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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
MORTON'S RESTAURANT GROUP, INC.
-------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BFMA HOLDING CORPORATION
-------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement, if other than the 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)(4)
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 transaction:
-------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------------
BFMA HOLDING CORPORATION
50 EAST SAMPLE ROAD, SUITE 400
POMPANO BEACH, FL 33064
May 8, 2001
Dear Fellow Shareholder:
We recently sent you a proxy statement and BLUE proxy card in
connection with the upcoming meeting of Morton's shareholders, currently
scheduled for this Thursday, May 10, 2001. To protect your investment, we urge
you to sign, date and return the enclosed BLUE proxy card TODAY. If you
previously voted for management's slate of directors, it is not too late to
change. Call Innisfree M&A Incorporated at 1-212-750-8253 for assistance. Vote
FOR the BFMA nominees TODAY.
BFMA is waging this proxy battle to give you - the shareholders - an
opportunity to tell management that you want the company put up for sale NOW.
The Morton's shareholders should vote FOR the BFMA nominees in order to
communicate to management their desire to explore a sale of the company. Despite
what management and the board say now, after this election, if Messrs.
Bernstein, Baldwin and Castle are re-elected to the board, there will be little
else any shareholder could do to influence their behavior. The only leverage
that shareholders have now is their right to vote to unseat the incumbent
directors. Your vote for the BFMA nominees today will keep the pressure on the
incumbent board and force them to act in the interests of the shareholders.
On May 2, 2001, we sent you a letter setting forth the real issues in
this election. Today, we wish to respond to certain misinformation we believe is
being spread by Tom Baldwin, Morton's CFO, in management's effort to scare you
into voting for its slate of directors. Why Tom Baldwin and not Allen Bernstein,
Morton's Chairman and CEO? Apparently, Mr. Bernstein does not speak with any of
Morton's shareholders, not even its largest institutional shareholders. This is
appalling behavior for the CEO of a public company. Even Jack Welch, Chairman
and CEO of General Electric Co., one of the largest companies in the world,
speaks with his institutional shareholders. Why is Allen Bernstein hiding from
you?
Meanwhile, Mr. Baldwin has been making some misinformed and deceptive
claims about BFMA. These claims did not persuade Institutional Shareholder
Services ("ISS"), the nation's leading independent provider of proxy voting and
governance advice to major institutional investors. After you read our
responses, the claims should not persuade you either.
ISS SUPPORTS THE BFMA NOMINEES AND THEIR PLATFORM
On Friday, May 4, ISS issued its report and recommended that
shareholders of Morton's vote FOR BFMA's dissident slate of nominees at Morton's
annual meeting.
The ISS recommendation stated: "To ensure that the company will
consider a sale in an expedient and fair manner to all shareholders, ISS
believes that shareholders should support the dissident slate of nominees." In
reaching its conclusion, the ISS report stated, "The critical issue to consider
is whether or not management will seriously consider the dissidents' offer or
any other offer for the company in a manner befitting the best interests of
shareholders. Under BFMA's bid, shareholders would receive at least $28.25 per
share, which represents an adequate premium over the company's stock price if
the company initiated a process to sell the company. It is indisputable that the
board cannot ignore the strategic alternative of selling the company as a means
to maximize shareholder value." The ISS report continued, "Given the company's
lack of liquidity in its shares, the unimpressive stock performance based on
three-year total shareholder returns and the increased competition in the
restaurant industry, ISS believes that a potential sale of the company should
seriously be considered by the board."
The ISS report further noted that, ". . . ISS believes the board should
have delayed the meeting in light of BFMA's recent bid. Given BFMA's bid, we
believe that shareholders should be given the opportunity to evaluate the
board's process in evaluating the bid, a possible sale of the company, and the
subsequent outcome of the process. ISS believes that the postponement of the
meeting would provide shareholders with more information to better assess the
board's motives before deciding on which nominees would best serve the interest
of all shareholders (emphasis added)." The ISS report further stated the ISS'
belief that "the [BFMA] dissidents have a single goal: to maximize shareholder
value by exploring a sale of the company to BFMA or the highest bidder."
ISS issued its report after considering the facts and holding
discussions with Tom Baldwin, Morton's CFO, and Mark Weingarten, Morton's
General Counsel, and with Barry W. Florescue, the Chairman of the Board and
President of BFMA, and his representatives. It is clear that ISS saw the real
economic and corporate governance issues in this situation and was not
distracted by the misinformation and deceptive claims of Morton's management.
