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SCHEDULE 14A INFORMATION
Revocation 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:
/X/ Preliminary Proxy Statement (Consent Revocation Statement)
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OREGON STEEL MILLS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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: ______
(3) Per unit price or 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): ______
(4) Proposed maximum aggregate value of transaction: $______
(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.
(1) Amount Previously Paid: ________________________________
(2) Form, Schedule or Registration Statement No.: __________
(3) Filing Party: __________________________________________
(4) Date Filed: ____________________________________________
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PRELIMINARY COPY - SUBJECT TO COMPLETION
DATED JANUARY 27, 1999
OREGON STEEL MILLS, INC.
1000 S.W. BROADWAY, SUITE 2200
P.O. BOX 5368
PORTLAND, OREGON 97205
(503) 223-9228
-------------------
STATEMENT BY THE
BOARD OF DIRECTORS OF OREGON STEEL MILLS, INC.
IN OPPOSITION TO THE SOLICITATION OF CONSENTS BY
THE AFL-CIO GROUP
-------------------
This Consent Revocation Statement and the accompanying [WHITE] Consent
Revocation Card are being furnished by the Board of Directors (the "Board") of
Oregon Steel Mills, Inc., a Delaware corporation (the "Company"), to the holders
of outstanding shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), in opposition to the solicitation (the "AFL-CIO Group
Solicitation") by the Committee to Restore Shareholder Value (the "AFL-CIO
Group") of written consents from the stockholders of the Company to do the
following ("AFL-CIO Proposals"):
1. Urge the Board to take the necessary steps to declassify the Board for
the purpose of director elections;
2. Urge the Board to add a provision to the Company's Bylaws to require
prior stockholder approval for adoption of (i) any shareholder rights plan or
"poison pill" and (ii) any amendment to or repeal of any such provision; and
3. Urge the Board to amend the Company's Bylaws to require (i) all
proxies, ballots and voting tabulations that identify how a stockholder has
voted to be kept confidential and (ii) stockholder approval of any amendment to
or repeal of any such provision.
YOUR BOARD UNANIMOUSLY OPPOSES EACH OF THE AFL-CIO PROPOSALS AND RECOMMENDS
THAT YOU DO NOT TO SIGN THE GOLD CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE
SENT TO YOU BY THE AFL-CIO GROUP.
EVEN IF YOU PREVIOUSLY SIGNED AND RETURNED THE AFL-CIO GROUP'S GOLD CONSENT
CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE. WE URGE YOU TO SIGN, DATE AND
MAIL THE ENCLOSED [WHITE] CONSENT REVOCATION CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED. YOUR PROMPT ACTION IS IMPORTANT. PLEASE RETURN THE [WHITE] CONSENT
REVOCATION CARD TODAY. IN ORDER TO BE SURE THAT YOU ARE REVOKING A PRIOR
CONSENT, YOU MUST EITHER MARK THE "REVOKE CONSENT" BOX ON THE [WHITE] CONSENT
REVOCATION CARD, OR SIGN THE [WHITE] CONSENT REVOCATION CARD WITHOUT MARKING ANY
BOXES.
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IF YOUR SHARES ARE HELD IN "STREET NAME," ONLY YOUR BROKER OR BANKER CAN
VOTE YOUR SHARES. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT HIM OR HER TO VOTE A [WHITE] CONSENT REVOCATION CARD ON YOUR BEHALF
TODAY.
This Consent Revocation Statement and the enclosed [WHITE] Consent
Revocation Card are first being mailed to stockholders on or about January __,
1999.
If you have questions about your revocation of consent or require
assistance, please call Georgeson & Company, Inc., the firm assisting the
Company in this solicitation, at the phone numbers shown below:
Georgeson & Company, Inc.
Wall Street Plaza
88 Pine Street 30th Fl.
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
FAX: (212) 440-9009
BACKGROUND AND REASONS FOR THE COMPANY'S POSITION
PLEASE REVIEW THE NEXT FEW PAGES BEFORE MAKING YOUR DECISION ON WHETHER TO
SUPPORT THE AFL-CIO PROPOSALS.
THE COMPANY BELIEVES THE AFL-CIO GROUP IS FORCING THE COMPANY TO SPEND YOUR
COMPANY'S MONEY IN RESPONDING TO THE UNION'S CONTINUED CORPORATE CAMPAIGN TO
HARASS THE COMPANY.
The AFL-CIO Group consists of The Crabbe Huson Group, Inc., Amalgamated
Bank of New York LongView MidCap 400 Index Fund and the American Federation of
Labor and Congress of Industrial Organizations ("AFL-CIO"). The AFL-CIO Group,
in what we believe is an effort to make it appear that they speak for other
stockholders, is calling itself a "Committee" of stockholders.
Although the AFL-CIO Proposals involve corporate governance issues, the
proposals are part of a United Steelworkers of America ("Union") corporate
campaign directed at the Company and is a harassment device. Your Board believes
that the AFL-CIO Proposals are designed as tools for labor bargaining and to
limit the Board's flexibility in protecting the interests of all stockholders.
However, the labor interests, nevertheless may be aligned with stockholder
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interests. The Union is a non-participant in the AFL-CIO consent solicitation
and is not a member of the Committee.
BACKGROUND. CF&I Steel, L.P., a majority owned subsidiary of the Company,
dba Rocky Mountain Steel Mills ("RMSM") purchased a steel mill and other assets
in Pueblo, Colorado ("Pueblo Mill") in 1993, after the previous owner had
declared bankruptcy. Huge pension and retiree health care obligations incurred
during the 1980s were a major factor forcing the bankruptcy filing in November
1990. At the time, many people assumed the plant would be liquidated and sold
for scrap, putting 1,500 people out of work. Instead, RMSM bought the assets of
the Pueblo Mill in 1993, invested about $200 million in modernization, and over
the past four years has returned the mill to profitability. The labor contract
negotiated with the Union in 1993, which expired September 30, 1997, provided a
24 percent increase in wages and benefits, along with profit sharing and an
excellent benefit package. The RMSM benefit package was comparable to the
Company's other benefit packages, including those of senior executives of the
Company.
THE STRIKE. On October 3, 1997, the Union, an affiliate of the AFL-CIO,
initiated a needless strike at RMSM. The Company believes the strike was
needless as prior to the strike (i) the Company offered reasonable terms; and
(ii) the Company offered to continue under the old contract and to continue
negotiations under the auspices of federal mediation. To help you better
understand the real issues prompting these proposals, we provide a recent
history of the labor dispute with the Union:
6/10/97- Negotiations on a new contract between RMSM and the Union; 22
9/27/97: bargaining sessions held.
9/28/97: Union introduces an unexpected pension demand (two days before
contract expiration) in the approximate amount of $55 million, plus an
additional $18 million a year in increased expenses; RMSM rejects it.
9/30/97: Contract with Union expires; RMSM offers to continue to work under
existing contract and/or go to federal mediation; Union agrees to
extend contract subject to 8 hour notice of termination, but rejects
federal mediation.
10/3/97: Union goes on strike, rejecting RMSM's proposal to continue under old
contract and to continue negotiations under auspices of federal
mediation.
10/97- RMSM hires 600 permanent employees and announces that it will return
12/97: to full operation by early 1998; 100 Union members cross picket line.
12/30/97: Union makes unconditional offer to return to work; former strikers are
recalled to fill 35 available vacant positions. All other former
strikers remain on the recall list.
1998: Additional former strikers are recalled as positions become available,
approximately 100 to date.
2/27/98: The National Labor Relations Board ("NLRB") issues a complaint
alleging unfair
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labor practices by RMSM, including bad faith bargaining by RMSM.
3/31/98: Union settles charges of picket line violence by strikers (as found by
the Regional Director of the NLRB).
8/17/98: NLRB hearing commences and is expected to continue into February 1999.
RMSM'S OFFER. Prior to the strike, RMSM's offer, included:
o Paying a $1,000 signing bonus.
o Paying a wage increase of $1.30 per hour over the three-year
contract (these increases were on top of wages that averaged
$42,000 per year at the time of the strike).
o Doubling RMSM's contribution to the 401(k) plan from one percent
to two percent of gross annual earnings.
o Continuing to pay the full health insurance premium for employees
and their families.
o Increasing RMSM's contribution to retiree health and welfare
benefits.
o Continuing the existing pension program, which is essentially the
same for all employees including senior executives.
o Paying contractual penalties to employees for overtime in excess
of agreed-upon hours.
UNION CONTRACT DEMANDS. The Union demands included that:
o The Union be given the right to purchase some or all of the
assets of RMSM before any other potential purchaser.
o RMSM accept the pension obligations of the previous owner and
increase retiree benefits, which would have resulted in an
immediate under-funding liability of approximately $55 million,
plus an additional $18 million a year in increased expenses.
o RMSM pay $1.60 per hour wage increase and $1,100 signing bonus.
o Doubling RMSM's contribution to the 401(k) plan from one percent
to two percent of gross annual earnings (a position consistent
with OSM's pre-strike proposal).
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o The seniority sections of the collective bargaining agreement be
revised to limit RMSM's right to assign employees to jobs.
o Substantial financial penalties be imposed for working overtime.
THE UNION CORPORATE CAMPAIGN. The Union in collaboration with the AFL-CIO,
has conducted a concerted corporate campaign against the Company. The Company
believes that the campaign is to pressure RMSM for two purposes: (i) to unionize
the employees of the Company at its non-union facilities in Portland, Oregon and
Napa, California; and (ii) to force RMSM to give in to the Union's demands at
the bargaining table. The principal focus of the corporate campaign has been to
attempt to undermine the Company's relationships with its investors, customers,
lenders, regulators, the community and the media. The corporate campaign has
included the following:
o TARGETING THE COMPANY'S LENDERS by engaging in handbilling, rallies,
boycotts, demonstrations and sit-ins; issuing inaccurate press
releases, encouraging withdrawal of deposits, and pressuring the
lenders regarding the Company's liquidity. Examples include:
o National boycott of Wells Fargo Bank, Norwest Corporation
and the Company.
o The Union claims that nearly $250 million has been withdrawn
from Wells Fargo accounts. [News release dated October 22,
1998]. The withdrawals are "to protest the bank's financial
backing of Oregon Steel's war on workers in Pueblo, CO."
[Handbill - The Phony Express - September 28, 1998 published
by Union and Local Unions #2102 & 3267].
o Demonstrations and sit-ins at Wells Fargo Bank which
resulted in the Union executing a settlement agreement with
the NLRB to refrain from secondary activities, including sit
ins, at the Wells Fargo Bank facilities.
o Demonstrations against the Bank of Nova Scotia in Canada.
o TARGETING CUSTOMERS by engaging in demonstrations, including a rally
at a customer's facilities, sending letters to customers, attempting
to persuade customers to cease dealing with RMSM and/or its various
operations and attempting to publicly embarrass customers. Examples
include:
o The Union storming the corporate headquarters of a major
customer of RMSM prior to the union contract expiration with
approximately 18 steel workers, demanding to meet with the
president.
o Conducting a letter writing campaign inaccurately suggesting
inferior and/or unsafe product.
