dfan14a01874088_01312008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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 Rule14a-6(e)(2))
¨ Definitive
Proxy Statement
¨ Definitive
Additional Materials
x Soliciting
Material Under Rule 14a-12
|
|
|
(Name
of Registrant as Specified in Its Charter)
|
| |
STEEL
PARTNERS II, L.P.
STEEL
PARTNERS II GP LLC
STEEL
PARTNERS II MASTER FUND L.P.
STEEL
PARTNERS LLC
WARREN
G. LICHTENSTEIN
JAMES
R. HENDERSON
JOHN
J. QUICKE
KEVIN
C. KING
DON
DEFOSSET
DELYLE
BLOOMQUIST
|
|
(Name
of Persons(s) Filing Proxy Statement, if Other Than the
Registrant)
|
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of Filing Fee (Check the appropriate box):
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fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
|
|
(3)
|
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unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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paid previously with preliminary materials:
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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
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Filed:
Steel
Partners II, L.P. (“Steel Partners”), together with the other participants named
herein, is filing materials contained in this Schedule 14A with the Securities
and Exchange Commission (“SEC”) in connection with the solicitation of proxies
for the election of its five director nominees at the 2008 annual meeting of
shareholders (the “Annual Meeting”) of EnPro Industries, Inc. (the
“Company”). Steel Partners has not yet filed a proxy statement with
the SEC with regard to the Annual Meeting.
Item
1: Letter from Steel Partners to William R. Holland, Chairman of the
Board of the Company, and Ernest F. Schaub, President and CEO of the
Company
STEEL
PARTNERS II, L.P.
590
Madison Avenue, 32nd Floor
January
30, 2008
VIA
FACSIMILE AND FEDERAL EXPRESS
EnPro
Industries, Inc.
5605
Carnegie Boulevard
Suite
500
Charlotte,
North Carolina 28209
Attn: William
R. Holland, Chairman of the Board
Ernest
F. Schaub, President and Chief
Executive Officer
CC:
Board
of Directors
Dear
Sirs:
As
you know, Steel Partners II, L.P.
(“Steel”) is one of the largest shareholders of EnPro Industries, Inc. (“EnPro”
or the “Company”) owning approximately 11.3% of its outstanding common
stock. We have been a long-term committed shareholder, having first
invested in 2003 because we believed the market substantially undervalued the
Company. The management team has done an excellent job of improving
EnPro’s operations over the last several years, the most recent example of which
is its third quarter operations performance, which reflected continued revenue
growth and increasing segment operating profits and margins. Unfortunately
for
EnPro’s shareholders, a poor job has been done managing the Company’s balance
sheet and allocating its capital.
We
have
been extremely disappointed to see the share price decline by 33% since EnPro’s
third quarter earnings announcement and by 40% since its July 12, 2007
high. We believe that the primary factors contributing to this sharp
decline and undervaluation of EnPro’s stock are the Company’s inefficient
balance sheet and perceived succession risk.
As such, we recommend EnPro capitalize on its operating momentum and utilize
the
strength of its balance sheet and substantial excess liquidity to pursue a
public recapitalization at $30.00 a share. Through a combination of
EnPro’s excess cash and availability under its existing credit facility, the
Company should be in a position to self tender for at least $150 million of
common stock, or approximately 23% of its outstanding shares at the
aforementioned price per share.
The
proposed recapitalization offers several benefits to EnPro and its shareholders.
First, given EnPro’s current market valuation and considering its favorable
prospects, we do not believe it is likely that the Company will find any
alternatives offering higher returns on investment. As such, the
recapitalization offers the most efficient use of capital. Second,
the recapitalization would provide immediate liquidity at a premium to the
current share price for your shareholders who elect to tender. Third,
a more efficient balance sheet will lower EnPro’s cost of capital and enhance
the growth of the Company’s levered free cash and therefore increase the upside
to those shareholders who opt not to tender their shares. After this
recapitalization, EnPro will still enjoy a strong and flexible balance sheet
that would support the Company’s long term strategic vision. Pro
forma for the recapitalization, EnPro’s leverage and fixed charges ratios will
remain highly conservative, allowing for ample additional debt capacity when
and
if needed.
The
status quo is not acceptable to Steel. If EnPro is unwilling to
pursue a recapitalization, we strongly encourage the Board to hire a nationally
recognized investment banking firm to explore all strategic alternatives to
maximize shareholder value, including a sale of the Company. We
expect that such a process will garner a high level of
interest. Although the Board declined our previous offer to enter
into negotiations to acquire EnPro’s outstanding common stock for $47 a share in
June 2007, we remain interested in purchasing the Company and would expect
to
participate in such a sale process.
We
trust
that the best interests of all shareholders continue to be of utmost importance
to you and the members of the Board and look forward to your prompt
response. In the meantime, we must preserve our right to seek
representation on the Board of Directors to the extent you do not pursue the
recapitalization transaction discussed above or take the steps necessary to
maximize shareholder value. Accordingly, attached hereto is a copy of
the notice being delivered simultaneously to the Corporate Secretary of EnPro
nominating five directors for election at the next annual meeting of
shareholders of the Company.
Respectfully,
/s/
Warren G. Lichtenstein
Warren
G.
Lichtenstein
CERTAIN
INFORMATION CONCERNING PARTICIPANTS
Steel
Partners II, L.P. (“Steel Partners II”), together with the other Participants
(as defined below), intends to make a preliminary filing with the Securities
and
Exchange Commission ("SEC") of a proxy statement and accompanying proxy
card to
be used to solicit proxies for the election of its slate of director nominees
at
the 2008 annual meeting of stockholders of EnPro Industries, Inc., a North
Carolina corporation (the “Company”).
STEEL
PARTNERS II STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE
PROXY
STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
SUCH PROXY STATEMENT WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION WILL
PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS
FOR
COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The
participants in the proxy solicitation are anticipated to be Steel Partners
II,
Steel Partners II GP LLC (“Steel GP LLC”), Steel Partners II Master Fund L.P.
(“Steel Master”), Steel Partners LLC (“Partners LLC”), Warren G. Lichtenstein,
James R. Henderson, John J. Quicke, Don DeFosset, Kevin C. King and Delyle
Bloomquist (collectively, the “Participants”). As of January 30,
2008, Steel Partners II beneficially owned 2,433,838 shares of common stock
of
the Company (the “Shares”), constituting approximately 11.3% of the
Shares outstanding. Steel Master is the sole limited
partner of Steel Partners II. Steel GP LLC is the general partner of
Steel Partners II and Steel Master. Partners LLC is the investment
manager of Steel Partners II and Steel Master. Warren G. Lichtenstein
is the manager of Partners LLC and the managing member of Steel GP
LLC. By virtue of these relationships, each of Steel GP LLC, Steel
Master, Partners LLC and Mr. Lichtenstein may be deemed to beneficially
own the
2,433,838 Shares owned by Steel Partners II. Currently, Messrs. Henderson,
Quicke, DeFosset, King and Bloomquist do not directly own any securities
of the
Company. As members of a “group” for the purposes of Rule 13d-5(b)(1)
of the Securities Exchange Act of 1934, as amended, they are each deemed
to
beneficially own the 2,433,838 Shares owned by Steel Partners II.