HOUSTON (Business Wire) -- Equus Total Return, Inc. (NYSE: EQS) (the “Fund”)today sent a letter to shareholders of the Fund in response to misleadingstatements from the “Committee to Enhance Equus,” a group led by Sam Douglass(the founder of the Fund and an officer or director of Equus since itsinception) and his wife, Paula Douglass (who until March 17, 2010 had been anofficer of the Fund and Vice Chairman of the Fund's former investment adviser).
“The Douglass Committee is seeking to regain control of the Equus board bylaunching a costly and disruptive proxy contest for reasons that we believe areself-serving and not in the best interest of shareholders,” said Richard F.Bergner, Chairman of the Board of Equus. “The Douglasses have long-standing tiesto Equus and exaggerated the independence of their nominees in an attempt tomislead shareholders.”
Mr. Bergner continued, “In contrast to the Douglass Committee's directorslate, the Fund's director nominees – which include four new directors whorepresent the largest single shareholder owning 9.28% in the Fund, and whoseinterests are aligned with all shareholders – will be intently focused onbuilding value for shareholders and transforming Equus from a smallHouston-based fund into a much larger, internationally focused and dynamicinvestment vehicle that can capitalize on opportunities around the world. Ourobjective is to put Equus firmly back on the track of receiving regular incomeand capital appreciation from our portfolio companies, with a goal ofreinstituting the Fund's quarterly dividend that was discontinued in early 2009under the Douglasses' leadership.”
The Fund urged Equus shareholders to take an important step towards puttingthe Fund back on the right track by reading the Fund's letter and definitiveproxy statement in their entirety and voting their shares on the WHITEproxy card today. Even if you have previously voted on the gold proxy cardsupplied by the Douglass Committee, you can still support the new direction ofthe Fund byvoting the enclosed WHITE proxy cardtoday.
If you have any questions, require assistance in voting your WHITEproxy card, or need additional copies of the Fund's proxy materials, please callGeorgeson Inc. toll-free at 866-821-2606 (banks and brokerage firms should call212-440-9800), or email equus@georgeson.com. Shareholders also can findadditional materials on the annual meeting, including biographies for each ofthe Fund's director nominees, and how to vote on the Fund's website atwww.equuscap.com.
Presented below is the text of the letter:
April 20, 2010
Dear Equus Shareholder,
We recently sent you the proxy materials and WHITE proxy card for theupcoming 2010 Annual Meeting of Stockholders of Equus Total Return, Inc.(“Equus” or “the Fund”), wherein you were asked to elect the Fund's directorsfor the next year. This year's meeting represents one of the most importantin the history of your Fund and this vote is one of the most critical you willmake regarding its future. The meeting will be held on May 12, 2010 andshareholders of record as of March 15, 2010 are entitled to vote.
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No matter how many shares you own, please make sure they are represented at themeeting.
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Submit your vote on the attached WHITE proxy card today.
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You may receive proxy materials from “The Committee to Enhance Equus,” agroup led by Sam Douglass (the founder of the Fund and an officer or director ofEquus since its inception) and his wife, Paula Douglass (who until recently hadbeen an officer of the Fund and Vice Chairman of the Fund's former investmentadviser). Do not be misled. The Douglass Committee is seeking to take control ofthe Equus board by launching a costly and disruptive proxy contest for reasonsthat we believe are self-serving and not in the best interest of shareholders,as discussed below.
Don't be fooled by the Douglass Committee's misleading statements.We urge you to consider the information below and vote TODAY in favor of theFund's nominees on the WHITE proxy card enclosed.
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OUR FOUR NEW BOARD NOMINEES REPRESENT THE SINGLE LARGEST SHAREHOLDER OF THE FUND. THEIR INTERESTS ARE FULLY ALLIGNED WITH THAT OF ALL SHAREHOLDERS – TO INCREASE SHAREHOLDER VALUE.
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Alessandro Benedetti, Bertrand des Pallieres, John A. Hardy, and FraserAtkinson, the four new nominees for your Board of Directors, represent 822,031shares, or 9.28% of Equus stock. As representatives of our largest shareholder,their interests in and objectives for the Fund are aligned with all of ourshareholders – they have a strong, vested interest in increasing Equusshareholder value.
