MGP Ingredients, Inc. Files Supplemental Proxy Materials and Sends Letter to
ATCHISON, Kan., July 12, 2013 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc.
(Nasdaq:MGPI) (the "Company") announced today that it filedsupplemental proxy
materials with the Securities and Exchange Commission ("SEC") in connection
with its 2013 Annual Meeting of Stockholders.
The independent directors of the Board also sent a letter urging stockholders
to reject the Cray Group's dissident nominees and proposals.
The independent directors recommend that stockholders vote for the election of
the highly qualified nominees of MGP on the WHITE proxy card.
Included below is the full text of the letter to MGP stockholders, which can
also be found at www.mgpingredients.com:
Dear Fellow Stockholder:
You have an important decision to make about the future of MGP. The decision
is clear: support MGP's continued strong progress as a public company
focused on the interests of all stockholders OR allow Karen Seaberg through
her influence over the Cray Group to use MGP as her personal empire at the
expense of common stockholders like you.
Support a Strong, Vibrant MGP Reject Karen Seaberg's Self-Serving
● MGP's independent directors are ● Mrs. Seaberg's proposals are bad for
working to serve the best interests of common stockholders and only serve her
all MGP stockholders interests
● MGP is doing well and on the right ● She is trying to seize control of MGP
path to increasing profitability for personal gain without fairly
● MGP's experienced, high quality compensating common stockholders
management team is vital to MGP's ● She has no plan for MGP and would
future derail MGP's strong progress and good
● MGP's independent directors all have governance
a wealth of experience to help ensure ● Mrs. Seaberg's hostile actions are
MGP's success unnecessary and wasting MGP resources
VOTE THE WHITE PROXY CARD TODAY DISREGARD ANY GOLD CARDS
YOUR INDEPENDENT DIRECTORS ARE ACTING IN THE BEST INTERESTS
OF ALL MGP STOCKHOLDERS
As at every public company, the Board of Directors has a fiduciary duty to
serve the best interests of all stockholders. We, the six independent
directors, take our duties very seriously. Based on our average tenure of
more than 12 years on MGP's Board and our extensive collective business
experience, we have a deep understanding of MGP's challenges and
opportunities. Along with MGP's talented management team, we are working
hard to ensure MGP continues to increase profitability and stockholder
Our independence as directors is especially critical given the Cray family's
dominant ownership in MGP. They are beneficial owners of 92% of MGP's
preferred stock and 27.5% of the common stock. Through their preferred stock
ownership, the family can elect five of the nine directors on the Board. Two
family members already serve on the Board.
Prior generations, including Cloud L. Cray, Sr., MGP's founder, and his
sons, Cloud L. "Bud" Cray, Jr. and Richard Cray, helped MGP grow during its
early years, publicly listing it in 1988. Many of us worked with Cloud, Bud
and Richard when they were leading the Company, and we respected their
decision years ago to professionalize the management of the Company and
ensure their own family voting processes would represent the interests of
all stockholders, not just the Cray family.
Unfortunately, Cloud's granddaughter, Mrs. Karen Seaberg (already a member
of MGP's Board), is now trying to undo their hard work and good intentions.
Through her hostile proxy contest, she is attempting to seize control of MGP
for her own benefit at the expense of common stockholders like you.
All of MGP's independent directors (including those of us who were
previously elected by the Cray family) strongly oppose Mrs. Seaberg's
MRS. SEABERG IS ATTEMPTING TO SEIZE CONTROL OF MGP FOR PERSONAL GAIN
WITHOUT FAIRLY COMPENSATING COMMON STOCKHOLDERS
Mrs. Seaberg's proposals and nominations would clear a path to her asserting
full dominance over MGP, effectively turning MGP into a quasi-private
company without compensating common stockholders.
