Saturday, June 10, 2000

Investors keep heat on Elder-Beerman

By Lisa Biank Fasig
The Cincinnati Enquirer

        The second-largest shareholder of Elder-Beerman Store Corp. has made good this week on a pledge to nominate three new directors and submitted for proxy 12 proposals seeking to relax the company's bylaws.

        PPM America Inc., a Chicago-based investment management firm that owns 13.2 percent of Elder-Beerman, said the merchant failed to address previous requests for measures to improve profits. In March, PPM said it would nominate three new directors after calling for Elder-Beerman to put itself up for sale or repurchase shares in a controlled auction.

        PPM's proposals essentially would soften company restrictions and bylaws to make it easier for shareholders to influence company operations.

        “The PPM Group believes that the company's current management and board have failed to represent effectively and adequately the interests of the company and its shareholders,” PPM wrote in a tersely worded document to the Securities and Exchange Commission. “(They) have failed to respond to the concerns raised by certain of its largest shareholders.”

        The board nominees are:

        • Mark Berner, 46, of New York, managing partner of SDG Resources, an oil and gas investment fund.

        • Moira Cary, 39, of Evanston, Ill., president of Drake Avenue Inc., a real estate investment and development company.

        • Eugene Davis, 45, of Livingston, N.J., chairman and chief executive of Pirinate Consulting Group and of Murdock Communication Corp. telecommunications.

        PPM is proposing election of these nominees over re- election of Stewart Kasen, John Muskovich and John Wiesner.

        PPM's slate of directors and proposed rule changes will be voted on at the company's annual meeting Aug. 24.

        Sources at Elder-Beerman could not be reached Friday, but in a statement the merchant called the PPM efforts “harmful to the process and ultimately the company's shareholders.”

        But other investors disagree. David Nierenberg, who owns a 6 percent stake in Elder-Beerman, has been calling for changes in management since last August. He said he will vote for PPM's 12 proposals to relax the company restrictions, but is still researching the board nominees.

        “It's about time we adopt a set of rules that are more shareholder friendly,” he said from his home in Washington state.

        Analyst Jeff Stinson, with Midwest Research Maxus Group in Cleveland, said Elder-Beerman's governance is somewhat standard.

        “Their bylaws aren't really unusual compared with what you'd find at other corporations,” he said.


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