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REXENE CORPORATION
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NYFS05...:\38\69638\0004\1530\SEC5297L.350
<PAGE>
REXENE ELECTS TWO MORE INDEPENDENT DIRECTORS
COMMITTED TO ENHANCING STOCKHOLDER VALUE
AND ANNOUNCES STOCK REPURCHASE PROGRAM
COMPANY ALSO PROVIDES UPDATE ON
BUSINESS PERFORMANCE AND REITERATES ITS
POSITION REGARDING A $16 FULLY FINANCED OFFER
Dallas, TX - March 19, 1997 - Rexene Corporation (NYSE:RXN) today
announced that Stephen C. Swid and Richard C. Perry have been elected to the
Company's Board of Directors, effective immediately. Entities affiliated with
these two new independent directors own in the aggregate approximately 1.2
million shares of Rexene common stock, or approximately 6 percent of the
outstanding shares of Rexene common stock.
Rexene also announced that its Board has authorized an $85 million
share repurchase program. The Company also provided an update on its business
operations which, despite unusually high raw material costs in the first
quarter, currently are experiencing more favorable trends.
New Directors
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Andrew J. Smith, Chairman and Chief Executive Officer of Rexene,
said, "Mr. Swid and Mr. Perry bring substantial financial and business expertise
to the Rexene Board of Directors. We are gratified that two highly qualified,
independent owners of a significant amount of Rexene stock and whose interests
are clearly aligned with stockholders have accepted our invitation to join the
Board."
Mr. Swid, 56, is Chairman and Chief Executive Officer of SCS
Communications, which owns and operates diverse media properties. He also has
served as Chairman and CEO of Westview Press, a scholarly book publisher based
in Boulder, Colorado; SBK Entertainment World, Inc., a leading music publisher
and worldwide entertainment services company; and Knoll International Holdings,
Inc.
A graduate of Ohio State University, Mr. Swid was Founder and Senior
Partner of Swid Investors, an investment limited partnership; general partner of
City Associates, a private management company; senior investment officer of the
Oppenheimer Fund; and a securities analyst at the Dreyfus Fund. He is a Member
of the Council of Foreign Relations and active supporter of the arts and
education.
Mr. Perry, 42, is President of Perry Corp., a New York based private
investment management firm. Mr. Perry is Chairman of the Board of Directors of
both FTD Corporation, the leading floral services company, and Radio & Records,
Inc., a media publisher. Prior to founding Perry Corp. in 1988, Mr. Perry was
with Goldman Sachs & Co.
A graduate of the Wharton School of the University of Pennsylvania
and of the New York University Graduate School of Business Administration, Mr.
Perry also serves on the Board of Trustees of Allen Stevenson School, the Milton
Academy, and Facing History and Ourselves. He is an Adjunct Associate Professor
at the New York University Stern School of Business Administration.
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Share Repurchase Program
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Rexene also announced today that, as part of its continuing efforts
to enhance stockholder value, the Board has approved a share repurchase program
of up to $85 million of the Company's common stock. Initial repurchases under
the program will be funded through $35 million in borrowings under the Company's
existing bank loan facility with the Bank of Nova Scotia, as agent, and other
lenders. The Company plans to submit the $50 million part of the repurchase
program for stockholder consideration at the special stockholders' meeting
scheduled for April 30, 1997.
The Company intends to purchase shares in open-market transactions
from time to time in the first part of the repurchase program, at prevailing
market prices. Repurchased shares will be held in the Company's treasury and may
be used for general corporate purposes.
"The repurchase of our shares represents an attractive investment
opportunity for Rexene," Mr. Smith said. "We have talked with a variety of
stockholders -- both institutional and individual -- who have expressed support
for our ongoing expansion and improvement program, and who also requested
additional action to enhance the value of Rexene stock. We believe that this
stock repurchase program, coupled with our capital program, will serve as a
valuable tool for building stockholder value and demonstrates the Board's
confidence in our strategy and outlook."
Business Update
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Mr. Smith said that unusually high raw material costs, which, as
previously disclosed, will adversely affect the Company's first quarter earnings
results, have begun to decline and should have less of an impact on its
performance in the second and third quarters of 1997.
"Feedstock prices have declined from the unusually high levels
experienced in late 1996 and earlier this year and appear to be moving to ranges
similar to last year's second and third quarters," Mr. Smith said. "At the same
time, we are seeing positive price momentum in our polyethylene and
polypropylene businesses as well as growing contributions from our new REXflex
FPO plant which began production in December 1996."
