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RJR
Nabisco Logo News Release
______________________________________________________________________________
CONTACT: Carl Makovich
(212) 258-5785
LEBOW BOARD DEPOSITIONS REVEAL LACK OF COMMITMENT
TO NABISCO SPIN-OFF; EMPHASIS ON LIGGETT, REYNOLDS MERGER
NEW YORK, NEW YORK -- April 1, 1996 -- RJR Nabisco said today that depositions
taken from Bennett LeBow's slate of director nominees for RJR Nabisco reveal
that, while Bennett LeBow -- in public statements and SEC filings -- was
representing his board nominees as committed to an immediate spin-off of
Nabisco, the nominees were not, in fact, committed to a spin-off.
Contrary to statements made by Bennett LeBow and filed in Brooke
Group's proxy materials during the period of the consent solicitation, a
number of LeBow nominees testified under oath that they were not committed to
an immediate spin-off of RJR Nabisco and that commitment to the spin-off was
not a criterion for joining the LeBow board slate.
The depositions, recently released by RJR Nabisco, were taken in
January, 1996, in connection with a lawsuit currently pending against Bennett
LeBow, regarding possible violation of SEC regulations.
Steven F. Goldstone, president and chief executive officer of RJR
Nabisco, speaking today in Washington, D.C. at the Council of Institutional
Investors to several hundred institutional investors, referred to the
deposition evidence in his speech, commenting that RJR Nabisco shareholders
would not be well served "by turning over RJR Nabisco to Mr. LeBow, Mr. Icahn
and a slate of directors that is riddled with financial conflict and not even
committed to the spinoff as Mr. LeBow promised to you they were."
Brooke Nominees Not Committed to Nabisco Spin-off
Under oath, seven nominees refused to testify that they were
committed to an immediate spin-off at a time when LeBow was representing to
RJR Nabisco's investors that the LeBow slate would guarantee an immediate
spin-off.
In fact, the November 21, 1995 press release announcing Brooke's
board said: "The board proposed by Brooke would be committed to effecting an
immediate tax-free spin-off of the Nabisco food business to RJR Nabisco
shareholders."
In addition, the presentation used by Brooke in its meetings with
institutional investors during the consent solicitation features a flip chart
which states that Brooke "will nominate a slate of directors prepared to take
this risk [spin-off] if [RJRN] management is not."
Several nominees stated that they had neither studied the issues
involved nor discussed the transaction with either LeBow or other informed
sources.
Representative findings and comments from the LeBow nominees include
the following:
o Robert Frome did not commit to the Nabisco spin-off before joining the
board. Mr. Frome said in his deposition testimony that he has never told
Bennett LeBow that he would support a spin-off, but "I'm sure he assumes
that I do." Mr. Frome said he had never received a report from a financial
advisor relating to a spin-off of Nabisco and that he has never received a
written or oral opinion regarding its legality.
o Rouben Chakalian initially said under oath that he joined the LeBow slate
for "...no specific reason. Because I wanted to...Because I know the
tobacco business" and "really not" in connection with spin-off. Later in
his testimony. Mr. Chakalian then said he had told LeBow he would vote to
support spin-off.
o Arnold Burns stated that willingness to support a Nabisco spin-off was
"absolutely not" required for LeBow's nominees.
o Barry Ridings said he has never analyzed the Nabisco spin-off and that he
was not committed to a spin-off. In his deposition, Mr. Ridings says, "I
have not guaranteed how I would vote on any matter -- any matter. I don't
have any information yet that would...fulfill the sort of obligations I
have as a director to make that sort of a decision."
o Richard Lampen also indicated that he had not studied the spin-off and
could not commit to the transaction. He said it was a decision that
"...could only be taken after a full...review of all the issues. It's
something that as a nominee I would have to exercise my fiduciary duties
and understanding fully all of the issues relating to a potential spin-
off, a process that I have not gone through."
o Similarly, Peter Strauss stated that he had not committed to support a
spin-off if elected a director of RJR Nabisco.
Liggett/Reynolds Merger Topic of Nominees' Meetings
While LeBow has said that all he wants from RJR Nabisco is a spin-off
of Nabisco, the depositions, taken together, show that his real agenda,
throughout the consent solicitation, was to seek a merger of Liggett with RJR.
Merger was also the point of emphasis with the nominees. While the
LeBow nominees were apparently not briefed on the issues surrounding a
spin-off either before or in the months after they agreed to be nominees, they
were briefed regarding a merger between Liggett and the R.J. Reynolds tobacco
business of RJR Nabisco.
