UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
BKF CAPITAL GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
STEEL PARTNERS II, L.P.
STEEL PARTNERS, L.L.C.
WARREN G. LICHTENSTEIN
RONALD LABOW
KURT SCHACHT
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Steel Partners II, L.P. ("Steel") is filing materials contained in
this Schedule 14A with the Securities and Exchange Commission in connection with
the solicitation of proxies in support of the election of the nominees of Steel
to the Board of Directors of BKF Capital Group, Inc. (the "Company") and other
business proposals at the 2005 annual meeting of the stockholders of the Company
scheduled to be held on June 9, 2005, or any other meeting of stockholders held
in lieu thereof, and any adjournments, postponements, reschedulings or
continuations thereof.
Item 1: The following is an open letter to the stockholders of BKF
Capital Group, Inc. from Steel Partners II, L.P. dated May 24, 2005.
STEEL PARTNERS, II. L.P.
ATTENTION BKF CAPITAL GROUP STOCKHOLDERS!
This is an important message regarding the 2005 Annual Meeting of BKF Capital
Group scheduled to be held on June 9, 2005. Steel Partners II, L.P. seeks your
vote in favor of its three, highly qualified independent directors for election
at the 2005 Annual Meeting and approval of important corporate governance
proposals described in further detail in our proxy statement previously
delivered to you. Your vote at the 2005 Annual Meeting is critical. This could
be the last opportunity for you, the true owners of BKF, to once and for all
show the Board of Directors that:
>> BKF SHOULD NOT BE IN THE BUSINESS OF LOSING MONEY
>> BKF SHOULD NOT BE A VEHICLE TO ENRICH ITS INVESTMENT PROFESSIONALS
>> BKF SHOULD NOT BE SLOW TO IMPLEMENT MODERN DAY CORPORATE GOVERNANCE REFORM
Steel Partners, the largest institutional stockholder of BKF, believes that a
change within the Board of Directors of BKF is necessary in order to achieve
consistent profitability and implement much needed corporate governance reforms.
We urge you to vote the GOLD proxy card FOR Steel Partners' three director
nominees, Warren G. Lichtenstein, Kurt N. Schacht and Ronald LaBow, who are
committed to achieving these goals and maximizing the value of BKF for the
benefit of all stockholders. Our nominees are committed to devoting all
necessary time required to fulfill their fiduciary duties as directors of BKF.
If elected, Mr. Lichtenstein intends to comply with guidelines set forth by
Institutional Shareholder Services limiting the number of public company
directorships that may be held by an individual.
STEEL PARTNERS' SLATE OF NOMINEES IS COMMITTED TO:
CONSISTENT PROFITABILITY
CORPORATE GOVERNANCE REFORM
DIRECTOR ACCOUNTABILITY
MAXIMIZING STOCKHOLDER VALUE
AFTER YEARS OF POOR FINANCIAL PERFORMANCE AND POOR CORPORATE GOVERNANCE,
CAN YOU AFFORD TO BELIEVE WHAT BKF IS NOW TELLING YOU?
" . . .We feel that 2004 was a year in which we made progress in our development
as a business."*
BKF sustained an annual loss of $1.8 million in 2004 compared to an annual loss
of $8.4 million in 2003. We do not call this progress, especially in an industry
in which its public competitors are profitable. If anything, 2004 was a year in
which BKF made progress in the enrichment of its investment professionals.
Notwithstanding heavy losses at the public holding company level, BKF's Board
has rewarded Henry Levin, son of CEO John Levin, over $16 million in
compensation during the last two years. In order to truly maximize value for all
stockholders, BKF must align compensation with bottom line performance.
"Our primary assets are our relationships with people - clients and employees -
and we need to foster an environment in which they can have the confidence to
establish and maintain long-term relationships with us."*
You can't argue that BKF has made its relationship with employees a top
priority. Frank Rango, one of two senior portfolio managers of the event-driven
group, has announced his intention to step down from his position as co-manager
of the event-driven group (which generated 48% of BKF's total advisory fees in
2004) at the conclusion of 2005. BKF admitted in its 2004 Form 10-K that "The
change in responsibilities for Mr. Rango may impact the ability of Levco to
retain and attract clients with respect to its event-driven strategies and may
impact the revenues generated by the event-driven accounts." Yet BKF later
announced that it had rewarded Mr. Rango with a sweetheart compensation package
that will obligate BKF to pay him millions but lacks any post-employment
restrictions. IF MR. RANGO WERE TO START A COMPETING VENTURE, THERE ARE NO
RESTRICTIONS ON HIS ABILITY TO SOLICIT BKF'S CLIENTS AND EMPLOYEES. This, in our
opinion, shows a patent disregard for BKF's stockholders.
