Lebow's Maybe Men

His RJR board nominees won't commit to a Nabisco spin-off

Bennett S. LeBow has never equivocated: If RJR Nabisco Inc. shareholders back him in his proxy battle with the food and tobacco giant, he will immediately split its operations into two.

Now, as investors gear up for the tally of the vote at the company's Apr. 17 annual meeting, LeBow's pledge may be less of a sure thing. In depositions taken in January as part of a still pending civil action between RJR and LeBow, the outside investor's board nominees say they have not pledged that they would automatically vote for a Nabisco spin-off if elected as RJR directors.

The unsealed depositions, which were provided to BUSINESS WEEK by RJR, indicate that only Rouben V. Chakalian, chairman of Liggett Group Inc., had definitely committed to a breakup. The others wouldn't make any promises. "I have not guaranteed how I would vote on any matter," Alex. Brown & Sons Managing Director Barry W. Ridings said in his deposition. "I don't have the information yet that would fulfill the sort of obligations I have as a director to make that sort of decision." Ridings won't comment on his current views of a spin-off.

KEY PROVISION. The depositions, which show that the proposed board's information on the spin-off came mostly from newspaper accounts and analyst reports, were taken just two months after LeBow's Brooke Group Ltd. promised that the board "would be committed to effecting an immediate tax-free spin-off of Nabisco." Robert F. Sharpe Jr., general counsel at RJR, says: "LeBow's statements on their commitment are completely at odds with their testimony." RJR Chief Executive Steven F. Goldstone has argued repeatedly that the time isn't right for a split of the tobacco and food units.

LeBow's legal counsel says the depositions are outdated and that the board nominees now are committed to a spin-off. Besides, says Larry Lederman, chairman of corporate practice at Milbank, Tweed, Hadley & McCloy, which represents LeBow, the proxy contains a provision that says directors can be replaced if the board doesn't agree to split the company within six months of being elected.

Few of the board nominees will discuss the matter. But one, William Starbuck, a professor at New York University's Stern School of Business, says he still isn't making promises. "Based on the information I have right now, an immediate spin-off is very desirable," Starbuck says. But "it wouldn't be intelligent for anybody to say, `I'm going to do this regardless of what I find out later."'

There's a chance--even if it's slim--that LeBow could win his proxy fight. But unless he persuades his would-be directors to do what he wants, it might prove a pointless victory.

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