Save GrafTech, an investor group led by Nathan Milikowsky, a
holder of over 15 million shares, or over 11.2%, of the common
stock of GrafTech International Ltd. (NYSE:GTI), today sent a
letter to the GrafTech Board of Directors disclosing that it has
submitted a notice to nominate a full slate of seven candidates for
election to the Board at the 2015 Annual Meeting.
GrafTech shareholders overwhelmingly supported the Save GrafTech
nominees by an average margin greater than three-to-one at the 2014
Annual Meeting, electing the entire slate of three independent
director nominees to the Board: Karen Finerman, David Jardini and
Nathan Milikowsky.
In the letter, Save GrafTech details the continued strategic and
operational missteps that have contributed to the Company’s
downward spiral and identifies four additional independent director
nominees who are qualified to oversee the necessary wholesale
restructuring of the Company.
Included below is the full text of the letter to GrafTech’s
Board of Directors:
January 23, 2015
Via EMail and Fed Ex
GrafTech Board of Directorsc/o Mr. Randy CarsonChairmanGrafTech
International Holdings12900 Snow RoadParma, Ohio 44130
Dear Fellow Directors:
As you know, at the 2014 Annual Meeting, David Jardini, Karen
Finerman and I – the entire “Save GrafTech” slate – were elected to
the GrafTech Board of Directors by an overwhelming majority of
shareholder votes – with a clear mandate to address the strategic,
operational and governance issues hurting the company’s performance
and stock price. We fully expected to work collaboratively and
constructively with the four other directors and implement
substantial changes to improve operational efficiency, reduce
corporate bureaucracy and drive shareholder returns. Unfortunately,
our efforts have been met with continued resistance by an
entrenched majority that prefers change at a glacial pace rather
than expeditiously focusing on the significant operational
restructuring required to address the pervasive issues that
continue to damage the company.
We are disappointed that since becoming CEO in January 2014,
Joel Hawthorne has proved incapable of addressing the serious
challenges currently facing GrafTech. During his tenure, management
has generally failed to meet its own forecasts, the business has
suffered quarterly net losses and GrafTech has written off a $126
million investment in advanced graphite materials – all without any
true accountability. GrafTech’s stock price has declined by over 60
percent in the past year alone while the demand for graphite
electrodes has actually increased over that same period. Mr.
Hawthorne’s failures have been tolerated by a four-person majority
of the Board that is unwilling to hold management accountable for
the company’s continuing underperformance, and has provided
stonewalling resistance to the Save GrafTech slate of
directors.
Accordingly, I have been left with no reasonable choice but to
nominate a full slate of seven directors for election at GrafTech’s
2015 Annual Meeting. The four new directors I am proposing, along
with the three incumbent “Save GrafTech” directors, have the
industry, financial and restructuring expertise to lead a wholesale
turnaround of the company over the next few years and, importantly,
are willing to make the tough decisions to benefit all
shareholders.
If elected, these nominees would take decisive action to install
a first-class management team at GrafTech, including replacing Joel
Hawthorne immediately with a qualified successor. I am open to
discussing potential interim CEO candidates with both my fellow
directors and shareholders. So long as the individual chosen has an
in-depth knowledge of the steel industry and the experience
necessary to restructure GrafTech’s operations, it makes no
difference if the interim CEO is selected from our slate or from
outside the company.
As a significant creditor of GrafTech and GrafTech’s largest
individual shareholder, I am deeply concerned about the long-term
success of the company and will do everything in my power to ensure
it succeeds. In that context, I recently sent a letter to the Board
stating my willingness to consider a partial refinancing of the
$200 million of notes that come due in November, which I own
together with my immediate family and individuals with whom I am
closely affiliated. My willingness to consummate a refinancing on
substantially better terms than otherwise available in the public
market would clearly help GrafTech increase shareholder value and
improve its financial position.
I would, of course, need to be comfortable with the direction
and composition of GrafTech’s Board and management team before
extending such a substantial investment in the company. After all,
the value of my existing investment has deteriorated significantly;
when I sold my companies to GrafTech in 2010, its shares were
trading at $19.601 per share, more than four times the current
share price. Despite this attractive refinancing proposal, the
four-person majority of the Board has not accepted my overture to
date.
The company’s downward spiral continues, and it is clear that
GrafTech will not regain its prior market share or the trust of its
shareholders and customers by continuing down the same path. At
this point, it is essential to replace GrafTech’s four stonewalling
directors with strong independent directors who have a shareholder
orientation, deep steel industry and restructuring experience, and
a firm commitment to improving GrafTech’s operating performance and
corporate governance. The individuals I am nominating are among the
strongest director candidates GrafTech has ever attracted, and I
would be honored to work alongside them on behalf of all GrafTech
shareholders. Our goal is a strong GrafTech that can provide the
returns shareholders deserve, the service and pricing customers
demand and a working environment employees can be proud of.
Biographies outlining the experience and qualifications of each
of the seven proposed nominees follow:
Jake Brace
Frederic (Jake) F. Brace served as President of Niko Resources
Ltd., where he led the company’s restructuring and recapitalization
efforts through 2014. Previously, Mr. Brace served as CFO of United
Airlines where he oversaw its emergence from Chapter 11 bankruptcy.
Mr. Brace has over 30 years of executive and board level experience
and is presently on the board of Anixter International and Corevest
Financial. Previously, he served as a member of the board of a
number of public companies, including: The Great Atlantic &
Pacific Tea Co., Bearing Point, SIRVA, Equant, Galileo
International, and GetThere.com. Additionally, he served as Chief
Administrative Officer and Chief Restructuring Officer of The Great
Atlantic & Pacific Tea Company. Mr. Brace earned his B.S. in
Industrial Engineering from the University of Michigan and his
M.B.A. from the University of Chicago with a specialization in
finance.
