RJR NABISCO releases letter to shareholders.NEW YORK--(BUSINESS WIRE)--March 20, 1996--RJR Nabisco (NYSE NYSE See: New York Stock Exchange :RN) said that the company is mailing the following letter to its shareholders today. March 19, 1996 Dear Fellow Shareholder: By now you have received two separate sets of annual meeting proxy materials Proxy Materials Documents regulated by the Securities & Exchange Commission in which a public company outlines its methods and procedures. These documents are used to inform shareholders and solicit votes for corporate decisions, such as the election of directors and other sent to you by RJR Nabisco RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co. in the second largest leveraged buyout in history, adjusted for inflation. and a group controlled by corporate raiders Bennett LeBow and Carl Icahn Carl Celian Icahn (born February 16, 1936) is an American billionaire financier, corporate raider, and private equity investor. Carl Icahn Net worth is $14.5 Billion as of 2007 Forbes estimate. . The LeBow/Icahn group has nominated an alternate slate of directors to replace your current board and give the LeBow/Icahn group control of RJR Nabisco. We believe your choice is clear: o You can vote for your current board of directors, which has demonstrated a commitment to managing RJR Nabisco with the interest of all shareholders in mind and, having gotten the company out from under a crushing debt load, is focusing on responsibly maximizing value for all shareholders; or o You can vote to turn over the company to a new slate of director candidates that were hand-picked by Bennett LeBow and Carl Icahn, both of whom have repeatedly demonstrated contempt and reckless disregard reckless disregard n. grossly negligent without concern for danger to others. Actually reckless disregard is redundant since reckless means there is a disregard for safety. (See: reckless) for shareholders at other companies they have controlled. A vote for the LeBow/Icahn nominees could leave the company in the hands of two corporate raiders with a history of self-enrichment and reckless behavior. We believe your current board is best able to manage RJR Nabisco for your benefit, in a responsible way that does not "junk" the company and ultimately erode value with unsustainable financial policies. THE BEST WAY TO SAFEGUARD YOUR INVESTMENT IS TO VOTE FOR YOUR EXISTING BOARD USING THE WHITE CARD. We strongly urge you to vote for the company's current board of directors at the annual meeting and to vote on the other proposals in the manner recommended by your board of directors. Carl Icahn's exploits as a corporate raider and greenmailer are legendary: o In 1985, he gained control of Trans World Trans World is an economic simulation game for the Commodore 64 published by Starbyte Software in 1990. The player takes control of a new trucking company and competes against up to either three other human or computer players to make the most money. Airways. In 1992, TWA TWA Time-weighted average, see there was forced to file for bankruptcy and Icahn was required to relinquish his stock in the company, resign as chairman and loan the company $190 million to extinguish Extinguish Retire or pay off debt. his liability for the company's underfunded un·der·fund tr.v. un·der·fund·ed, un·der·fund·ing, un·der·funds To provide insufficient funding for. underfunded adj → infradotado (económicamente) pension obligations. o In addition, he has forced a number of companies, including Saxon Industries, Hammermill Paper Co. and Viacom International Viacom International, Inc. is a current subsidiary of Viacom (as was the case with Viacom's predecessor). It is the holding company for copyrights associated with Viacom's corporate website and its cable networks. , Inc., to pay him "greenmail greenmail, payment, by a corporation that is a takeover target, of a premium price for the shares of its stock that have been accumulated by the potential buyer. In exchange, the potential buyer stops the takeover bid. " at the expense of other shareholders. Bennett LeBow's corporate abuses are also well chronicled: o At MAI MAI Mail (File Name Extension) MAI Multilateral Agreement on Investment MAI Maius (Latin: May) MAI Ministerul Administratiei si Internelor (Romanian) Systems, LeBow acquired a minority position in the company. He converted his position into a preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. holding and led the company into bankruptcy, wiping out all other shareholders in the process. LeBow was left with control of the company. o At Western Union, LeBow gained control of a company with more than $500 million of debt and $25 million of equity. Under LeBow's control, Western Union was unable to pay interest on its debt, fired workers and ultimately filed for bankruptcy. o LeBow's foray into Verb 1. foray into - enter someone else's territory and take spoils; "The pirates raided the coastal villages regularly" raid encroach upon, intrude on, obtrude upon, invade - to intrude upon, infringe, encroach on, violate; "This new colleague invades my the tobacco business with Liggett is also cause for grave concern. In the ten years LeBow has controlled the company, its volume has dropped by almost 50 percent, its overall market share has fallen by almost half to a mere 2.2 percent and its total full-price brands' market share have virtually evaporated to just one-half of one percent. In all of these cases, the companies involved had boards of directors, which in theory should have protected shareholders. The fact is, however, that both raiders have demonstrated time and again that they are able to impose damaging financial policies on the companies they control, enriching themselves and leaving other shareholders with little to show for their investment. A majority of LeBow's slate of director nominees have direct financial ties to the LeBow/Icahn group that raise legitimate questions about their ability or willingness to represent other shareholders over the financial interests of LeBow and Icahn. LeBow and Icahn agreed to pay their slate of nominees a total of $450,000 before they are even elected and begin receiving director fees from RJR Nabisco. This is especially ironic in that LeBow and Icahn, in their proxy materials to you, claim to support curbs on director compensation. The potential consequences of electing a board slate hand-picked by Bennett LeBow and Carl Icahn are severe. Just last week, the LeBow/Icahn group demonstrated how dangerous its behavior can be to shareholders of RJR Nabisco. In a high-risk gamble to advance their proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. agenda, the LeBow/Icahn group agreed to a dangerous deal with tobacco litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. plaintiffs. The news of this development wiped out billions of dollars of stock market value for holders of RJR Nabisco and other tobacco-related stocks and demonstrated, once again, how little regard these men have for the long-term interests of other shareholders. THE CHOICE IS CLEAR: VOTE FOR THE