Harbinger Group Inc. – ‘8-K’ for 11/17/95 – EX-17

As of:  Tuesday, 11/21/95   ·   For:  11/17/95   ·   Accession #:  899243-95-821   ·   File #:  2-25420

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         7     31K 
 2: EX-17       Letter re: Departure of Director                       4     18K 

EX-17   —   Letter re: Departure of Director

EX-17
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                                                                      EXHIBIT 17

[LOGO OF HOLT COMPANIES APPEARS HERE] 

November 16, 1995 

Board of Directors                                                              
Zapata Corporation                                                              
1717 St. James Place, Suite 550                                                 
Houston, Texas 77056                                                            

Attention: Mr. Malcolm I. Glazer, Chairman of the Board                         

Gentlemen:                                                                      

 As a shareholder and director of Zapata Corporation ("Zapata"), I am becoming
increasingly alarmed as I more fully understand the new objectives which have   
been set for Zapata and various actions which have been or will soon be taken in
furtherance of these objectives.                                                

For those who have become members of the Board of Directors since the       
acquisition of my family's gas compression business ("Energy Industries") I     
point out that when my family sold Energy Industries to Zapata in 1993, the sale
was not merely an act on our part to cash in on our work and investment. Rather,
we viewed the sale as an opportunity to insure the continued growth and success 
of Energy Industries and looked forward to contributing to, and by taking a     
substantial equity position, enjoying the benefit of, such success. At the time,
we believed that Zapata was committed to the common objective, recited in our   
agreement, of "combining resources to allow for an enhanced natural gas         
compression business and to lay the foundation for the structuring of an        
integrated gas services company." I have, since my involvement with Zapata,     
considered Energy Industries to be Zapata's "flagship operation," thought its   
markets continued to "appear attractive," have expected its profitability to    
"improve" and believed that "the prospects for continued growth remain          
favorable." The words quoted are those used by Malcolm Glazer in his letter to  
Zapata's shareholders of December 28, 1994 and I quote them because I cannot    
convey my sentiments of that date or today regarding Energy Industries any      
better than did Malcolm.                                                        

 Notwithstanding Malcolm's assurances that the prospects for Energy Industries
remained bright as of the end of 1994, Zapata has recently disclosed a new      
strategic plan which is premised upon Zapata's departure from the energy        
services industry and its entry into the food service industry. Our duty, as a  
Board of Directors, requires that the Zapata's shareholders be told exactly why,
when and by whom this new strategy was adopted. The decision was not made by the
Board of Directors. To my knowledge, the September 20, 1995 special meeting of  
the Board was the first occasion on which the new strategy was presented to the 
Board for a vote, and the                                                       

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Board of Directors                                                              
Zapata Corporation                                                              
November 16, 1995                                                               
Page 2                                                                          

conclusion, viewed in the most favorable light, to be drawn from the Board's    
affirmative vote during this meeting is that, by implication, the new strategy  
was ratified well after the fact of its implementation. And yet the shareholders
are told that this strategy has been in development since late 1994 and early   
1995.                                                                           

I have reviewed the Preliminary Proxy Statement filed by Zapata with the    
Securities and Exchange Commission (the "SEC") on September 29, 1995 (the       
"Initial Proxy Statement") and the latest version of the Preliminary Proxy      
Statement filed November 14, 1995 (the "Proxy Statement"). Despite efforts in   
the Proxy Statement to correct inaccurate or misleading statements in the       
Initial Proxy Statement, there remain statements in the Proxy Statement which   
must be corrected in order for Zapata's disclosures to be not misleading and as 
Directors we cannot permit final proxy materials to be disseminated unless they 
are accurate in all material respects. The following represent areas of         
particular concern.                                                             

1. The Proxy Statement discloses that the proceeds of the Energy Industries 
sale are intended to be used for general corporate purposes which may include   
acquisitions in the food service industry, but states that the Company does not 
have any current plans for specific acquisitions and has no plans to advance its
expansion into the food services industry. If it is appropriate or necessary to 
disclose in the Proxy Statement the use of proceeds from the Energy Industries  
sale, as I believe is the case, then it follows that Zapata's disclosure, in    
this regard, must accurately state the relevant and material facts. In its      
present form, this portion of the Proxy Statement conveys to the uninformed     
reader, at best, only a half truth. The Agenda published for the September 20th 
special meeting of the Board of Directors included a proposed resolution        
creating a special committee to be vested with sole discretion to consider and  
close the acquisition by Zapata of Houlihan's Restaurant Group, Inc. and        
Specialty Equipment Companies, Inc., both of which are owned or controlled by   
Malcolm Glazer and affiliates. I presume these resolutions were adopted and, as 
was the case with Envirodyne acquisition, the acquisition of these two          
additional investments will be committed to the discretion of a special         
committee without further review by the Board, but in any event, it is apparent 
to me that Zapata has already identified its acquisition candidates and its     
failure to so state in the proxy materials is misleading.                       

