Ryerson, Harbinger both reach out to stockholders regarding Aug. 23 vote; war of words continues

By Lisa Kerner

Charlotte, N.C., Aug. 15 - Ryerson Inc.'s board of directors called out the proposed board nominees of Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, LP in an open letter on Wednesday. And for the second time in two days, the board urged its shareholders to reject Harbinger's slate.

The board sent the letter to nominees Gerald Morris, Larry Liebovich, Eugene Davis, Daniel Dienst, Keith Butler, Richard Kochersperger and Allen Ritchie.

"Ryerson's stockholders think it's time you emerge from Harbinger's shadow and explain exactly why you deserve to be directors of Ryerson. Ryerson stockholders need answers, not Harbinger's predictable and empty rhetoric, if you expect them to hand over control of Ryerson to you for free and risk losing their right to vote on the $34.50 per share Platinum Equity transaction. Why haven't we heard from you?" the letter stated.

The board brought to light perceived weaknesses on the part of each candidate that included membership on too many boards and lack of experience.

Ryerson said its stockholders deserve better than a "blank slate of nominees with no position on the Platinum merger, no operating changes for the company, and no plans on how to replace the debt that would be accelerated" if Harbinger's group gains control.

The open letter was signed by chairman, president and chief executive officer Neil S. Novich.

Harbinger issued its own response to Ryerson asking the company's stockholders if they trust Ryerson's board to maximize value.

The investor also posted related information on its www.maximizeryersonvalue.com web site, according to a company statement.

Harbinger, with a 9.5% stake in Ryerson, believes CEO Novich wants shareholders to save his job.

"We believe that the current board and management team have consistently and repeatedly disregarded stockholder rights and failed to enhance value for the company's stockholders," Harbinger said.

Regarding its board nominees, Harbinger said Ryerson reacted by delaying the annual meeting and denying stockholders the right to vote for new leadership. Harbinger also cited Ryerson's acceptance of a "take-under bid that keeps management in place but pays stockholders only $34.50."

Ryerson's board has used "scare tactics" in regards to increased debt but cannot prove that the election of Harbinger's nominees will result in debt acceleration, according to Harbinger.

As previously reported, Ryerson shareholders are expected to vote Aug. 23 on the company's proposed acquisition by Platinum Equity, LLC in a $2 billion transaction that will take the company private.

Under the companies' definitive agreement, an affiliate of the Beverly Hills, Calif.-based private equity firm will acquire all of the outstanding shares of Ryerson's common and convertible preferred stock for $34.50 per share in cash. The Chicago-based metal processor's board unanimously approved the deal.

Harbinger Capital is a New York investment firm.

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