BFMA'S OFFER IS REAL
On May 1, 2001, BFMA sent a letter to Allen Bernstein offering to
acquire all of the shares of Morton's at $28.25 per share in cash. What is not
"real" about that? BFMA has committed a substantial amount of capital and
resources to make it clear to Morton's board and everyone else that it is
serious about its desire to acquire the company. To date, BFMA has invested more
than $8,000,000 in Morton's stock and expended millions more on commitment fees,
legal fees and related expenses in connection with this process. BFMA has
committed to provide no less than $20 million of equity to the acquisition and
has received a commitment from Icahn Associates Corp., an affiliated entity of
Carl C. Icahn, to provide $240 million of bridge financing. This is more than
enough capital to consummate the purchase of Morton's at BFMA's offer price. Any
claims by Morton's that BFMA's offer is not real are simply excuses. What is
clear to us is that neither Mr. Baldwin nor Morton's board wants to acknowledge
that BFMA's offer is real. In the week since BFMA made its offer, no one from
the company or any of their advisors has returned our repeated telephone calls
nor have they contacted BFMA to discuss the offer.
We understand that Mr. Baldwin claims that BFMA's offer would only be
real if BFMA commenced a tender offer. This is disingenuous at best. Morton's
has a number of significant anti-takeover devices put in place by management and
the board, including a "poison pill," which was implemented without shareholder
approval. It makes an acquisition of Morton's by a purchaser not approved by the
board practically impossible by permitting the amount of Morton's stock
outstanding to be dramatically increased in the face of such a proposed
acquisition. As described in Morton's Annual Report on Form 10-K published last
month, this "pill" automatically goes into effect "10 days following the
commencement or announcement of an intention to make a tender offer or exchange
offer, the consummation of which would result in the beneficial ownership by a
person or group of 15%" of Morton's stock. In other words, once BFMA or any
other would-be purchaser NOT approved by the board merely announced its
intention to make a tender offer to acquire Morton's, the poison pill would be
triggered. Therefore, even if BFMA commenced a tender offer, the board would
still have to approve the transaction in advance. They could still just say
"no."
Given Morton's response to BFMA's initial overtures and the board's
recent actions to entrench themselves and management, BFMA does not believe that
announcing a tender offer would be effective or prudent. The tender process is
expensive and would serve only to reduce the amount BFMA could pay to Morton's
shareholders for their shares. This serves the board's interest, not yours.
BFMA'S COMMITMENT FOR FINANCING FROM ICAHN ASSOCIATES IS CREDIBLE
BFMA paid Icahn Associates Corp. a $1.5 million commitment fee to
obtain a commitment to provide the bridge financing for BFMA's offer. Although
this commitment has a few conditions, they are less onerous than conditions
typically found in commitment letters furnished by other financing sources.
These conditions are reasonable, especially considering the offer was made
without the cooperation of Morton's management or the board. We note that the
bridge financing will be collateralized not only by the assets of Morton's but
also by the stock of BFMA's operating subsidiary Marietta Corporation.
Therefore, BFMA is confident that, although the cost of capital for the
financing appears expensive and the leverage seems high, BFMA, as a whole, has
the wherewithal to comfortably service its debt.
BFMA IS COMMITTED TO PAYING AT LEAST $28.25 PER SHARE IN CASH
BFMA has repeatedly stated that it is committed to paying at least
$28.25 for each share of Morton's and that it would consider raising its offer
if Morton's management and board were able to demonstrate value not apparent
from the publicly available information. However, BFMA is not asking you to vote
on its offer price today. BFMA is requesting that the company initiate a sale
process and that BFMA be given a fair chance to participate in that process. If
another bidder emerges to purchase Morton's at a higher price, BFMA will either
increase its offer price or be topped. This proxy fight is about the process -
not about the price.
We understand that Mr. Baldwin has alleged that BFMA has a history of
bidding high initially and lowering its price later. Let's look at the facts.
BFMA has previously made offers to acquire two other public companies: Marietta
Corporation and Guest Supply, Inc. BFMA ultimately acquired Marietta and was
outbid by a larger public strategic competitor for Guest Supply.
Let's address Marietta first. During the sale process for Marietta,
which took more than one year, the company's operating performance collapsed,
with cash flow decreasing more than 35%. Notwithstanding the collapse, BFMA
continued with the sale process and, fourteen months later, ultimately purchased
Marietta. At that time, a special committee of the board of directors of
Marietta received a fairness opinion rendered by Goldman Sachs & Co., one of the
preeminent investment banks in the world, that the price per share that BFMA
paid to the then shareholders of Marietta was fair, from a financial point of
view.
As for Guest Supply, BFMA began its negotiations with management on a
friendly basis in early May 2000. By November 2000, negotiations had broken off
and management's projections turned out to be overly optimistic. The company had
reported its June and September quarterly results at levels well below what
management was indicating only a few months earlier. In addition, during the six
month period, there was a substantial deterioration in public market and private
valuation multiples and in the overall financial markets. Despite these negative
trends, BFMA remained steadfast in its desire to purchase Guest Supply and in
November 2000 made a formal offer, albeit at a lower price than its earlier
offer. In January 2001, Sysco Systems, Inc., a public company in the
distribution business with a market capitalization of $20 billion, topped BFMA's
offer by agreeing to pay a premium of approximately 55% above the share price
the day prior to BFMA's first public offer and approximately 24% over BFMA's
offer price. It is worth noting that the shareholders of Guest Supply were
substantially better off as a result of BFMA's efforts to acquire that company.
