Elliott Questions Why Citigroup Should Pocket $3.7 Billion From Legg Mason Transaction When Citi's Salomon Brothers Fund Has Fai
28 Settembre 2005 - 10:38PM
PR Newswire (US)
Major Stockholders and Others Join or Support Efforts to Defeat New
Management Agreement NEW YORK, Sept. 28 /PRNewswire/ -- Elliott
Associates, L.P. and Elliott International, L.P. (collectively
"Elliott"), who together are reportedly the largest stockholder of
The Salomon Brothers Fund Inc. (NYSE:SBF), today stepped up their
campaign to urge fellow stockholders to vote AGAINST a proposed new
management agreement, scheduled for a vote at a Special
Stockholders' Meeting at 4:00 p.m. on October 21, 2005, at the
American Conference Centers, 780 Third Avenue, in New York. The
requested vote is necessary as part of the pending transaction
between Citigroup Inc. (NYSE:C) and Legg Mason, Inc. (NYSE:LM),
which contemplates a transfer of the SBF management agreement from
Citigroup to Legg Mason. In a new letter to SBF stockholders,
Elliott, a long-term investor and the beneficial owner of 5.88
million shares, or approximately 6%, of SBF, said: * VOTE FOR
CHANGE -- TELL CITIGROUP AND THE SBF BOARD THAT IT IS TIME TO
ENHANCE STOCKHOLDER VALUE TODAY! * DON'T LET CITIGROUP POCKET $3.7
BILLION WITHOUT ELIMINATING OUR FUND'S $200 MILLION DISCOUNT TO NET
ASSET VALUE -- AND RETURNING THAT VALUE TO STOCKHOLDERS! * WE ARE
NOT ALONE IN URGING YOU TO DEFEAT THE NEW MANAGEMENT AGREEMENT --
READ BELOW WHAT OTHERS ARE SAYING! * VOTE AGAINST THE NEW
MANAGEMENT AGREEMENT BY SIGNING, DATING, AND RETURNING THE ENCLOSED
BLUE PROXY CARD TODAY! September 27, 2005 Dear Fellow SBF
Stockholder: As we have previously written you, the stockholder
vote at the October 21, 2005 Special Meeting is critical to the
value of your SBF investment. Stockholders will be asked to approve
a new management agreement ("New Management Agreement") in
connection with the pending $3.7 billion transaction between
Citigroup and Legg Mason ("Citigroup Transaction"), pursuant to
which Legg Mason will acquire substantially all of Citigroup's
worldwide asset management business, including Salomon Brothers
Asset Management, the Fund's advisor. We believe Citigroup should
not be allowed to pocket $3.7 billion unless SBF first takes care
of its stockholders by eliminating the discount to net asset value
("NAV"). You can help send that message by voting AGAINST the New
Management Agreement. We are not the only stockholders who are
concerned about SBF's discount to NAV. Western Investments LLC and
Karpus Investment Management, both major SBF stockholders, have
each filed Schedule 13D disclosures with the SEC indicating that
the discount to NAV should be eliminated or nearly eliminated
before approving the New Management Agreement. Western Investments
LLC also stated that "absent such a satisfactory resolution to this
problem, [it] will likely oppose approval of the new management
agreement." (1) Here is what others are saying: Breakingviews.com:
"Over the past two years, the Salomon Brothers Fund, for instance,
has mimicked, yet still underperformed, the S&P 500 at six
times the cost of a comparable index fund. ... In reality, Citi is
looking to collect the multiples of the fat management fees it
would get from transferring the closed-ended funds -- and their
earnings streams -- to Legg Mason." (2) Tony Tessitor, Gramercy
Investment Advisors LLC "These guys have a combination of poor
performance and a big discount and I don't like it." (3) "The
proposed asset swap between Citigroup and Legg Mason is a golden
opportunity for the management of SBF to fulfill its duties to the
shareholders of SBF and cause the discount to disappear and improve
NAV performance." (4) Thomas J. Herzfeld, Thomas J. Herzfeld
Associates " ... [F]und managers are being given 'a windfall, while
shareholders are being stuck at a discount.'" (5) "What is
bewildering to us is that Legg and Citi have a historic deal here
... and the whole transaction is being tainted because it appears
they're going to keep shareholders trapped in these funds at
discounts." (6) The Fund's low share price and its persistent,
meaningful discount to NAV have long concerned us. The historical
average 14% discount to NAV, measured from the beginning of 2002
and ending August 31, 2005, implies that on average there was
approximately $200 million -- roughly $2.00 per share -- in
aggregate value trapped in the Fund during that period. That's $200
million that belongs to all SBF stockholders, but it is not
reflected in the price of our shares. The efforts by SBF's Board
and management to reduce the discount to NAV through share buyback
programs have been inadequate and ineffective, in our opinion, and
have failed to enhance stockholder value in any meaningful way. The
upcoming Special Meeting is a unique opportunity for SBF
stockholders to remind the SBF Board and management that they run
the Fund for the benefit of the stockholders -- the Fund's owners
-- and no one else. Tell the Board that if they want your support
in connection with the $3.7 billion Citigroup Transaction, they
must do something for stockholders: Return the trapped value in the
Fund to stockholders - where it belongs -- by taking effective
action NOW to eliminate or nearly eliminate the discount to NAV!
