-----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, AuxWfCD363h1G1UOLKkpfJvqX0DehHeLCcrxNSyLUI4/TVpVB1mQzUspozRjS7SP 8k0COMgqfzil2mZErRaVhw== 0000940180-99-001274.txt : 19991101 0000940180-99-001274.hdr.sgml : 19991101 ACCESSION NUMBER: 0000940180-99-001274 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIRMINGHAM STEEL CORP CENTRAL INDEX KEY: 0000779334 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 133213634 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 001-09820 FILM NUMBER: 99737949 BUSINESS ADDRESS: STREET 1: 1000 URBAN CENTER DRIVE STREET 2: SUITE 300 CITY: BIRMINGHAM STATE: AL ZIP: 35242 BUSINESS PHONE: 2059701200 MAIL ADDRESS: STREET 1: P.O. BOX 1208 CITY: BIRMINGHAM STATE: AL ZIP: 35201-1208 DEFA14A 1 SCHEDULE 14A SCHEDULE 14A (Rule 14a-101) SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission Only (as permitted by Rule 14a- 6(e)(2)) [_] Definitive Proxy Statement [X] Definitive Additional Materials [_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 BIRMINGHAM STEEL CORPORATION ----------------------------------- (Name of Registrant as specified in its charter) ---------------- (Name of person(s) filing proxy statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] 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: (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: (4) Proposed maximum aggregate value of transactions: (5) Total fee paid. - -------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: [BIRMINGHAM STEEL COPRORATION LOGO] Contacts: Roy Winnick/Roanne Kulakoff Kekst and Company 212-521-4842 or 4837 BIRMINGHAM STEEL SENDS LETTER TO STOCKHOLDERS BIRMINGHAM, Ala., October 29, 1999 - Birmingham Steel Corporation (NYSE: BIR) today said that it is sending the following letter and related material to its stockholders: October 29, 1999 Dear Fellow Stockholder: Birmingham Steel is currently under attack by a small group of dissident stockholders who, with less than 8% of the Company's stock, want to take complete control of your Company, without paying you a change of control premium. This dissident group includes James Todd, former Chairman and CEO of Birmingham Steel, and John Correnti, formerly of Nucor Corporation and the dissident group's hand-picked choice to become your Company's new CEO. The dissident group wants to take over your Company by electing its nominees to your Company's Board. Before you vote on this critically important matter, we urge you to take a hard look at Todd and Correnti and at their records at Birmingham Steel and Nucor, respectively--and then ask yourself whether Todd and Correnti can bring any real value to Birmingham Steel or to your investment in its stock. CAN YOU AFFORD JAMES TODD? In what has become an increasingly desperate attempt to take over your Company, the dissident group has launched a personal and no-holds-barred attack seeking to blame your current Board of Directors and management for the challenges Birmingham Steel has faced over the past three years. Indeed, the dissidents recently sent you a letter that was littered with half-truths and falsehoods about the actions and intentions of your Board of Directors, including a contemptible allegation of "blackmail" that is completely unfounded. What the dissident group has not told you--and hopes you will not find out--is that former CEO Todd and his senior management team were themselves primarily responsible for your Company's problems--problems that your current Board and management have spent the past three years addressing. In fact, James Todd's tenure as Birmingham Steel's Chairman and CEO (October 1991 to January 1996) was marked by bad decisions, bad execution and bad performance. Here are the facts about Birmingham Steel's performance under Todd's questionable "leadership": Fact #1: Massive Increase in Debt Caused by Todd. It was operational decisions and financial commitments made by the Todd management team--particularly decisions and commitments related to the SBQ division--that saddled your Company with a mountain of debt, damaged its earnings and greatly reduced its operational and financial flexibility. The dissident group's repeated attempts to blame the current Board of Directors and management for the Company's operational and financial challenges and the resulting impact on stockholder value is inappropriate, unfair and obviously self-serving. Fact #2: Stock Price Plunge Under Todd. During the last two years of Todd's tenure, Birmingham Steel's stock price plunged nearly 50%, from a high of $32.63 on March 18, 1994 to $16.38 on January 4, 1996, Todd's last day as CEO. Again, the dissidents' suggestion that the erosion of stockholder value began under the current Board and management is not correct. Fact #3: Inferior Performance of Core Operations Under Todd. The performance of the Company's core operations has shown substantial improvement since Todd left the Company, despite the worst industry conditions in over forty years. As outlined in the proxy materials previously mailed to you by Birmingham Steel, Todd's tenure as Chairman and CEO of the Company was marked by a series of errors of omission and commission, lack of business analysis, and ill- thought-out actions that led directly to many of the problems your Company has faced over the past three years. In light of this unimpressive record, Birmingham Steel and its stockholders cannot afford to let James Todd return to a position of power and influence at Birmingham Steel. WHO IS JOHN