SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities Exchange Act
of 1934
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Dairy Mart Convenience Stores, Inc.
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(Name of Registrant as Specified in Its Charter)
Committee of Concerned Dairy Mart Shareholders
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant
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COMMITTEE OF CONCERNED DAIRY MART SHAREHOLDERS
360 BLOOMFIELD AVENUE, SUITE 208
WINDSOR, CT 06095
May 16, 2000
TIME IS RUNNING SHORT
PLEASE VOTE YOUR BLUE PROXY CARD TODAY TO SALVAGE THE
VALUE OF YOUR INVESTMENT IN DAIRY MART
Dear Fellow Dairy Mart Shareholder:
When the Committee of Concerned Dairy Mart Shareholders began this
contest we told you that three things would happen:
>> The Committee's nominees would make their best efforts to force a sale of
Dairy Mart at a significant premium to the pre-contest $1 5/8 stock price.
>> Management would desperately announce brand new plans for Dairy Mart in
response to our contest in order to save their high-salaried positions,
cars, computers and repriced stock options.
>> Management would attempt to avoid blame for its terrible performance by
engaging in a nasty smear campaign against Frank Colaccino, who served as
Dairy Mart's President and/or CEO at a time when Dairy Mart experienced
record profits and EBITDA -- unlike the massive losses and stock price
decline of current management who took control six years ago.
WE WERE RIGHT ON ALL ACCOUNTS! LOOK AT WHAT HAS HAPPENED SINCE THE COMMITTEE
LAUNCHED ITS PROXY CONTEST JUST LAST MONTH:
>> Dairy Mart responded to our contest by opposing our plan to sell the
company and announcing a defeatist plan to sell 40% of Dairy Mart's stores.
When current management sold the Northeast stores in June 1997, the
company's debt and losses actually increased and the stock price has since
---
declined by approximately 50%!
>> As a result of OUR efforts, just days later, management abandoned their
unpopular strategy of selling Dairy Mart stores, and announced the
possibility of a sale of the entire company, resulting in a stock price
leap from $1 5/8 prior to the announcement of our contest to a closing
stock price of $4 1/4 on May 16. AMAZINGLY, THE BOARD AND MANAGEMENT WANT
YOU TO BELIEVE THAT ITS POOR PERFORMANCE OVER THE PAST SIX YEARS IS THE
REASON THE STOCK PRICE SUDDENLY INCREASED BY 70%.
>> Management has unleashed a vicious and unwarranted attack against former
CEO Frank Colaccino, rewriting history to magically absolve itself from six
years of pathetic performance in which it racked up cumulative losses of
$34 million and mountains of debt (17:1 debt-to-equity ratio), while
spending millions to compensate themselves and defend against shareholder
lawsuits. In contrast, under Mr. Colaccino, Dairy Mart was profitable in
four out of five years, with one year of loss during a planned
restructuring. Rather than being "saddled" with debt, the company had a
little more than 2:1 debt-to-equity ratio under Mr. Colaccino. The starkly
contrasting performances of Mr. Colaccino and the current management team
speaks for itself.
WHO CAN YOU TRUST TO SELL DAIRY MART?
As a last desperate attempt to save their salaries, bonuses and other corporate
perks, the Dairy Mart Board and management team are tempting shareholders with
the possible sale of the company. But look at what they said in their May 16
letter. After five years of disastrous management, they announced the hiring of
an investment banker "to explore all of the Company's strategic options,
including the sale of the company." Management also claimed in its letter that
this proxy contest is distracting them from pursuing a sale of the company.
Ask yourself the following questions:
>> Why is the Stein and Landry management team beginning to explore their
options ten days before they face losing a proxy fight?
>> If the board is reelected on May 25 and management's jobs are safe for
another year, WILL THEY REALLY SELL THE COMPANY? OR, IS ONE OF THEIR
"OPTIONS" TO CONTINUE RUNNING THE COMPANY AS POORLY AS THEY HAVE FOR THE
PAST SIX YEARS? IN THEIR LETTER, THEY HAVE NOT RULED OUT SELLING 40% OF
DAIRY MART'S STORES AND CONTINUING TO RUN THE COMPANY.
>> Do you really think that the Committee is "distracting" the process of
selling the company with the annual meeting only a week away, when
management has announced the hiring of an investment banker within the last
24 hours?
>> Can you trust the board and management to act in your best interests when
millions of dollars have been spent to defend themselves and to settle
complaints of breaches of their fiduciary duties?
MANAGEMENT CANNOT BE TRUSTED
Incredibly, despite six years of heavy losses and one failure after another,
management's latest letter claims full credit for the increase in stock price
over the past few weeks. Imagine, presiding over a stock price decline from $7
to $1 5/8 and then boasting about a subsequent increase to $4 1/4 that only
occurred because shareholders took action to force the company's hand.
This contest is not about any one person or "Who Wants to Be a CEO." Our
Committee represents shareholders who recognize that it is in the best interests
of all Dairy Mart shareholders for the company to be sold at the highest
possible price. The Committee's objective is clear:
>> We do not want to take control of Dairy Mart's Board to become its new
management team.
>> We do not want to waste the shareholders time and money "exploring"
alternatives and options that have already failed.
>> We do not want the expensive corporate perks, executive compensation or
golden parachutes with which management has rewarded itself.
THIS MAY BE YOUR LAST CHANCE TO SELL DAIRY MART WHILE
WE STILL HAVE A COMPANY TO SELL
If management is not replaced, it will likely continue to run our company as
poorly as it has for over a half decade. If they continue on their current path
for much longer, we believe it is likely that Dairy Mart will be worth less in a
sale in the future than it would be worth if sold today. OUR COMMITMENT TO THE
DAIRY MART SHAREHOLDERS IS THAT WE WILL ACCELERATE THE PROCESS OF SELLING DAIRY
MART FOR THE HIGHEST POSSIBLE PRICE. If you agree that it is time for all
shareholders to realize the full value of Dairy Mart shares through a sale of
the company without delay then PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE
PROXY CARD TODAY.
Sincerely,
COMMITTEE OF CONCERNED DAIRY
MART SHAREHOLDERS
By: Frank Colaccino, Chairman
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IMPORTANT
1. Be sure to vote on the Committee's BLUE proxy card. We urge you not to
sign any proxy card which is sent to you by Dairy Mart Convenience Stores,
Inc.
2. If any of your shares are held in the name of a bank, broker or other
nominee, please contact the person responsible for your account and direct
him or her to vote on the BLUE proxy "FOR" the Committee's nominees.
3. If you have questions or need assistance in voting your shares, please call
toll free:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street, 10th Floor
New York, NY 10004
CALL TOLL-FREE (800) 223-2064
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