Support our efforts to force the SBF Board to eliminate or nearly
eliminate the discount to NAV. Sign, date, and return the enclosed
BLUE proxy card with a vote AGAINST the New Management Agreement.
DO NOT LET MANAGEMENT'S SCARE TACTICS OBSCURE THE FACTS -- ELLIOTT
IS FIGHTING TO DELIVER VALUE TO ALL STOCKHOLDERS. You may have
recently received a letter from SBF that uses scare tactics about
Elliott's intentions. Founded in 1977, Elliott has over $5.2
billion of capital under management. Elliott is a long-term SBF
stockholder and our goal is the same as yours -- to see that the
SBF Board takes immediate, effective action to eliminate or nearly
eliminate the discount to NAV and deliver value to all
stockholders. There are several ways to accomplish this goal and
promote the interests of all stockholders. Other funds have done it
successfully; we have discussed various such alternatives with
management, but they still have not acted. What are they waiting
for? SBF's Board has emphasized its fiduciary duty to you. Now is
the time for the Board to discharge that duty by returning the
Fund's trapped value to all stockholders. SHOULDN'T SBF'S SEPTEMBER
23 LETTER HAVE MENTIONED POSSIBLE SEC PROCEEDINGS AGAINST SBF'S
ADVISOR? We note that SBF's September 23rd letter to you failed to
mention a possible SEC proceeding against SBF's advisor. Regardless
of the outcome of that potential investigation, don't you think the
Board should have mentioned it in its letter to you? YOUR VOTE IS
EXTREMELY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED BLUE PROXY CARD TODAY.
REMEMBER, EVEN IF YOU HAVE ALREADY RETURNED MANAGEMENT'S WHITE
PROXY CARD YOU HAVE EVERY RIGHT TO CHANGE YOUR MIND. SIMPLY SIGN,
DATE, AND RETURN THE ENCLOSED BLUE PROXY CARD IN THE POSTAGE PAID
ENVELOPE PROVIDED. Act now to prevent being trapped in SBF at a
significant discount. Vote AGAINST the New Management Agreement!
Sincerely yours, Mark Levine Portfolio Manager About Elliott
Associates, L.P. Elliott Associates, L.P. and its sister fund,
Elliott International, L.P., have more than $5.2 billion of capital
under management as of July 2005. Founded in 1977, Elliott
Associates is one of the oldest funds of its kind under continuous
management. (1) Schedule 13D/A filed by Western Investments LLC
with the SEC on September 7, 2005. We have not sought nor obtained
the consent of any of the sources quoted in this letter to the use
of such quotes. (2) Fleeing the Citi, Breakingviews.com, posted
September 19, 2005. (3) Salomon Bros Fund Faces More Dissident
Pressure, Reuters, September 15, 2005. (4) Gramercy Investment
Advisors LLC letter to R. Jay Gerken, Chairman, Salomon Brothers
Asset Management, Inc., dated September 15, 2005. (5) Salomon Bros
Fund Faces More Dissident Pressure, supra. (6) Fund Shareholders
Challenge Legg Citigroup's Asset Swap, Baltimore Business Journal,
September 12, 2005 DATASOURCE: Elliott Associates, L.P. CONTACT:
Scott Tagliarino for Elliott Associates, L.P., +1-212-506-2999,
+1-917-922-2364 cell
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