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/ Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials /X/ Soliciting Material Under Rule 14a-12 ANGELICA CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) STEEL PARTNERS II, L.P. STEEL PARTNERS, L.L.C. WARREN G. LICHTENSTEIN JAMES HENDERSON JOHN QUICKE - -------------------------------------------------------------------------------- (Name of Persons(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)(1) 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: -2- Steel Partners II, L.P. ("Steel"), together with the other participants named herein, is filing materials contained in this Schedule 14A with the Securities and Exchange Commission ("SEC") in connection with the solicitation of proxies in favor of certain proposals to amend the Restated Articles of Incorporation of Angelica Corporation (the "Company") and for the election of its two director nominees at the Company's 2006 annual meeting of shareholders (the "Annual Meeting"). Steel has not yet filed a proxy statement with the SEC in connection with the Annual Meeting. Item 1: On May 23, 2006, Steel issued the following press release. FOR IMMEDIATE RELEASE STEEL PARTNERS, ANGELICA CORPORATION'S LARGEST SHAREHOLDER, TELLS BOARD IT IS DISAPPOINTED OVER COMPANY'S POOR FINANCIAL PERFORMANCE; CALLS AMENDMENTS TO BY-LAWS SELF-SERVING NEW YORK, May 23/ PRNewswire/ - Steel Partners II L.P., the largest individual shareholder of Angelica Corporation (NYSE: AGL), today told that company's Board of Directors that it "is extremely disappointed by Angelica's continued poor financial performance and the Board's self-serving amendments to Angelica's by-laws, the primary purpose of which, we believe, is to entrench itself, as well as to continue the Board's disenfranchisement of Angelica shareholders." "The fact that we continue to own our significant investment in Angelica should not be interpreted as an endorsement of the incumbent Board or management, Steel Managing Member Warren G. Lichtenstein said in a letter to the Board. Mr. Lichtenstein continued, "Despite recent `lip service' by the Board in self-serving press releases regarding appointing a special committee to address issues raised by Steel Partners, we see no true change. On the contrary, our grave concerns about the Board's ability to adequately oversee the Company's operations, are now heightened and we are at red alert." In the letter, Mr. Lichtenstein described Angelica's recent string of acquisitions as "financial and operational disasters" that have saddled the company with additional debt and significantly decreased shareholder value. Mr. Lichtenstein also protested recent attempts by the Board to entrench itself at the expense of shareholders, such as delaying the annual shareholder meeting, amending the company's by-laws to prevent shareholders from calling special shareholder meetings and extending to three years the period directors can sit on the board before facing reelection. Steel Partners holds over 19% of Angelica's outstanding shares. The text of the letter from Steel Partners to the Board of Directors of Angelica follows: -3- STEEL PARTNERS II, L.P. 590 MADISON AVENUE 32ND FLOOR NEW YORK, NEW YORK 10022 May 23, 2006 Board of Directors Angelica Corporation 424 South Woods Mill Road Chesterfield, Missouri 63017-3406 Ladies and Gentlemen: As we highlighted in our previous communications with the Board, Steel Partners II, L.P. ("Steel"), the largest stockholder of Angelica Corporation ("Angelica"), is extremely disappointed by Angelica's continued poor financial performance and the Board's self-serving amendments to Angelica's by-laws the primary purpose of which, we believe, is to entrench itself, as well as to continue the Board's disenfranchisement of Angelica shareholders. The fact that we continue to own our significant investment in Angelica should not be interpreted as an endorsement of the incumbent Board or management. Despite recent "lip service" by the Board in self-serving press releases regarding appointing a special committee to address issues raised by Steel Partners, we see no true change. On the contrary, our grave concerns about the Board's ability to adequately oversee the Company's operations, as well as the Board's