Nov 18, 2004
Fortress collects $6 million from Stelmar
The decision by Stelmar shareholders to reject an acquisition offer by Fortress Investment Group LLC has cost the company $6 million. Fortress collected that amount under the terms of the merger agreement when Stelmar failed to proceed.
According to figures released by Stelmar founder Stelios Haji-Ioannou, only 16.9 percent of shareholders voted in favor of the Fortress acquisition at a special meeting on November 16.
Following the special meeting, says a Stelmar release issued yesterday, "four independent directors of Stelmar met with Mr. Stelios Haji-Ioannou to discuss Mr. Haji-Ioannou's interest in joining Stelmar's Board of Directors. The independent directors invited Mr. Haji-Ioannou to join the Board of Directors of the Company and proposed that the Board designate a special committee of independent directors, to be chaired by Mr. Haji-Ioannou, to solicit and evaluate proposals for the possible sale of the Company."
"As a condition to joining the Board," continues the statement, "Mr. Haji-Ioannou demanded the summary dismissal of both the Chief Executive Officer and the Chief Financial Officer of the Company. After consideration of this demand and other issues, the independent directors concluded that the removal of the two key members of the senior management team is unwarranted and would destabilize the Company to the detriment of shareholder value."
"As no agreement has been reached, Mr. Haji-Ioannou has not joined the Board at this time," notes the statement.
But Stamatis Molaris, Stelmar's Chief Financial Officer has now resigned as an officer and director, "citing the personal attacks to which he has been subjected and his wish to pursue other opportunities."
The Stemar board says it is "determined to work to advance the interests of all Stelmar shareholders with or without the cooperation of Mr. Haji-Ioannou."
The Board says it remains open "to discuss with Mr. Haji-Ioannou his joining the Board if he changes his position on the retention of the Company's Chief Executive Officer and otherwise agrees to work with the Board in a constructive and cooperative manner for the benefit of all Stelmar shareholders."
The Board has determined promptly to initiate another process to solicit and evaluate proposals for the possible sale of the company and has designated a special committee of four independent directors to undertake the process.
Stelmar says it intends to release the four parties, including Fortress, subject to standstill agreements executed in connection with the prior strategic review to permit them to present proposals should they wish to do so.
The board has written Stelios Haji-Ioannou asking him to provide details of an offer to which he referred in an announcement of November 15, 2004 as well as any other offer or indication of interest that he has received for the acquisition of the company.
The board says it discussed with Fortress whether it would be prepared to extend the merger agreement previously signed with the company while permitting Stelmar to release the existing standstill agreements.
"Fortress was unwilling to do so unless it received a substantial additional cash payment and even then only for a limited period, which the board concluded was inappropriate in the circumstances," says the Stelmar statement. Fortress has terminated its merger agreement with Stelmar, "and a payment of $6 million will be made by the company to Fortress in accordance with the terms of the agreement.