-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FciUMBhndIaMctSWtVT2naHzFcCTaXpthPFOQ6Tkffir9YKShawwP2Rao5uFuEFj nUXyUQBXi0uL8Pm+XucrAA== 0000921895-98-000945.txt : 19981203 0000921895-98-000945.hdr.sgml : 19981203 ACCESSION NUMBER: 0000921895-98-000945 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19981202 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KINARK CORP CENTRAL INDEX KEY: 0000055805 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 710268502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-31242 FILM NUMBER: 98762524 BUSINESS ADDRESS: STREET 1: 2250 EAST 73RD STREET STREET 2: SUITE 300 CITY: TULSA STATE: OK ZIP: 74136-6832 BUSINESS PHONE: (918)494-0964 MAIL ADDRESS: STREET 1: 2250 EAST 73RD STREET STREET 2: SUITE 300 CITY: TULSA STATE: OK ZIP: 74136-6832 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL CO DATE OF NAME CHANGE: 19690601 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL & GAS CO DATE OF NAME CHANGE: 19680906 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STEEL PARTNERS II L P CENTRAL INDEX KEY: 0000915653 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 750 LEXINGTON AVE 27TH FL CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 150 EAST 52ND STREET, 21ST FLOOR CITY: NY STATE: NY ZIP: 10022 SC 13D/A 1 SCHEDULE 13D AMENDMENT NO. 10 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 10)(1) KINARK CORPORATION - -------------------------------------------------------------------------------- (Name of issuer) COMMON STOCK, $.10 PAR VALUE - -------------------------------------------------------------------------------- (Title of class of securities) 494474109 - -------------------------------------------------------------------------------- (CUSIP number) STEVEN WOLOSKY, ESQUIRE OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP 505 Park Avenue New York, New York 10022 (212) 753-7200 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) December 1, 1998 - -------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Note. six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 10 Pages) Exhibit Index on Page 8 - -------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 2 of 10 Pages - ----------------------------- --------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS STEEL PARTNERS II, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS* PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OR ORGANIZATION DELAWARE NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 442,200 OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER -0- 9 SOLE DISPOSITIVE POWER 442,200 10 SHARED DISPOSITIVE POWER -0- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 442,200 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.52% 14 TYPE OF REPORTING PERSON* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 3 of 10 Pages - ----------------------------- --------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS WARREN LICHTENSTEIN 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS* PF, OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OR ORGANIZATION USA NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 442,250 OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER - 0 - 9 SOLE DISPOSITIVE POWER 442,250 10 SHARED DISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 442,250 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.52% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 4 of 10 Pages - ----------------------------- --------------------------- This constitutes Amendment No. 10 ("Amendment No. 10") to Schedule 13D filed by the undersigned on March 25, 1995 (the "Schedule 13D"). Except as specifically amended by this Amendment No. 10, the Schedule 13D, as amended, remains in full force and effect. Defined terms shall have the meaning specified in the Schedule 13D, except as otherwise provided herein. Item 3 is amended to read in its entirety as follows: Item 3. Source and Amount of Funds or Other Consideration. The aggregate purchase price of the 442,200 Shares owned by Steel Partners II is $1,465,975. The Shares owned by Steel Partners II were acquired with partnership funds. The aggregate purchase price for the 50 Shares purchased by Mr. Lichtenstein is $250, and came from his personal funds. Item 4 is hereby amended to add the following: Item 4. Purpose of Transaction. On December 1, 1998, the Reporting Persons sent a letter to the Issuer's Board of Directors, in which, among other things, the Reporting Persons questioned Issuer's poor operating performance and lagging stock price since its 1992 high (-78.1%), stating, among other concerns, the Reporting Persons' strong belief that the