Mr. Smith noted that significantly higher feedstock costs in late
1996 and earlier this year are expected to reduce Rexene's operating earnings
for the first quarter of 1997 by approximately $7.5 million after tax, or $0.39
per share as compared with the same period last year. However, a gain from the
reversal in the first quarter of an environmental accrual established in prior
years will partially offset the significantly higher feedstock costs, and Rexene
anticipates that net income for the first quarter ending March 31, 1997 will be
only slightly below the $0.34 per share net income reported by the Company in
the same period last year.
"Following 13 months of extensive discussions, the Texas Natural
Resources Conservation Commission recently notified Rexene that it has approved
our program for remediation of a portion of our Odessa facility", Mr. Smith
said. "This will allow Rexene to reduce its environmental accruals by $5.6
million after tax, resulting in a gain of $0.29 per share in the first quarter.
Mr. Smith said the company's expansion and cost improvement programs
are on track and have begun to enhance stockholder value. "Our REXflex FPO
business continues to grow, with annualized production capacity expected to
reach 75 million pounds by mid-year", he said. "Our 260 million pound olefins
expansion project is on schedule for completion in October 1998 and is expected
to result in annual savings of approximately
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$25 million. Engineering work is completed for our new 220 million pound REXell
linear low density plant, and we are receiving positive customer responses in
our premarketing efforts.
Separately, in response to recent comments from Jon Huntsman, Rexene
reiterated that its Board of Directors would not oppose an all-cash, fully
financed offer to purchase the Company for $16 per share from Mr. Iluntsman or
any other party.
Except for the historical information contained herein, the matters
discussed in this news release are forward-looking statements that involve risks
and uncertainties, including the cyclical nature of the polyethylene,
polypropylene and styrene markets in which the Company competes, the impact of
competitive products and pricing, price volatility of petrochemical feedstocks,
possibility of delays in the successful implementation of the Company's capital
expenditure program, the commercial acceptance of new products such as REXflex
polymers and other risks described from time to time in the Company's SEC
reports. These risks and uncertainties could cause actual results to differ
materially from those discussed in this press release.
Rexene Corporation, through its Rexene Products and CT Film
divisions, manufactures thermoplastic resins, styrene and plastic film.
Headquartered in Dallas, Texas, the Company has manufacturing facilities in
Texas, Wisconsin, Georgia, Delaware, Utah and in England.
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<PAGE>
ARTHUR L. GOESCHEL
Consultant
March 19, 1997
Mr. Andrew Smith Bernard McNamee, Esq.
Chief Executive Officer General Counsel
Rexene Corporation Rexene Corporation
Suite 500, Occidental Tower Suite 500, Occidental Tower
5005 LBJ Freeway 5005 LBJ Freeway
Dallas, TX 75244 Dallas, TX 75244
Gentlemen:
I have served on the Board of Directors ("Board") of Rexene Corporation
("Company") for many years and was the Chairman of the Board for over four and
one-half years. During my tenure on the Board, I believe that I have always
served the best interest of the Company's shareholders and carried out my
fiduciary obligations to them in a manner which I believed was, and is, to the
best of my ability and judgment. It is in this context that I must now resign my
position as a director of the Company due to actions that have been taken by the
Board of the Company, which I believe are not in the best interest of the
Company's shareholders.
The Board has recently approved the borrowing of Thirty Five Million Dollars
($35,000,000) and will, in the near future, ask the shareholders to approve the
Issuance of preferred stock, which will generate an additional Fifty Million
Dollars ($50,000,000). The $35,000,000 in borrowed funds is to be used to
conduct an immediate stock buy-back program ("Program"), and the $50,000,000
from the issuance of the preferred stock will also be used for the Program at a
later date. The Program will be conducted in such a manner so as to purchase the
stock of individuals or groups that have indicated their intention to vote for
the removal of the Company's current Board at a Special Meeting of Shareholders
of the Company to be held on April 30, 1997. The intent of the Program has been
made clear to me at several meetings of the Board and, in my opinion, as
confirmed by statements made by certain of the Company's financial advisors will
be targeted and therefore will serve no purpose other than to entrench the
current Board, some of whom are also executives of the Company. I am not opposed
to stock repurchase programs that are designed to enhance shareholder value. I
cannot, however, rationalize how a targeted stock repurchase program, designed
to benefit a group of shareholders who have expressed dissatisfaction with the
current Board concerning their inability or sincere desire to sell the Company
at a fair and reasonable price, is anything other than an attempt to entrench
the current Board at the expense of those shareholders who are remaining after
the Program is executed. The Company, if the full Program is executed, will have
an additional $85,000,000 in obligations, either in loans or preferred stock
obligations, and will have in its Treasury, stock possibly repurchased at a
price that is at or near the highest price the stock has traded for in the last
several years. This action is particularly inappropriate in view of the
Company's press release on March 19, 1997, indicating that the operating
earnings for the first quarter will be very weak. These results, the taking on
of additional debt, and the cost of the Treasury stock in a period of poor
operating earnings, will be the aftermath of the Program designed, In my opinion
and confirmed to me at several Board meetings, to eliminate those shareholders
who are attempting to unseat the current Board and to replace them with
directors who, in their opinion, will realize a fair and reasonable price for
the Company, which will benefit all shareholders.
