Sent: Friday, May 17, 2002 7:13 AM
Subject: Plans for initial Forum activities
Based on discussions with several Forum
participants, it is suggested that initial activities be focused on two
subjects which must be addressed by mid-June:
- Define 3-5 strategic alternatives
to realize more than $400 per share - Nearly all of the
participants who've talked with me have suggested a preferred strategy to
enhance shareholder value. These could be classified into categories
such as buyback programs, spin-offs, auction sales, buyouts, etc., but even
within the same categories there were significant variations for liquidity,
tax or other considerations. It will be important to have a manageable
number of specific scenarios that can be professionally evaluated, so that we
can use them as standards for comparison with current conditions or any other
alternatives. We will also want to refer to these defined scenarios as
an indication of directions and ranges of what might be relevant in
considering any governance proposals. We can always consider different
scenarios or variations later, and refine the list as we proceed, but we need
something to start.
- Review proposals for shareholder
submission at annual meeting - A few of the participants have
expressed an interest in submitting shareholder proposals or nominating
directors for this year's annual meeting. The process for shareholder
proposals is relatively simple, if submitted by the June 27, 2002 deadline for
presentation in the company's proxy statement, and can provide shareholders
with an opportunity to decide whether the company should be regulated by the
SEC as an investment company, establish requirements for independent board
members, or make other changes in its governance policies or practices.
Proposing candidates for election to the board could be done by presenting a
recommendation to the existing board for its consideration as a management
nominee, or by the more ambitious process of independent nomination and proxy
solicitation. The Forum will support shareholder interests in any of
these undertakings by providing procedural guidance and, more importantly, an
effective exchange of participant views about what is relevant to shareholder
interests.
A "Workshop" will be established for the purpose
of defining and evaluating the strategic alternatives. This will be open
to all investment professionals, including advisers to Forum participants as
well as qualified analysts and financial journalists who are not Farmer
Brothers shareholders. It should be assumed that the Workshop will
operate very informally, the same as those in past forum programs I've
conducted, with the understanding that each person who joins in the
communication with other Workshop participants agrees to consider it private
unless given explicit permission to identify or quote, just as I respect the
privacy of each Forum participant who communicates separately with me.
This allows Workshop participants to collaborate freely on professional
issues, and to present questions to management or shareholders through a
Workshop representative if they prefer not to be identified. People can
join at any time or engage selectively in relation to specific issues, but it
would be very helpful if those of you who are interested would let me know
now, while efforts are being organized.
For those of you interested in shareholder
proposals or director nominations, I will respond personally to at least
determine your requirements. We will also provide for informal
participant comments on contemplated proposals, and, depending on the number
and nature of initiatives, we will probably conduct some form of shareholder
survey to determine the relevance of issues and guide proponents in their
refinement of final proposals. If you're thinking about a shareholder
proposal, or interested in commenting on what others propose, please call me.
I thank those of you who offered advice during the
past couple of weeks, and will of course continue to welcome questions or
suggestions from all Forum participants.
GL - 5/17/02
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
(Tel: 212/605-0335)
(Fax: 212/605-0325) |