EnPro Industries, Steel Partners avoid proxy contest with settlement agreement

By Lisa Kerner

Charlotte, N.C., April 11 - EnPro Industries, Inc. and Steel Partners II, LP entered into an agreement to settle the contested election of directors at the upcoming 2008 annual meeting of EnPro shareholders, the companies announced.

Under the agreement, EnPro will expand its board of directors to nine members from eight with the addition of Don DeFosset, the former chairman, president and chief executive officer of Walter Industries, Inc., following the company's 2008 annual meeting.

EnPro agreed to submit for shareholder approval at the meeting an amendment to the company's charter that would repeal the charter's classified board provision. If the proposal is approved, all directors will continue to stand for election annually. Should the proposal fail to be approved, EnPro said it will submit and support the same proposal again at its 2009 annual meeting.

"We believe the settlement will benefit all shareholders and give EnPro's new CEO and the board an opportunity to continue to create value going forward," Steel Partners managing member Warren Lichtenstein said in an EnPro news release.

EnPro also rescheduled its 2008 annual meeting to June 9 from April 30. The record date for the meeting is April 24.

On March 27 it was reported that Steel Partners filed a definitive proxy statement with the Securities and Exchange Commission in connection with the election of Steel Partners' candidates, DeFosset and Delyle Bloomquist, to EnPro's board of directors at the annual meeting on April 30.

Steel Partners had been critical of EnPro's management of its balance sheet and allocation of capital. As a result, Steel Partners recommended that EnPro pursue a public recapitalization at $30 a share or explore all strategic alternatives, a prior news release said.

EnPro maintained that its $100 million share repurchase program "strikes an appropriate balance between returning cash to EnPro shareholders and maintaining the flexibility we require to pursue our objectives for growth."

The company also disagreed with Steel Partners' claim that a sale of the company would maximize shareholder value.

EnPro makes sealing products, bearings, compressors and engines and is based in Charlotte, N.C.

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