================================================================================
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
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ERLY INDUSTRIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THE POWELL GROUP
FARMERS RICE MILLING COMPANY, INC.
NANETTE N. KELLEY
- --------------------------------------------------------------------------------
(Name of Person(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)(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:
-------------------------------------------------------------------------
Notes:
FOR IMMEDIATE RELEASE
Company Contact:
Nanette N. Kelley
President
(504) 922-4540
INSTITUTIONAL SHAREHOLDER SERVICES RECOMMENDS ERLY
INDUSTRIES INC. (NASDAQ) SHAREHOLDERS VOTE "AGAINST"
MANAGEMENT'S PROPOSALS TO ELIMINATE CUMULATIVE
VOTING AND RIGHT TO ACT BY WRITTEN CONSENT
Describes ERLY's Financial Position As "Precarious"
---------------------------------------------------
BATON ROUGE, LOUISIANA, October 14, 1997 . . . The Powell Group, its
wholly owned subsidiary Farmers Rice Milling Company and The Powell Group
President Nanette N. Kelley, who together own approximately 3.6% of the common
shares of ERLY INDUSTRIES INC. (NASDAQ:ERLY), Los Angeles, announced today that
Institutional Shareholder Services (ISS), an independent advisor to
institutional shareholders, has recommended in its October 7, 1997 report that
ERLY shareholders vote "AGAINST" ERLY's proposals to prohibit cumulative voting
and to eliminate the ability of shareholders to act by written consent.
ISS said it recommends a vote "AGAINST" management's proposal to
eliminate cumulative voting because "cumulative voting encourages management to
maximize share value by making it easier for a would-be acquirer to gain board
representation. Cumulative voting also guarantees that shareholders with a
significant stake in the company are assured a voice on the board."
The ISS report also noted that The Powell Group holds less than 4.0
percent of ERLY's common stock: "In order to elect one dissident director to
the board... Ms. Kelley would need to garner the support of holders of a sizable
percentage of the company's noninsider-owned equity, considering that current
officers and directors of the company own almost 40% of the outstanding common
stock. In such an event, we believe that Ms. Kelley, or whomever the nominee may
be, would deserve to have a seat on the board."
"We are pleased that ISS agrees with us on the important issue of
cumulative voting. We believe that ERLY's board of directors is seeking to
strip shareholders of their basic rights and, in so doing, entrench itself.
ERLY shareholders must act decisively to defeat this proposal," Kelley
explained.
In recommending a vote "AGAINST" ERLY's proposal to eliminate or
restrict shareholders' right to act by written consent, ISS said that "without
the right to act by written consent, shareholders may not be able to remove
directors or initiate a shareholder resolution without having to wait for the
next
(more)
ISS RECOMMENDS ERLY SHAREHOLDERS VOTE AGAINST PROPOSALS
October 14, 1997
Page Two
scheduled meeting. Annual and special meetings of shareholders are expensive.
Thus, unnecessary costs can be avoided if written consent ballots are sent to
shareholders to vote on unusual business matters that require their immediate
attention."
Kelley added that ERLY shareholders should also note ISS's
description of ERLY's financial position, which concludes that "ERLY is in a
precarious financial position due to significant leverage. If the company's
operating performance worsens over the near term, the company could have trouble
meeting its debt payments. ERLY's present management has made some decisions
which may have contributed to this situation, and the Powell Group has raised
some valid concerns about the company."
"We believe that ERLY shareholders would best be served by electing
our nominees, who have a comprehensive plan to solve ERLY's problems of cash,
capital and confidence and who are dedicated to maximizing the value for all
ERLY shareholders. ERLY shareholders also should take immediate action to vote
`AGAINST' ERLY's two proposals to eliminate cumulative voting and the ability of
shareholders to act by written consent, both of which fly in the face of good
corporate governance practices. Time is short, and shareholders should vote
promptly on ERLY's BLUE PROXY," Kelley said.
The Powell Group also responded to criticism regarding its statement
in an earlier communication that the ERLY management team had "breached its
fiduciary duty to shareholders." Kelley said, "The Powell Group's statement is
consistent with the allegations that have been made in the pending shareholder
derivative lawsuit and was based on the fact that, as a result of a civil jury
verdict in Texas, ERLY and American Rice may be subject to millions of dollars
of damages arising out of the Murphy's personal real estate transactions.
Although our prior statement was based upon our belief and our interpretation of
the facts surrounding the Texas verdict, the Texas case did not address
fiduciary duty issues. Shareholders should draw their own conclusions as to
whether it is acceptable for directors of a company to involve the company in
the personal finances of management and whether that constitutes a breach of
fiduciary duties."
A privately-held holding company based in Baton Rouge, Louisiana, The
Powell Group has interests in rice farming, rice milling and storage, rice
hull-to-electricity generation, radio broadcasting, commercial and residential
real estate development and construction, travel management services and timber.
* * * * *