In December 1995, at a meeting of the LeBow nominees, a lengthy
document, which included extensive analysis of a combination of the two
companies and pro forma financials of a Liggett/Reynolds combination, were
distributed to all the nominees.
In addition, according to the deposition testimony, during this
period, when he was meeting with institutional investors of RJR Nabisco, LeBow
told at least one of his nominees that he was uncomfortable with the fact that
he was not mentioning his hopes of merging his failing tobacco company with
Reynolds to the institutional investors.
While not revealed in the depositions, it is also relevant to note
that while publicly disclaiming interest in a merger between Liggett and
Reynolds during this period, LeBow had already initiated discussions with
plaintiffs attorneys that resulted in the March 13 "settlement"
announcement, a pact that included terms contemplating a combination of
Liggett and Reynolds.
o Although LeBow insists he abandoned the idea of a merger in August of 1995,
the depositions reveal that he continued to update the proposal through
October and November 1995.
o LeBow testified that he told his nominees about the possibility of a merger
with Liggett.
o William Starbuck testified that, at a gathering of his board nominees,
LeBow said that "he was uncomfortable talking to the large stockholders and
not mentioning his hope of possibly merging Liggett with RJR."
o LeBow distributed to his nominees an information packet about RJR that
began with a "summary of transaction." The "transaction" was a merger of
Liggett and RJR. While Robert Frome said he never discussed supporting a
spin-off with Bennett LeBow, Frome testified that he read the document and
assumed that LeBow intended to merge Liggett with RJR. Frome mentioned
specifically a book that was distributed to the nominees with information
"illustrating the financial impact of a combination between RJR and
Liggett...I have to assume this is part of the plan."
o Rouben Chakalian was also aware of the preparation by someone at Liggett of
pro forma operating statements from RJR and Liggett on a combined basis.
Under oath, Mr. Chakalian initially said that he would vote for a
LiggettReynolds merger if the LeBow slate was elected, though he later
retracted this, claiming confusion.
For copies of a more detailed summary of the deposition testimony or
copies of the depositions, please contact Julia Gusakova, RJR Nabisco, (212)
258-5782.
RJR logo
needs your vote . . .
Vote the "WHITE CARD" today!
If you need assistance completing the WHITE CARD, help centers will be set up
in locations across the company. Employee volunteers will be there to answer
questions or offer assistance in completing your proxy vote.
NO LeBOW (name has a slash through it)
JUST SAY NOT TO LEBOW.
DESTROY THE "BLUE CARD."
LeBOW . . .
As the facts about Bennett LeBow's recent "settlement" become
public, shareholders of RJR Nabisco are finding out what LeBow really settled
- - NOT MUCH. Our tobacco company remains confident that it will prevail in all
pending litigation and we have no intention of settling any claims.
. . . LeBOGUS.
LeBow's deal is a reckless publicity ploy which has hurt our company and our
industry.
Here's what some experts had to say:
"It's going to get a lot more lawyers interested in going after tobacco
companies."
Marc Galanter, Univ. of Wisconsin Law School, The New York Times
"Instead of limiting liability, LeBow would unleash a new flood of
litigation." Gary Black, Sanford C. Bernstein research report
"LeBow has not escaped the threat of litigation."
Stanley M. Rosenblatt, Tobacco Plaintiffs' Attorney, The New York Times
"If there's any fantasy by Liggett that they can settle it all and come out
OK... it's just that - a fantasy."
Richard Daynard, Tobacco Plaintiffs' Attorney, BusinessWeek
"RJR would be unable to compete...it would be extremely debilitating."
Advertising Age
WHAT NEXT?
Already, LeBow's irresponsible actions have cost holders of RJR Nabisco and
other tobacco-related stocks billions of dollars of market value. RJR Nabisco
shareholders have cause for real concern over what reckless action he will
dream up next.
Vote your proxy for the Board of Director of RJR Nabisco.
You can't afford not to.
RJR Nabisco Logo
Vote your WHITE proxy today. If you have any questions or need assistance in
voting your WHITE PROXY, PLEASE CALL:
MacKenzie
Partners, Inc. D.F. King & Co. Inc.
Toll-Free 800-322-2885 Toll-Free 800-290-6430
No permission has been sought or received to quote from, or refer to,
published materials cited in this advertisement.