Harbinger Group Inc.
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SEC Filings

HRG GROUP, INC. filed this Form 8-K on 11/21/1995
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Board of Directors
Zapata Corporation
November 16, 1995
Page 2

conclusion, viewed in the most favorable light, to be drawn from the Board's 
affirmative vote during this meeting is that, by implication, the new strategy 
was ratified well after the fact of its implementation. And yet the shareholders
are told that this strategy has been in development since late 1994 and early 

  I have reviewed the Preliminary Proxy Statement filed by Zapata with the 
Securities and Exchange Commission (the "SEC") on September 29, 1995 (the 
"Initial Proxy Statement") and the latest version of the Preliminary Proxy 
Statement filed November 14, 1995 (the "Proxy Statement"). Despite efforts in 
the Proxy Statement to correct inaccurate or misleading statements in the 
Initial Proxy Statement, there remain statements in the Proxy Statement which 
must be corrected in order for Zapata's disclosures to be not misleading and as 
Directors we cannot permit final proxy materials to be disseminated unless they 
are accurate in all material respects. The following represent areas of 
particular concern.

  1. The Proxy Statement discloses that the proceeds of the Energy Industries 
sale are intended to be used for general corporate purposes which may include 
acquisitions in the food service industry, but states that the Company does not 
have any current plans for specific acquisitions and has no plans to advance its
expansion into the food services industry. If it is appropriate or necessary to 
disclose in the Proxy Statement the use of proceeds from the Energy Industries 
sale, as I believe is the case, then it follows that Zapata's disclosure, in 
this regard, must accurately state the relevant and material facts. In its 
present form, this portion of the Proxy Statement conveys to the uninformed 
reader, at best, only a half truth. The Agenda published for the September 20th 
special meeting of the Board of Directors included a proposed resolution 
creating a special committee to be vested with sole discretion to consider and 
close the acquisition by Zapata of Houlihan's Restaurant Group, Inc. and 
Specialty Equipment Companies, Inc., both of which are owned or controlled by 
Malcolm Glazer and affiliates. I presume these resolutions were adopted and, as 
was the case with Envirodyne acquisition, the acquisition of these two 
additional investments will be committed to the discretion of a special 
committee without further review by the Board, but in any event, it is apparent 
to me that Zapata has already identified its acquisition candidates and its 
failure to so state in the proxy materials is misleading.

  The larger problem suggested by the foregoing is Zapata's failure to advise 
its shareholders of what actually is meant by the words "new strategy" and 
"acquisitions in the food service industry." To my knowledge, the only 
acquisitions which have been seriously considered by Zapata in furtherance of 
the "new strategy", utlizing the proceeds from the Energy Industries 
transaction, are from Malcolm Glazer and his affiliates. It thus seems apparent 
that it is Mr. Glazer's ownership of the target and consequent enrichment from 
its acquisition that distinguish a particular acquisition candidate, not 
industry segment.

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