Harbinger Group Inc.
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SEC Filings

HRG GROUP, INC. filed this Form DEFA14A on 11/30/1995
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underwritings, private placements and valuations for estate, corporate and
other purposes. In connection with the Energy Industries divestiture, Schroder
Wertheim initiated contacts with a significant number of prospective purchasers
which are described below under "--The Energy Industries Sale Proposal."
  A meeting of the Company's Board of Directors was held on May 5, 1995 to
review and discuss the status of the sale of Energy Industries and Cimarron. At
that meeting, the Board ratified the engagement of Schroder Wertheim and
authorized officers of the Company to negotiate terms and conditions of sale
with viable bidders for each of Energy Industries and Cimarron, subject to
approval by the Board of Directors. The authorized officers were the Chairman
of the Board, the President, the General Counsel and the Chief Financial
Officer of the Company. These officers were selected based on their positions
and history with the Company and their collective operational, legal and
financial expertise. Schroder Wertheim was also granted authority to negotiate
terms on behalf of the Company, and participated in negotiations in
consultation with the President, General Counsel and Chief Financial Officer of
the Company, subject to final approval by the Board of Directors.
  In June 1995, the Company sold a portion of its natural gas reserves in the
Gulf of Mexico. In August 1995, the Company sold its remaining domestic oil and
gas operations, including its interests in five offshore federal leases in the
Gulf of Mexico.
  In August 1995, the Company purchased 31% of the common stock of Envirodyne
Industries, Inc. ("Envirodyne") for $18.8 million from a trust controlled by
Malcolm I. Glazer, Chairman of the Board of the Company and, through his
beneficial ownership of a trust, a major stockholder of the Company. Mr. Glazer
is also a director of Envirodyne. Such shares represented all of Mr. Glazer's
beneficial interest in Envirodyne. The Company paid the purchase price by
issuing a subordinated promissory note in a principal amount of $18.8 million,
bearing interest at the prime rate and maturing in August 1997, subject to
prepayment at the Company's option. This transaction was approved by a special
committee composed of outside members of the Company's Board of Directors, and
Schroder Wertheim provided a fairness opinion to the Board of Directors
regarding the fairness, from a financial point of view, of the transaction. The
Company has since prepaid approximately $15.6 million of principal on the
promissory note. Envirodyne is a major supplier of food packaging products and
food service supplies and is a leading worldwide producer of cellulosic casings
used in the preparation and packaging of processed meat products. It is the
world's second largest producer of heat shrinkable plastic bags and specialty
films for packaging and preserving fresh and processed meat products, poultry
and cheeses. Envirodyne is also a leading domestic producer of disposable
plastic cutlery, drinking straws, custom dining kits and related products. In
addition, Envirodyne is a leading domestic producer of thermo-formed and
injection-molded plastic containers and horticultural trays and inserts. The
Company may continue to evaluate the acquisition of additional shares of
Envirodyne common stock or proposing a merger with, or acquisition of,
Envirodyne in the future, although the Company currently has no plans or
proposals to do so.
  On August 11, 1995, a purported derivative lawsuit was filed in a case styled
Harwin v. Glazer, et al., in the Court of Chancery of the State of Delaware in
and for New Castle County. The complaint names the Company and each of its
directors as defendants and generally alleges that the Company's directors
engaged in conduct constituting breach of fiduciary duty and waste of the
Company's assets in connection with the Company's investment in Envirodyne. The
complaint alleges, among other things, that the purchase of the Envirodyne
common stock from Malcolm Glazer's affiliate was a wrongful expenditure of the
Company's funds and was designed to permit Malcolm Glazer to obtain substantial
personal financial advantages to the detriment of the Company. The complaint
seeks relief including, among other things, rescission of the Company's
purchase of the shares of Envirodyne common stock from the trust controlled by
Malcolm Glazer, voiding of the election of Robert V. Leffler, Jr. and W. George
Loar (both of whom were elected at the Company's Annual Meeting of Stockholders
held on July 27, 1995) and an award of unspecified compensatory damages and
expenses, including attorneys' fees. The complaint alleges, among other things,
that Messrs. Leffler and Loar (both of whom served on the special committee)
lack independence from

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