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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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UNITED INDUSTRIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
STEEL PARTNERS II, L.P.
WARREN G. LICHTENSTEIN
GLEN M. KASSAN
JAMES R. HENDERSON
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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STEEL PARTNERS II, L.P.
150 EAST 52ND STREET
21ST FLOOR
NEW YORK, NEW YORK 10022
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TEL (212) 813-1500
FAX (212) 813-2198
September 18, 2002
DEAR FELLOW SHAREHOLDER:
We are the owners of 1,310,250 shares of United Industrial Corporation
("UIC") common stock, representing approximately 10% of the outstanding shares.
By now, we hope you have received the proxy materials that we mailed seeking
your support for the election of our director-nominee Glen Kassan at the UIC
annual meeting scheduled for October 4, 2002.
We are convinced that the full value of our investment will never be
realized under the leadership of the current Board of Directors. We are offering
shareholders the opportunity to add one more independent director to the Board.
If Mr. Kassan is elected, he will join Warren Lichtenstein, CEO of Steel
Partners who was elected to UIC's Board in 2001. BOTH MESSRS. KASSAN AND
LICHTENSTEIN ARE FULLY COMMITTED TO PURSUING A COURSE OF ACTION THAT WILL
MAXIMIZE SHAREHOLDER VALUE.
We have launched our proxy contest only as a last resort because of what we
believe to be the Board's ongoing lack of commitment to selling UIC. Despite the
Board's public stance that they have asked their financial advisor to "intensify
and accelerate" a sales process, no formalized mechanism for seeking potential
acquirers has been implemented and the Board has not accepted Mr. Lichtenstein's
repeated offers to initiate a formalized sales process. MOREOVER, THE BOARD HAS
POINTEDLY EXCLUDED MR. LICHTENSTEIN FROM DISCUSSIONS AND MEETINGS REGARDING THE
SALE OF UIC.
Mr. Lichtenstein has urged the Board to adopt and publicly announce a
formal timetable and responsibility schedule to organize a prudent businesslike
sales process. Unfortunately, the Board has elected not to heed Mr.
Lichtenstein's advice. Help us to convince the Board to publicly commit to the
type of sales process outlined below:
Weeks 1-2 Distribute new confidentiality agreements and distribute
revised Confidential Information Memoranda to interested
parties
Week 3 Receive written indications of interest. Board meeting to
discuss indications of interest. Invite the highest
indications to conduct due diligence
Weeks 4-5 Potential purchasers conduct due diligence
Weeks 6-7 Receive final bids, Board meets to analyze and discuss final
bids and reach determinations. Notify three highest bidders and
schedule additional due diligence
Weeks 8-12 Draft and review acquisition and tender offer documentation
and make necessary filings, and commence tender offer
Week 13 Closing of transaction
In the event the Board determines not to proceed with the sale of the
entire company, then specific divisions could be sold, the New York office
should be closed and the contemplated transaction should be closed within the
above scheduled timeline.
In our opinion, the Board needs to develop a formalized sales process,
similar to the one detailed above, and have it published. ONLY BY HAVING A
PUBLIC SALES PROCESS CAN WE BE ASSURED THAT UIC IS NOT DEALING WITH SELECTIVE
PURCHASERS AND THAT THEY WILL PERFORM A PUBLIC AUCTION. Ask yourself, by not
pursuing a full auction, has the Board discouraged potential purchasers? By not
announcing a full auction, is the Board doing everything it can to maximize
shareholder value?
LET'S SET THE RECORD STRAIGHT
In addition to providing our fellow shareholders with the reasons for our
proxy fight and allowing our fellow shareholders to see how we would initiate a
formalized sales process, we are also writing to you to clarify some points that
UIC made about Steel Partners, Warren Lichtenstein and Glen Kassan in a recent
letter.
Steel Partners is an investment firm that focuses on undervalued companies
that it believes are out of favor with Wall Street or followed by few analysts,
but offer long-term growth potential. We are not seeking control of UIC, and if
Glen Kassan is elected, he and Mr. Lichtenstein will constitute only a minority
on the UIC Board. We strongly believe that there is no need for more than one
management director on a six member Board. Currently the Board is comprised of
six members, three of whom are insiders. WE DON'T BELIEVE THAT HAVING 50% OF THE
BOARD'S SEATS HELD BY COMPANY INSIDERS IS GOOD CORPORATE GOVERNANCE. Messrs.
Kassan and Lichtenstein intend to be constructive, independent participants in
the deliberations of the Board. As seasoned business people, Messrs. Kassan and
Lichtenstein will assist the Board by, among other things, designing and
implementing a formal sales process and reducing unnecessary expenses. However,
there can be no assurance that the election of Mr. Kassan will maximize or
otherwise enhance shareholder value.
