Elliott Criticizes Citigroup and The Salomon Brothers Fund for Calling Stockholder Campaign a 'Side Show,' Calls on SBF Director
12 October 2005 - 2:46AM
PR Newswire (US)
NEW YORK, Oct. 11 /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 sent an open letter to the SBF Board of
Directors criticizing Citigroup (NYSE:C) and SBF for calling the
growing opposition to the proposed new management agreement a "side
show," and calling on SBF directors to eliminate the discount to
net asset value. Elliott is campaigning AGAINST the new management
agreement that is 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. and Legg Mason, Inc. (NYSE:LM). In an open letter to
SBF directors, Elliott, a long-term investor and the beneficial
owner of 5.88 million shares, or approximately 6%, of SBF, said: *
Stockholder value is not a "side show" - it should be the main
event * Our fund's persistent discount to net asset value must be
eliminated or nearly eliminated to create stockholder value, even
if it reduces the amount of management fees paid to Citigroup or
any successor * Until you address and solve the discount problem we
will continue to urge SBF stockholders to vote against the new
management agreement October 11, 2005 Mr. Andrew L. Breech Ms.
Carol L. Colman Mr. William R. Dill Mr. R. Jay Gerken, Chairman Mr.
William R. Hutchinson Mr. Thomas F. Schlafly Dear Directors of The
Salomon Brothers Fund Inc.: You have recommended that stockholders
voting at the October 21, 2005 Special Meeting approve a new
management agreement as part of Citigroup's $3.7 billion sale of
its asset management business to Legg Mason. As you are aware, we
are urging stockholders to vote the BLUE proxy card against
adoption of the new management agreement unless and until you take
action to eliminate or nearly eliminate SBF's significant discount
to net asset value. On September 27, 2005, additional proxy
solicitation materials were filed with the SEC on behalf of SBF and
other funds advised by Citigroup Asset Management. In those
materials we were shocked to see the following statement describing
Elliott's campaign to see the SBF Board take concrete steps to
eliminate or nearly eliminate the discount to net asset value:
"Side show issue - Dissidents are focusing on issue that lacks
relevance to the purpose of the Special Meeting." Is it really your
view that creating value by eliminating or nearly eliminating the
discount to net asset value "lacks relevance"? What then is the
main event -- Citigroup's $3.7 billion? In our view, creating
stockholder value should always be the main event for Directors. We
suspect our fellow stockholders agree. Taking effective steps to
eliminate or nearly eliminate the discount to net asset value, in
turn, should be a critical focus in the Board's ongoing commitment
to stockholders. As we fully explained in our proxy materials, we
believe SBF's stockholders have suffered from approximately $200
million in aggregate value trapped by the Fund's discount to net
asset value, and SBF's efforts to address this problem through
limited stock buybacks have been wholly ineffective in our opinion.
As you know, there are several ways to remedy this problem for the
benefit of all stockholders, and we have discussed the various
options available to SBF in detail with your Chairman. Some of the
strategies could involve shrinking the assets under management upon
which Citigroup's management fees are based, but that must not
stand in the way of the Board's acting in the interest of
stockholders. Based on disclosure in SBF's recent public filings,
it appears that the five directors labeled as "independent" by SBF
collectively maintain approximately 90 paid directorships on the
Boards of funds managed by Citigroup affiliates, seemingly
resulting in aggregate compensation amounting to hundreds of
thousands of dollars in calendar year 2004. SBF's stockholders --
the people who have placed their trust and money in your care --
continue to suffer because of the discount to net asset value. Yet
the elimination of that discount seems to be something you cannot
bring yourselves to discuss in your correspondence with
stockholders. We believe you should formulate and disclose to all
stockholders your specific plans to eliminate or nearly eliminate
that discount before you try to sell them on a new management
agreement that facilitates a transaction benefiting Citigroup and
its stockholders to the tune of $3.7 billion. Please take care of
SBF's stockholders first. After you have done that, you may find a
more receptive audience for your Citigroup-Legg Mason
recommendation. We trust that you agree that as Directors, you owe
a fiduciary duty to the stockholders of SBF and no one else. We
hope that you also agree as Directors that creating value for
stockholders should always be the "main event." Accordingly, we
call upon you to publicly repudiate SBF's "side show"
characterization. The discount to net asset value can and should be
eliminated or nearly eliminated. Until you address and solve that
problem we will continue to urge SBF stockholders to 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 $5.4 billion of capital under management. Founded in
1977, Elliott Associates is one of the oldest funds of its kind
under continuous management. DATASOURCE: Elliott Associates, L.P.
CONTACT: Scott Tagliarino, +1-212-506-2999, or +1-917-922-2364
(cell)
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