On March 17, 2010, a majority of your Fund directors determined that Equusneeded to change course away from years of stagnation and declining value underSam and Paula Douglass. This is why Sam and Paula Douglass are not part of theFund's director nominee slate. We expect that the four new Board members, will,if elected, provide the Fund with access to investment opportunities, capital asrequired, execution capacity and management expertise. We invite you to read thebackgrounds of our new director nominees summarized at the end of this letter tobetter understand the tremendous resources they will bring to Equus.
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SAM AND PAULA DOUGLASS (FOUNDERS OF ‘THE COMMITTEE TO ENHANCE EQUUS') HAVE BEEN INTIMATELY INVOLVED IN THE MANAGEMENT OF THE FUND SINCE ITS CREATION
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The Douglass Committee has attempted to mislead shareholders and characterizethe Douglasses as outsiders not associated with the management of the Fund, butin fact:
- Sam Douglass was the founder of the Fund and has been an officer or director of Equus since its inception;
- ALL of the Fund's current investments, including those investments which have performed poorly in the past several years, were approved by Sam or Paula Douglass as officers and directors of Moore, Clayton Capital Advisors (“MCCA”), the Fund's most recent investment adviser;
- One or both of Mr. and Mrs. Douglass have been a member of the Fund's investment committee since the formation of the Fund until March 2010 when a majority of your directors determined to change course by terminating Mrs. Douglass' employment and nominating four new directors with no ties or preexisting relationship with Sam Douglass.
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THE DOUGLASSES HAVE RECEIVED MILLIONS OF DOLLARS FROM MCCA
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Sam Douglass was the chief supporter of MCCA and its appointment as adviserto the Fund because he and Paula Douglass stood to personally benefit from itsinvolvement:
- MCCA was appointed as the Fund's investment adviser in June 2005 in connection with the sale by Sam Douglass of the Fund's previous investment advisor, Equus Capital Management Company (“ECMC”), to MCCA's parent company.
- Two trusts controlled by Sam Douglass were entitled to receive $6 million from the sale of ECMC, a large portion of which was a continuing earn-out contingent on MCCA remaining as advisor to the Fund.
- At the time it was sold, ECMC was beneficially owned and controlled by Sam Douglass.
- Mr. and Mrs. Douglass became officers, directors, and employees of MCCA, collectively drawing over $1.6 million in salary and bonus.
- When MCCA's investment management agreement with the Fund was terminated in June 2009, Mr. and Mrs. Douglass were no longer entitled to receive income from MCCA as employees or as installment payments for the purchase of ECMC.
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ASK YOURSELF WHY THE DOUGLASSES ARE NOW UNDERTAKING THIS PROXY
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CONTEST TO GET CONTROL OF THE FUND'S MANAGEMENT
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THE DOUGLASS COMMITTEE'S BOARD SLATE ALSO INCLUDES BOTH THE CHAIRMAN AND CEO OF A COMPANY THAT IS IN DEFAULT ON A $2.2 MILLION LOAN FROM EQUUS
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Jonathan H. Godshall and John D. White serve as the CEO and Chairman,respectively, of Trulite, Inc., a portfolio company of Equus that has defaultedon a $2.2 million loan which was originated by Sam and Paula Douglass on behalfof the Fund. Each of Messrs. Godshall and White and Paula Douglass are directorsof Trulite. Instead of pressing for collection and recovery of this investment,the Douglasses, through the Douglass Committee, have instead sought to appointMessrs. Godshall and White, both based in Houston, as well as Paula Douglass toyour Fund's Board of Directors.
DON'T LET SAM ANDPAULA DOUGLASS DERAIL THE TURN-AROUND
While the Board is in the process of executing a turn-around, Sam and PaulaDouglass have chosen to launch this costly and disruptive proxy contest, seekingto replace your entire board with their Houston friends and associates. Pleasedo not be misled. Please discard any gold proxy card you may receive from theDouglass Committee. The Douglasses' own proxy materials state that Mrs. Douglassintends to seek reimbursement from the Fund for her proxy solicitation expenses,which could total up to $300,000 -- without a vote of the Fund's shareholders.Ask yourself if the Douglasses' nominees' interests are the same as yours.Support real change by voting the enclosed WHITE proxy card.