CORRENTI? Until what appears to have been his forced resignation a few months ago, John Correnti was President and CEO of Nucor. He and two other dissident group nominees also sit on the Board of Directors of Harnischfeger Industries, a company that recently filed for bankruptcy. The dissident group's entire campaign is based on the presumption that Birmingham Steel needs "saving" and that John Correnti is the perfect savior. They ask you to believe that Correnti is the preeminent operator of steel mini- mills in the world and that he possesses remarkable managerial skills. The fact is, neither of these assertions is correct. What is true is that Correnti was such a failure at Nucor that the Nucor Board, we believe, finally forced him to resign. Here is what Nucor Chairman H. David Aycock was quoted as saying when Correnti was forced out of Nucor:* "The [Nucor] Board said things have to change. We could not have a company that was drifting ... There was no effort to develop a strategic plan to carry the company forward to the next century ... There [have] been no significant innovation and developments in the company since the very early 1990's." (Charleston Post and Courier, June 5, 1999) * * * "The earnings [at Nucor] have been declining. And the return on assets has been in decline for some time. Part of that was management style." (Business Journal of Charlotte, June 19, 1999) * * * "[Nucor has] had impulsive management for so long, but we're at a different plateau now." (Business Week, June 21, 1999) If John Correnti's operational and management skills were not good enough for Nucor, how can the dissident group possibly think they are good enough for you and Birmingham Steel? - -------- * Permission to use the quotations cited in this letter was neither sought nor obtained. NUCOR STOCKHOLDERS PAID DEARLY FOR JOHN CORRENTI--WHY SHOULD YOU? Poor performance and poor management style do not come without a price. When Correnti became Nucor's CEO on January 2, 1996, Nucor's stock was trading at $56.75. When Correnti left Nucor on June 4, 1999, Nucor's stock was trading at $46.44, a decrease of approximately 18%. During the same period of time, the S&P 500 Index was increasing by approximately 114% and the Dow Jones Industrial Average was increasing by approximately 109%. And Correnti--in addition to the operational and management problems that culminated in his departure from Nucor--would come to Birmingham Steel with a very high price tag. This is what the dissident group already has agreed to have your Company pay Correnti if they take control of your Board: Annual Base Salary............................................... $ 600,000 Estimated Annual Bonus in Year 2000**............................ 1,080,000 1,000,000 Below-Market Stock Options***.......................... 1,625,000 ----------- $ 3,305,000 ===========
THE FUTURE OF BIRMINGHAM STEEL UNDER THE CURRENT BOARD AND MANAGEMENT LOOKS BRIGHT The good news for Birmingham Steel and the value of your investment is that the future looks bright for your Company. Under the leadership of your Company's highly experienced and dedicated Board of Directors--which includes eight independent directors, five of whom have served as CEO of ASARCO, Eaton, LTV, Texaco and Union Carbide--and an equally experienced and dedicated management team, Birmingham Steel has made significant progress in fixing the problems of the past. While much remains to be done, we believe that our recently announced strategic restructuring--which we expect to complete by no later than May 2000--is a major step forward in positioning the Company for increased operational and financial success and increased stockholder value both near and long term. This restructuring program--which the dissident group opposes--will allow Birmingham Steel to focus on our strong and profitable core mini-mill and scrap operations, reduce debt and minimize any future impact of the SBQ division. Moreover, we are already beginning to see the positive effect of the restructuring. Recently, Birmingham Steel announced net income for its first fiscal quarter ended September 30, 1999 of $5.8 million or $0.19 per share. Excluding start-up expenses at the Cartersville plant, net income for the quarter was $8.4 million or $0.28 per share. ---------------- The fate of Birmingham Steel and the value of your investment are in your hands. You can vote for an experienced and dedicated incumbent Board and management team or turn control over to a group that includes Todd, Correnti and their slate of Board nominees, seven of whom have no steel industry experience. You can vote for an incumbent Board and - -------- ** Bonus is equal, per Correnti's contract with the dissident group, to 1% of estimated earnings from core operations before interest, taxes, depreciation and amortization. Calculation excludes earnings from assets held for sale. *** Calculated on the basis of current market value of shares of Birmingham Steel common stock ($6.50 per share on October 27, 1999), less the exercise price of the options ($4.875 per share). management that have developed a well-thought-out strategic restructuring program that includes the sale of the SBQ division--or for a dissident group that wants to keep SBQ indefinitely and keep pouring untold millions of your money into it. IN SHORT, THE CHOICE IS YOURS. YOU CAN REJECT THE TODD-CORRENTI DISSIDENT GROUP AND THEIR NOMINEES BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD TODAY. WE URGE YOU NOT TO