GrafTech Issues Statement Regarding Board Nominations
Via Email and Fedex
Mr.
Suite 106
Dear Nathan:
It is unfortunate that we could not have come to an agreement to add independent Directors to the GrafTech Board and avoid the distraction of a proxy contest in 2015. I thought you and the Board were engaged in mutual and good faith negotiations to arrive at a reasonable solution in the best interest of all shareholders.
As you know, all Directors except for me are new to the GrafTech Board within the last 12 months.
I too believed that all Directors would come poised to work collaboratively and constructively to improve efficiency, simplify the organization, plan for the future and generate long-term value for all stakeholders. Unfortunately, that turned out not to be the case. Neither you nor your other two representatives,
Your conceptual discussions with the Board about extending the maturity of some of your senior subordinated notes due in
As an independent Director, I, along with my fellow Directors, have a fiduciary responsibility to follow a diligent process and make informed decisions in the best interest of all stockholders. We believe that stockholders would object to giving you control of the Board, particularly when you are not offering to pay any premium (and have at best suggested only the possibility that there might be some interest and fee savings at a later date), when you have repeatedly demanded reimbursement for over
Neither you nor Karen or David came forward with any actionable strategy, save one - - pursue a commodity-focused, volume-based graphite electrode strategy. This is a strategy that the other independent GrafTech Board members, independent experts, third party analysts, a credit rating agency and most stockholders recognize would be disastrous for
Despite this, Joel and the management team have expeditiously developed and successfully executed on initiatives to improve operations, reduce costs, enhance liquidity and effectively respond to continuing weak demand from the global steel industry and other end market challenges to insure long-term success of the Company. These initiatives include:
- An ongoing company-wide cost savings program, which is enabling
GrafTech to achieve total annual cost savings of more than$120 million (more than 10% of annual sales). - Optimization of the graphite electrode manufacturing platform by rationalizing its two highest cost manufacturing sites, including significant headcount reductions.
- Changes to the operating and management structure to simplify and decentralize the organization.
- Redesign of the Company’s research and development function to accelerate innovation for new product development and commercial introduction.
- Downsizing of the Company’s corporate functions, including headcount and other SG&A reductions.
- Rationalization of underperforming product lines.
- Enhancement of financing arrangements that increased borrowing capacity by over
$125 million in the past nine months. - Significant inventory reduction (over
$70 million in 2014). - Continued development of new products for consumer electronics markets, including lithium ion battery and crystal growth markets which have contributed approximately 50% of the revenue in the Engineered Solutions segment, which will provide long-term value creation for the Company and its stockholders.
These initiatives have allowed
I find your characterization of the write-off of the
There is of course more work to be done, and the management – with no actionable input from you – is presently focused on successfully driving that work forward to enhance long-term value for all of our stockholders. I am disappointed that you have chosen to further distract management and the Board from that work and instead have chosen to subject the Company to the cost and disruption of another proxy contest despite the addition of three of your representatives to the Board at the 2014 Annual Meeting. The Board has included and carefully and thoughtfully listened to you, David or Karen in every aspect of its decision-making, and has had no intention of excluding any of you from the Company’s governance in the future. I am disappointed that you have rejected the Board’s willingness to add independent Directors who would bring new and beneficial skill sets to the Board for the benefit of all shareholders.
The Board and management will continue to take action to enhance long-term and sustainable value of the enterprise. The GrafTech Board has been and continues to be committed to active and full engagement in open dialogue on all opportunities and challenges facing the Company.
The Board will carefully review your nominations and present its recommendation with respect to the election of Directors in its definitive proxy statement, which will be filed with the
I hope that we can continue to work together as fellow Board members and to resolve this without a public campaign.
Sincerely,
Chairman of the Board
IMPORTANT: THE COMPANY WILL FILE WITH THE SEC AND DISTRIBUTE TO STOCKHOLDERS A DEFINITIVE PROXY STATEMENT IN CONNECTION WITH THE COMPANY’S 2015 ANNUAL MEETING OF STOCKHOLDERS. THE COMPANY STRONGLY ADVISES ALL STOCKHOLDERS TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. THE COMPANY’S PROXY STATEMENT, AS FILED, AND ANY FURTHER AMENDMENTS, SUPPLEMENTS OR OTHER RELEVANT PROXY SOLICITATION DOCUMENTS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT WWW.SEC.GOV, OR BY CONTACTING INVESTOR RELATIONS,
THE COMPANY AND ITS DIRECTORS AND OFFICERS AND OTHER PERSONS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM THE COMPANY’S STOCKHOLDERS WITH RESPECT TO THE ELECTION OF DIRECTORS. INFORMATION ABOUT THE COMPANY’S DIRECTORS AND EXECUTIVE OFFICERS AND THEIR OWNERSHIP OF THE COMPANY’S COMMON STOCK WILL BE SET FORTH IN THE DEFINITIVE PROXY STATEMENT FOR THE COMPANY’S 2015 ANNUAL MEETING OF STOCKHOLDERS, WHICH WILL BE FILED WITH THE
NOTE ON FORWARD-LOOKING STATEMENTS: This news release and related discussions may contain forward-looking statements about such matters as: our outlook; growth prospects and rates; the markets we serve and our position in them; future or targeted operational and financial performance, profitability, cash flow, liquidity, sales, costs and expenses, tax rates, working capital, inventory levels, debt levels, capital expenditures, ebitda, cost savings and business opportunities and positioning; strategic plans; cost, inventory and supply chain management; rationalization, product line change, cost competitiveness, liquidity and related initiatives and their impact; possible, expected or targeted changes in production capacity or levels, operating rates or efficiency in our operations or our competitors' or customers' operations; possible, expected or targeted future prices and demand for our or our competitors' or customers' products and changes therein; product quality, diversification, introductions and improvements and their impact; demand for their products; regional and global economic and industry market conditions, changes therein and impacts on us and our customers, competitors and suppliers; the impact of accounting changes; and currency exchange and interest rates and changes therein.
We have no duty to update these statements. Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets. Actual future events, circumstances, performance and trends could differ materially, positively or negatively, due to various factors, including: adjustments to our preliminary 2014 fourth quarter results; actual timing of the filing of our Form 10-K with the
GTI-G
Director, Investor Relations
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