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o Attempting to persuade a major customer of the Company's
Napa Pipe operation to switch its business elsewhere.
o TARGETING THE COMMUNITY by engaging in rallies and marches, sending
letters to the media and the Company, and running biased and
inaccurate infomercials.
o TARGETING THE MEDIA by staging events (picket line activity, marches,
press conferences), issuing inaccurate and incomplete press releases,
engaging in advertising and direct mailings, and participating in talk
shows. Examples include:
o "Saying, `We don't give a damn what it costs,' the president
of the Union pledged to continue turning up the heat on
Oregon Steel until it agrees to restore jobs to the union's
1000 workers in Pueblo." [The Pueblo Chieftain - January 30,
1998]
o "`The corporate campaign will not fail,' he said. `If it's
not working we escalate it. We don't give a damn what it
costs.'" [The Pueblo Chieftain - January 30, 1998]
o TARGETING INVESTORS by publishing inaccurate letters and pamphlets to
investors and financial advisors, circulating inaccurate information
on the internet, press releases and handbills, and threatening to
withdraw invested pension funds. Examples include:
o The Union publishing and circulating a handbill on The
Crabbe Huson Group, Inc. accusing it of "union busting" and
highlighting that it is a major money manager for
Taft-Hartley pension funds. [Handbill entitled "Tell Crabbe
Huson Union-Busting Is Not Value Investing"]
o Demonstrating and being disruptive at the Company's Annual
Meeting of Stockholders.
o Public accusations that the Company is misleading its
stockholders.
o TARGETING REPLACEMENT WORKERS of RMSM and their families by using
intimidation, violence and threats.
o The state court issued an injunction against continued
authorization or ratification of violence, intimidation and
threats.
o TARGETING THE EMPLOYEES AT THE COMPANY'S PORTLAND AND NAPA PIPE
OPERATIONS by a continued campaign of attacks upon management
decisions, the Company's prospects, and their future employment.
o TARGETING GOVERNMENT/REGULATORS by filing complaints regarding RMSM
with the public health department, fire department, city council, OSHA
and Colorado Department of Health (the Company has resolved all Union
targeted complaints
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without a resulting fine or penalty), and applying political pressure
through federal/state legislators and the Colorado governor.
The Company believes that fourth quarter 1997 and first quarter 1998
financial results were negatively impacted by the Union's decision to strike the
Pueblo facility on October 3, 1997. The actions of certain affiliates of members
of the AFL-CIO Group bear a direct cause to the financial results of the
twelve-month periods discussed in the AFL-CIO Group solicitation. Other negative
factors contributing to the Company's financial performance subsequent to the
first quarter of 1998 are adverse market conditions for commodity plate,
seamless pipe, and rod, unscheduled equipment delays at the Combination Mill, an
extensive power outage in May 1998 at RMSM and increased expenses incurred due
to the Union labor dispute.
However, the AFL-CIO Group solicitation fails to mention that earnings
before interest, taxes, depreciation and amortization (EBITDA) were the highest
in the history of the Company at $101.7 million for the twelve months ended
December 31,1998 and $88.4 million for the nine months ended September 30, 1998
compared to $57.5 million and $71.0 million for the comparable 1997 periods.
1998 results occurred despite reduced operations due to the needless strike in
the fourth quarter of 1997 and despite deteriorating steel markets during 1998.
The Company believes these results indicate improving financial performance.
EBITDA for the third quarter of 1998 was $37.2 million, the highest in the
Company's history and 39% higher than the third quarter of 1997 results of $26.8
million.
The Company believes that the AFL-CIO Proposals are one more attempt to
drive a wedge between the Company and its stockholders. These proposals could
have been presented to the Company and the stockholders as part of the Annual
Meeting of Stockholders in 1999. However, the AFL-CIO Group has chosen to use a
consent solicitation to present non-binding resolutions. Why have they decided
on this tactic? The answer is quite simple - so the Union can continue its
corporate campaign to harass the Company, its lenders, its investors, its
suppliers and its customers.
Based on this background and the information provided below, the Board
believes you will agree that the AFL-CIO Proposals are not in your best
interest. Your Board unanimously opposes the AFL-CIO Solicitation and urges you
not to sign the GOLD Consent Card or any other forms which may be sent to you by
the AFL-CIO Group.
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YOUR BOARD'S POSITION
YOUR BOARD UNANIMOUSLY OPPOSES EACH OF THE AFL-CIO PROPOSALS AND RECOMMENDS
THAT YOU DO NOT SIGN THE GOLD CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE SENT
TO YOU BY THE AFL-CIO GROUP.
AFL-CIO PROPOSAL 1: DECLASSIFY THE BOARD
- -----------------------------------------
The Board strongly OPPOSES the following AFL-CIO Proposal as being harmful to
the best interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's board of directors (the "Board") to take
the necessary steps to declassify the Board for the purpose of director
elections, whereby all directors would be elected annually and not by
classes. The Board shall be declassified in a manner that does not
affect the unexpired terms of directors previously elected."
The Board opposes the proposal for the following reasons:
As approved by the stockholders, the Board has been divided into three
classes since 1988. Your Board continues to believe that a classified board is
in your best interests. Classification helps to ensure continuity and stability
in the leadership and policies of the Company by providing that at any time a
majority of the directors will have prior experience as a director and in-depth
knowledge of the Company. At least two annual stockholder meetings, instead of
one, ordinarily will be required to effect a change in control of the Board. The
Company believes that the continuity and stability resulting from a classified
board are particularly important to the Company and its stockholders in light of
the rapid changes in the current capital markets.
The Company has observed that certain takeover tactics, such as hostile
tender or exchange offers, have become relatively common occurrences for
publicly-held companies without anti-takeover provisions. The Company has few
meaningful anti-takeover provisions. The anti-takeover provisions currently in
place at the Company are (i) the classified board provision; (ii) removal of the
board only for cause; (iii) the Company's ability to issue preferred stock; and
(iv) the limitations of the Delaware business combination law. The Company does
not have a rights plan in place. The Company does not have, other typical
anti-takeover provisions, such as supermajority voting requirements, fair price
provisions, limits on shareholder meetings or consent actions, anti-greenmail
provisions, provisions requiring consideration of social, economic and other
factors in evaluating a transaction, or long term "sweetheart" employment
contracts with executive officers. The Company believes that the classification
of the Board offers some protection to our stockholders against tactics which
can be highly disruptive to the Company's business, and adversely affect the
Company's relationships with its employees, customers, business partners and
others on which the Company's successful performance depends, all to the
detriment of the stockholders as a whole. A classified board encourages any
potential acquiror to negotiate at arm's length with a seasoned Board who would
work to ensure that our stockholders receive the full value of the Company.
However, a classified board may prevent the occurrence of certain transactions,
including acquisitions, that may be in the best interests of the stockholders
and annual elections of directors
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could provide greater accountability to stockholders. The Company does not have
cumulative voting.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
AFL-CIO PROPOSAL 2: REQUIRE PRIOR STOCKHOLDER APPROVAL OF POISON PILLS
- -----------------------------------------------------------------------
The Board OPPOSES the following AFL-CIO Proposal as being harmful to the best
interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's Board of Directors to add a provision to
the bylaws of the Company (the "Bylaws") requiring the prior approval
by holders of a majority of the outstanding shares of the Company's
common stock (the "Shares") of (a) any shareholder rights plan or
"poison pill" (such provision of the Bylaws is referred to herein as
the "Shareholder Approval Bylaw"), and (b) any amendment to or repeal
of the Shareholder Approval Bylaw."
The Board opposes this proposal for the following reasons:
Rights Plans Generally
- ----------------------
The overall effect of a rights plan may be to render more difficult or to
discourage a merger, tender offer or proxy contest, the assumption of control by
a principal stockholder and the removal of incumbent management. A rights plan
could make the accomplishment of a given transaction more difficult even if it
is favorable to the interests of stockholders and could make the removal of
management more difficult even if such removal would be generally beneficial to
stockholders. A rights plan may have the effect of limiting stockholder
participation in certain transactions such as mergers or tender offers whether
or not such transactions are favored by incumbent management.
A rights plan is intended to strengthen a board's ability, in the exercise
of its fiduciary duties, to protect and maximize the value of stockholders'
investment in the event of an attempt to acquire control of a company. A rights
plan is not intended to, and does not, preclude unsolicited, non-abusive offers
to acquire a company at a fair price. It is designed, instead, to encourage any
potential acquiror to negotiate directly with a board, to negotiate on behalf of
the stockholders and to protect stockholders against abusive tactics during the
takeover process, such as partial and two-tiered tender offers and creeping
stock accumulation programs, which do not treat all stockholders fairly and
equally. Rights plans do not prevent a takeover on terms that are fair and
equitable to all stockholders, nor are they a deterrent to a proxy contest.
Rights plans have been adopted by a majority of the corporations included
in the Standard & Poor's 500. A November 1997 study by Georgeson & Company Inc.,
a proxy solicitation and investor relations firm, entitled "Mergers &
Acquisitions Poison Pills and Shareholder Value/ 1992-1996" found that
corporations with a shareholder rights plan receive a higher takeover premium
than companies which do not have a rights plan. The study was not performed for
the Company or any of its affiliates. However, commentators and corporate
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governance experts disagree on the propriety and utility of poison pills, and
that alternative devices can provide some of the benefits allegedly conferred by
a poison pill.
The Company's Position
- ----------------------
The Board believes that the adoption of a rights plan by the Company should
be determined by the Board without having to first seek stockholder approval.
The Company does not currently have a rights plan in place. The Company does not
anticipate and is not aware of any proposed or pending takeover attempt. The
Board has carefully evaluated its policy towards adoption of a rights plan.
Based on its analysis, the Board believes that the AFL-CIO Proposal is too
restrictive and should be rejected.
Although the Company has not adopted a rights plan, the Board believes
there is empirical evidence that in certain situations such plans may assist in
negotiating a fair price for stockholders. In order to adopt a rights plan, the
Board must determine, in the exercise of its fiduciary duties, that the plan is
in the best interests of the Company. A bylaw provision which requires
stockholder action to adopt and implement a rights plan removes the Board's
flexibility to respond to market conditions and removes certain incentives for a
potential acquiror to negotiate with the Board so that stockholders are treated
fairly. The Board with its fiduciary duties imposed by law is in the most
effective position to negotiate with any potential acquiror and to take other
action in the best interests of the Company and its stockholders.
However, the Board is sensitive to investors concerns and trends in
corporate governance. For the past year, the Company has been analyzing several
corporate governance issues, including the need for a "poison pill." In its
analysis, the Company is considering various alternatives. An alternative being
considered is the adoption of a bylaw provision which would be applicable to any
rights plan adopted by the Company and could contain some of the following
features:
o Shareholders would automatically be given the right to vote on the
redemption or termination of the rights plan if within sixty days of
the Board receiving an offer that met the criteria outlined below the
Board itself had either not redeemed the rights or approved a
financially superior offer.
o The offer which would start the 60-day period referenced above would
meet the following conditions:
(i) the offer must be for all outstanding shares of the
Company's common stock for the same price per share,
(ii) the portion of the offer that is for cash must be fully
funded,
(iii) any portion of the offer that is for non-cash
consideration must be in the form of New York Stock
Exchange [or NASDAQ National Market] listed securities
and the offer must provide tax-deferred treatment for
stockholders, and
(iv) the offer cannot be subject to financing, funding or
due diligence conditions.
