Western Investment Hedged Partners L.P. Releases Letter to Stockholders of Tri-Continental Corporation - Cites Inquiry by New Y
2006年4月8日 - 2:39AM
ビジネスワイヤ(英語)
Western Investment Hedged Partners L.P. today announced that in
connection with its effort to elect three candidates to the board
of Tri-Continental Corporation (NYSE-TY) it has mailed the
following letter to Tri-Continental stockholders: -0- *T April 7,
2006 Dear Fellow Stockholder: Time for a Change Do you know that
Seligman, your fund manager, is the target of a mutual fund timing
inquiry by the New York Attorney General including fraud and
deception allegations involving over $80 million? Western
Investment Hedged Partners L.P. and its affiliates currently own
over 7.6 million shares of common stock of Tri-Continental
Corporation, or more than 7% of the outstanding common shares. We
are seeking your support for the election of our nominees to the
board of directors of Tri-Continental at the annual meeting of
stockholders scheduled for May 4, 2006. As the largest holder of
Tri-Continental shares, our interests are firmly aligned with those
of other Tri-Continental stockholders -- if our investment in
Tri-Continental prospers, so does yours. We have no intention of
selling our shares back to Tri-Continental in a private
transaction. We are convinced that after considering the following
facts, you will agree that the current directors of the Company
have failed miserably in representing the interests of
Tri-Continental stockholders. Eleven Years of Sub-Standard Returns
Eleven Years of an Unacceptable Net Asset Value Discount Eleven
Years of Poor Investment Management Consider the chart.
Tri-Continental has underperformed the S&P 500 index in eight
of the last eleven years. If you had invested $1,000 in an S&P
500 index fund in 1994 instead of Tri-Continental, you would be
about $700 richer today. Over those same eleven years, the fund's
manager, J. & W. Seligman & Co. Incorporated, whose
compensation is based on net assets under management, not
performance, pocketed millions in management fees for its dismal
results. Ask yourself if the relationship between the current
independent directors and Seligman - they all are directors or
trustees of at least 22 other Seligman-managed funds - has
something to do with it. Consider the results over the past eleven
years and ask yourself if the board has failed in its oversight,
and if Seligman has failed in its management of the fund. You
should know that the Seligman New Technologies Fund, another
Seligman fund, has a cumulative return since its inception in July
1999 of an appalling 84.7% LOSS, and in February 25, 2004, the
shareholders authorized a plan to liquidate and dissolve that fund.
This information is available on the Seligman website, although
these results are not indicative or predictive of the results of
the Company. It is time for a change! We are offering stockholders
the opportunity to elect three independent directors to the nine
member Tri-Continental board. While our nominees would only hold
three seats on the board, they would strongly urge their fellow
directors to take action to address the persistent net asset value,
or NAV, discount and to improve the performance of the fund. The
Fund's NAV Discount is Unacceptable Tri-Continental shares have
regularly traded at prices which do not reflect the value of their
underlying securities. Thus, when Tri-Continental stockholders sell
their shares, they are forced to leave a sizeable portion of the
value underlying those shares behind. This "Discount to Net Asset
Value" has, at year-end, ranged between 14% and 18% from 1995 to
2005. We believe that the persistence of this discount is in part
due to the failed management provided by Seligman and the market's
perception that the persistent and substantial NAV discount is not
being, and will not be, addressed. The Tri-Continental stockholders
are being damaged twice in that regard - once with substandard
returns on their investment and again, should they choose to leave
the fund, with the discounted market price they receive for their
shares. Do not let it continue! Management has shockingly argued
that this persistent discount does not represent lost value, but in
fact benefits new stockholders, since new stockholders are able to
buy shares at a discount to NAV. As an existing stockholder, we are
outraged by this viewpoint. We believe the fair value of a share of
common stock should be its NAV, or a value very close. We believe
the independent directors' primary obligation is to the existing
stockholders of Tri-Continental, not prospective buyers. Management
states that any short term gain that could be realized through
open-ending or similar proposals would be offset by the expenses
that implementing such proposals could entail. The potential
difference in value from eliminating the NAV discount would be
approximately $383 million (applying the December 31, 2005 discount
of 16% to the approximately $2.4 billion in net assets). We believe
that this difference in value is substantial, and that the
potential costs are nowhere near this amount. We note that
management has not offered any quantification of these alleged
expenses, or claimed to have done an analysis of such alleged
expenses. Ongoing Inquiry of Seligman by the Office of the New York
Attorney General We are extremely concerned regarding the events
giving rise to the action which the Office of the New York State
Attorney General (the "Attorney General's Office") has determined
to commence against Seligman and a related investigation by the
Securities and Exchange Commission. The Company has disclosed that
since February 2004, Seligman, the manager of Tri-Continental, has
been in discussions with the New York staff of the Securities and
Exchange Commission and the Attorney General's Office in connection
with trading in certain of the Seligman group of funds. No
settlement has been reached and the SEC staff has indicated that it
is considering recommending to the Commissioners of the SEC the
initiation of a formal action against Seligman and Seligman
Advisors, Inc. According to the Company, none of the trading
arrangements being investigated involve the Company, however we are
concerned about this inquiry even if it involves other funds
managed by Seligman. We are concerned that the existence of such an
inquiry may distract Seligman senior management and make it more
difficult to attract and retain talented professional staff.