So, what is Mr. Baldwin's concern? By making the analogy to the
Marietta situation, is he implying that Morton's financial performance is going
to deteriorate? Or is he afraid of another buyer offering a substantially higher
premium for Morton's shares, as happened in the Guest Supply situation? Which is
it?
DON'T FORGET THE REAL ISSUES IN THIS ELECTION
o Morton's shares have underperformed the overall market - in fact, over the
last eight years, you would have done better depositing your money in a
savings account. Allen Bernstein and his board are responsible for the low
value and illiquid nature of the shares and for the shares trading at very
low multiples.
o There is substantial value in Morton's that Allen Bernstein and his board
have failed to deliver to you - primarily due to poor business and
financial judgment, excessive overhead spending and dilution to value
through excessive option grants to themselves. Allen Bernstein's track
record in the restaurant business and specifically at Morton's has included
a string of failures.
o Allen Bernstein and Tom Baldwin have enriched and entrenched themselves at
your expense through high salaries, bonuses and cheap options and through a
poison pill, a staggered board and lucrative employment and change of
control agreements. They have actively resisted other expressions of
interest in acquiring Morton's.
o BFMA has made a fully financed offer to purchase ALL of the Morton's shares
for $28.25 per share in cash -- a premium of 36% above the weighted average
closing price of the shares for the 20 trading days prior to May 1, 2001,
the day BFMA announced its offer, and higher than Morton's shares have ever
traded.
THE CHOICE IS YOURS
In the next two days, you have a simple but important choice to make:
you can support the status quo and suffer with a low multiple, low value and
illiquid stock OR you can vote for the BFMA nominees, telling Morton's
management and board that you are tired of their delay and you want them to
explore a sale of the company - NOW.
The BFMA nominees are committed to affording the Morton's shareholders,
the TRUE owners of the company, the opportunity to consider BFMA's offer as well
as any other potential transactions that would provide a greater value to
Morton's shareholders. BFMA has offered to purchase all of the shares of
Morton's for $28.25 per share in cash and will consider offering a higher price
if Morton's management and board are able to demonstrate value not apparent in
the publicly available information.
A VOTE FOR THE BFMA NOMINEES IS A VOTE FOR SHAREHOLDER VALUE. IF YOU
BELIEVE THAT MORTON'S SHOULD EXPLORE A SALE TO THE HIGHEST BIDDER TO MAXIMIZE
VALUE, YOU MUST ACT TODAY! THE ANNUAL MEETING IS ONLY TWO DAYS AWAY! YOUR VOTE
AND PROMPT ACTION ARE IMPORTANT. WE URGE YOU TO GRANT YOUR PROXY FOR THE BFMA
NOMINEES BY SIGNING, DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD TODAY.
Sincerely,
/s/ Barry Florescue
Barry Florescue
President and Chairman of the Board
of BFMA Holding Corporation
-------------------------------------------------------------------------------
********** IMPORTANT **********
Please vote the BLUE card TODAY FOR the BFMA nominees. We urge you not to
sign any proxy card sent to you by Morton's, even to vote against the incumbent
Board of Directors. Remember, each properly executed proxy you submit revokes
all prior proxies. Even if you have already submitted a proxy sent to you by
Morton's, you should sign and return the BFMA BLUE Proxy.
If any of your shares hare held in the name of a bank or broker or other
nominee, please contact the person responsible for your account and direct
him/her to vote on the BLUE PROXY CARD FOR the BFMA nominees.
If you have any questions or need assistance in voting your shares, please
feel free to call INNISFREE M&A INCORPORATED collect at 212-750-8253.
-------------------------------------------------------------------------------
SECURITIES LAW LEGEND
A PROXY STATEMENT DATED APRIL 26, 2001, AS AMENDED MAY 4, 2001,
DESCRIBING BFMA'S SOLICITATION OF PROXIES TO ELECT CLASS 3 DIRECTORS WAS
PREPARED AND MAILED TO ALL SHAREHOLDERS. YOU SHOULD READ THE PROXY STATEMENT AND
THE AMENDMENT TO OBTAIN INFORMATION ABOUT BFMA HOLDING CORPORATION, ITS OFFICERS
AND DIRECTORS, INCLUDING RICHARD A. BLOOM, LOGAN D. DELANY, JR., AND CHARLES W.
MIERSCH. A COPY OF THE PROXY STATEMENT, THE AMENDMENT AND OTHER RELATED
DOCUMENTS PREPARED BY OR ON BEHALF OF BFMA AND FILED WITH THE SEC ARE AVAILABLE
FOR FREE, EITHER AT THE WEB SITE OF THE SEC (http://www.sec.gov) OR FROM BFMA BY
WRITING TO: BFMA HOLDING CORPORATION, 50 EAST SAMPLE ROAD, POMPANO BEACH, FL
33064, ATTENTION: SECRETARY.