure a prompt
curtailment of losses by year-end and the repositioning of the Company for
profitability and growth for the future.
OUR BLUEPRINT FOR VALUE - PHASE ONE IS AN "INTENSIVE CARE"
ANSWER DESIGNED TO ADDRESS ESC'S IMMEDIATE NEEDS
We believe the new independent Board can immediately start to restore confidence
in the Company and value for shareholders. Our recommendation is a plan
consisting of two phases. If adopted by the new Board, Phase One could be
implemented with the assistance of a leading management consulting firm. The new
Board would be able to move quickly with this firm and assemble a team with the
necessary talents in the medical device field and in turnarounds and corporate
strategy within the first ninety days after their election. Phase One should be
fully in place by year-end.
We believe the Phase One steps discussed below are necessary to stop further
bleeding and to begin the healing process for the Company and its shareholders.
* The Board should establish a Committee to recruit a new CEO and review
other immediate management needs and make changes as appropriate.
* The CEO candidates should have proven experience as a CEO or chief
operating officer of a significant medical device company, a track record
of successful turnaround experience and a demonstrated ability to provide
leadership in a growth environment.
* We have already spoken with two qualified candidates that the new Board may
want to consider who have indicated serious interest and near term
availability. We have already started discussions about other candidates
with an internationally recognized executive search firm that the new Board
could interview to recruit a top flight CEO.
Page 8 of 14 Pages
<PAGE>
* The Board should establish a strong Finance and Capital Committee of the
Board that can work with the new CEO to bring cost structure in line with a
realistic revenue run rate ($120 million using Q1 1999 actual).
* The Finance and Capital committee should have a priority to preserve cash
resources until profitability is assured and sustained.
* The new Board and management should take immediate steps, such as the
creation of a strong outside Medical Advisory Group, to re-establish the
confidence of customers and create a program to communicate ESC's new
dedication to customer satisfaction and support.
* An advertising and promotional campaign directed to physicians and
consumers should be developed to generate traffic and improve their
business.
THE NEED FOR CHANGE IS CLEAR
BUT TIME IS RUNNING OUT!
* A new pricing structure for certain products, using a significant
downpayment and a per use fee, should be considered to stimulate sales
while maintaining overall profit margins.
* The well-known and highly regarded SHARPLAN brand name should be
reinstated.
* Additional and more appropriate sales incentives should be developed. All
of the above initiatives should be supported by major investments in
customer service and training.
* Manufacturing costs, which account for 45% of total costs need to be cut
further by considering additional consolidation of facilities and physical
plants and elimination of slow moving or low margin products. Headcount
plans should be reexamined (950 employees is far too many in light of the
low current sales run rate).
* Sales and Marketing expenses, which were 63% of sales in Q1 1999, are out
of control and need to be brought back to not more than 25% - 30% of sales.
* R & D expenses, which ballooned to 16% because of the dramatic drop of
sales in Q1 1999, need to be brought back to 8% of sales going forward.
This can be achieved by focusing on high growth projects and outsourcing
technology while also stressing product modifications and enhancements most
likely to immediately raise profitability and by addressing glaring needs
in the marketplace.
OUR BLUEPRINT FOR VALUE - PHASE TWO IS
TO RELAUNCH A STRATEGIC GROWTH PLAN
We are extremely confident of the new Board's ability to restore shareholder
value based on the qualifications of our director candidates and on the similar
experience of turning around Laser. If ESC's new Board takes the same steps we
took of installing a new management team and monitoring and supporting them, we
believe ESC can return to satisfactory gross margin profits and operating
profits targets in the first full year.
We believe Phase Two of the Blueprint can be fully developed by year-end 1999
and implemented throughout 2000, with the goal to generate sustainable and solid
profitability levels and to return ESC to growth.
Page 9 of 14 Pages
<PAGE>
* ESC should seek to dramatically increase its current actual quarterly sales
run rate, which was only $31 million in Q1 1999. We believe a realistic
target must be established because we should not expect to return to the
$50-60 million quarterly sales rates overnight.
* In Phase Two the objective should be to re-launch ESC on a growth
trajectory with annual growth rate targets of 15%-20% by continuing to
focus on customer service and satisfaction.
* ESC should focus the strategy on a core group of markets and market
segments and exit existing marginal businesses, markets and products.
* We believe ESC needs to finalize the implementation of sound and effective
Management Information and Control Systems and take advantage of
opportunities to improve new product introductions by improving
communication among R&D, Production and Marketing and especially our
customers.
* ESC should create additional appropriate incentives to attract and retain
top-flight talent at all levels of management.
* ESC needs to aggressively work to resolve all outstanding litigation,
especially the lawsuits caused by the hundreds in millions in claimed
market value losses by shareholders, but also the lawsuits and claims by
our physician customers.
* ESC must also create a capital program to address liquidity requirements
and to develop real alternatives regarding the $115 million in Convertible
Bonds that come due and payable on September 1, 2002.
Finally, ESC must continue a communication program to keep shareholders,
potential shareholders and industry analysts fully informed as to the current
progress of ESC and its realistic outlook.
ENOUGH IS ENOUGH - WE CAN'T AFFORD ANY MORE
UNFORESEEN LOSSES, DRAMATIC SALES DECLINES, AND
SURPRISE WRITE-OFFS!