Seligman has filed suit seeking to enjoin the Attorney General's
Office from pursuing a fee inquiry. The Attorney General's Office
has been forced to go to court to seek documents from Seligman
relating to its inquiry. The affidavit submitted by the Attorney
General's Office to the New York State Supreme Court in connection
with its seeking documents that are material and necessary to its
inquiry has raised a number of matters which cause us grave
concern. The affidavit states, among other things, that: --
"Seligman is currently the fifth most expensive fund family in the
United States among hundreds of competitors;" -- The boards of
directors of the Seligman group of funds "are subservient to
Seligman;" -- "Seligman's high costs are the result of the Boards'
failure to negotiate at arms' length with Seligman;" -- "The
"dilution" of the value of the Seligman group of funds due to
timing activity is estimated to be in excess of $80 million since
1998;" and -- "Based on his investigation to date, the Attorney
General believes that Seligman engaged in 'fraud, deception,
concealment, suppression (and) false pretense' in violation of" New
York's General Business Law. In its court papers, the Attorney
General's Office says that it believes that Seligman and its
co-respondents, William C. Morris, the chairman of the Company's
board, and Brian T. Zino, President and Chief Executive Officer and
a director of the Company, engaged in two separate frauds relating
to mutual fund timing activities in the Seligman group of funds.
According to the Attorney General's Office court papers, the
respondents expressly permitted and knowingly tolerated mutual fund
timing activities that violated the terms of the Seligman group of
funds' prospectuses and harmed shareholders of the affected funds.
According to the court papers, Messrs. Morris and Zino own an
aggregate of approximately 85% of Seligman. The Attorney General's
Office affidavit states that the "dilution" of the value of the
Seligman group of funds due to timing activity is estimated to be
in excess of $80 million since 1998. Tri-Continental has disclosed
that any resolution of these matters with regulatory authorities
may include, but not be limited to, sanctions, penalties,
injunctions regarding Seligman, restitutions to mutual fund
stockholders or changes in procedures. Seligman claims that these
matters do not affect Tri-Continental but, ask yourself, is it in
the stockholders' best interests to have a fund manager burdened
with this inquiry and allegations? Tri-Continental has also
disclosed that Seligman believes it may have violated applicable
requirements for certain orders to buy and sell portfolio
securities with brokerage firms in recognition of their sales of
Seligman's mutual funds as a result of compensation arrangements
Seligman had with certain brokerage firms. In connection with this
matter, Seligman made payments to 24 funds, including $637,118 to
Tri-Continental. Tri-Continental has disclosed that there can be no
assurance that the SEC's investigation or the Attorney General
Office's inquiry and any related publicity will not result in
reduced demand for shares of the Seligman group of funds or other
adverse consequences. What are the independent directors doing to
protect our investment? The Independent Directors All Serve as
Directors or Trustees of at Least 23 Seligman-Managed Registered
Investment Companies Each of the independent directors of the
Tri-Continental board of directors serves as a director or trustee
of each of at least 23 registered investment companies of the
Seligman group of funds. We question whether it is possible for a
director to spend enough time on company matters when he or she has
so many other responsibilities. We believe the Company's
independent directors should have the Company as the primary focus,
not 22 other registered investment companies managed by Seligman.
