Steel Partners seeks representation on EnPro board, recommends recapitalization

By Lisa Kerner

Charlotte, N.C., Jan. 31 - Steel Partners II, LP notified EnPro Industries, Inc. that it is nominating five individuals for election to the company's board of directors at the 2008 annual meeting.

The investor nominated James R. Henderson, John J. Quicke, Don DeFosset, Kevin C. King and Delyle Bloomquist, according to a schedule 13D filing with the Securities and Exchange Commission.

In a letter to the company, Steel Partners said EnPro has done a poor job managing its balance sheet and allocating its capital. The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

"We have been extremely disappointed to see the share price decline by 33% since EnPro's third quarter earnings announcement and by 40% since its July 12, 2007 high," the letter stated.

Steel Partners recommended that EnPro capitalize on its "operating momentum" and "substantial excess liquidity" to pursue a public recapitalization at $30 a share.

"Through a combination of EnPro's excess cash and availability under its existing credit facility, the company should be in a position to self tender for at least $150 million of common stock, or approximately 23% of its outstanding shares at the aforementioned price per share," Steel Partners said.

The proposed recapitalization, said Steel Partners, is the most efficient use of capital and provides immediate liquidity for shareholders.

Should EnPro choose not to pursue a recapitalization, Steel Partners urged the board to hire a nationally recognized investment banking firm to explore all strategic alternatives.

"Although the board declined our previous offer to enter into negotiations to acquire EnPro's outstanding common stock for $47 a share in June 2007, we remain interested in purchasing the company and would expect to participate in such a sale process," Steel Partners said in its letter.

Steel Partners beneficially owns 2,433,838 shares, or 11.3%, of the company's common stock.

EnPro makes sealing products, bearings, compressors and engines and is based in Charlotte, N.C.

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