OUR OBJECTIVE
In contrast to the direction taken by the Douglasses, we believe that our newdirector nominees will help transform Equus from a small Houston-based fund intoa much larger, internationally focused and dynamic investment vehicle that cancapitalize on opportunities around the world. Our objective is to put Equusfirmly back on the track of receiving regular income and capital appreciationfrom our portfolio companies, with a view to resuming the Fund's quarterlydividend that was discontinued in early 2009 under the Douglassesleadership.
The election of the Fund's director nominees will ensure that the Board cancontinue to move forward with its plan to build shareholder value and willposition the Fund to benefit from the significant actions we have already taken.
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YOUR VOTE IS IMPORTANT;
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VOTE THE WHITE PROXY CARD TODAY
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To support your Board, please sign, date and return the WHITE proxycard in the postage paid envelope provided. Even if you have previouslyvoted on the gold proxy card supplied by the Douglass Committee, you can stillsupport your Board byvoting the enclosed WHITE proxy cardtoday. YOUR RESPONSE TODAY WILL HELP PUT THE FUND BACK ON THE RIGHT TRACK.
If you have any questions, require assistance in voting your WHITEproxy card, or need additional copies of the Company's proxy materials, pleasecall our proxy solicitation firm, Georgeson Inc. toll-free at 866-821-2606(banks and brokerage firms should call 212-440-9800), or emailequus@georgeson.com. Shareholders also can find additional materials on theannual meeting and how to vote on our website at www.equuscap.com.
We thank you for your consideration and support.
| Sincerely, |
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| /S/ Richard F. Bergner |
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| Richard F. Bergner |
| Chairman of the Board |
Equus Total Return, Inc. is a business development company that trades as aclosed-end fund on the New York Stock Exchange, under the symbol "EQS".Additional information on Equus Total Return, Inc. may be obtained from Equus'website at www.equuscap.com.
This press release may contain certain forward-looking statements regardingfuture circumstances. These forward-looking statements are based upon the Fund'scurrent expectations and assumptions and are subject to various risks anduncertainties that could cause actual results to differ materially from thosecontemplated in such forward-looking statements including, in particular, therisks and uncertainties described in the Fund's filings with the Securities andExchange Commission. Actual results, events, and performance may differ. Readersare cautioned not to place undue reliance on these forward-looking statements,which speak only as to the date hereof. The Fund undertakes no obligation torelease publicly any revisions to these forward-looking statements that may bemade to reflect events or circumstances after the date hereof or to reflect theoccurrence of unanticipated events. The inclusion of any statement in thisletter does not constitute an admission by the Fund or any other person that theevents or circumstances described in such statements are material.
Important Information
The Fund has filed a definitive proxy statement and other relevant documentsconcerning the 2010 Annual Meeting of Stockholders with the United StatesSecurities and Exchange Commission (“SEC”) on April 12, 2010. Before solicitingproxies, the Fund will provide stockholders with the definitive proxy statement.The Fund advises stockholders to read the definitive proxy statement because itcontains important information about the election of directors and any othermatters to be presented at the 2010 Annual Meeting of Stockholders. Stockholdersmay obtain free copies of the definitive proxy statement and other documents theCompany files with the SEC at the SEC's website at www.sec.gov. They may alsoaccess a copy of the Fund's definitive proxy statement by accessingwww.equuscap.com. In addition, stockholders may obtain a free copy of thedefinitive proxy statement and other related documents by contacting GeorgesonInc. toll-free at 866-821-2606 (banks and brokerage firms should call212-440-9800), or email equus@georgeson.com.
The Fund, its directors, some of its executive officers and certain other ofits employees are participants in the solicitation of proxies in respect of thematters to be considered at the 2010 Annual Meeting of Stockholders. Informationabout the participants is set forth in the definitive proxy statement.Information about the participants' direct or indirect interests in the mattersto be considered at the annual meeting is also contained in the proxy statementreferred to above.