SIGN ANY BLUE PROXY CARD SENT TO YOU BY THE DISSIDENT GROUP. We thank you for your thoughtful attention to these important issues, and for your continued confidence and support. Sincerely, /s/ Robert A. Garvey ------------------------------------ ROBERT A. GARVEY Chairman and Chief Executive Officer IMPORTANT VOTE FOR A BOARD OF DIRECTORS THAT IS COMMITTED TO BUILDING THE VALUE OF BIRMINGHAM STEEL FOR ALL STOCKHOLDERS! WE STRONGLY URGE YOU TO VOTE FOR THE COMPANY'S BOARD OF DIRECTORS BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD TODAY! If you have any questions or need assistance in voting your shares, please call: Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor New York, New York 10022 Call Toll-Free: (888) 750-5834 Banks and Brokers call collect (212) 750-5833 SETTING THE RECORD STRAIGHT In their letters and press releases, the dissident group calling itself The United Company Shareholder Group makes numerous assertions and allegations that we believe are misrepresentations of fact. It is clear to us that, in their desperation to take control of the Company, the dissidents have been more than willing to play fast and loose with reality. For the benefit of our stockholders, we offer the following examples of the dissident group's assertions and the corresponding facts as we know and understand them. United Group Assertions Birmingham Steel Facts ----------------------- ---------------------- 1. Birmingham Steel might not receive an Birmingham Steel received an unqualified opinion from its auditors unqualified opinion from its auditors 2. Birmingham Steel has only $235 million Birmingham Steel has $250 million of of availability under its revolving availability today, which will credit facility through December 31, increase incrementally to $300 1999 million, effective January 1, 2000 3. Birmingham Steel has "sub-standard" Birmingham Steel's core mini-mills and management scrap operations are strong and profitable, despite some of the worst industry conditions in many years Performance of the core operations under current management is demonstrably better than under Todd's management Birmingham Steel's prior losses are primarily attributable to the SBQ division, were caused by misguided strategic and operational decisions made by the Todd management team and should now be a thing of the past as the strategic restructuring is implemented and completed 4. John Correnti is the world's premiere The Board of Nucor--a mini-mill mini-mill operator operation--decided that Correnti was not right for the job of running Nucor Nucor's equity did not grow--it shrank--while Correnti was CEO at Nucor Correnti has little experience with SBQ products and, to our knowledge, no experience operating a leveraged company 5. The United Group has a "plan" for Hiring unidentified management and Birmingham Steel consultants and hoping they will find a way to make SBQ work is not a plan "Fixing" SBQ is the wrong plan; the Company does not have the financial resources to continue to fund the SBQ operations indefinitely 6. SBQ division is easily "fixable" for Significant capital--perhaps as no more than $15 million much as $100 million--would be needed to make the SBQ division operationally competitive The issue at the SBQ division is resource availability, not managerial expertise
United Group Assertions Birmingham Steel Facts ----------------------- ---------------------- 7. Continuing to retain and operate SBQ is Continuing to operate the SBQ a no-risk proposition division would seriously jeopardize the Company's financial health 8. Defaults under financing agreements Costs attributable to the SBQ have caused Birmingham Steel's problems division are responsible for Birmingham Steel's high debt levels and the terms of its financing arrangements 9. Birmingham Steel's current Board is Todd was the sponsor of the SBQ responsible for SBQ acquisition Six of Birmingham's nine current directors were not directors when the acquisition of SBQ was approved 10. Decision to invest in American Iron Detailed letter of intent for AIR Reduction (AIR) joint venture was made joint venture was signed by Todd by current management in August 1995--prior to current management's joining Birmingham Steel. Also, financing arrangements were put in place by CFO appointed by Todd--not current CFO 11. Birmingham Steel has misled Defects in caster were not known, shareholders about the Memphis or knowable, until production operations levels reached the 50,000 ton per month operating rate earlier this year 12 Birmingham Steel has over-spent for Cost for Cartersville Cartersville significantly below "greenfield" cost of new mill Dissident group's comments demonstrate their lack of understanding of Cartersville's importance to Birmingham Steel's future 13. Birmingham Steel is "blackmailing" Lenders normally require change shareholders with change of control of control provisions and, as the provisions dissidents know, the lenders refused Birmingham Steel's request to delete these provisions from the Company's financing agreements 14. Bob Garvey has no interest in As the beneficial owner of Birmingham Steel post-retirement 264,782 shares of Birmingham Steel stock, Bob Garvey has, and will continue to have, a significant personal stake in Birmingham Steel's future Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The common stock of Birmingham Steel is traded on the New York Stock Exchange under the symbol "BIR."
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