The larger problem suggested by the foregoing is Zapata's failure to advise 
its shareholders of what actually is meant by the words "new strategy" and      
"acquisitions in the food service industry." To my knowledge, the only          
acquisitions which have been seriously considered by Zapata in furtherance of   
the "new strategy", utlizing the proceeds from the Energy Industries            
transaction, are from Malcolm Glazer and his affiliates. It thus seems apparent 
that it is Mr. Glazer's ownership of the target and consequent enrichment from  
its acquisition that distinguish a particular acquisition candidate, not        
industry segment.                                                               

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Board of Directors                                                              
Zapata Corporation                                                              
November 16, 1995                                                               
Page 3                                                                          

2. In light of the foregoing discussion, I believe the portions of the Proxy
Statement which describe the factors that were considered by the Board in       
reaching their decision to "begin the exit of the energy business" and to enter 
the food service business are misleading. "In late 1994," there was no Board    
action taken to develop a plan to exit the energy services business and enter   
the food service business and, to my knowledge, the only Board action taken in  
this regard was during the aforementioned meeting on September 20, 1995, well   
after the exit had begun. The entry into food services, based upon the          
information that has been made available to me, was predicated not upon the     
identification of a more attractive industry segment than energy services, but  
upon the make-up of Mr. Glazer's investment portfolio, apparently the only      
source of candidates which are regarded, by those responsible for the new       
strategy, as suitable for acquisition by Zapata.                                

For the foregoing reasons, I ask the Board to:                              

1. Resolve to conduct no further negotiations for the acquisition of    
   investments from Malcolm I. Glazer and his affiliates except upon the
  condition that any such acquisition will be subjected to independent
  scrutiny and the closing of the acquisition will be conditioned upon
shareholder approval;                                             

   2. Obtain the advice of independent counsel regarding the enforceability of
Zapata's obligation regarding the acquisition of the Envirodyne   
investment, with a view towards rescission; and                   

   3. Cause to be filed with the SEC proxy materials accurately reflecting the
    matters discussed in this letter as well as the actions indicated in 1
       and 2, above, and schedule and provide notice of a shareholder meeting to
approve the sale of Energy Industries to Enterra.                 

Nothing can be gained by delay. I see no reason why the foregoing described 
acts cannot be accomplished promptly, so as not to unduly delay the             
aforementioned shareholder meeting and vote upon the sale of Energy Industries  
to Enterra.                                                                     

  Finally, I have become concerned with the practice of calling special meetings
of the Board on short notice to address matters of great importance to Zapata's 
shareholders and without providing the directors sufficient information in      
advance of the meeting to permit an informed vote. There are of course matters  
which arise and which require a rapid response by the Board, but I have not been
able to discern any circumstances so compelling that the Board meetings which   

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Board of Directors                                                              
Zapata Corporation                                                              
November 16, 1995                                                               
Page 4                                                                          

advance of the meetings, of adequate information in support of the actions which
have been recommended for the Board. Moreover, when my attorneys or I have      
requested materials relevant to Board actions and meetings, such requests have  
been frequently ignored. For me this is intolerable.                            

For that reason, for the reason that I do not agree with and cannot support 
the "new strategy" and in light of my serious reservations regarding the        
intentions of those responsible for the misleading disclosures in the Proxy     
Statement, not to mention the disclosures themselves, I am left no option except
to resign.                                                                      

 Accordingly, in addition to the foregoing, accept this as my resignation from
the Board of Directors of Zapata and of all management and Board positions I    
hold with Energy Industries as well as any other affiliate of Zapata.           

 In this regard, I am sure that you are aware of Zapata's obligation under the
Securities Exchange Act of 1934 to file a Form 8-K due to my resignation because
of a disagreement with Zapata on matters relating to Zapata's operations,       
policies and practices. This letter describes the nature of this disagreement   
and I must insist that my resignation and this disagreement be disclosed. The   
Form 8-K must state the date of my resignation (today), summarize my description
of this disagreement, and include a copy of this letter as an exhibit. The Form 
8-K is due at the SEC and at the New York Stock Exchange within five business   
days after today.                                                               

                            Sincerely,

                                   /s/ Peter M. Holt

                               Peter M. Holt

cc: Mr. Joseph L. von Rosenberg, III                                            

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
Filed on:		11/21/95
For Period End:		11/17/95
		11/16/95		1		4
		11/14/95		2					PRER14A
		9/29/95		2					15-15D,  PRE 14A,  S-8 POS
		9/20/95		1		3			8-K
		12/28/94		1
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