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The actions taken by the current Board, as outlined in this letter, have caused
me to resign my position as a director of the Company, which I believe is my
only alternative if I am to fulfill my fiduciary obligations to the Company's
shareholders. This decision on my part was not arrived at easily, but only after
very serious thought and consultation with counsel. As you know, my position on
this subject has been made very clear in the numerous Rexene board meetings that
have taken place over the last weeks. I hereby request that the Company publicly
disclose my resignation from the Board with a complete and accurate description
of the reasons therefor.
Sincerely,
Arthur L. Goeschel
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March 26, 1997
Mr. Arthur L. Goeschel
Way Hollow Road & Woodland Road
Sewickley, Pennsylvania 15143
Dear Art:
We are in receipt of your letter of resignation, which the Board
accepts. In order to set the record straight, it is necessary to respond to the
allegations and outright misstatements set forth in your letter.
As you know, based upon the many Board meetings and personal
meetings I have had with you regarding this subject, the Rexene Board authorized
the stock repurchase program solely as a result of the requests of many of the
Company's stockholders as expressed to Rexene management and directors in recent
months and because the Rexene directors feel that the program complements the
Company's capital and improvement programs and will build stockholder value. The
first part of the program, which is limited to purchases of up to $35 million,
will be conducted as an open market purchase program in accordance with rules
and regulations promulgated by the Securities and Exchange Commission. It is
indisputable that the program will not discriminate among stockholders and will
be open to all stockholders who desire to sell their shares at current market
prices. You conveniently ignore the fact that the stock repurchase program will
have the effect of actually reducing the number of affirmative votes that the
Wyser-Pratte Group will need to obtain at the Special Meeting to be successful
in removing Rexene's current directors. You also understandably fail to
acknowledge that, at current market prices, the program should make Rexene a
more attractive acquisition candidate for an acquiror intending to pay $16.00
per share. Further, as designed by the Board, the majority of repurchases
pursuant to the program will be made only if stockholders approve the stock
repurchase proposal at the Special Meeting and, accordingly, could not possibly
have any impact on the vote at the Special Meeting. You have refused to listen
to the explanations of the workings of the stock repurchase program because it
doesn't match your preconceived views. You have consistently refused to accept
the advice of professionals because in your own mind, you have said you know
better.
Your stated concerns regarding the possible effects of the financing
of the program are, at best disingenuous. The Company's financial advisors have
on several occasions expressed to the Board their view (and demonstrated with
their detailed financial analyses) that the financing of the program would not
negatively impact the financial condition of the Company. You yourself have
stated on more than one occasion at our Board meetings that the additional
borrowings and proposed preferred stock issuance will not in any way put the
Company in financial jeopardy.
An honest review of the record can only lead to the conclusion that
the Rexene directors have acted based solely upon a full and fair consideration
of the facts in a manner that they believe is in the best interest of all of the
Rexene shareholders. Regrettably, your actions have been taken solely as part of
a personal desire to advance your own selfish interests and retaliate for the
Board's intent to decrease its size and decline to ask that you stand for
re-election at the Annual Meeting. Every Board member believes that you were
entitled to voice your opinion as a director in the meeting, but you are not
entitled to manipulate the board process through false and unsupported
accusations and threats of publicly accusing your fellow Board members of
unethical conduct in an attempt to coerce them into adopting your point of view,
especially when such is not the case. I am confident that the Rexene Board has
reached the right decisions on these matters and I am gratified that the Board
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will be able to continue to work to enhance the interests of our stockholders
free of the distractions resulting from your unwillingness to respond to efforts
to maximize stockholder value.
Very truly yours,
Andrew J. Smith
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