*Mrs. Seaberg's Proposals Would Enable Her to Control the Board.Three of
Mrs. Seaberg's proposals are clearly aimed at giving her the ability to
dismiss and elect directors when she wants.She proposes:
*De-staggering the Board so all directors are elected each year and can
be removed without reason, putting the Board at Mrs. Seaberg's whim each
*Allowing stockholders with 10% or more of outstanding preferred or
common stock to call special meetings of MGP, essentially handing this
authority to the Cray Group as the only 10%+ stockholder.
*Filling vacancies on the Board exclusively by stockholder vote, instead
of allowing the Board to do so as is more common, which gives Mrs.
Seaberg more chances to pack the Board, and in the aggregate, a path to
replace any directors disloyal to her.
*Hand-Picked Nominees Would Reduce Board Independence. Mrs. Seaberg is
attempting to replace (with one of her hand-picked nominees) MGP's
Chairman John R. Speirs, who is an independent member of the Board elected
by common stockholders.As Chairman, Mr. Speirs draws on his wealth of
experience developed through over 35 years in senior leadership positions
across leading companies in the food and alcohol industries including,
Diageo PLC, Pillsbury and Lever Brothers.Mr. Speirs' expertise has been a
critical factor in setting the strategy that is driving MGP's
success.Together with Mr. Speirs, our strong, independent Board has the
necessary and relevant expertise that is critical to ensuring that the
interests of all stockholders are represented within a family-dominated
company like MGP.
*Highly Unusual, Unnecessary Vote Proposal Designed to Manipulate MGP.Mrs.
Seaberg's proposal seeking confidential voting at our annual meeting is
both unprecedented and unorthodox.It is another clear attempt to
manipulate the governance practices of MGP for the benefit of her own
personal agenda.Well before Mrs. Seaberg introduced this proposal,
stockholders were able to vote confidentially and MGP adopted strict
policies of non-retaliation against employees for stockholder voting.The
effect of Mrs. Seaberg's proposal would be to restrict MGP's ability to
solicit votes while she would have no such restriction. We believe it is
Mrs. Seaberg's proxy contest is costly and unnecessary. As MGP directors,
Mrs. Seaberg and her father, Bud (also an MGP director), had ample
opportunities to voice any concerns with MGP and advocate for change within
the established structure of the Board. Instead, after voting in favor MGP's
nominees and proposals, they abruptly revoked their votes the night before
the Annual Meeting of Stockholders (May 23, 2013) and launched a hostile
proxy battle, which is usually an avenue taken by stockholders with no
MGP IS ON THE RIGHT PATH TO DELIVERING SIGNIFICANT, SUSTAINABLE
STOCKHOLDER VALUE – DON'T LET MRS. SEABERG DERAIL MGP'S PROGRESS
MGP is executing a carefully designed plan to grow profits and deliver
long-term value to all stockholders. To mitigate the negative impact of the
significant commodity volatility on the business and generate greater cash
flow, our Board and management team have refocused MGP on a higher value
sales mix, developed a more effective supply chain and increased
productivity across our asset base.
By implementing this strategy, MGP is well positioned to capitalize on the
strong growth of the distilled spirits market, particularly the surge in
popularity among high-end and super-premium whiskeys. In 2012, U.S. whiskey
sales increased by 3.6%—higher than growth for vodka, gin and tequila and
the largest such increase in 30 years^1. Our focus on expanding our presence
in higher margin businesses like premium distilled spirits, as well as
nutritional health innovations, while also ensuring we remain a low cost
white goods producer is generating real results:
*The first quarter of 2013 marked MGP's fourth consecutive quarter of
growth in income from operations, reaching $1.2 million compared to a loss
of $2.3 million in the first quarter of 2012.
*Full year 2012 net sales rose 20% through execution of the existing Board
and management's strategic plan to focus on higher margin manufactured
*Gross profit margins more than doubled from 3% in 2011 to 8% in 2012
reflecting the greater profitability of the premium product line.
With respect to Mrs. Seaberg, we do not believe she has the experience or
business acumen to lead MGP. Beyond her MGP Board membership, the extent of
her business experience has been working as an executive travel agent, local
restaurateur and being involved in community charity organizations.