In his recent proxy mailing to you, Shimon Eckhouse asked you to support his
"current version" of a strategic plan. Even this most recent strategy, which we
believe is in response to our proxy contest, is superficial and seriously
flawed. It fails to address ESC's most critical problems, lacks specific
details, and offers no means or metrics to measure progress. Let us not forget
that this plan is offered by Eckhouse, who has failed so dismally to deliver on
his promises.
* The value of our ESC shares in the past twelve months fell almost 90% from
a high of $46.50 to a low of $4.75 per share.
* Deteriorating product quality, poor customer service and support on top of
poor fiscal mismanagement have all contributed to the serious revenue
problem and financial crisis facing ESC Medical.
* We believe Eckhouse's current Board of Directors has to be held responsible
for these catastrophic results.
Page 10 of 14 Pages
<PAGE>
REPLACE THE ECKHOUSE BOARD OF DIRECTORS!
VOTE YOUR NEW BLUE PROXY TODAY!
In summary, we believe the "Blueprint to Restore Shareholder Value" program is a
practical business plan. It is designed to stop the bleeding and to bring in new
leadership, create an emphasis on customer service and satisfaction, and focus
on restoring shareholder value. We believe the plan is achievable and has been
built upon programs tested and used successfully at Laser Industries.
SHAREHOLDERS HAVE TOO MUCH AT STAKE!
WE CAN NO LONGER AFFORD TO BELIEVE IN
SHIMON ECKHOUSE OR HIS "PHANTOM" PLAN!
Time is short! We urge you to take the time now to sign, date and return the
enclosed new BLUE proxy. Thank you for your continued support.
Sincerely,
/s/ Barnard J. Gottstein /s/ Arie Genger
Page 11 of 14 Pages
<PAGE>
VOTE FOR A BUSINESS PLAN THAT YOU CAN BELIEVE IN!
VOTE FOR DIRECTORS THAT YOU CAN DEPEND ON!
Any questions or requests for assistance or additional copies of this Open
Letter to Shareholders, the Proxy, the Proxy Statement and any other related
materials may be directed to the Information Agent at the address and telephone
number set forth below. Shareholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning Mr.
Genger's and Mr. Gottstein's proposal (the "Proposal").
The Information Agent for the Proposal is:
MacKenzie
Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-free: (800) 322-2885
VOTE TO STOP THE BLEEDING AT ESC!
VOTE THE NEW BLUE PROXY TODAY!
Page 12 of 14 Pages
Exhibit 33
FOR IMMEDIATE RELEASE
Contact:
Larry Dennedy
MacKenzie Partners, Inc.
212-929-5500
ESC MEDICAL MISLEADS PUBLIC ABOUT ISRAELI COURT'S RULING
June 18, 1999, New York, New York - - Contrary to a misleading press release
issued earlier today by ESC Medical Systems Ltd. (Nasdaq: ESCMF), the court in
Israel has set a hearing date for Tuesday, June 22, 1999 on two of the three
motions filed by Messrs. Genger and Gottstein in order to prevent ESC from
misusing the corporate machinery for its own self interest. The only thing the
court decided today was not to hear one of the motions ex-parte, and to set a
hearing on Tuesday, June 22 for two of the motions. The hearing date on the
third motion has yet to be set.
As previously reported, Messrs. Genger and Gottstein have sought to hold ESC in
contempt of court for violating a court order to turn over a list of the
Company's beneficial owners within the time required by the Israeli court,
thereby severely prejudicing Messrs. Genger and Gottstein's ability to
communicate with ESC shareholders on equal footing with ESC, all as required
pursuant to the court order. In order for the court to demand ESC and Eckhouse
to show cause as to why they should not be held in contempt, the court asked
Messrs. Genger and Gottstein's attorneys to file a formal request to do so,
which they have done. Once the order is signed by the court, a hearing date will
be set.
Messrs. Genger and Gottstein have also sought to prevent ESC from voting the
shares held by a trust for the benefit of Eckhouse and other ESC employees -
shares which were purchased with Company funds in transactions whose legality is
highly suspect. Separately, Messrs. Genger and Gottstein have raised serious
legal questions as to why the trust failed to file a Schedule 13D with respect
to the shares held, thereby keeping all shareholders in the dark about the
nature of the purchases, and the actual amount held in the trust.
Finally, Messrs. Genger and Gottstein have sought a declaration from the Israeli
court requiring ESC to honor the blue proxy cards being used for Messrs. Genger
and Gottstein's solicitation after ESC threatened to invalidate such proxies,
thereby disenfranchising all ESC shareholders who wish to support Messrs. Genger
and Gottstein's efforts to replace Shimon Eckhouse and his fellow Directors.
The second two motions described above will be heard on June 22, 1999.
Page 13 of 14 Pages
<PAGE>
According to Messrs. Genger and Gottstein, "Once again Eckhouse and his
management have demonstrated their contempt for shareholder rights. We think any
shareholder understanding these tactics should be outraged by ESC's blatant
attempt to disenfranchise them and prevent a fair election from occurring. At
every turn, ESC has used Company resources to thwart our efforts and mislead
shareholders. Their press release today is yet another example of how ESC has
tried to mislead the public. Supporting ESC in this election would be to us
tantamount to an endorsement of their outrageous actions."
Page 14 of 14 Pages