Alan Carr
Alan Carr is currently the CEO of Drivetrain, LLC and has nearly
20 years of experience in dealing with financially distressed
companies. Mr. Carr previously worked as a corporate restructuring
attorney at Skadden, Arps, Slate, Meagher & Flom LLP and as a
Managing Director of Strategic Value Partners. He currently holds
directorships and management positions at several companies. Mr.
Carr is a graduate of Tulane Law School and has a Bachelor of Arts
in Economics and Sociology from Brandeis University.
Michael Christodolou
Michael N. Christodolou is Manager of Inwood Capital Management,
LLC, an investment management firm he founded in 2000. Mr.
Christodolou has 30 years of investment and corporate governance
experience with publicly traded companies. Since 1999, Mr.
Christodolou has served as a Director of Lindsay Corporation and as
Chairman since 2003. In 2011 Mr. Christodolou joined the board of
Quest Capital Group LLC. He has previously served as a Director and
Audit Committee Chair of XTRA Corporation. Mr. Christodolou earned
a B.S. in Economics and an M.B.A. from the Wharton School of the
University of Pennsylvania.
Karen Finerman
Ms. Finerman has served as a director of GrafTech since May
2014. Ms. Finerman is the CEO of Metropolitan Capital Advisors, a
New York-based investment management firm that she co-founded in
1992. She was previously the Lead Research Analyst for the Risk
Arbitrage department at DLJ Securities Corp. Ms. Finerman is a
permanent panelist on CNBC’s Fast Money. Ms. Finerman received her
B.S. in Economics from the Wharton School of the University of
Pennsylvania.
David Jardini
Mr. Jardini has served as a director of GrafTech since May 2014.
Mr. Jardini co-founded C/G Electrodes with Nathan Milikowsky in
2003 and served as its President until it was sold to GrafTech in
November 2010. He is currently Chairman of Black Diamond
Investments, a diversified investment partnership focused on
manufacturing and real estate development, President of American
Gas Lamp Works LLC, and Chairman of West Salisbury Foundry and
Machine Company. Mr. Jardini has over 15 years of experience in the
steel and graphite electrode businesses. Mr. Jardini holds a B.A.
in Economics from Swarthmore College and a Masters and Ph.D in
History from Carnegie Mellon University.
Nathan Milikowsky
Mr. Milikowsky has served as a director of GrafTech since May
2014 and previously from late 2010 until March 2013. He previously
served as President of Seadrift Coke and Chairman and CEO of C/G
Electrodes, which he formed in 2003, before selling these companies
to GrafTech. In 2003, he led a group that purchased the closed St.
Mary’s, PA plant of the bankrupt predecessor and restarted the
production of UHP graphite electrodes. Mr. Milikowsky has been
involved in manufacturing and steel trading since 1969.
Additionally, Mr. Milikowsky serves as Chairman of Premia Spine
Ltd. Mr. Milikowsky is a graduate of Yale University.
Fiona M. Scott Morton
Fiona M. Scott Morton is a Professor of Economics at the Yale
School of Management, where she has been on the faculty since 1999.
Dr. Scott Morton was Deputy Assistant Attorney General for Economic
Analysis with the Antitrust Division of the US Department of
Justice from May 2011 to December 2012. She has served as the
Senior Associate Dean for Faculty Development at Yale’s School of
Management. Dr. Scott Morton holds a B.A. from Yale and a Ph.D.
from MIT.
Now, more than ever, there is an urgent need to save GrafTech.
It is imperative that the current Board publicly schedule the 2015
Annual Meeting and let shareholders decide which set of directors
will best protect and increase the value of their investment in
GrafTech.
Sincerely,
Nathan Milikowsky
Important Information
Nathan Milikowsky, Daniel Milikowsky, The Daniel Milikowsky
Family Holdings, LLC, The Daniel and Sharon Milikowsky Family
Foundation, Inc., and The Rebecca and Nathan Milikowsky Family
Foundation (collectively, “Save GrafTech”) intend to file with the
Securities and Exchange Commission (the “SEC”) and begin
distributing to the stockholders of GrafTech International, Ltd.
(the “Company”) a definitive proxy statement (the “Proxy
Statement”) in connection with the Company’s 2015 annual meeting of
stockholders. SAVE GRAFTECH STRONGLY ADVISES ALL STOCKHOLDERS OF
THE COMPANY TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION, INCLUDING
INFORMATION RELATING TO THE SAVE GRAFTECH PARTICIPANTS IN SUCH
PROXY SOLICITATION. SAVE GRAFTECH’S PROXY STATEMENT, AS FILED, AND
ANY FURTHER AMENDMENTS, SUPPLEMENTS OR OTHER RELEVANT PROXY
SOLICITATION DOCUMENTS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S
WEB SITE AT WWW.SEC.GOV, OR BY CONTACTING D.F. KING & CO., INC.
BY TELEPHONE AT THE FOLLOWING NUMBERS: BANKS AND BROKERS CALL
COLLECT: (212) 269-5550 AND ALL OTHERS, INCLUDING SHAREHOLDERS,
CALL TOLL-FREE: (800) 628-8532.
1 Closing price of GTI on November 30, 2010
Media:Sard Verbinnen & CoGeorge Sard/Renée Soto/Jared
Levy212-687-8080