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o The bylaw provision would only be amended by the stockholders.
o Any adopted plan would contain a sunset provision requiring the
holders of a majority of the shares voting to extend the term of the
plan.
The Board has not adopted the above described bylaw provision and the
Company is not proposing the bylaw amendment as a proposal at this time as the
Company is continuing to analysize various features and to obtain input from
stockholders. The reason that the Company is considering features, such as
conditions (i) through (iv) is to ensure that stockholders have the power to
allow the completion of such an offer regardless of the Board's position on such
an offer and yet allow the Board the flexibility to respond to other offers
without requiring a stockholder vote. Although a bylaw amendment would not
require a stockholder vote, the Company is also considering proposing the matter
for a stockholder vote.
The Board plans to review corporate government issues and alternatives,
such as the one described, at its board meeting in April or July of 1999. At
such time, the Board will take into consideration all stockholder input,
including the results of the consent solicitation. At this time, the Board has
not determined whether any alternative or bylaw amendment will be adopted and
the Company is under no legal obligation to adopt any bylaw amendment. As the
AFL-CIO Proposals are precatory in nature, even if a majority of consents are
received for the AFL-CIO Proposals, the Company is under no legal obligation to
adopt any bylaw amendment.
The Board believes that an alternative similar to the one discussed above
will preserve the Board's flexibility to adopt a rights plan while at the same
time allowing stockholders the ability to redeem any rights and eliminate a
rights plan in the event an offer is made which treats all stockholders fairly.
If adopted by the Board, an alternative similar to the one discussed above would
strengthen the stockholders' ultimate control over any rights plan adopted by
the Board.
The Board urges you not to limit the Board's ability to respond to this
issue by adopting the AFL-CIO Proposal.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
AFL-CIO PROPOSAL 3: ESTABLISH CONFIDENTIAL VOTING
- --------------------------------------------------
The Board OPPOSES the following AFL-CIO Proposal as being harmful to the best
interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's Board of Directors to amend the Company's
bylaws to (a) add a provision requiring that all proxies, ballots and
voting tabulations that identify how a shareholder has voted are to be
kept confidential (such provision is referred to herein as the
"Confidential Voting Bylaw"), and (b) require the prior approval by
holders of a majority of the Company's outstanding common stock of any
amendment to or repeal of the Confidential Voting Bylaw."
Confidential Voting Generally
- -----------------------------
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The Board believes confidential voting is important and in the past has
implemented the following procedures to protect stockholders' confidential
voting rights:
o The Company uses the services of an independent corporate service
company to tabulate the voting results of its Annual Meeting of
Stockholders.
o The Company always has conducted its election process and all
communications with our stockholders in a fair, constructive and
non-coercive manner. The Company has never monitored your voting with
any intent or purpose of "possible retaliation," as the AFL-CIO Group
suggests.
o The Company has taken a number of actions to ensure confidentiality
throughout the proxy tabulation. For example, the Company recognizes
that its employees who own shares through its employee stock ownership
plan cannot register these shares in the nominee names. The Company
observes confidential pass through voting.
o Stockholders already have the option to keep their votes confidential
by registering their stock in the name of a broker, bank or other
nominee. This method offers privacy for those who wish it.
The Company's Position
- ----------------------
The AFL-CIO Proposal would be too restrictive on the Company's ability to
comply with certain legal requirements, to effectively engage in a contested
proxy solicitation and to certify voting results in the case of a dispute. In
addition, many of you have chosen to use your proxy cards to communicate with
us. Your comments are valued by the Company. Implementing the AFL-CIO Proposal
would encumber this convenient method of communication by which our stockholders
have historically offered input.
The Board is sensitive to investors concerns and trends in corporate
governance. For the past year, the Company has been analyzing several corporate
governance issues. In connection with its analysis, and after discussions with
investors, the Company is evaluating a bylaw provision which would strengthen
the confidential voting rights of the stockholders while at the same time
avoiding the disadvantages of the AFL-CIO Proposal.
The Company is currently reviewing a bylaw provision, which could only be
amended by the stockholders, and which would provide as follows:
o All proxies, ballots, consents, and voting tabulations that identify
the vote of a particular stockholder would be held in confidence by
the independent tabulators and inspectors of election and would not be
disclosed to any other person, including the Company and its
directors, officers, and employees, except in certain limited
circumstances, including:
(i) as necessary to meet legal requirements or to pursue or
defend legal actions;
(ii) to allow the inspectors of election to certify the
results of the vote;
(iii) when expressly authorized by a stockholder;
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(iv) in the event of a contested proxy solicitation; or
(v) if a bona fide dispute exists regarding the
authenticity of any proxy card or ballot or the
accuracy of any tabulation of votes.
o However, the bylaw provision would permit disclosure of any comments
or other information written on any proxy card, consent or ballot
without reference to the vote of the stockholder, except where such
vote is included in, and necessary to an understanding of, such
written material.
The Board has not adopted the above described bylaw provision and the
Company is not proposing the bylaw amendment as a proposal at this time as the
Company is continuing to analysize various features and to obtain input from
stockholders. Although a bylaw amendment would not require a stockholder vote,
the Company is also considering proposing the matter for a stockholder vote.
The Board plans to review corporate government issues and alternatives,
such as the one described, at its board meeting in April or July of 1999. At
such time, the Board will take into consideration all stockholder input,
including the results of the consent solicitation. At this time, the Board has
not determined whether any alternative or bylaw amendment will be adopted and
the Company is under no legal obligation to adopt any bylaw amendment. As the
AFL-CIO Proposals are precatory in nature, even if a majority of consents are
received for the AFL-CIO Proposals, the Company is under no legal obligation to
adopt any bylaw amendment.
The Board urges you not to limit the Board's ability to respond to this
issue by adopting the AFL-CIO Proposal.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
--------------------------
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YOUR BOARD UNANIMOUSLY BELIEVES THAT THE AFL-CIO PROPOSALS ARE NOT IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND URGES STOCKHOLDERS TO
REJECT SUCH PROPOSALS. YOUR BOARD THEREFORE REQUESTS THAT YOU SIGN, DATE AND
RETURN THE ENCLOSED [WHITE] CONSENT REVOCATION CARD, WHETHER OR NOT YOU HAVE
PREVIOUSLY SIGNED AND RETURNED THE GOLD CONSENT CARD SOLICITED BY THE AFL-CIO
GROUP.
THE CONSENT PROCEDURE
Under the General Corporation Law of the State of Delaware ("DGCL"), unless
otherwise provided in the certificate of incorporation, any action which may be
taken at an annual or special meeting of stockholders of a corporation may be
taken without a meeting if consents in writing, setting forth the action so
taken, are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted, and such consents are duly delivered to the corporation.
Thus, the unrevoked consent of the holders of not less than a majority of
the shares of Common Stock outstanding and entitled to vote on the Record Date
(as defined below) must be obtained within the time limits specified to adopt
each of the AFL-CIO Proposals. Each share of Common Stock is entitled to one
vote per share. Since consents are required from the holders of record of a
majority of the outstanding shares of Common Stock in order for each of the
AFL-CIO Proposals to be adopted, an abstention from voting on the AFL-CIO
Group's GOLD Consent Card or a broker non-vote will have the practical effect of
a vote against such proposals.
In order to be effective, consents with respect to the AFL-CIO Proposals
must be delivered within 60 days of the earliest dated consent with respect to
the AFL-CIO Proposals delivered to the Company in the manner required by
Delaware law. On December 30, 1998, a consent with respect to 300 shares of
Common Stock executed on behalf of Cede & Co and The Bank of New York and dated
December 24, 1998 was delivered to the Company. Accordingly, the record date
("Record Date") for stockholders entitled to consent is December 30, 1998 and
assuming no earlier dated consents are delivered to the Company, the consents
will not be effective unless the requisite number of unrevoked consents are
delivered to the Company on or before February 22, 1999. As of the Record Date,
there were 25,776,804 shares of Common Stock issued and outstanding. The Company
has determined that two consent cards, both of which were delivered on behalf of
The Crabbe Huson Special Fund and each relating to 207,300 shares of the Company
are invalid consents under Delaware law for the following reasons: (i) the
signer of the consent card dated as December 14, 1998 and delivered to the
Company on December 15, 1998 was not a record holder; and (ii) the other consent
card, also dated as of December 14, 1998 and delivered on December 18, 1998,
although purportedly signed on behalf of a record holder, appeared to be either
backdated or signed without authority.
A stockholder may revoke any previously signed consent by signing, dating
and returning a [WHITE] Consent Revocation Card in the postage-paid envelope
provided, and either marking the "Revoke Consent" box or not marking any boxes.
A consent may also be revoked by delivery of a written consent revocation to the
AFL-CIO Group. STOCKHOLDERS ARE
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URGED, HOWEVER, TO DELIVER ALL CONSENT REVOCATIONS TO GEORGESON & COMPANY, INC.,
THE FIRM ASSISTING THE COMPANY IN THIS SOLICITATION, AT Georgeson & Company
Inc., Wall Street Plaza, 88 Pine Street 30th Fl., New York, NY 10005, Banks and
Brokers Call Collect: (212) 440-9800, All Others Call Toll-Free: (800) 223-2064,
FAX: (212) 440-9009. The Company requests that if a consent revocation is
instead delivered to the AFL-CIO Group, a photocopy of the revocation also be
delivered to the Company at the address set forth above, so that the Company
will be aware of all revocations. Any consent revocation may itself be revoked
at any time by signing, dating and returning to the AFL-CIO Group a subsequently
dated GOLD consent card, or by delivery of a written revocation of such consent
revocation to the Company or the AFL-CIO Group.
If any shares of Common Stock that you owned on the Record Date were held
for you in an account with a stock brokerage firm, bank nominee or other similar
"street name" holder, you are not entitled to vote such shares directly, but
rather must give instructions to the stock brokerage firm, bank nominee or other
"street name" holder to grant or revoke consent for the shares of Common Stock
held in your name. Accordingly, you should contact the person responsible for
your account and direct him or her to execute the enclosed [WHITE] consent card
on your behalf. You are urged to confirm in writing your instructions to the
person responsible for your account and provide a copy of those instructions to
the Company at the address set forth above so that the Company will be aware of
your instructions and can attempt to ensure such instructions are followed.