RJR NABISCO BOARD. The changes put in place by the company's management are producing impressive results at RJR RJR R.J. Reynolds RJR Thorny Skate (FAO fish species code) Nabisco's operating businesses. Our debt is significantly reduced, the company is now financially stable, and we finally are in a position to focus on business building and shareholder returns. We have made a number of important strategic, operating and management changes at our operating businesses to assure that the company can produce strong financial results that will reward shareholders. The results of those changes were obvious in the company's operating performance at year-end 1995: o The domestic tobacco business turned around its market share performance after a decline that preceded the leveraged buyout leveraged buyout, the takeover of a company, financed by borrowed funds. Often, the target company's assets are used as security for the loans acquired to finance the purchase. by more than a decade. In the fourth quarter, full- price market shares were ahead of the year-ago quarter and the Camel and Doral brands showed particularly strong growth in shipments and market share. This progress is a result of a re-energized focus on core brand marketing and cost-cutting to meet our commitment to deliver strong earnings to shareholders. o The international tobacco business finished the year with double-digit volume and earnings growth, posting a strong recovery from export disruptions early in 1995 in the Middle East and Russia and putting the business on track for continued strong performance in 1996. o Nabisco has grown revenue significantly and increased its leading market shares in recent years despite intense competition in the U.S. biscuit and nut markets. The company has also built a substantial international business. Wall Street has greeted our initial public offering of Nabisco shares enthusiastically, demonstrating its belief that Nabisco has a terrific future ahead of it. With our businesses on track for a strong 1996, the company will have the resources needed to enrich shareholders directly and assure the company's businesses can sustain their performance in the future. RJR Nabisco is committed to using using more of its growing cash flow to reward shareholders. The board recently adopted an important change in the company's financial policy to return increased levels of RJR Nabisco's free cash flows to shareholders. The policy results in two immediate actions: o A 23 percent increase in RJR Nabisco's annual common dividend rate to $1.85 per common share from $1.50 per common share ($.465 per common share from $.375 per common share on a quarterly basis, effective as of the April 1, 1996 dividend). o The adoption of a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. objective of approximately 10 million common shares over the next several years based on the achievement of performance targets, and the immediate authorization by the board for the company to repurchase up to $100 million of stock in 1996. We took these financial actions because of the company's tremendous earnings potential, now that its finances are in order and its businesses are on track. The RJR Nabisco board is committed to maintaining a level of financial integrity for the company that will enable it to build on its ability to reward shareholders in a sustainable fashion Sustainable fashion is fashion that is designed to be environmentally friendly. It is part of the larger trend of "ethical fashion," and according to the May 2007 Vogue appears not to be a short-term trend but one could last multiple seasons. . While our financial policy represents a dramatic change, it is a prudent change. We did not "junk" RJR Nabisco. We did not promise a dividend level beyond what we believe we can realistically maintain. We did not starve the rapidly growing international tobacco business that will play an increasingly important role in the company s future ability to return value to shareholders. We approved a payout that should maximize value for you today while maintaining prospects for future growth in the value of your investment. The RJR Nabisco board of directors is committed to a successful spin-off of Nabisco. The board of directors is committed to spinning off Nabisco as soon as we believe that it can be done successfully. Your board has already taken a number of steps that were necessary to allow a spin-off when it will not jeopardize your investment. In raising the dividend rate to $1.85 on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis, we have increased your common dividend to a level that reflects the dividend income the company receives from its 80.5 percent interest in Nabisco as well as the performance of the tobacco businesses. We believe this approach is a responsible means of allowing shareholders to participate in Nabisco dividend income until we can achieve an actual spin-off for you. The RJR Nabisco board is committed to a structure that benefits all shareholders. Over the past 18 months, the company has evolved from a company controlled by one leveraged buy-out investment firm to a company with broad, public ownership. Your board recently voted to form a new corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and nominating committee A nominating committee is a group formed usually from inside the membership of an organization for the purpose of nominating candidates for office within the organization. It works similarly to an electoral college, the main difference being that the available candidates, either of the board to provide a formal means of determining what additional steps are necessary to complete the company's transition. The committee will be limited to outside directors of the company and will be chaired by former Assistant Secretary of State Rozanne Ridgway. In carrying out its responsibilities, the corporate governance and nominating committee will review and recommend appropriate changes regarding board policies, including director compensation, and recruit additional outside directors committed to managing the company responsibly for your benefit. We urge you NOT to sign or return the BLUE proxy cards sent to you by the LeBow/Icahn group or its agents, including Brooke Group. We ask you to sign, date and return the accompanying WHITE card, using the enclosed postage-paid envelope, indicating your support of the company's board and management. If you have any questions or need assistance in completing the enclosed WHITE card, please call our solicitors: MacKenzie Partners, Inc., toll free, at 1-800-322- 2885 or D.F. King & Co., Inc., toll free, at 1-800-290-6430. On Behalf of Your Board of Directors, Charles M. Harper Steven F. Goldstone gold·stone n. An aventurine with gold-colored inclusions. Noun 1. goldstone - aventurine spangled densely with fine gold-colored particles Chairman President and Chief Executive Officer CONTACT: RJR Nabisco Holdings Corp., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Carol Makovich, (212) 258-5785 |
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