Issuer must take steps to pursue certain strategic business initiatives to enhance shareholder value, including the sale of certain underperforming assets or the sale of the Issuer as a whole. The description of the letter does not purport to be complete, and is qualified in its entirety by reference to the Letter, which is filed as Exhibit 1 to this Amendment No. 10 to Schedule 13D. Depending upon such factors as the Reporting Person considers relevant from time to time, the Reporting Person may seek further contact with the Issuer, the Issuer's representatives and other persons interested in the Issuer, for the purpose of discussing the letter. Depending upon the Issuer's response to the letter, if any, the results of further contact with the Issuer, if any, market considerations and other factors as the Reporting Person considers relevant from time to time, the Reporting Person may consider additional courses of action with respect to the Issuer, including acquiring additional Shares or other securities of the Issuer in the open market, in privately negotiated transactions or through a tender offer or otherwise, or selling Shares in the open market or otherwise, on such terms and at such times as the Reporting Persons may deem advisable. The Reporting Persons may also propose that the Issuer retain an investment banker to solicit offers for a transaction whereby all or a portion - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 5 of 10 Pages - ----------------------------- --------------------------- of the Issuer be sold. In connection therewith, the Reporting Persons may seek to participate in such transaction or seek to acquire control of the Issuer in a negotiated transaction or otherwise. Should the Reporting Persons believe that the Issuer's Shares continue to be undervalued, the Reporting Persons also may seek in the future to have one or more of its representatives appointed to the Board of Directors of the Issuer, by agreement with the Issuer or otherwise, including by running its own slate of nominees at an annual or special meeting of the Issuer. The Reporting Persons may in the future propose other matters for consideration and approval by the Issuer's stockholders or the Board of Directors, through a solicitation of proxies, consent solicitation or otherwise, but has not identified such matters at this date. Although the foregoing activities represent the range of activities within the current contemplation of the Reporting Person, it should be noted that the activities within such contemplated range are subject to change at any time. Items 5(a) and (c) are amended to read in their entirety as follows: Item 5. Interest in Securities of the Issuer. (a) The aggregate percentage of Shares of Common Stock reported owned by each person named herein is based upon 6,778,345 Shares outstanding, which is the total number of Shares of Common Stock outstanding as reported in the Company's Form 10-Q for the quarter ended September 30, 1998. As of the close of business on December 1, 1998, Steel Partners II beneficially owned 442,200 Shares of Common Stock, constituting approximately 6.52% of the Shares outstanding. Mr. Lichtenstein beneficially owned 442,250 Shares, representing approximately 6.52% of the Shares outstanding. Mr. Lichtenstein has sole voting and dispositive power with respect to the 50 Shares owned by him and the 442,200 Shares owned by Steel Partners II by virtue of his authority to vote and dispose of such Shares. (c) Schedule A annexed hereto lists all transactions in the Issuer's Common Stock in the last sixty days by the Reporting Persons. Item 7 is amended to read as follows: Item 7. Material to be Filed as Exhibits. 1. Letter dated December 1, 1998 from Steel Partners II, L.P. to the Board of Directors of the Issuer - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 6 of 10 Pages - ----------------------------- --------------------------- SCHEDULE A Transactions in the Shares Within the Past 60 Days Shares of Common Price Per Date of Stock Purchased/ Share Purchase/ (Sold) Sale STEEL PARTNERS II, L.P. (2,500) 2.34492 11/10/98 (2,500) 2.34492 11/12/98 (500) 2.42990 11/18/98 (700) 2.44991 11/19/98 WARREN LICHTENSTEIN None. - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 7 of 10 Pages - ----------------------------- --------------------------- SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 1, 1998 STEEL PARTNERS II, L.P. By: Steel Partners, L.L.C., General Partner By: /s/ Warren G. Lichtenstein ----------------------------- Warren G. Lichtenstein, Chief Executive Officer /s/ Warren G. Lichtenstein --------------------------------- WARREN G. LICHTENSTEIN - ----------------------------- --------------------------- CUSIP No. 494474109 13D Page 8 of 10 Pages - ----------------------------- --------------------------- Exhibit Index Page 1. Letter dated December 1, 1998 from Steel 9 Partners II L.P., to the Board of Directors of the Issuer EX-99.1 2 LETTER DATED DECEMBER 1, 1998 December 1, 1998 Board of Directors Kinark Corporation 7060 South Yale Tulsa, OK 74136-3324 Dear Sirs: Steel Partners II, L.P. ("Steel Partners" or "Steel") has been a long-term shareholder of Kinark Corporation ("Kinark" or "the Company") and currently owns 442,200 shares or 6.52% of the primary shares outstanding. As an investor that seeks out opportunities in undervalued securities, Steel Partners has sought, with some success, to find investments and assist companies and all of their shareholders in realizing significant value over the long term. Steel continues to believe there is significant value inherent in Kinark's assets despite dismal operating performance during the 1990's which includes minimal revenue growth and a significant decline in earnings, resulting in a poorly performing stock. Kinark shareholders have not been rewarded for their investment in Kinark during the 1990's. Since reaching a high of $10.88 in the first quarter of 1992, Kinark's share price has dropped precipitously to its current price of $2.38. This represents an absolute return of -78.1% to shareowners of Kinark Corporation. In comparison, the NASDAQ Composite returned 230.8%, the Russell 2000 Index returned 103.2% and the S&P 500 returned 178.8% during the same time period. Additionally, the current share price represents a -20.7% decline from the rights offering price of $3.00 in late 1996. A review of each of Kinark's business lines illustrates why shareholder value has suffered since the early 1990's. Galvanizing In the early 1990's, Kinark earned as much as 26.1% or $4.82 million on $18.5 million of Galvanizing annual revenue. Since that time, Kinark has acquired additional Galvanizing assets which doubled revenues to $38.6 million, however Galvanizing earnings slumped to $2.6 million or 6.9% in 1997. In the early 1990's, the Company blamed its poor performance in Galvanizing on a recession; recently it has blamed zinc prices and a competitive environment. Kinark's Galvanizing sales have been relatively flat the past three years, not even achieving parity with inflation. Meanwhile, some of its Galvanizing competitors continue to enjoy revenue growth and operating margins greater than 20% compared to Kinark's dreadful 6.9% margin. Warehousing North American Warehousing has been a slow growing business in recent years and subject to significant business risk in that 55% of its revenues come from one client. In the third quarter, Kinark lost this account! Chemical Storage Lake River Chemical Storage has lost money in two of the last three years and revenues are down 14.6% and 6.5% through three months and nine months 1998, respectively. Steel Partners Recommends that Kinark Either Put Itself Up for Sale or Sell Underperforming Assets Steel Partners believes that much of Kinark's problems stem from management's lack of focus on its core Galvanizing business and its continued investment in its non core assets such as the Chemical Storage and Warehousing businesses despite poor performance and no apparent competitive advantages in these businesses. Our concern with the direction of Kinark's business is heightened by Kinark's recent determination to make a $443,000 investment of an undisclosed nature. This investment was made despite other available alternatives to enhancing shareholder value including paying down a portion of the $9.3 million of Kinark debt or buying back Kinark stock. One can only ascertain from this investment decision that, despite Kinark's depressed share price, the Company when given a choice, would rather invest in another Company than invest in Kinark stock. As a long time shareholder with a sizable stake in Kinark, we have grave concerns about this decision. Kinark's precipitous stock price decline to $2.38 from $10.88 in early 1992 while the broader markets have risen sharply during this time period is a clear indictment of the Company's poor strategic and operating performance. As such, Steel Partners strongly urges Kinark to focus on selling off underperforming assets or looking for a buyer for the entire company so as to create immediate shareholder value where none has been created since early 1992! We believe there are a number of logical buyers who undoubtedly would be interested in buying Kinark. Sincerely, Warren G. Lichtenstein Chairman -----END PRIVACY-ENHANCED MESSAGE-----