YOU HAVE THE RIGHT TO REVOKE ANY CONSENT YOU MAY HAVE PREVIOUSLY GIVEN TO
THE AFL-CIO GROUP. TO DO SO, YOU NEED ONLY SIGN, DATE AND RETURN IN THE ENCLOSED
POSTAGE-PAID ENVELOPE THE [WHITE] CONSENT REVOCATION CARD WHICH ACCOMPANIES THIS
REVOCATION STATEMENT. IF YOU DO NOT INDICATE A SPECIFIC VOTE ON THE [WHITE]
CONSENT REVOCATION CARD WITH RESPECT TO ANY AFL-CIO PROPOSAL, THE CARD WILL BE
USED IN ACCORDANCE WITH THE BOARD RECOMMENDATION TO REVOKE ANY CONSENT WITH
RESPECT TO SUCH PROPOSAL.
IF YOU ARE AGAINST THE AFL-CIO PROPOSALS AND HAVE NOT SIGNED A AFL-CIO
GROUP CONSENT, YOU MAY SHOW YOUR OPPOSITION TO THE PROPOSALS BY SIGNING, DATING
AND RETURNING THE ENCLOSED [WHITE] CONSENT REVOCATION CARD. THIS WILL BETTER
ENABLE THE COMPANY TO KEEP TRACK OF HOW MANY STOCKHOLDERS OPPOSE THE AFL-CIO
PROPOSALS.
The Company has retained Georgeson & Company, Inc. to assist in
communicating with stockholders in connection with the AFL-CIO Solicitation and
to assist in our efforts to obtain consent revocations. If you have any
questions about how to complete or submit your [WHITE] consent revocation card
or any other questions, Georgeson & Company, Inc. will be pleased to assist you.
You may call Georgeson & Company, Inc. toll-free at (800) 223-2064; Banks and
Brokers call (212) 440-9800.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
CERTAIN VOTING SECURITIES AND PRINCIPAL OWNERS THEREOF
The following table sets forth as of January __, 1999 the name of each
person who, based on publicly available information, beneficially owns more than
5% of the shares outstanding at such date, the number of shares owned by each
such person and the percentage of the outstanding shares represented thereby:
<TABLE>
<CAPTION>
Amount and Nature
of Percentage of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock
------------------------------------ -------------------- -------------
<S> <C> <C>
First Pacific Advisors, Inc. (1)
11400 West Olympic Boulevard, Suite 1200
Los Angeles, CA 90064 2,704,600 10.5%
Scudder Kemper Investments, Inc. (2)
345 Park Avenue
New York, NY 10154 2,311,500 9.0%
Oregon Steel Mills, Inc. (3)
Employee Stock Ownership Plan Trust
1000 SW Broadway, Suite 2200
Portland, OR 97205 1,933,228 7.5%
<FN>
<F1> Based on information obtained from an Amendment #1 to Schedule 13G dated
March 10, 1998, filed by First Pacific Advisors, Inc. ("First Pacific")
with the SEC. According to the Schedule 13G, as amended, First Pacific has
the shared power to dispose of 2,704,600 shares and the shared power to
vote 813,800 shares.
<F2> Based on information obtained from an Amendment #4 to Schedule 13G dated
February 12, 1998, filed by Scudder Kemper Investments, Inc. ("Scudder")
with the SEC. According to the Schedule 13G, as amended, Scudder has the
sole power to dispose of 2,311,500 shares and the sole and shared power to
vote 1,669,100 and 151,400 shares, respectively.
<F3> Based on information obtained from the Company's definitive Proxy Statement
dated March 13, 1998.
</FN>
</TABLE>
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SHARES HELD BY THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial
ownership of Shares by each director and the five most highly compensated
executive officers of the Company, and all directors and officers as a group, as
of January __, 1999 based on information obtained from the Company's definitive
Proxy Statement dated March 13, 1998:
<TABLE>
<CAPTION>
Name of Amount and Nature Percentage of
Beneficial Owner of Beneficial Ownership Common Stock
---------------- ----------------------- -------------
<S> <C> <C>
Thomas B. Boklund (1) (2) 79,770 (3) *
L. Ray Adams (2) 3,556 (4) *
Joe E. Corvin (1) (2) 31,820 (3) *
C. Lee Emerson (1) 87,810 *
V. Neil Fulton (1) 6,568 (4) *
Edward C. Gendron (1) 2,000 *
Richard J. Kasten (2) 12,989 (4) *
Robert W. Keener (1) 1,000 *
Richard G. Landis (1) 5,600 *
James A. Maggetti (1) 7,000 *
Steven M. Rowan (2) 19,802 (3) *
John A. Sproul (1) 2,000 *
George J. Stathakis (1) 2,000 *
William Swindells (1) 5,000 *
All directors and executive officers as a group
(18 persons) 313,024 (5) 1.2%
* Less than 1% of the outstanding Common Stock
<FN>
<F1> Member of the Board of Directors.
<F2> Named executive officer.
<F3> All Shares are held by the Oregon Steel Mills, Inc. Employee Stock
Ownership Plan Trust (the "ESOP") for Messrs. Boklund, Corvin and
Rowan. Participants in the ESOP
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have the power to vote these Shares under the terms of the ESOP, but they
do not have investment power with respect to such Shares.
<F4> Includes 1,056 Shares, 773 Shares and 12,589 Shares held by the ESOP for
the accounts of Messrs. Adams, Fulton, and Kasten, respectively. Under the
terms of the ESOP, Messrs. Adams, Fulton and Kasten have the power to vote
these Shares, but they do not have investment power with respect to such
Shares.
<F5> Includes 186,854 Shares held by the ESOP for the accounts as to which,
under the terms of the ESOP, the respective beneficial owners have the
power to direct the vote, but do not have investment power, with respect to
such Shares.
</FN>
</TABLE>
SOLICITATION OF REVOCATIONS
The cost of solicitation of revocations of consent will be borne by the
Company. The Company estimates that the total expenditures in connection with
such solicitations (including fees and expenses of the Company's attorneys,
advisors and solicitors, advertising, printing, mailing, travel and other
costs, but excluding salaries and wages of officers and employees) will be
approximately $________, of which $_______ has been spent to date. In addition
to the Board's solicitation by mail, directors, officers and other Company
employees may, without additional compensation, solicit revocations by mail, in
person, by telecommunication or by other electronic means.
The Company has retained Georgeson & Company, Inc., at an estimated fee
of $25,000, plus reasonable out-of pocket expenses, to assist in the
solicitation of revocations. The Company will reimburse brokerage houses, banks,
custodians and other nominees and fiduciaries for out-of-pocket expenses
incurred in forwarding the Company's consent revocation material to, and
obtaining instructions relating to such materials from, beneficial owners of
Common Stock. The Company has agreed to indemnify it against certain liabilities
and expenses in connection with its engagement, including certain liabilities
under the federal securities laws.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the 1999 proxy materials
and consideration at the 1999 Annual Meeting of Stockholders must have been
received by the Company no later than November 13, 1998 and no earlier than
October 14, 1998.
In order to be considered at the 1999 Annual Meeting of Stockholders,
written notice of a non-Rule 14a-8 stockholder proposal or director nomination
must contain the information required by the Company's bylaws and must be
received by the Company no later than November 13, 1998 and no earlier than
October 14, 1998.
We appreciate your support and encouragement.
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IMPORTANT
1. If your shares are registered in your own name, please sign, date and mail
the enclosed [WHITE] Consent Revocation Card to Georgeson & Company, Inc. in the
postage-paid envelope provided.
2. If you have previously signed and returned a GOLD consent card to the
AFL-CIO Group, you have every right to change your vote. Only your latest dated
card will count. You may revoke any GOLD consent card already set to the AFL-CIO
Group by signing, dating and mailing the enclosed [WHITE] Consent Revocation
Card in the postage-paid envelope provided.
3. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a [WHITE] Consent Revocation Card with
respect to your shares and only after receiving your specific instructions. To
ensure that your shares are voted, you should also contact the person
responsible for your account and give instructions for a [WHITE] Consent
Revocation Card to be issued representing your shares.
4. After signing the enclosed [WHITE] Consent Revocation Card, do not sign or
return the GOLD consent card. Do not use the AFL-CIO Group's GOLD consent card
or any other forms sent to you by the AFL-CIO Group to indicate your opposition
to the AFL-CIO Proposals.
If you have any questions about giving your revocation of consent or
require assistance, please call:
Georgeson & Company Inc.
Wall Street Plaza
88 Pine Street 30th Fl.
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
FAX: (212) 440-9009
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PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED JANUARY 27, 1999
FORM OF CONSENT REVOCATION CARD -- [WHITE]
OREGON STEEL MILLS, INC.
THIS REVOCATION OF CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OREGON STEEL MILLS, INC. IN OPPOSITION TO THE SOLICITATION BY THE AFL-CIO GROUP
(OPERATING UNDER THE NAME "THE COMMITTEE TO RESTORE SHAREHOLDER VALUE").
The undersigned, a holder of shares of Common Stock, par value $.01 per
share (the "Common Stock"), of Oregon Steel Mills, Inc. (the "Company"), acting
with respect to all of the shares of Common Stock held by the undersigned,
hereby revokes any and all consents that the undersigned may have given with
respect to each of the following proposals:
THE BOARD OF DIRECTORS OF OREGON STEEL MILLS, INC. UNANIMOUSLY RECOMMENDS THAT
YOU "REVOKE CONSENT." PLEASE SIGN, DATE AND MAIL THIS CONSENT REVOCATION CARD
TODAY.
IMPORTANT: IN ORDER TO BE SURE THAT YOU ARE REVOKING A PRIOR CONSENT, YOU MUST
EITHER MARK THE "REVOKE CONSENT" BOX OR SIGN THIS CONSENT REVOCATION CARD
WITHOUT MARKING ANY BOXES.
AFL-CIO PROPOSAL 1: Urge the Board to take the necessary steps to declassify the
Board for the purpose of director elections.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
AFL-CIO PROPOSAL 2: Urge the Board to add a provision to the Company's Bylaws to
require prior stockholder approval for adoption of (i) any shareholder rights
plan or "poison pill" and (ii) any amendment to or repeal of any such provision.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
AFL-CIO PROPOSAL 3: Urge the Board to amend the Company's Bylaws to require (i)
all proxies, ballots and voting tabulations that identify how a stockholder has
voted to be kept confidential and (ii) stockholder approval of any amendment to
or repeal of any such provision.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
IF NO DIRECTION IS MADE, THIS REVOCATION CARD WILL BE DEEMED TO REVOKE ALL
PREVIOUSLY EXECUTED CONSENTS WITH RESPECT TO ANY OR ALL OF THE PROPOSALS SET
FORTH HEREIN.
Please sign your name below exactly as it appears hereon. If shares are
held jointly, each stockholder should sign. When signing as attorney, executor,
administrator, trustee or guardian,
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please give full title as such. If a corporation, please sign in full corporate
name by president or authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ____________, 1999
________________________________
Name:
Title:
________________________________
Name (if held jointly):
Title:
PLEASE SIGN, DATE AND RETURN THIS CONSENT REVOCATION PROMPTLY.
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Preliminary Copy
SCHEDULE 14A INFORMATION
Revocation 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:
/X/ Preliminary Proxy Statement (Consent Revocation Statement)
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OREGON STEEL MILLS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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: ______
(3) Per unit price or 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): ______
(4) Proposed maximum aggregate value of transaction: $______
(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.
