Post of the Day
August 15, 1998

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Subject: Corporate America: Is there no shame?
Author: Ayce2nd

As I was leaving the office tonight I caught an interesting news items which innocently scrolled by the screen. The news item referenced a settlement between McAndrews & Forbers and Sunbeam Corporation. I thought to myself - "That is very interesting" since these two entities while legally are independent entities are for all intensive purposes essentially the same corporate mind - Ronald Perlman.

The news headline should have read: Ronald Perlman settles with Ronald Perlman. After closer observation it soon became apparent that the circus at Sunbeam did not end with the the termination of Al Dunlap but instead was only taking intermission as we prepared for the Second Act. The Second Act features Ron Perlman and his savvy circle of well-paid executives enriching themselves off the remaining carcus of Sunbeam. The rationale I am sure is that they were taken advantage by Dunlap and now seek compensation for their monetary damage. Since they control Sunbeam and shareholders are legally helpless, let's replenish our wealth under the guise of management incentives. The actual remedy is that McAndrews and Forbes will be issued 25mm warrants of Sunbeam stock at $7.50 per share.

  "It seems to be if anyone deserves compensation for damages it is the Coleman public shareholders."

While this rolls of the tongue with ease, one needs to evaluate the dynamics of this situation. Foremost, Perlman has forgotten about his "public investors' The public investors are still sitting with Coleman stock waiting for the SEC to allow the back-end of the merger to close. If you remember, Perlman and the gang orchestrated a two-step transaction in which McAndrews & Forbes was cashed out on the front-end in a private transaction. The Company received cash of $6.44/stock and SOC shares which they says they still own. The Public Shareholders were to be treated equally (a rarity with Perlman but plausible until now) but instead were left holding the bag as 3 days later Sunbeam "unexpectedly" discovered and disclosed that the world was not according to Al Dunlap or Garp but instead that Dunlap and Sunbeam were mythical creations of a very imaginative mind. In other word, Sunbeam was a fraud. (Anyone who knows me realizes that I called Dunlap a fraud and the story unrealistic staring in 1996. Yet the stock went from $20 to $50 on Wall Street incompetent recommendations and momentum investor folly).

Back to the Public Shareholders. The Public Shareholders of Coleman remain waiting for Sunbeam to close the back-end of the transaction. However, SOC must have audited financials to complete the Proxy Statement and the SEC must sign off on the Fraud Issues. Perlman and his managerial proxy at Sunbeam (Mr. Levin) seem to be in no hurry to complete their "fiduciary role" in this regard representing the public shareholders

  "It seems to be if anyone deserves compensation for damages it is the Coleman public shareholders."

Why? Because they are so busy figuring tactics to enrich themselves at Sunbeam and Coleman shareholders' expense. The news release was so comical with comments stating that shareholder approval was not necessary or in the best interest of SOC shareholders. Instead, we understand that Sunbeam shareholders will be pleased to sacrifice 1/3 of their devalued equity in Sunbeam for the satisfication that a strong management team will be in place newly enriched and focused on increasing shareholder value. Boy, I can sleep tonight.

This is the same management team that is leaving the Coleman shareholders holding huge paper losses. It seems to be if anyone deserves compensation for damages it is the Coleman public shareholders. Is it not McAndrews & Forbes who is at fault for recommending the transaction to Coleman shareholders? It is interesting that the settlement is only for Perlman and that the public shareholders do not recieve proportinate compensation.

As for Mr. Levin - one must ask why no one has brought insider trading charges against him. Mr. Levin exercised 500,000 shares of Coleman options in the $13/range upon the announcement of the Sunbeam merger. This man is intimately involved in the merger discussions. Mr. Levin than sells the entire position in the $33/range (as reported on a Bloomberg article) three days before SOC discloses material information which sends Sunbeam stock into a nosedive. Are we to beleive that Mr. Levin had no notification of the report. This is a travesty.

  "What kind of world have we created where corporate executives control the treasury and issue outrageous stock options and compensation packages for performing their everyday job roles.[?]"

Where are the regulators? Regulators are like Wall Street analysts. They react to news. Wall Street tells us after the fact. Take Andy Shore. Andy Shore tell us that he called the Sunbeam debacle. Bull. Andy Shore is the reason the stock went to $45. You can not push the stock to $45 and then get off the train and tell us you are innocent. Any analyst worth is salt would have never recommended the stock in the first place. The numbers never made sense.

Regulators. Where are they? Why are they letting McAndrews & Forbes issue themselves (through there representation at Sunbeam) the right to own 1/3 of Sunbeam. Essentially, Perlman is saying that I made a mistake and I will now issue shares to myself to make me whole. The NYSE has already approved the transaction. The announcement says gleefully that SOC shareholders have no voting right on this matter. The Board of Directors is showing its usual incompetence. Who will protect the shareholder?

The SEC must put its foot down. The Board of Directors must stop this injustice. What kind of world have we created where corporate executives control the treasury and issue outrageous stock options and compensation packages for performing their everyday job roles. When the CEO's screw up they are paid immense sums of money to leave and shut up. Where is the alignment with shareholders.

So much more to say. So disgusted with it all.

ayce2nd


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