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Suburban Lodges of America, Inc.
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(Name of Registrant as Specified In Its Charter)
Raymond A.D. French
Paul R. Coulson
Sharwell Securities Trading Ltd.
Kappa Alpha Ltd.
Hibernian Investment Managers
Yeoman International Holdings S.A
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The following is a press release issued by Raymond A.D. French on May 7, 2001.
French and Coulson criticize SLAM's Governance "Smoke Screen"
New York, New York - May 7, 2001 - Ray French and Paul Coulson, who are waging a
proxy contest for election to the board of Suburban Lodges of America, Inc.
(NASDAQ:SLAM), today called on Suburban Lodges to make meaningful and permanent
changes to the company's corporate governance structure.
Last Friday the company announced that it had removed the 'dead hand'
provisions from its poison pill, but the board retained the poison pill itself
and the right to reinstate the dead hand provisions at any time without
shareholder approval.
"The fact that the board did not make this change permanent, makes it
meaningless. If the Board had been serious about fixing the Company's poison
pill," Mr. French said, "they would have made the pill "chewable" and eliminated
the right of the Board to reinstate the dead hand by amending the pill. The way
things stand now, anytime the board feels threatened by a possible bid for the
company, they can reinstate the dead hand. Their action last Friday was nothing
more than a smokescreen. I have a lot of confidence in the Company's
shareholders, and I'm sure they won't be fooled by this pre-election ploy."
Mr. French said, "Instead of offering minimal cosmetic changes, the
Board needs to get serious about addressing the Company's corporate governance
problems. Serious changes are needed if shareholders are to have a stronger
voice in major decisions about the Company's future:"
- NEED FOR INDEPENDENT DIRECTORS. Two members of the Audit and
Compensation Committees and members of their families have
business relationships with the Company that, Mr. French and Mr.
Coulson believe, should disqualify them from serving on these
Committees. These two directors are also Mr. French's and Mr.
Coulson's opponents for election to the Board.
- ELIMINATION OF STAGGERED BOARD. Their current staggered board
serves to prevent the stockholders of the company from electing
an entirely new Board selected by them at any single Annual
Meeting.
- CHEWABLE POISON PILL WITH NO DEAD HAND - EVER. Not only was it
wrong for the Board to reserve the right to reinstate the dead
hand, Mr. French said, they should have made the pill 'chewable'
so that the stockholders would be given the choice to redeem it
if the company received a takeover offer at a premium that they
wanted to accept.
- NO OPT-OUT OF GEORGIA ANTI-TAKEOVER LAW. They have not chosen to
opt out of the Georgia anti-takeover law, thereby making it more
difficult for another company to acquire Suburban Lodges.
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Mr. French said: "The company has a strong arsenal of anti-takeover
defenses that can allow current management to reject a takeover offer, even if
it provides a significant premium to shareholders. If elected, we intend to
replace those defenses with a corporate governance structure that gives the
shareholders themselves the ability to reject or accept takeover offers for
their shares. In fact, as Directors committed to an unlocking of shareholder
value, we will encourage potential buyers to make premium-to-market offers for
the Company."
DEAD HAND POISON PILL. The term "dead hand poison pill" refers to a
provision that allows only "continuing directors" to redeem the pill. Continuing
directors are directors who were in office at a particular point in time (such
as when the pill was adopted) or are nominated by Continuing Directors. If a
poison pill has a dead hand feature, shareholders who favor an acquisition
proposal opposed by the board can not neutralize the pill by electing a new
board majority who, subject to their fiduciary duties, will redeem the pill in
order to sell the Company at the highest available price.
The dead hand pill is widely considered to be one of the most egregious
anti-takeover defenses, and, although legal in Georgia, is not even enforceable
in many states, such as Delaware.
"If Suburban Lodges' nominees for Director are elected," Mr. French
said, " there will be nothing to stop them from reinstating an even stronger
version of the 'dead hand' pill after the Annual Meeting if the company were the
target of a takeover, even if shareholders supported such a takeover. It is very
telling that, prior to our proxy contest, the current board never showed any
indication whatsoever of instituting shareholder-friendly corporate governance
improvements."
If elected, Ray French and Paul Coulson are committed to pushing for
meaningful and permanent improvements in the Company's corporate governance.
French and Coulson believe the first and most important of these improvements is
the achievement of a Board with a majority of independent Directors who will put
shareholders' interests, and only shareholders' interests, first. Shareholders
who want a Board free of conflicts of interest, and committed only to their best
interests, should send in their GOLD proxy cards and discard the white proxy
card mailed by management.
French and Coulson encourage shareholders to call their proxy solicitor
MacKenzie Partners, at (212) 929-5500 (call collect) or (800) 322-2885
(toll-free) with any questions they might have about how to vote their GOLD
proxy cards. Or, if shareholders would like to speak with Ray French directly,
he can be reached at (212) 582-0900 or (516) 924-1176.
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