We do not believe that an independent director should be a director
or trustee of 22 or more other funds managed by Seligman. How do
Tri-Continental's directors have time to adequately monitor
Tri-Continental's multi-billion dollar portfolio when they are also
serving on 22 or more other boards? We believe that in serving as
trustee or director of so many registered investment companies
managed by Seligman, inherent conflicts may arise. For example, we
believe it is possible for a person serving in such multiple
positions to become unduly beholden to Seligman, and less inclined
to act in the best interests of Tri-Continental stockholders,
although we have no evidence that any of Tri-Continental directors
have acted in this way. Are the current directors the best people
to perform the essential task of evaluating Seligman's performance
as manager? We were recently forced to sue Tri-Continental to
obtain a stockholder list. The Supreme Court of the State of New
York issued an order requiring Tri-Continental to provide a list.
The purpose of the list is to permit us to contact all stockholders
in connection with the annual meeting. Do not be misled by any
statements from Tri-Continental regarding their refusal to provide
the list. We believe their refusal to provide the stockholder list
was a violation of state law. A copy of the Court's order will be
posted online shortly at www.fixmyfund.com. Why is Tri-Continental
afraid for us to contact all stockholders? It Does Not Have to Be
This Way! There are a variety of remedies that may be available to
Tri-Continental. Our nominees, if elected, will demand that the
Tri-Continental board immediately review all possible alternatives
and that it take action to reduce the discount in the Company's
share price compared to its net asset value. With your vote, we can
deliver a clear message to the Tri-Continental board: -- End the
lackadaisical oversight. -- End the acceptance of poor investment
performance. -- Deliver to stockholders the real value of their
investment. Don't Be a Rubber Stamp for a Do-Nothing Board. Vote
for Change. Vote Yes for All Items on the Gold Proxy Card Today!
Thank you for your support. Arthur D. Lipson Western Investment
Hedged Partners L.P. IMPORTANT If your shares are held in your own
name, please sign, date and return your GOLD proxy card today. If
your shares are held in "Street-Name," only your broker or bank can
vote your shares and only upon your specific instructions. Please
return your GOLD proxy card to your broker or bank and contact the
person responsible for your account to ensure that a GOLD proxy is
voted on your behalf. Do not sign any White proxy card you may
receive from Tri-Continental. If you have any questions, or need
assistance in voting your shares, please contact the firm assisting
us in the solicitation of proxies: INNISFREE M&A INCORPORATED
TOLL-FREE: (877) 456-3510 Banks and Brokers call collect: (212)
750-5833 Additional information can be found at:www.fixmyfund.com
*T Certain Information Concerning Western Investment Western
Investment Hedged Partners L.P. ("Western Investment"), together
with the other Participants (as defined below), has made a
definitive filing with the SEC of a proxy statement (the "Proxy
Statement") and accompanying proxy cards to be used, among other
things, to solicit votes for the approval of certain matters at the
annual meeting (the "Annual Meeting") of Tri-Continental
Corporation (the "Company") scheduled for May 4, 2006 and in
support of the election of the Participants' slate of director
nominees at the Annual Meeting. Western Investment advises all
stockholders of the Company to read the Proxy Statement and other
proxy materials relating to the Annual Meeting as they become
available because they contain important information. Such proxy
materials are available at no charge on the SEC's web site at
http://www.sec.gov. In addition, the Participants in the
solicitation will provide copies of the proxy materials, without
charge, upon request. Requests for copies should be directed to the
Participants' proxy solicitor, Innisfree M&A Incorporated, at
its toll-free number: (877) 456-3510 or by e-mail at:
mbrinn@innisfreema.com. The Participants in the proxy solicitation
are Western Investment, Western Investment LLC, Arthur D. Lipson,
Western Investment Activism Partners LLC, Benchmark Plus
Institutional Partners, L.L.C., Benchmark Plus Partners, L.L.C.,
Benchmark Plus Management, L.L.C., Paradigm Partners, N.W., Inc.,
Scott Franzblau, Robert Ferguson, Michael Dunmire, Paul DeRosa,
Marlene A. Plumlee and Elyse Nakajima (the "Participants").
Information regarding the Participants and their direct or indirect
interests is available in the Schedule 13D jointly filed with the
SEC on January 6, 2006, as subsequently amended on January 10,
2006, February 15, 2006 and March 3, 2006 and the Proxy Statement.
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