Steel Partners II, L.P. has made numerous investments in addition to the
few described by UIC. Unfortunately, UIC's management failed to mention many of
the successful transactions Steel Partners has completed including the following
public company investments:
o Medical Imaging Centers of America (OTC Bulletin Board:MIGA) -- Steel
Partners believed MIGA was undervalued in the market and acquired
approximately 20% of its shares and commenced a proxy fight. Pursuant to an
agreement obtained by Steel Partners, MIGA agreed to effect a prompt sale
of the company and did so for $11.75 per share in cash, AN INCREASE OF 169%
from the date that Steel Partners first publicly disclosed its position in
its Schedule 13D filing.
o Aydin Corporation (NYSE:AYD) -- Steel Partners believed AYD was undervalued
in the market and acquired approximately 10% of its shares. Steel Partners
lost confidence in the company's management after several years and
successfully completed a consent solicitation to gain majority
representation on the board of directors. The new board of directors
restructured AYD and was responsible for selling AYD at $13.50 per share in
cash (a 39% premium to market), AN INCREASE OF 74% from the date that Steel
Partners first publicly disclosed its position in its Schedule 13D filing.
o Tech-Sym Corporation (NYSE:TSY) -- Steel Partners believed TSY was
undervalued in the market and acquired approximately 10% of its shares. Two
of Steel Partners' nominees were elected to the board of directors. The new
board restructured TSY and successfully sold the company for $30 per share
in cash, AN INCREASE OF 36% from the date that Steel Partners first
publicly disclosed its position in its Schedule 13D filing.
o PLM International, Inc. (AMEX: PLM) -- Steel Partners believed PLM was
undervalued in the market and acquired approximately 18% of its shares. Two
of Steel Partners' nominees were elected to the board of directors and were
instrumental in prompting the September 2000 sale of a subsidiary, which
resulted in a $5.00 per share cash dividend. Steel Partners' nominees were
also instrumental in closing the merger of PLM in February 2001 that
yielded shareholders an additional $3.46 per share in cash. From the date
that Steel Partners first publicly disclosed its interest in PLM in its
Schedule 13D filing to the consummation of the merger, PLM SHAREHOLDERS
REALIZED A 54% INCREASE in their investment.
You may have recently received a letter from UIC seeking to discredit Steel
Partners, Warren Lichtenstein and Glen Kassan and sway your vote by presenting
what we believe to be a misleadingly selective account of our past investment
activities. We question why UIC's management is attacking Steel Partners, Warren
Lichtenstein and Glen Kassan in this manner. WHY ARE THEY NOT FOCUSING ON THE
IMPORTANT ISSUE -- UIC'S SALES PROCESS AND MAXIMIZING SHAREHOLDER VALUE?
A sizeable part of our business involves investments in undervalued
companies. Over the long term, we believe that we have achieved superior returns
overall on our investments. While UIC's management has focused on a few
instances where, on the surface, Steel Partners' returns on its investment may
not have been fully realized, our track record is much better than they would
have you believe. WE BELIEVE THAT OUR INVESTMENTS DESCRIBED ABOVE SUPPORT OUR
CONVICTION THAT WE CAN ACHIEVE MAXIMUM VALUE FOR ALL UIC SHAREHOLDERS BY
UNDERTAKING THE SALES PROCESS.
We have invested in UIC in order to make a profit and we presume you did as
well. We believe that with the election of Glen Kassan, who along with Warren
Lichtenstein is publicly committed to a prompt sale of UIC, we can achieve our
goal of maximizing shareholder value. We urge you to support our efforts by
signing, dating and returning your GOLD proxy card today.
You need only ask yourself: Would it not be of substantial value to UIC to
have two shareholder representatives on the Board, directors who are experienced
business people, who have an interest in the company worth more than $25
million, who have a proven track record of creating shareholder value and whose
only interest is to MAXIMIZE the value of their investment for themselves and
other UIC shareholders?
VOTE YOUR GOLD PROXY CARD TODAY
VOTE THE GOLD PROXY TODAY. Do not return any white proxy sent to you by UIC
management. If you have already returned management's white proxy card, you may
revoke that proxy by signing, dating and returning the enclosed GOLD proxy card.
The latest dated proxy card is the only one that counts.
If you have any questions or need assistance in voting your shares, please
call our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 (toll-free)
or (212) 929-5500 (call collect).
Thank you for your support,
/S/ WARREN LICHTENSTEIN
WARREN LICHTENSTEIN
On Behalf of Steel Partners II, L.P.
[MacKenzie Partners, Inc. Logo]
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (call collect)
E-mail: proxy@mackenziepartners.com
or
CALL TOLL FREE (800) 322-2885
