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WHX Corporation
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(Name of Registrant as Specified In Its Charter)
Dolphin Limited Partnership I, L.P.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/ / 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: Series A
Convertible Preferred Stock, $.10 par value Series B Convertible Preferred
Stock, $.10 par value
(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
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The following press release was issued by Dolphin Limited Partnership I, L.P. on
July 8, 2004. Dolphin does not intend at this time to conduct a solicitation
with respect to any security of WHX Corporation. The filing of the press release
on Schedule 14A under Rule 14a-12 is made only as a cautionary matter and is
without prejudice to the possibility that Dolphin's intentions may change at any
time in the future. Donald T. Netter, the senior managing director of Dolphin,
owns 2,000 shares of Series A convertible preferred stock of WHX and may be
deemed a participant in any solicitation made by Dolphin.
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PRESS RELEASE
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DOLPHIN-I SEEKS LIST OF WHX PREFERRED HOLDERS AND KEY
BOARD MINUTES TO REDRESS ABSENCE OF CLASS
REPRESENTATION
STAMFORD, CONNECTICUT, July 8, 2004/Businesswire/ - Dolphin Limited Partnership
I, L.P., a Stamford, CT. based private investment partnership and the holder of
approximately 170,000 of the WHX Series A and B Convertible Preferred Stock, is
seeking a current list of preferred beneficial holders and key board minutes to
redress an absence of class representation. Accordingly, today Dolphin sent the
following letter to the Company:
July 8, 2004
Mr. Neale X. Trangucci, CEO
WHX Corporation
110 East 59th St.
NY, NY, 10022
Dear Mr. Trangucci:
Thank you for your prompt response to Dolphin Limited Partnership I, L.P.'s
letter of July 2, 2004 requesting that:
(i) The WHX ten member board be substantially reduced and two qualified
preferred directors be added, and
(ii) WHX pro-actively organize a preferred holder committee and
underwrite the related professional expenses, as is customary.
Unfortunately, your oral responses to us as well as your letter fail to answer
our key question: Given the Company's historical performance, what has the
Company's core management group and continuing ten member board done to earn the
trust of the preferred holders that there will be a fair process for all
stakeholders? In this regard, we believe that the Company has been insensitive
to four key facts:
(i) Over the past five years, common and preferred holders have lost
over $275 million while members of senior management and the WHX
board have been highly compensated;
(ii) The preferreds (with an aggregate redemption value of $276 million
excluding 15 quarters of accrued and unpaid dividends) have a market
value of nearly three times that of the equity, are senior to the
equity, but have no representation on the WHX board. Neither in our
conversations nor in your response letter have you offered a
credible explanation why the WHX ten member board should not be
significantly reduced, or why two representative preferred directors
should not be added (which, as our attorneys indicated, does not
necessarily have to include Dolphin representatives);
(iii) The Company has engaged Jefferies & Co. to advise on an as-yet
undisclosed recapitalization plan, which is likely to be of critical
importance to the holders of the preferred stock. Unlike the common
equity, the preferred holders have no representatives with full
access to Company information or to the proposed terms of the
recapitalization program. The Company has offered select preferred
holders access to information, about which the Company "makes no
representation or warranty as to [its] accuracy or completeness" and
"has no duty to update or supplement." This does not in our view
discharge the Company's fiduciary obligations to the preferred class
which, we believe, can only be achieved through preferred board
representation and a representative committee of preferred holders
underwritten by the Company.
(iv) Without consulting the preferred holders, on March 31, 2004 the
Company structurally subordinated stakeholders at the parent
(including the preferreds) by downstreaming significant cash and
operating assets from the parent to the Handy & Harman subsidiary
and executed a senior refinancing at no less than a 12% interest
rate at this subsidiary.
In your response letter, you stated that, with regard to the preferred holders
electing directors, the Company does not have any "present intention to either
support or hinder any proposal." Given the Company's current financial
circumstances and the lack of representation of the preferreds, we do not view
the addition of preferred directors as "disruptive at the present time" as
indicated in your letter. In fact, we have not yet heard a credible reason as to
why the Company has not bent over backwards to redress this situation.
Again, we understand from the Company's press release on June 7th and our
conversations with you that, just over 50% of the preferreds failed to even vote
at this year's June annual meeting (just missing a quorum). This is most
shocking, as sophisticated preferred holders, with fiduciary duties to their
investing constituencies should appreciate the overwhelmingly positive value of
obtaining board representation for the class. As we indicated, we believe that a
fully publicized process, in which the Company gives its blessing and
encouragement to the exercise
of the rights of the preferred holders, would lead to qualified preferred
representation on the board, measurably adding to any potential restructuring.
Finally, you have indicated to us, both in your letter and in our conversations,
that the Company favors the formation of a committee of preferred holders. Yet,
we have not seen the Company take any concrete steps in this direction,
notwithstanding Jefferies having been engaged for quite some time now.
Despite our overtures and our suggestions for a governance structure that fairly
addresses the rights and concerns of all preferred holders, we believe the
Company has been unresponsive. Dolphin has made many investments in its ten-year
history. In only a handful of circumstances have we found it necessary to take
public action. Accordingly, by separate letter and pursuant to our rights under
Delaware law, we will be requesting the most currently available list of
preferred beneficial holders (and the list that Jefferies has been using to
solicit preferred holders), and the minutes of the board meetings regarding the
hiring of Jefferies, the recapitalization plan, the asset downstreaming and the
costly refinancing that occurred on March 31, 2004.
Our door remains open if the Company chooses to modify its positions. We further
ask that you distribute this letter to the WHX board of directors.
Very Truly Yours,
/s/ Donald T. Netter
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Donald T. Netter
Senior Managing Director
Contact: L. Bolster
(203) 358-8000