(1) Amount Previously Paid: ________________________________
(2) Form, Schedule or Registration Statement No.: __________
(3) Filing Party: __________________________________________
(4) Date Filed: ____________________________________________
<PAGE>
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PRELIMINARY COPY - SUBJECT TO COMPLETION
DATED JANUARY 27, 1999
OREGON STEEL MILLS, INC.
1000 S.W. BROADWAY, SUITE 2200
P.O. BOX 5368
PORTLAND, OREGON 97205
(503) 223-9228
-------------------
STATEMENT BY THE
BOARD OF DIRECTORS OF OREGON STEEL MILLS, INC.
IN OPPOSITION TO THE SOLICITATION OF CONSENTS BY
THE AFL-CIO GROUP
-------------------
This Consent Revocation Statement and the accompanying [WHITE] Consent
Revocation Card are being furnished by the Board of Directors (the "Board") of
Oregon Steel Mills, Inc., a Delaware corporation (the "Company"), to the holders
of outstanding shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), in opposition to the solicitation (the "AFL-CIO Group
Solicitation") by the Committee to Restore Shareholder Value (the "AFL-CIO
Group") of written consents from the stockholders of the Company to do the
following ("AFL-CIO Proposals"):
1. Urge the Board to take the necessary steps to declassify the Board for
the purpose of director elections;
2. Urge the Board to add a provision to the Company's Bylaws to require
prior stockholder approval for adoption of (i) any shareholder rights plan or
"poison pill" and (ii) any amendment to or repeal of any such provision; and
3. Urge the Board to amend the Company's Bylaws to require (i) all
proxies, ballots and voting tabulations that identify how a stockholder has
voted to be kept confidential and (ii) stockholder approval of any amendment to
or repeal of any such provision.
YOUR BOARD UNANIMOUSLY OPPOSES EACH OF THE AFL-CIO PROPOSALS AND RECOMMENDS
THAT YOU DO NOT TO SIGN THE GOLD CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE
SENT TO YOU BY THE AFL-CIO GROUP.
EVEN IF YOU PREVIOUSLY SIGNED AND RETURNED THE AFL-CIO GROUP'S GOLD CONSENT
CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE. WE URGE YOU TO SIGN, DATE AND
MAIL THE ENCLOSED [WHITE] CONSENT REVOCATION CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED. YOUR PROMPT ACTION IS IMPORTANT. PLEASE RETURN THE [WHITE] CONSENT
REVOCATION CARD TODAY. IN ORDER TO BE SURE THAT YOU ARE REVOKING A PRIOR
CONSENT, YOU MUST EITHER MARK THE "REVOKE CONSENT" BOX ON THE [WHITE] CONSENT
REVOCATION CARD, OR SIGN THE [WHITE] CONSENT REVOCATION CARD WITHOUT MARKING ANY
BOXES.
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IF YOUR SHARES ARE HELD IN "STREET NAME," ONLY YOUR BROKER OR BANKER CAN
VOTE YOUR SHARES. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT HIM OR HER TO VOTE A [WHITE] CONSENT REVOCATION CARD ON YOUR BEHALF
TODAY.
This Consent Revocation Statement and the enclosed [WHITE] Consent
Revocation Card are first being mailed to stockholders on or about January __,
1999.
If you have questions about your revocation of consent or require
assistance, please call Georgeson & Company, Inc., the firm assisting the
Company in this solicitation, at the phone numbers shown below:
Georgeson & Company, Inc.
Wall Street Plaza
88 Pine Street 30th Fl.
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
FAX: (212) 440-9009
BACKGROUND AND REASONS FOR THE COMPANY'S POSITION
PLEASE REVIEW THE NEXT FEW PAGES BEFORE MAKING YOUR DECISION ON WHETHER TO
SUPPORT THE AFL-CIO PROPOSALS.
THE COMPANY BELIEVES THE AFL-CIO GROUP IS FORCING THE COMPANY TO SPEND YOUR
COMPANY'S MONEY IN RESPONDING TO THE UNION'S CONTINUED CORPORATE CAMPAIGN TO
HARASS THE COMPANY.
The AFL-CIO Group consists of The Crabbe Huson Group, Inc., Amalgamated
Bank of New York LongView MidCap 400 Index Fund and the American Federation of
Labor and Congress of Industrial Organizations ("AFL-CIO"). The AFL-CIO Group,
in what we believe is an effort to make it appear that they speak for other
stockholders, is calling itself a "Committee" of stockholders.
Although the AFL-CIO Proposals involve corporate governance issues, the
proposals are part of a United Steelworkers of America ("Union") corporate
campaign directed at the Company and is a harassment device. Your Board believes
that the AFL-CIO Proposals are designed as tools for labor bargaining and to
limit the Board's flexibility in protecting the interests of all stockholders.
However, the labor interests, nevertheless may be aligned with stockholder
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interests. The Union is a non-participant in the AFL-CIO consent solicitation
and is not a member of the Committee.
BACKGROUND. CF&I Steel, L.P., a majority owned subsidiary of the Company,
dba Rocky Mountain Steel Mills ("RMSM") purchased a steel mill and other assets
in Pueblo, Colorado ("Pueblo Mill") in 1993, after the previous owner had
declared bankruptcy. Huge pension and retiree health care obligations incurred
during the 1980s were a major factor forcing the bankruptcy filing in November
1990. At the time, many people assumed the plant would be liquidated and sold
for scrap, putting 1,500 people out of work. Instead, RMSM bought the assets of
the Pueblo Mill in 1993, invested about $200 million in modernization, and over
the past four years has returned the mill to profitability. The labor contract
negotiated with the Union in 1993, which expired September 30, 1997, provided a
24 percent increase in wages and benefits, along with profit sharing and an
excellent benefit package. The RMSM benefit package was comparable to the
Company's other benefit packages, including those of senior executives of the
Company.
THE STRIKE. On October 3, 1997, the Union, an affiliate of the AFL-CIO,
initiated a needless strike at RMSM. The Company believes the strike was
needless as prior to the strike (i) the Company offered reasonable terms; and
(ii) the Company offered to continue under the old contract and to continue
negotiations under the auspices of federal mediation. To help you better
understand the real issues prompting these proposals, we provide a recent
history of the labor dispute with the Union:
6/10/97- Negotiations on a new contract between RMSM and the Union; 22
9/27/97: bargaining sessions held.
9/28/97: Union introduces an unexpected pension demand (two days before
contract expiration) in the approximate amount of $55 million, plus an
additional $18 million a year in increased expenses; RMSM rejects it.
9/30/97: Contract with Union expires; RMSM offers to continue to work under
existing contract and/or go to federal mediation; Union agrees to
extend contract subject to 8 hour notice of termination, but rejects
federal mediation.
10/3/97: Union goes on strike, rejecting RMSM's proposal to continue under old
contract and to continue negotiations under auspices of federal
mediation.
10/97- RMSM hires 600 permanent employees and announces that it will return
12/97: to full operation by early 1998; 100 Union members cross picket line.
12/30/97: Union makes unconditional offer to return to work; former strikers are
recalled to fill 35 available vacant positions. All other former
strikers remain on the recall list.
1998: Additional former strikers are recalled as positions become available,
approximately 100 to date.
2/27/98: The National Labor Relations Board ("NLRB") issues a complaint
alleging unfair
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labor practices by RMSM, including bad faith bargaining by RMSM.
3/31/98: Union settles charges of picket line violence by strikers (as found by
the Regional Director of the NLRB).
8/17/98: NLRB hearing commences and is expected to continue into February 1999.
RMSM'S OFFER. Prior to the strike, RMSM's offer, included:
o Paying a $1,000 signing bonus.
o Paying a wage increase of $1.30 per hour over the three-year
contract (these increases were on top of wages that averaged
$42,000 per year at the time of the strike).
o Doubling RMSM's contribution to the 401(k) plan from one percent
to two percent of gross annual earnings.
o Continuing to pay the full health insurance premium for employees
and their families.
o Increasing RMSM's contribution to retiree health and welfare
benefits.
o Continuing the existing pension program, which is essentially the
same for all employees including senior executives.
o Paying contractual penalties to employees for overtime in excess
of agreed-upon hours.
UNION CONTRACT DEMANDS. The Union demands included that:
o The Union be given the right to purchase some or all of the
assets of RMSM before any other potential purchaser.
o RMSM accept the pension obligations of the previous owner and
increase retiree benefits, which would have resulted in an
immediate under-funding liability of approximately $55 million,
plus an additional $18 million a year in increased expenses.
o RMSM pay $1.60 per hour wage increase and $1,100 signing bonus.
o Doubling RMSM's contribution to the 401(k) plan from one percent
to two percent of gross annual earnings (a position consistent
with OSM's pre-strike proposal).
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o The seniority sections of the collective bargaining agreement be
revised to limit RMSM's right to assign employees to jobs.
o Substantial financial penalties be imposed for working overtime.
THE UNION CORPORATE CAMPAIGN. The Union in collaboration with the AFL-CIO,
has conducted a concerted corporate campaign against the Company. The Company
believes that the campaign is to pressure RMSM for two purposes: (i) to unionize
the employees of the Company at its non-union facilities in Portland, Oregon and
Napa, California; and (ii) to force RMSM to give in to the Union's demands at
the bargaining table. The principal focus of the corporate campaign has been to
attempt to undermine the Company's relationships with its investors, customers,
lenders, regulators, the community and the media. The corporate campaign has
included the following:
o TARGETING THE COMPANY'S LENDERS by engaging in handbilling, rallies,
boycotts, demonstrations and sit-ins; issuing inaccurate press
releases, encouraging withdrawal of deposits, and pressuring the
lenders regarding the Company's liquidity. Examples include:
o National boycott of Wells Fargo Bank, Norwest Corporation
and the Company.
o The Union claims that nearly $250 million has been withdrawn
from Wells Fargo accounts. [News release dated October 22,
1998]. The withdrawals are "to protest the bank's financial
backing of Oregon Steel's war on workers in Pueblo, CO."
[Handbill - The Phony Express - September 28, 1998 published
by Union and Local Unions #2102 & 3267].
o Demonstrations and sit-ins at Wells Fargo Bank which
resulted in the Union executing a settlement agreement with
the NLRB to refrain from secondary activities, including sit
ins, at the Wells Fargo Bank facilities.
o Demonstrations against the Bank of Nova Scotia in Canada.
o TARGETING CUSTOMERS by engaging in demonstrations, including a rally
at a customer's facilities, sending letters to customers, attempting
to persuade customers to cease dealing with RMSM and/or its various
operations and attempting to publicly embarrass customers. Examples
include:
o The Union storming the corporate headquarters of a major
customer of RMSM prior to the union contract expiration with
approximately 18 steel workers, demanding to meet with the
president.
o Conducting a letter writing campaign inaccurately suggesting
inferior and/or unsafe product.
