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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
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Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PREFERRED INCOME MANAGEMENT INCORPORATED
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/ / 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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PREFERRED INCOME MANAGEMENT FUND INCORPORATED
301 E. COLORADO BOULEVARD, SUITE 720
PASADENA, CALIFORNIA 91101
DON'T LET MR. HOREJSI TURN YOUR INVESTMENT UPSIDE DOWN
TO SERVE HIS PERSONAL PURPOSES
VOTE YOUR GREEN PROXY CARD TODAY
March 23, 1998
TO OUR SHAREHOLDERS:
By now, you may have received proxy materials from Stewart Horejsi
soliciting your vote in his attempt to elect directors who will support his
radical restructuring of Preferred Income Management Fund. Don't be fooled!
WHAT IS MR. HOREJSI REALLY UP TO?
Two things jump out of Mr. Horejsi's proposals:
O FIRST, MR. HOREJSI HAS A TAX PROBLEM. HIS SOLUTION IS TO CUT YOUR INCOME TO
THE BONE.
O Second, he wants to become an investment advisor by getting control of your
money.
MR. HOREJSI'S PROPOSALS ARE A "PIG IN A POKE."
ALL YOU KNOW FOR SURE IS THAT HE WANTS TO CUT THE DISTRIBUTIONS THAT THE
FUND PAYS TO YOU BY THE MAXIMUM AMOUNT POSSIBLE. HE HAS SAID SO IN HIS PROXY
MATERIALS. Beyond that, it is tough to figure out just what might happen. He
says he wants the Fund to invest in a small number of common stocks, including
"troubled companies", taking larger positions than are permitted for diversified
funds. He concedes that his proposals could ". . . significantly increase the
volatility of the price of the Fund's shares."
Most incredibly, Mr. Horejsi claims a company controlled by him, which does
not presently exist, would be better suited to implement this new equity
orientation he proposes. Simply put, Mr. Horejsi -- a welding supply company
executive -- now wants to be an equity portfolio manager. HE WANTS TO USE YOUR
CAPITAL FOR HIS FIRST FORAY INTO THE INVESTMENT ADVISORY BUSINESS, WITH AN
OBJECTIVE RADICALLY DIFFERENT FROM WHAT LED YOU TO INVEST WITH US IN THE FIRST
PLACE.
WE TRIED TO HEAD OFF THIS SQUABBLE AND STILL PROTECT YOU
We worked hard to try to come to a fair settlement with Mr. Horejsi. We
were willing to give him new seats on the Board in reflection of his large
holding of our shares. In return, we wanted assurance that shareholders would be
given a choice about going along with his proposals. That choice could be in the
form of a cash tender offer, periodic share buybacks or other steps that would
give shareholders a reasonable opportunity to liquidate their investments at a
fair price not penalized by the Horejsi proposals. We signed on the dotted line;
Mr. Horejsi did not.
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WHAT HAS MR. HOREJSI FAILED TO TELL YOU?
Mr. Horejsi has said that he anticipates a gradual transition in the Fund's
investments, with no changes to be made for a year. HERE IS WHAT HE LEFT OUT! IF
HE SUCCEEDS IN ELECTING HIS TWO DIRECTORS TO THE BOARD THIS YEAR, IT WOULD BE
POSSIBLE FOR HIM TO GAIN A MAJORITY OF THE BOARD A YEAR FROM NOW. IF THAT
HAPPENS, YOU CAN BET ON CHANGES BEING MADE.
DOES AN "800 POUND GORILLA" ALWAYS GET WHAT HE WANTS?
Can Mr. Horejsi call all the shots because he is the Fund's largest
stockholder? That is up to you. He holds 39% of the shares; the rest of us hold
61%. He has said in his legal filings that he believes he can control the Fund
with less than 50% of the stock. The majority rules, but he is obviously
counting on many of you not voting so he can prevail. YOU DO NOT HAVE TO LET
THIS HAPPEN, BUT YOU DO HAVE TO ACT NOW.
PROTECT YOUR INCOME! VOTE YOUR GREEN PROXY TODAY.
TIME IS SHORT. THE ANNUAL MEETING IS APRIL 17.
Even if you have already signed a BLUE Horejsi Group proxy card, you have
every legal right to change your mind and vote a GREEN card in support of your
current Board.
If you have questions about the Fund or about voting your shares, we invite
you to call Carl Johns, Manager, Fund Investor Relations at (626) 795-7300 or
MacKenzie Partners, Inc. toll free at (800) 322-2885. We appreciate your
continued support of the Preferred Income Management Fund and its investment
objective.
On behalf of your Board of Directors,
Sincerely,
/s/ Robert T. Flaherty
ROBERT T. FLAHERTY
Chairman of the Board and Chief Executive
Officer