REVIEW OF STRATEGIC ALTERNATIVES INCLUDES WIDE RANGE OF OPTIONS
We are confident that our strategy will continue to drive revenue and cash
flow generation leading to higher profits and value for all stockholders.
However, one constant in the business world is the need to continually
evolve. To ensure we are exploring all avenues to maximizing value, the
independent members of the Board are conducting a strategic review of
alternatives. Contrary to Mrs. Seaberg's misleading statements, this does
not necessarily mean the Company will be sold. The Board is reviewing a wide
range of alternatives. The process may take several months to complete, and
it is critical that the Company continue to progress and execute at the
highest levels during this time.
WE ARE COMMITTED TO ATCHISON AND OTHER COMMUNITIES
WHERE WE LIVE AND WORK
Through her various interviews with local media, Mrs. Seaberg claims MGP is
not committed to the communities where it operates. That is a blatant
misrepresentation of the facts. Several directors and most of MGP's
management team live in Atchison. The MGP team works hard to support the
communities where we live and work, whether through donations to local
charities, engagement with community leaders and civic causes, or growth of
the business itself. Under our stewardship, dating back to before Mrs.
Seaberg joined the Board, MGP has invested over $27 million into expanding
its facilities in Atchison. This multi-year investment, which included the
construction of a new Corporate Office and Technical Innovation Center,
added significantly to the local economy and reflects our commitment to the
community. For as long as we remain directors, we plan to keep MGP
headquartered in Atchison.
MRS. SEABERG HAS NO PLAN AND IS MISLEADING STOCKHOLDERS
Mrs. Seaberg has not offered an alternative plan other than asserting
dominance over MGP at the expense of your interests and terminating
management who dare to act independently of her. She desires control for
control's sake. Mrs. Seaberg is relying on incomplete and inaccurate
statements we believe to mislead stockholders.
*Legal Uncertainty Regarding the Validity of the Cray Voting Trust is
Paralyzing MGP's Governance Process.MGP believes actions of members of
the Cray Group, acting as trustees with control over MGP's preferred
stock, are invalid.MGP recently cited two of the three trustees
responsible for voting the preferred stock held by the Cray Group's Voting
Trust as unfit to serve due to their poor health.Subsequent changes to
the Trust by Mrs. Seaberg are further evidence of her attempt to
manipulate governance of the Company to her advantage.
*Also, the Company believes Mrs. Seaberg did not satisfy the MGP stock
ownership requirements to qualify as a trustee of the Voting Trust at
the time she replaced her father as a trustee.
*The simple fact is that the dysfunction and invalidity of the family's
Voting Trust is impairing MGP's ability to execute even the most
standard governance processes leaving the Company with no choice but to
seek a ruling from the court to enable the Company to carry out normal
governance and business operations.
*MGP has filed litigation in the District Court of Johnson County to seek
a declaratory judgment regarding this serious issue so that the Company
has assurance that the majority of the preferred stock now held by the
Voting Trust is being properly represented.
*Contradictory Statements on the Company's Business Plan.While criticizing
management in the Cray Group's proxy materials, elsewhere Mrs. Seaberg
acknowledges the merit of management's strategy.She has been quoted in
the press stating, "We believe in the strategy (of the Company). It's
good."^2 We agree. However, supporting a strategy but not the management
team that created and is executing that strategy simply doesn't make
*Incomplete Facts on Management Compensation.The Cray Group's proxy
materials and Mrs. Seaberg's media interviews criticize MGP management's
compensation in direct conflict with the fact that Mrs. Seaberg and Mr.