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o Attempting to persuade a major customer of the Company's
Napa Pipe operation to switch its business elsewhere.
o TARGETING THE COMMUNITY by engaging in rallies and marches, sending
letters to the media and the Company, and running biased and
inaccurate infomercials.
o TARGETING THE MEDIA by staging events (picket line activity, marches,
press conferences), issuing inaccurate and incomplete press releases,
engaging in advertising and direct mailings, and participating in talk
shows. Examples include:
o "Saying, `We don't give a damn what it costs,' the president
of the Union pledged to continue turning up the heat on
Oregon Steel until it agrees to restore jobs to the union's
1000 workers in Pueblo." [The Pueblo Chieftain - January 30,
1998]
o "`The corporate campaign will not fail,' he said. `If it's
not working we escalate it. We don't give a damn what it
costs.'" [The Pueblo Chieftain - January 30, 1998]
o TARGETING INVESTORS by publishing inaccurate letters and pamphlets to
investors and financial advisors, circulating inaccurate information
on the internet, press releases and handbills, and threatening to
withdraw invested pension funds. Examples include:
o The Union publishing and circulating a handbill on The
Crabbe Huson Group, Inc. accusing it of "union busting" and
highlighting that it is a major money manager for
Taft-Hartley pension funds. [Handbill entitled "Tell Crabbe
Huson Union-Busting Is Not Value Investing"]
o Demonstrating and being disruptive at the Company's Annual
Meeting of Stockholders.
o Public accusations that the Company is misleading its
stockholders.
o TARGETING REPLACEMENT WORKERS of RMSM and their families by using
intimidation, violence and threats.
o The state court issued an injunction against continued
authorization or ratification of violence, intimidation and
threats.
o TARGETING THE EMPLOYEES AT THE COMPANY'S PORTLAND AND NAPA PIPE
OPERATIONS by a continued campaign of attacks upon management
decisions, the Company's prospects, and their future employment.
o TARGETING GOVERNMENT/REGULATORS by filing complaints regarding RMSM
with the public health department, fire department, city council, OSHA
and Colorado Department of Health (the Company has resolved all Union
targeted complaints
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without a resulting fine or penalty), and applying political pressure
through federal/state legislators and the Colorado governor.
The Company believes that fourth quarter 1997 and first quarter 1998
financial results were negatively impacted by the Union's decision to strike the
Pueblo facility on October 3, 1997. The actions of certain affiliates of members
of the AFL-CIO Group bear a direct cause to the financial results of the
twelve-month periods discussed in the AFL-CIO Group solicitation. Other negative
factors contributing to the Company's financial performance subsequent to the
first quarter of 1998 are adverse market conditions for commodity plate,
seamless pipe, and rod, unscheduled equipment delays at the Combination Mill, an
extensive power outage in May 1998 at RMSM and increased expenses incurred due
to the Union labor dispute.
However, the AFL-CIO Group solicitation fails to mention that earnings
before interest, taxes, depreciation and amortization (EBITDA) were the highest
in the history of the Company at $101.7 million for the twelve months ended
December 31,1998 and $88.4 million for the nine months ended September 30, 1998
compared to $57.5 million and $71.0 million for the comparable 1997 periods.
1998 results occurred despite reduced operations due to the needless strike in
the fourth quarter of 1997 and despite deteriorating steel markets during 1998.
The Company believes these results indicate improving financial performance.
EBITDA for the third quarter of 1998 was $37.2 million, the highest in the
Company's history and 39% higher than the third quarter of 1997 results of $26.8
million.
The Company believes that the AFL-CIO Proposals are one more attempt to
drive a wedge between the Company and its stockholders. These proposals could
have been presented to the Company and the stockholders as part of the Annual
Meeting of Stockholders in 1999. However, the AFL-CIO Group has chosen to use a
consent solicitation to present non-binding resolutions. Why have they decided
on this tactic? The answer is quite simple - so the Union can continue its
corporate campaign to harass the Company, its lenders, its investors, its
suppliers and its customers.
Based on this background and the information provided below, the Board
believes you will agree that the AFL-CIO Proposals are not in your best
interest. Your Board unanimously opposes the AFL-CIO Solicitation and urges you
not to sign the GOLD Consent Card or any other forms which may be sent to you by
the AFL-CIO Group.
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YOUR BOARD'S POSITION
YOUR BOARD UNANIMOUSLY OPPOSES EACH OF THE AFL-CIO PROPOSALS AND RECOMMENDS
THAT YOU DO NOT SIGN THE GOLD CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE SENT
TO YOU BY THE AFL-CIO GROUP.
AFL-CIO PROPOSAL 1: DECLASSIFY THE BOARD
- -----------------------------------------
The Board strongly OPPOSES the following AFL-CIO Proposal as being harmful to
the best interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's board of directors (the "Board") to take
the necessary steps to declassify the Board for the purpose of director
elections, whereby all directors would be elected annually and not by
classes. The Board shall be declassified in a manner that does not
affect the unexpired terms of directors previously elected."
The Board opposes the proposal for the following reasons:
As approved by the stockholders, the Board has been divided into three
classes since 1988. Your Board continues to believe that a classified board is
in your best interests. Classification helps to ensure continuity and stability
in the leadership and policies of the Company by providing that at any time a
majority of the directors will have prior experience as a director and in-depth
knowledge of the Company. At least two annual stockholder meetings, instead of
one, ordinarily will be required to effect a change in control of the Board. The
Company believes that the continuity and stability resulting from a classified
board are particularly important to the Company and its stockholders in light of
the rapid changes in the current capital markets.
The Company has observed that certain takeover tactics, such as hostile
tender or exchange offers, have become relatively common occurrences for
publicly-held companies without anti-takeover provisions. The Company has few
meaningful anti-takeover provisions. The anti-takeover provisions currently in
place at the Company are (i) the classified board provision; (ii) removal of the
board only for cause; (iii) the Company's ability to issue preferred stock; and
(iv) the limitations of the Delaware business combination law. The Company does
not have a rights plan in place. The Company does not have, other typical
anti-takeover provisions, such as supermajority voting requirements, fair price
provisions, limits on shareholder meetings or consent actions, anti-greenmail
provisions, provisions requiring consideration of social, economic and other
factors in evaluating a transaction, or long term "sweetheart" employment
contracts with executive officers. The Company believes that the classification
of the Board offers some protection to our stockholders against tactics which
can be highly disruptive to the Company's business, and adversely affect the
Company's relationships with its employees, customers, business partners and
others on which the Company's successful performance depends, all to the
detriment of the stockholders as a whole. A classified board encourages any
potential acquiror to negotiate at arm's length with a seasoned Board who would
work to ensure that our stockholders receive the full value of the Company.
However, a classified board may prevent the occurrence of certain transactions,
including acquisitions, that may be in the best interests of the stockholders
and annual elections of directors
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could provide greater accountability to stockholders. The Company does not have
cumulative voting.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
AFL-CIO PROPOSAL 2: REQUIRE PRIOR STOCKHOLDER APPROVAL OF POISON PILLS
- -----------------------------------------------------------------------
The Board OPPOSES the following AFL-CIO Proposal as being harmful to the best
interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's Board of Directors to add a provision to
the bylaws of the Company (the "Bylaws") requiring the prior approval
by holders of a majority of the outstanding shares of the Company's
common stock (the "Shares") of (a) any shareholder rights plan or
"poison pill" (such provision of the Bylaws is referred to herein as
the "Shareholder Approval Bylaw"), and (b) any amendment to or repeal
of the Shareholder Approval Bylaw."
The Board opposes this proposal for the following reasons:
Rights Plans Generally
- ----------------------
The overall effect of a rights plan may be to render more difficult or to
discourage a merger, tender offer or proxy contest, the assumption of control by
a principal stockholder and the removal of incumbent management. A rights plan
could make the accomplishment of a given transaction more difficult even if it
is favorable to the interests of stockholders and could make the removal of
management more difficult even if such removal would be generally beneficial to
stockholders. A rights plan may have the effect of limiting stockholder
participation in certain transactions such as mergers or tender offers whether
or not such transactions are favored by incumbent management.
A rights plan is intended to strengthen a board's ability, in the exercise
of its fiduciary duties, to protect and maximize the value of stockholders'
investment in the event of an attempt to acquire control of a company. A rights
plan is not intended to, and does not, preclude unsolicited, non-abusive offers
to acquire a company at a fair price. It is designed, instead, to encourage any
potential acquiror to negotiate directly with a board, to negotiate on behalf of
the stockholders and to protect stockholders against abusive tactics during the
takeover process, such as partial and two-tiered tender offers and creeping
stock accumulation programs, which do not treat all stockholders fairly and
equally. Rights plans do not prevent a takeover on terms that are fair and
equitable to all stockholders, nor are they a deterrent to a proxy contest.
Rights plans have been adopted by a majority of the corporations included
in the Standard & Poor's 500. A November 1997 study by Georgeson & Company Inc.,
a proxy solicitation and investor relations firm, entitled "Mergers &
Acquisitions Poison Pills and Shareholder Value/ 1992-1996" found that
corporations with a shareholder rights plan receive a higher takeover premium
than companies which do not have a rights plan. The study was not performed for
the Company or any of its affiliates. However, commentators and corporate
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governance experts disagree on the propriety and utility of poison pills, and
that alternative devices can provide some of the benefits allegedly conferred by
a poison pill.
The Company's Position
- ----------------------
The Board believes that the adoption of a rights plan by the Company should
be determined by the Board without having to first seek stockholder approval.
The Company does not currently have a rights plan in place. The Company does not
anticipate and is not aware of any proposed or pending takeover attempt. The
Board has carefully evaluated its policy towards adoption of a rights plan.
Based on its analysis, the Board believes that the AFL-CIO Proposal is too
restrictive and should be rejected.
Although the Company has not adopted a rights plan, the Board believes
there is empirical evidence that in certain situations such plans may assist in
negotiating a fair price for stockholders. In order to adopt a rights plan, the
Board must determine, in the exercise of its fiduciary duties, that the plan is
in the best interests of the Company. A bylaw provision which requires
stockholder action to adopt and implement a rights plan removes the Board's
flexibility to respond to market conditions and removes certain incentives for a
potential acquiror to negotiate with the Board so that stockholders are treated
fairly. The Board with its fiduciary duties imposed by law is in the most
effective position to negotiate with any potential acquiror and to take other
action in the best interests of the Company and its stockholders.
However, the Board is sensitive to investors concerns and trends in
corporate governance. For the past year, the Company has been analyzing several
corporate governance issues, including the need for a "poison pill." In its
analysis, the Company is considering various alternatives. An alternative being
considered is the adoption of a bylaw provision which would be applicable to any
rights plan adopted by the Company and could contain some of the following
features:
o Shareholders would automatically be given the right to vote on the
redemption or termination of the rights plan if within sixty days of
the Board receiving an offer that met the criteria outlined below the
Board itself had either not redeemed the rights or approved a
financially superior offer.
o The offer which would start the 60-day period referenced above would
meet the following conditions:
(i) the offer must be for all outstanding shares of the
Company's common stock for the same price per share,
(ii) the portion of the offer that is for cash must be fully
funded,
(iii) any portion of the offer that is for non-cash
consideration must be in the form of New York Stock
Exchange [or NASDAQ National Market] listed securities
and the offer must provide tax-deferred treatment for
stockholders, and
(iv) the offer cannot be subject to financing, funding or
due diligence conditions.
