sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /X/
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
/_/ Definitive Additional Materials
/X/ Soliciting Material Under Rule 14a-12
THE TOPPS COMPANY, INC.
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(Name of Registrant as Specified in Its Charter)
PEMBRIDGE VALUE OPPORTUNITY FUND LP
PEMBRIDGE CAPITAL MANAGEMENT LLC
CRESCENDO PARTNERS II L.P. SERIES Y
CRESCENDO INVESTMENTS II, LLC
CRESCENDO ADVISORS LLC
ERIC ROSENFELD
TIMOTHY E. BROG
ARNAUD AJDLER
JOHN J. JONES
TOPPS FULL VALUE COMMITTEE
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On May 17, 2006, the Topps Full Value Committee (the "Committee"),
together with the other participants (as defined below), made a preliminary
filing with the Securities and Exchange Commission ("SEC") of a proxy statement
and accompanying GOLD proxy card to be used to solicit votes for the election of
its slate of director nominees and certain non-binding business proposals at the
2006 annual meeting of stockholders (the "2006 Annual Meeting") of The Topps
Company, Inc., a Delaware corporation (the "Company").
Item 1: On May 22, 2006, the following news story was published by
Crain's New York Business publication:
FIGHT TO BE ON TOPPS
LIMPING BASEBALL CARD ICON FACES SHAREHOLDER REVOLT
By AARON ELSTEIN
Published on May 22, 2006
Sitting in his 22nd-floor office in midtown, Timothy Brog can clearly see the
future of Topps Inc., maker of America's favorite baseball trading cards and
Bazooka bubblegum. The hedge fund manager envisions Topps turning its famous
brands into a licensing gold mine and plastering them on everything from
T-shirts and mugs to an array of sports gear.
"Topps is a great name, but it has been terribly managed," says Mr. Brog, who
has a history of pressuring underperforming executive teams to take action.
Trouble is, Mr. Brog doesn't run Topps--Chairman and Chief Executive Arthur
Shorin does. And Mr. Shorin, who has worked there for 48 years and run it for
26, shows no sign of going anywhere. Rather than sit back and wait for Mr.
Shorin to retire, Mr. Brog teamed up with another hedge fund last week to launch
a formal proxy fight for control of the company.
The effort of the two firms, which together own 2 million shares of Topps,
hinges largely on their ability to win the backing of a few big shareholders,
including Private Capital Management and Merrill Lynch & Co., which together own
about 40% of the stock. The matter is expected to come to a head at the annual
meeting in July.
"Topps' top shareholders are known for being independent thinkers," says Bruce
Goldfarb, a senior managing director at proxy advisory firm Georgeson
Shareholder. "This will be a really interesting battle."
STAGNATION
Mr. Brog hopes to use a vast pool of shareholder discontent, fed by years of
slipping performance, to replace Mr. Shorin and two other directors on Topps'
nine-member board.
Fiscal 2006 net income was a minuscule $1.2 million, down 99% from five years
earlier, when Topps rode the Pokemon craze as the U.S. licensee for the trading
cards. Revenue has stagnated at just under $300 million, and Topps' share price
-3-
has fallen more than 10%. In contrast, the Dow Jones U.S. Food Products Index
has risen more than 40% since 2001.
"The company has been moribund for the last three to five years," says Dennis
McAlpine, an analyst at research firm McAlpine Associates. "Give Topps 10
choices to do something, and management will say no to every one."
While he acknowledges that results have been disappointing, Mr. Shorin cites
factors that he insists were beyond his control, including rising sugar prices
and the 80% industrywide drop in sports-card sales since 1991.
He predicts a turnaround, driven by a relaunch of the Bazooka brand this summer,
new executives he has recruited and his retention (in 2005) of a licensing
consultant.
"We have been in a struggle for a few years, and most of our shareholders
understand that," Mr. Shorin says. "They also understand we have a good future."
Last year, he asked Lehman Brothers to explore a sale of Topps' candy business,
but he ultimately called off the auction. Mr. Shorin has also cut costs by
eliminating 8% of the workforce, shifting some manufacturing operations to
Mexico and freezing the employee pension plan.
But those steps have shaved just $2.5 million from Topps' overhead tab of $100
million--stunningly high for a company with such sluggish sales.
Mr. Shorin sees the proxy fight as a distraction and has some advice for his
would-be successors. "Everyone who goes to a bullfight says it looks easy," he
says. "But get yourself in the ring with the bull and see how easy it is."
That refrain is all too familiar to Mr. Brog and the other dissidents, who blame
Mr. Shorin's long-running, ultracautious reign and insular management style for
Topps' problems.
Mr. Shorin's son-in-law is president and in line to succeed him at the company,
which was co-founded by Mr. Shorin's father 68 years ago. Critics also point out
that Topps has more than $80 million of cash and short-term investments on its
books but has rejected most opportunities to put the money to work.
AN ENIGMA
Mr. Brog wants Topps to become a product licensing machine in the gilded mold of
comic-book giant Marvel Entertainment and Crayola maker Binney & Smith. The
concept has been bandied about for years on Wall Street, where it has plenty of
support.
"Topps has a room in their headquarters full of stuff like T-shirts and baseball
bats from people who want the company to lend its name to their product," says
Jefferies & Co. analyst Robert Routh. "Why management hasn't done anything is an
enigma to me."
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CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
The Topps Full Value Committee filed with the Securities and Exchange
Commission ("SEC") on May 17, 2006 a preliminary proxy statement and
accompanying GOLD proxy card to be used to solicit votes for the election of its
slate of director nominees and certain business proposals for use at the 2006
Annual Meeting. The Committee strongly advises all Topps stockholders to read
the proxy statements and other proxy materials as they become available because
they contain important information.
STOCKHOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF THE PROXY STATEMENT FILED
WITH THE SEC BY THE TOPPS FULL VALUE COMMITTEE THROUGH THE WEBSITE MAINTAINED BY
THE SEC AT WWW.SEC.GOV. IN ADDITION, INVESTORS WILL BE ABLE TO OBTAIN FREE
COPIES OF THE PROXY STATEMENT FROM THE TOPPS FULL VALUE COMMITTEE BY CONTACTING
TIMOTHY BROG, PEMBRIDGE CAPITAL, 708 THIRD AVENUE, NEW YORK, NY 10017 OR BY
CALLING D.F. KING & CO., INC. AT (800) 628-8532.
THE PARTICIPANTS IN THE PROXY SOLICITATION ARE PEMBRIDGE VALUE OPPORTUNITY FUND
LP, A DELAWARE LIMITED PARTNERSHIP, PEMBRIDGE CAPITAL MANAGEMENT LLC, A DELAWARE
LIMITED LIABILITY COMPANY, TIMOTHY E. BROG, CRESCENDO PARTNERS II, L.P., SERIES
Y, A DELAWARE LIMITED PARTNERSHIP, CRESCENDO INVESTMENTS II, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, CRESCENDO ADVISORS LLC, A DELAWARE LIMITED LIABILITY
COMPANY, ERIC ROSENFELD, ARNAUD AJDLER AND JOHN J. JONES.
INFORMATION CONCERNING THE PARTICIPANTS AND THEIR INTERESTS IN THE SOLICITATION
IS SET FORTH IN THE PROXY STATEMENT FILED WITH THE SEC.