Cray, as directors of the Company, voted in favor of the current
compensation of management not just once, but twice, the most recent vote
being on July 11, 2013. Mrs. Seaberg and Mr. Cray previously voted as
directors in favor of the compensation of Mr. Speirs as lead director of
the Board. Also, Mrs. Seaberg fails to acknowledge that her husband earned
a similar level of compensation as Mr. Newkirk when Mr. Seaberg served as
CEO. The Board's responsibility is to ensure that management compensation
is aligned with value creation. The Board works for stockholders, all
RETURN YOUR WHITE CARD TO SUPPORT YOUR INDEPENDENT BOARD AND
MGP'S STRONG PROGRESS
Mrs. Seaberg appears to be trying to steamroll over MGP's stockholders in a
self-serving effort to purge disloyalty to her and reassert family control.
However, as you know, the duty of any public company Board is to serve the
best interests of all stockholders. That is our commitment to you, and we
take it seriously. We appreciate your support of a strong, independent Board
at MGP and the progress we are making delivering value to all stockholders.
You may have received a WHITE proxy card from the Company related to our May
23, 2013 annual meeting, which was adjourned and will be rescheduled in due
course.If you voted that WHITE card already, you do not need to take any
further action.If you have not voted the WHITE card yet, we encourage you
to do so today.
Thank you again for your support,
/s/ John R. Speirs /s/ Michael Braude /s/ John E. /s/ Gary
John R. Speirs Michael Braude John E. Byom Gary Gradinger
Chairman Director Director Director
/s/ Linda E. /s/ Daryl R.
Linda E. Miller Daryl R. Schaller
The Independent Directors of the Board
^1 The Distilled Spirits Council of the United States
^2 June 19^th interview in the Atchison Globe
If you have questions about how to vote your shares, or need additional
please contact the firm assisting us in the solicitation of proxy votes:
Innisfree M&A Incorporated
Stockholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call: (212) 750-5833
Vote the White Proxy Card today!
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This letter contains forward-looking statements as well as historical
information. Forward-looking statements are usually identified by or are
associated with such words as "intend," "plan," "believe," "estimate,"
"expect," "anticipate," "hopeful," "should," "may," "will," "could,"
encouraged," "opportunities," "potential" and/or the negatives of these terms
or variations of them or similar terminology. They reflect management's
current beliefs and estimates of future economic circumstances, industry
conditions, Company performance and financial results and are not guarantees
of future performance. All such forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those contemplated by the relevant forward-looking statement.
Investors should not place undue reliance upon forward-looking statements and
the Company undertakes no obligation to publicly update or revise any
forward-looking statements. Important factors that could cause actual results
to differ materially from our expectations include, among others: (i)
disruptions in operations at our Atchison facility or Indiana Distillery, (ii)
the availability and cost of grain and fluctuations in energy costs, (iii) the
effectiveness of our hedging strategy, (iv) the competitive environment and
related market conditions, (v) the ability to effectively pass raw material
price increases on to customers, (vi) the viability of the Illinois Corn
Processing, LLC ("ICP") joint venture and its ability to obtain financing,
(vii) our ability to maintain compliance with all applicable loan agreement
covenants, (viii) our ability to realize operating efficiencies, (ix) actions
of governments, (x) and consumer tastes and preferences. For further
information on these and other risks and uncertainties that may affect our
business, including risks specific to our Distillery and Ingredient segments,
see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended
December 31, 2012.
Important Additional Information
MGP Ingredients, Inc., its directors, and certain of its officers are
participants in the solicitation of proxies from MGP stockholders in
connection with the Company's 2013 Annual Meeting of Stockholders. Important
information concerning the identity and interests of these persons is
available in the definitive proxy statement that MGP filed with the SEC on
April 11, 2013 as subsequently supplemented, including the proxy supplement
dated July 12, 2013.
The definitive proxy statement, any other relevant documents and other
materials filed with the SEC concerning MGP are available free of charge at
www.sec.gov and www.mgpingredients.com. Stockholders should carefully read the
definitive proxy statement, including supplements thereto, before making any
CONTACT: Investors & Analysts:
George Zagoudis, Investor Relations
913-360-5441 or firstname.lastname@example.org
Shanae Randolph, Corporate Director of Communications
913-367-1480 or email@example.com
MGP Ingredients, Inc. logo
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