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o The bylaw provision would only be amended by the stockholders.
o Any adopted plan would contain a sunset provision requiring the
holders of a majority of the shares voting to extend the term of the
plan.
The Board has not adopted the above described bylaw provision and the
Company is not proposing the bylaw amendment as a proposal at this time as the
Company is continuing to analysize various features and to obtain input from
stockholders. The reason that the Company is considering features, such as
conditions (i) through (iv) is to ensure that stockholders have the power to
allow the completion of such an offer regardless of the Board's position on such
an offer and yet allow the Board the flexibility to respond to other offers
without requiring a stockholder vote. Although a bylaw amendment would not
require a stockholder vote, the Company is also considering proposing the matter
for a stockholder vote.
The Board plans to review corporate government issues and alternatives,
such as the one described, at its board meeting in April or July of 1999. At
such time, the Board will take into consideration all stockholder input,
including the results of the consent solicitation. At this time, the Board has
not determined whether any alternative or bylaw amendment will be adopted and
the Company is under no legal obligation to adopt any bylaw amendment. As the
AFL-CIO Proposals are precatory in nature, even if a majority of consents are
received for the AFL-CIO Proposals, the Company is under no legal obligation to
adopt any bylaw amendment.
The Board believes that an alternative similar to the one discussed above
will preserve the Board's flexibility to adopt a rights plan while at the same
time allowing stockholders the ability to redeem any rights and eliminate a
rights plan in the event an offer is made which treats all stockholders fairly.
If adopted by the Board, an alternative similar to the one discussed above would
strengthen the stockholders' ultimate control over any rights plan adopted by
the Board.
The Board urges you not to limit the Board's ability to respond to this
issue by adopting the AFL-CIO Proposal.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
AFL-CIO PROPOSAL 3: ESTABLISH CONFIDENTIAL VOTING
- --------------------------------------------------
The Board OPPOSES the following AFL-CIO Proposal as being harmful to the best
interests of the Company:
"RESOLVED, that the shareholders of Oregon Steel Mills, Inc. (the
"Company") urge the Company's Board of Directors to amend the Company's
bylaws to (a) add a provision requiring that all proxies, ballots and
voting tabulations that identify how a shareholder has voted are to be
kept confidential (such provision is referred to herein as the
"Confidential Voting Bylaw"), and (b) require the prior approval by
holders of a majority of the Company's outstanding common stock of any
amendment to or repeal of the Confidential Voting Bylaw."
Confidential Voting Generally
- -----------------------------
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The Board believes confidential voting is important and in the past has
implemented the following procedures to protect stockholders' confidential
voting rights:
o The Company uses the services of an independent corporate service
company to tabulate the voting results of its Annual Meeting of
Stockholders.
o The Company always has conducted its election process and all
communications with our stockholders in a fair, constructive and
non-coercive manner. The Company has never monitored your voting with
any intent or purpose of "possible retaliation," as the AFL-CIO Group
suggests.
o The Company has taken a number of actions to ensure confidentiality
throughout the proxy tabulation. For example, the Company recognizes
that its employees who own shares through its employee stock ownership
plan cannot register these shares in the nominee names. The Company
observes confidential pass through voting.
o Stockholders already have the option to keep their votes confidential
by registering their stock in the name of a broker, bank or other
nominee. This method offers privacy for those who wish it.
The Company's Position
- ----------------------
The AFL-CIO Proposal would be too restrictive on the Company's ability to
comply with certain legal requirements, to effectively engage in a contested
proxy solicitation and to certify voting results in the case of a dispute. In
addition, many of you have chosen to use your proxy cards to communicate with
us. Your comments are valued by the Company. Implementing the AFL-CIO Proposal
would encumber this convenient method of communication by which our stockholders
have historically offered input.
The Board is sensitive to investors concerns and trends in corporate
governance. For the past year, the Company has been analyzing several corporate
governance issues. In connection with its analysis, and after discussions with
investors, the Company is evaluating a bylaw provision which would strengthen
the confidential voting rights of the stockholders while at the same time
avoiding the disadvantages of the AFL-CIO Proposal.
The Company is currently reviewing a bylaw provision, which could only be
amended by the stockholders, and which would provide as follows:
o All proxies, ballots, consents, and voting tabulations that identify
the vote of a particular stockholder would be held in confidence by
the independent tabulators and inspectors of election and would not be
disclosed to any other person, including the Company and its
directors, officers, and employees, except in certain limited
circumstances, including:
(i) as necessary to meet legal requirements or to pursue or
defend legal actions;
(ii) to allow the inspectors of election to certify the
results of the vote;
(iii) when expressly authorized by a stockholder;
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(iv) in the event of a contested proxy solicitation; or
(v) if a bona fide dispute exists regarding the
authenticity of any proxy card or ballot or the
accuracy of any tabulation of votes.
o However, the bylaw provision would permit disclosure of any comments
or other information written on any proxy card, consent or ballot
without reference to the vote of the stockholder, except where such
vote is included in, and necessary to an understanding of, such
written material.
The Board has not adopted the above described bylaw provision and the
Company is not proposing the bylaw amendment as a proposal at this time as the
Company is continuing to analysize various features and to obtain input from
stockholders. Although a bylaw amendment would not require a stockholder vote,
the Company is also considering proposing the matter for a stockholder vote.
The Board plans to review corporate government issues and alternatives,
such as the one described, at its board meeting in April or July of 1999. At
such time, the Board will take into consideration all stockholder input,
including the results of the consent solicitation. At this time, the Board has
not determined whether any alternative or bylaw amendment will be adopted and
the Company is under no legal obligation to adopt any bylaw amendment. As the
AFL-CIO Proposals are precatory in nature, even if a majority of consents are
received for the AFL-CIO Proposals, the Company is under no legal obligation to
adopt any bylaw amendment.
The Board urges you not to limit the Board's ability to respond to this
issue by adopting the AFL-CIO Proposal.
YOUR BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THIS AFL-CIO PROPOSAL BY
SIGNING, DATING AND RETURNING THE ACCOMPANYING [WHITE] FORM OF REVOCATION OF
CONSENT TODAY.
--------------------------
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YOUR BOARD UNANIMOUSLY BELIEVES THAT THE AFL-CIO PROPOSALS ARE NOT IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND URGES STOCKHOLDERS TO
REJECT SUCH PROPOSALS. YOUR BOARD THEREFORE REQUESTS THAT YOU SIGN, DATE AND
RETURN THE ENCLOSED [WHITE] CONSENT REVOCATION CARD, WHETHER OR NOT YOU HAVE
PREVIOUSLY SIGNED AND RETURNED THE GOLD CONSENT CARD SOLICITED BY THE AFL-CIO
GROUP.
THE CONSENT PROCEDURE
Under the General Corporation Law of the State of Delaware ("DGCL"), unless
otherwise provided in the certificate of incorporation, any action which may be
taken at an annual or special meeting of stockholders of a corporation may be
taken without a meeting if consents in writing, setting forth the action so
taken, are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted, and such consents are duly delivered to the corporation.
Thus, the unrevoked consent of the holders of not less than a majority of
the shares of Common Stock outstanding and entitled to vote on the Record Date
(as defined below) must be obtained within the time limits specified to adopt
each of the AFL-CIO Proposals. Each share of Common Stock is entitled to one
vote per share. Since consents are required from the holders of record of a
majority of the outstanding shares of Common Stock in order for each of the
AFL-CIO Proposals to be adopted, an abstention from voting on the AFL-CIO
Group's GOLD Consent Card or a broker non-vote will have the practical effect of
a vote against such proposals.
In order to be effective, consents with respect to the AFL-CIO Proposals
must be delivered within 60 days of the earliest dated consent with respect to
the AFL-CIO Proposals delivered to the Company in the manner required by
Delaware law. On December 30, 1998, a consent with respect to 300 shares of
Common Stock executed on behalf of Cede & Co and The Bank of New York and dated
December 24, 1998 was delivered to the Company. Accordingly, the record date
("Record Date") for stockholders entitled to consent is December 30, 1998 and
assuming no earlier dated consents are delivered to the Company, the consents
will not be effective unless the requisite number of unrevoked consents are
delivered to the Company on or before February 22, 1999. As of the Record Date,
there were 25,776,804 shares of Common Stock issued and outstanding. The Company
has determined that two consent cards, both of which were delivered on behalf of
The Crabbe Huson Special Fund and each relating to 207,300 shares of the Company
are invalid consents under Delaware law for the following reasons: (i) the
signer of the consent card dated as December 14, 1998 and delivered to the
Company on December 15, 1998 was not a record holder; and (ii) the other consent
card, also dated as of December 14, 1998 and delivered on December 18, 1998,
although purportedly signed on behalf of a record holder, appeared to be either
backdated or signed without authority.
A stockholder may revoke any previously signed consent by signing, dating
and returning a [WHITE] Consent Revocation Card in the postage-paid envelope
provided, and either marking the "Revoke Consent" box or not marking any boxes.
A consent may also be revoked by delivery of a written consent revocation to the
AFL-CIO Group. STOCKHOLDERS ARE
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URGED, HOWEVER, TO DELIVER ALL CONSENT REVOCATIONS TO GEORGESON & COMPANY, INC.,
THE FIRM ASSISTING THE COMPANY IN THIS SOLICITATION, AT Georgeson & Company
Inc., Wall Street Plaza, 88 Pine Street 30th Fl., New York, NY 10005, Banks and
Brokers Call Collect: (212) 440-9800, All Others Call Toll-Free: (800) 223-2064,
FAX: (212) 440-9009. The Company requests that if a consent revocation is
instead delivered to the AFL-CIO Group, a photocopy of the revocation also be
delivered to the Company at the address set forth above, so that the Company
will be aware of all revocations. Any consent revocation may itself be revoked
at any time by signing, dating and returning to the AFL-CIO Group a subsequently
dated GOLD consent card, or by delivery of a written revocation of such consent
revocation to the Company or the AFL-CIO Group.
If any shares of Common Stock that you owned on the Record Date were held
for you in an account with a stock brokerage firm, bank nominee or other similar
"street name" holder, you are not entitled to vote such shares directly, but
rather must give instructions to the stock brokerage firm, bank nominee or other
"street name" holder to grant or revoke consent for the shares of Common Stock
held in your name. Accordingly, you should contact the person responsible for
your account and direct him or her to execute the enclosed [WHITE] consent card
on your behalf. You are urged to confirm in writing your instructions to the
person responsible for your account and provide a copy of those instructions to
the Company at the address set forth above so that the Company will be aware of
your instructions and can attempt to ensure such instructions are followed.