accountability to Angelica's shareholders, are now heightened and we are at red alert. Angelica's recent operating performance has been extremely disappointing and the Board's decisions have been even worse. The string of recent acquisitions by Angelica can only be classified as financial and operational disasters. o INSTEAD OF MAXIMIZING SHAREHOLDER VALUE THROUGH ACCRETIVE ACQUISITIONS, WE BELIEVE THE STRING OF NINE ACQUISITIONS FOR OVER $100 MILLION (FUNDED WITH A SUBSTANTIAL INCREASE IN BORROWINGS) HAVE BEEN DILUTIVE AND HAVE SIGNIFICANTLY DECREASED SHAREHOLDER VALUE. o ANGELICA OVERPAID FOR MANY OF ITS ACQUISITIONS. COMPOUNDING THE PROBLEM, WE BELIEVE CURRENT MANAGEMENT HAS FAILED TO PROPERLY INTEGRATE SUCH ACQUISITIONS AS A RESULT OF THE LACK OF GOOD STANDARD WORK PRACTICES THROUGHOUT THE ANGELICA ORGANIZATION, FURTHER DESTROYING SHAREHOLDER VALUE. During the past three years Angelica's gross margins have declined to an alarming level. -4- o GROSS MARGINS HAVE DETERIORATED FROM 19% IN FISCAL 2003 TO 12.9% IN FISCAL 2005 (AND WERE ONLY 10.6% IN THE FOURTH QUARTER OF FISCAL 2005). THIS DETERIORATION IN GROSS MARGIN HAS VIRTUALLY ELIMINATED ANGELICA'S PROFITABILITY. Contributing to the gross margin erosion has been management's poor control of expenses. o AS A RESULT OF POORLY MANAGING NATURAL GAS COSTS, CURRENT MANAGEMENT HAS PERMITTED UTILITIES COSTS AS A PERCENTAGE OF SALES TO INCREASE FROM 7.3% IN FISCAL 2003 TO 9.8% IN FISCAL 2005. Current management has not effectively managed Angelica's natural gas costs. They have entered into long term sales contracts that do not provide for escalations to recover increases in natural gas prices and have compounded the issue by poorly timed natural gas hedges. Partially as a result of entering into natural gas hedges at very high prices, natural gas costs will increase by $3,000,000 in fiscal 2006, further reducing gross margins. o AS A RESULT OF A LACK OF STANDARD WORK PRACTICES AND POOR UNION RELATIONS, WE BELIEVE CURRENT MANAGEMENT HAS ALLOWED PRODUCTION EXPENSES AS A PERCENTAGE OF SALES TO INCREASE FROM 41% IN FISCAL 2003 TO 45.5% IN FISCAL 2005. o ANGELICA CONTINUES TO HAVE BLOATED STAFFING, MAINTAINING A 15 PERSON CORPORATE STAFF IN THEIR ST. LOUIS OFFICE, WHICH ONLY MANAGES ONE BUSINESS UNIT, RATHER THAN EFFICIENTLY COMBINING THE ST. LOUIS OPERATIONS WITH OPERATING HEADQUARTERS IN ATLANTA. Despite the Company's poor performance, the Board does not seem to be recognizing that problems exist. Instead, the Board has rewarded an ineffective management with generous restrictive stock grants. We understand that in light of its record members of the Board may feel extremely vulnerable to shareholder criticism and action, and in fact may be concerned that they will be voted out at the next election of directors. Could this be the reason for recent actions by the Board which we believe are primarily designed to entrench the Board? Some recent examples of egregious actions taken by the Board include the following: o DELAYING THE ANNUAL MEETING UNTIL OCTOBER 31, 2006 We are deeply concerned with the timing of the 2006 Annual Meeting of Shareholders. Angelica has consistently for more than a decade held its Annual Meeting in the last two weeks of May. However, this year, where we have questioned the Board's actions and have provided notice of nominating directors and proposing Bylaw amendments, the Annual Meeting Date has inexplicitly been delayed to October 31, 2006, and the Bylaws have been amended to provide for such date. BYLAWS WERE AMENDED APRIL 28, 2006. o AMENDING THE BYLAWS TO PROHIBIT SHAREHOLDERS FROM CALLING SPECIAL MEETINGS OF SHAREHOLDERS We believe that the Board has forgotten who are the owners of the Company. Annual and Special Meetings of Shareholders are important tools for shareholders voices to be heard. Not only has the Board delayed the Annual Meeting, but it has completely disenfranchised shareholders by prohibiting shareholders from calling a special meeting. In our December 14, 2005 letter to the Board we recommended that the Bylaws be amended to allow shareholders who own more than 10% of Angelica shares to call special meetings, rather than the prior 50% standard. Instead, the Board amended the Bylaws to prohibit shareholders from calling a special meeting under any -5- circumstances. BYLAWS WERE AMENDED MARCH 20, 2006. DOES THE BOARD REALLY BELIEVE THAT SHAREHOLDERS SHOULD NOT BE PERMITTED TO ACT, EVEN THOUGH WE ARE THE TRUE OWNERS OF ANGELICA? o AMENDING THE BYLAWS TO PERMIT DIRECTORS APPOINTED BY THE BOARD TO SERVE ON THE BOARD FOR UP TO THREE YEARS BEFORE HAVING TO STAND FOR ELECTION BY SHAREHOLDERS, RATHER THAN HAVING TO STAND FOR ELECTION AT THE NEXT ANNUAL MEETING Allowing the Board to appoint directors whose nominations do not have to be submitted to shareholders for up to three years is just a further way the Board has insulated itself from accountability to Angelica's true owners, the shareholders. BYLAWS WERE AMENDED JANUARY 17, 2006. We believe the aggressive actions recently taken by the Board clearly contradict general standards of good corporate governance. We are concerned that the interests of the Board and management may not be clearly aligned with the interests of Angelica's shareholders. Steel's 1,847,250 shares owned in Angelica in contrast to the 258,490 shares actually owned by all directors and officers as a group, clearly demonstrate that Steel's interests are closely aligned with that of all of Angelica's shareholders. We continue to believe that Angelica's significant inherent value will continue to deteriorate unless immediate action is taken by the Board. It is imperative for the Board, in fulfilling its fiduciary duties to shareholders, to be attentive to the objectives of its shareholders as the Board attempts to enhance the value of Angelica's common stock and to address issues raised by significant shareholders. Steel Partners is committed to working to improve Angelica's performance, and would welcome the opportunity to do so with the Board. However, as a significant shareholder of Angelica, Steel Partners will not permit itself to be held hostage to a Board acting to protect its own interests, rather than the interests of shareholders. Steel Partners stands ready to meet with the Board of Directors and its representatives as soon as possible if the Board is willing to constructively address its concerns. Please contact the undersigned at (212) 520-2330 in order to schedule a meeting. Steel Partners II, L.P. Warren G. Lichtenstein Managing Member of General Partner CERTAIN INFORMATION CONCERNING PARTICIPANTS Steel Partners II, L.P. ("Steel Partners"), together with the other Participants (as defined below), intend to make a preliminary filing with the Securities and Exchange Commission ("SEC") of a proxy statement and accompanying proxy card to be used to solicit votes for the election of its slate of director nominees at the 2006 annual meeting of shareholders of Angelica Corporation, a Missouri corporation (the "Company"), which has not yet been scheduled. -6- STEEL PARTNERS STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY STATEMENT WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR, MORROW & CO., INC., AT ITS TOLL-FREE NUMBER: (800) 662-5200. The participants in the proxy solicitation are anticipated to be Steel Partners, Steel Partners, L.L.C. ("Partners LLC"), Warren G. Lichtenstein, James Henderson and John Quicke (collectively, the "Participants"). As of the close of business on May 22, 2006, Steel Partners beneficially owned 1,847,250 shares of common stock of the Company (the "Shares"), constituting approximately 19.6% of the Shares outstanding. As the general partner of Steel Partners, Partners LLC may be deemed to beneficially own the 1,847,250 Shares owned by Steel Partners, constituting approximately 19.6% of the Shares outstanding. As the sole executive officer and managing member of Partners LLC, which in turn is the general partner of Steel Partners, Mr. Lichtenstein may be deemed to beneficially own the 1,847,250 Shares owned by Steel Partners, constituting approximately 19.6% of the Shares outstanding. Mr. Lichtenstein has sole voting and dispositive power with respect to the 1,847,250 Shares owned by Steel Partners by virtue of his authority to vote and dispose of such Shares. Currently, Messrs. Henderson and Quicke do not beneficially own any Shares. -7-
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DFAN14A Filing
Steel Partners Ii Inactive DFAN14AAdditional proxy materials by non-management
Filed: 23 May 06, 12:00am