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"In the early part of 2005, BKF Capital Group took a number of steps to further
enhance value for our stockholders."*
On the contrary, we believe that the BKF Board's actions during early 2005 lack
substance and are merely half-baked gestures to win your vote. BKF ONLY BEGAN TO
TAKE AN INTEREST IN CORPORATE GOVERNANCE REFORM AFTER WE NOMINATED OUR SLATE OF
DIRECTOR NOMINEES IN OPPOSITION TO THE INCUMBENT BOARD. The facts speak for
themselves:
o BKF modified the poison pill so that it does not apply to tender
offers for 100% of the outstanding shares to the extent that a
majority of BKF shares are acquired in such tender offer AFTER WE
SUBMITTED OUR NOMINATION.
o BKF announced a special dividend of $0.925 per share and a new policy
to commit approximately 70% of annual free cash flow generated by BKF
to the payment of dividends AFTER WE SUBMITTED OUR NOMINATION.
o BKF submitted for consideration at the 2005 Annual Meeting a charter
amendment to declassify the Board AFTER WE SUBMITTED OUR NOMINATION.
o BKF submitted for consideration at the 2005 Annual Meeting a charter
amendment to eliminate the supermajority provision for certain
fundamental transactions AFTER WE SUBMITTED OUR NOMINATION.
"Steel Partners' hostile efforts to displace a significant part of our board and
gain influence over BKF Capital may hinder our business momentum, especially in
light of the fact that Steel is recognized not only as an investor in BKF but as
a competitor with it as well."*
We believe that three straight years of losses, increasing administrative costs
and the Board's unwillingness to implement measures approved by its stockholders
(for three consecutive years the stockholders have overwhelmingly supported a
proposal requesting the Board to redeem the poison pill), has disproportionately
allocated BKF's assets to its employees at the expense of BKF's stockholders.
We have previously attempted to publicly and privately voice our concerns to BKF
about BKF's business operations, specifically its compensatory practices, and
have received no substantive response. For these reasons, we are conducting this
proxy fight as a last resort to maximize the value of BKF shares for all
stockholders. Furthermore, we think that it is irrelevant that Steel Partners is
also in the business of investing in public companies. BKF's three largest
stockholders (other than Steel Partners and John Levin), one of whom also
submitted a stockholder proposal for inclusion in BKF's proxy statement, are
also in the business of investing in public companies.
AS THE LARGEST STOCKHOLDER OF BKF, STEEL PARTNERS IS COMMITTED TO GETTING
ACTIVELY INVOLVED TO PROTECT AND ENHANCE VALUE FOR ALL STOCKHOLDERS. It is an
extremely important goal of Steel Partners to serve as a positive influence to
the companies in which we invest - from both a financial and corporate
governance perspective. This is fundamental to our business and reputation as a
long-term value investor. Any inference that we may have ulterior motives has no
merit and is a smoke screen to cloud the real issues in this election. We have
no intention of engaging in any activity that would damage either our investment
in BKF or our effectiveness as a catalyst for positive change.
We believe that the best opportunity to bring about meaningful change is to
elect our slate of independent nominees and approve the stockholder-friendly
proposals set forth in our proxy statement.
Thank you for your support,
/s/ Warren Lichtenstein
May 24, 2005
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* Quoted from Letter to Stockholders from BKF Board dated May 18, 2005.
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IMPORTANT
PLEASE SIGN, DATE AND RETURN THE GOLD PROXY CARD TODAY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
DO NOT SIGN ANY WHITE PROXY CARD THAT YOU
MAY RECEIVE FROM THE COMPANY.
If your shares are held on your behalf by a broker or bank,
please sign, date and return the GOLD proxy in the
envelope provided and contact the person responsible for
your account and ask them to ensure that your shares are
voted on the GOLD card.
IF YOU HAVE ANY QUESTIONS, OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE
CONTACT THE FIRM ASSISTING US IN THE SOLICITATION OF PROXIES:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
(212) 754-8000
BANKS AND BROKERAGE FIRMS, PLEASE CALL: (800) 654-2468
STOCKHOLDERS CALL TOLL FREE: (800) 607-0088
E-MAIL: STEEL.INFO@MORROWCO.COM