YOU HAVE THE RIGHT TO REVOKE ANY CONSENT YOU MAY HAVE PREVIOUSLY GIVEN TO
THE AFL-CIO GROUP. TO DO SO, YOU NEED ONLY SIGN, DATE AND RETURN IN THE ENCLOSED
POSTAGE-PAID ENVELOPE THE [WHITE] CONSENT REVOCATION CARD WHICH ACCOMPANIES THIS
REVOCATION STATEMENT. IF YOU DO NOT INDICATE A SPECIFIC VOTE ON THE [WHITE]
CONSENT REVOCATION CARD WITH RESPECT TO ANY AFL-CIO PROPOSAL, THE CARD WILL BE
USED IN ACCORDANCE WITH THE BOARD RECOMMENDATION TO REVOKE ANY CONSENT WITH
RESPECT TO SUCH PROPOSAL.
IF YOU ARE AGAINST THE AFL-CIO PROPOSALS AND HAVE NOT SIGNED A AFL-CIO
GROUP CONSENT, YOU MAY SHOW YOUR OPPOSITION TO THE PROPOSALS BY SIGNING, DATING
AND RETURNING THE ENCLOSED [WHITE] CONSENT REVOCATION CARD. THIS WILL BETTER
ENABLE THE COMPANY TO KEEP TRACK OF HOW MANY STOCKHOLDERS OPPOSE THE AFL-CIO
PROPOSALS.
The Company has retained Georgeson & Company, Inc. to assist in
communicating with stockholders in connection with the AFL-CIO Solicitation and
to assist in our efforts to obtain consent revocations. If you have any
questions about how to complete or submit your [WHITE] consent revocation card
or any other questions, Georgeson & Company, Inc. will be pleased to assist you.
You may call Georgeson & Company, Inc. toll-free at (800) 223-2064; Banks and
Brokers call (212) 440-9800.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
CERTAIN VOTING SECURITIES AND PRINCIPAL OWNERS THEREOF
The following table sets forth as of January __, 1999 the name of each
person who, based on publicly available information, beneficially owns more than
5% of the shares outstanding at such date, the number of shares owned by each
such person and the percentage of the outstanding shares represented thereby:
<TABLE>
<CAPTION>
Amount and Nature
of Percentage of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock
------------------------------------ -------------------- -------------
<S> <C> <C>
First Pacific Advisors, Inc. (1)
11400 West Olympic Boulevard, Suite 1200
Los Angeles, CA 90064 2,704,600 10.5%
Scudder Kemper Investments, Inc. (2)
345 Park Avenue
New York, NY 10154 2,311,500 9.0%
Oregon Steel Mills, Inc. (3)
Employee Stock Ownership Plan Trust
1000 SW Broadway, Suite 2200
Portland, OR 97205 1,933,228 7.5%
<FN>
<F1> Based on information obtained from an Amendment #1 to Schedule 13G dated
March 10, 1998, filed by First Pacific Advisors, Inc. ("First Pacific")
with the SEC. According to the Schedule 13G, as amended, First Pacific has
the shared power to dispose of 2,704,600 shares and the shared power to
vote 813,800 shares.
<F2> Based on information obtained from an Amendment #4 to Schedule 13G dated
February 12, 1998, filed by Scudder Kemper Investments, Inc. ("Scudder")
with the SEC. According to the Schedule 13G, as amended, Scudder has the
sole power to dispose of 2,311,500 shares and the sole and shared power to
vote 1,669,100 and 151,400 shares, respectively.
<F3> Based on information obtained from the Company's definitive Proxy Statement
dated March 13, 1998.
</FN>
</TABLE>
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SHARES HELD BY THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial
ownership of Shares by each director and the five most highly compensated
executive officers of the Company, and all directors and officers as a group, as
of January __, 1999 based on information obtained from the Company's definitive
Proxy Statement dated March 13, 1998:
<TABLE>
<CAPTION>
Name of Amount and Nature Percentage of
Beneficial Owner of Beneficial Ownership Common Stock
---------------- ----------------------- -------------
<S> <C> <C>
Thomas B. Boklund (1) (2) 79,770 (3) *
L. Ray Adams (2) 3,556 (4) *
Joe E. Corvin (1) (2) 31,820 (3) *
C. Lee Emerson (1) 87,810 *
V. Neil Fulton (1) 6,568 (4) *
Edward C. Gendron (1) 2,000 *
Richard J. Kasten (2) 12,989 (4) *
Robert W. Keener (1) 1,000 *
Richard G. Landis (1) 5,600 *
James A. Maggetti (1) 7,000 *
Steven M. Rowan (2) 19,802 (3) *
John A. Sproul (1) 2,000 *
George J. Stathakis (1) 2,000 *
William Swindells (1) 5,000 *
All directors and executive officers as a group
(18 persons) 313,024 (5) 1.2%
* Less than 1% of the outstanding Common Stock
<FN>
<F1> Member of the Board of Directors.
<F2> Named executive officer.
<F3> All Shares are held by the Oregon Steel Mills, Inc. Employee Stock
Ownership Plan Trust (the "ESOP") for Messrs. Boklund, Corvin and
Rowan. Participants in the ESOP
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have the power to vote these Shares under the terms of the ESOP, but they
do not have investment power with respect to such Shares.
<F4> Includes 1,056 Shares, 773 Shares and 12,589 Shares held by the ESOP for
the accounts of Messrs. Adams, Fulton, and Kasten, respectively. Under the
terms of the ESOP, Messrs. Adams, Fulton and Kasten have the power to vote
these Shares, but they do not have investment power with respect to such
Shares.
<F5> Includes 186,854 Shares held by the ESOP for the accounts as to which,
under the terms of the ESOP, the respective beneficial owners have the
power to direct the vote, but do not have investment power, with respect to
such Shares.
</FN>
</TABLE>
SOLICITATION OF REVOCATIONS
The cost of solicitation of revocations of consent will be borne by the
Company. The Company estimates that the total expenditures in connection with
such solicitations (including fees and expenses of the Company's attorneys,
advisors and solicitors, advertising, printing, mailing, travel and other
costs, but excluding salaries and wages of officers and employees) will be
approximately $________, of which $_______ has been spent to date. In addition
to the Board's solicitation by mail, directors, officers and other Company
employees may, without additional compensation, solicit revocations by mail, in
person, by telecommunication or by other electronic means.
The Company has retained Georgeson & Company, Inc., at an estimated fee
of $25,000, plus reasonable out-of pocket expenses, to assist in the
solicitation of revocations. The Company will reimburse brokerage houses, banks,
custodians and other nominees and fiduciaries for out-of-pocket expenses
incurred in forwarding the Company's consent revocation material to, and
obtaining instructions relating to such materials from, beneficial owners of
Common Stock. The Company has agreed to indemnify it against certain liabilities
and expenses in connection with its engagement, including certain liabilities
under the federal securities laws.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the 1999 proxy materials
and consideration at the 1999 Annual Meeting of Stockholders must have been
received by the Company no later than November 13, 1998 and no earlier than
October 14, 1998.
In order to be considered at the 1999 Annual Meeting of Stockholders,
written notice of a non-Rule 14a-8 stockholder proposal or director nomination
must contain the information required by the Company's bylaws and must be
received by the Company no later than November 13, 1998 and no earlier than
October 14, 1998.
We appreciate your support and encouragement.
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IMPORTANT
1. If your shares are registered in your own name, please sign, date and mail
the enclosed [WHITE] Consent Revocation Card to Georgeson & Company, Inc. in the
postage-paid envelope provided.
2. If you have previously signed and returned a GOLD consent card to the
AFL-CIO Group, you have every right to change your vote. Only your latest dated
card will count. You may revoke any GOLD consent card already set to the AFL-CIO
Group by signing, dating and mailing the enclosed [WHITE] Consent Revocation
Card in the postage-paid envelope provided.
3. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a [WHITE] Consent Revocation Card with
respect to your shares and only after receiving your specific instructions. To
ensure that your shares are voted, you should also contact the person
responsible for your account and give instructions for a [WHITE] Consent
Revocation Card to be issued representing your shares.
4. After signing the enclosed [WHITE] Consent Revocation Card, do not sign or
return the GOLD consent card. Do not use the AFL-CIO Group's GOLD consent card
or any other forms sent to you by the AFL-CIO Group to indicate your opposition
to the AFL-CIO Proposals.
If you have any questions about giving your revocation of consent or
require assistance, please call:
Georgeson & Company Inc.
Wall Street Plaza
88 Pine Street 30th Fl.
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
FAX: (212) 440-9009
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PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED JANUARY 27, 1999
FORM OF CONSENT REVOCATION CARD -- [WHITE]
OREGON STEEL MILLS, INC.
THIS REVOCATION OF CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OREGON STEEL MILLS, INC. IN OPPOSITION TO THE SOLICITATION BY THE AFL-CIO GROUP
(OPERATING UNDER THE NAME "THE COMMITTEE TO RESTORE SHAREHOLDER VALUE").
The undersigned, a holder of shares of Common Stock, par value $.01 per
share (the "Common Stock"), of Oregon Steel Mills, Inc. (the "Company"), acting
with respect to all of the shares of Common Stock held by the undersigned,
hereby revokes any and all consents that the undersigned may have given with
respect to each of the following proposals:
THE BOARD OF DIRECTORS OF OREGON STEEL MILLS, INC. UNANIMOUSLY RECOMMENDS THAT
YOU "REVOKE CONSENT." PLEASE SIGN, DATE AND MAIL THIS CONSENT REVOCATION CARD
TODAY.
IMPORTANT: IN ORDER TO BE SURE THAT YOU ARE REVOKING A PRIOR CONSENT, YOU MUST
EITHER MARK THE "REVOKE CONSENT" BOX OR SIGN THIS CONSENT REVOCATION CARD
WITHOUT MARKING ANY BOXES.
AFL-CIO PROPOSAL 1: Urge the Board to take the necessary steps to declassify the
Board for the purpose of director elections.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
AFL-CIO PROPOSAL 2: Urge the Board to add a provision to the Company's Bylaws to
require prior stockholder approval for adoption of (i) any shareholder rights
plan or "poison pill" and (ii) any amendment to or repeal of any such provision.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
AFL-CIO PROPOSAL 3: Urge the Board to amend the Company's Bylaws to require (i)
all proxies, ballots and voting tabulations that identify how a stockholder has
voted to be kept confidential and (ii) stockholder approval of any amendment to
or repeal of any such provision.
___ REVOKE CONSENT ___ DO NOT REVOKE CONSENT
IF NO DIRECTION IS MADE, THIS REVOCATION CARD WILL BE DEEMED TO REVOKE ALL
PREVIOUSLY EXECUTED CONSENTS WITH RESPECT TO ANY OR ALL OF THE PROPOSALS SET
FORTH HEREIN.
Please sign your name below exactly as it appears hereon. If shares are
held jointly, each stockholder should sign. When signing as attorney, executor,
administrator, trustee or guardian,
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please give full title as such. If a corporation, please sign in full corporate
name by president or authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ____________, 1999
________________________________
Name:
Title:
________________________________
Name (if held jointly):
Title:
PLEASE SIGN, DATE AND RETURN THIS CONSENT REVOCATION PROMPTLY.
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