Handleman investor asks company to change record date for liquidation vote

By Lisa Kerner

Charlotte, N.C., Sept. 22 - Handleman Co. investor S. Muoio & Co. LLC expressed concern about the steps the company has taken in setting the record date for the Oct. 1 shareholders meeting.

Shareholders will be asked to vote on the proposed plan of liquidation of Handleman, according to a schedule 13D filed with the Securities and Exchange Commission.

In addition, the investor does not believe the information provided in Handleman's definitive proxy statement is "adequate for any investor to make an informed decision on how to vote" regarding the plan of liquidation.

Muoio asked Handleman's board to consider issuing "a more informative proxy statement" with a record date for the shareholders meeting that "will not disenfranchise over two-thirds of the company's current shareowners."

The investor supports Handleman's liquidation. However, Muoio believes the Aug. 4 record date will make approval of the plan difficult because as many as 13.8 million shares, or approximately 68% of Handleman's outstanding shares, have traded between the record date and Sept. 19.

In the letter, Muoio asked Handleman for the date on which the board adopted the record date.

"If that resolution was adopted on or prior to Aug. 4 then that material fact was omitted from Handleman's preliminary proxy materials filed on Aug. 15," the letter said.

Muoio said if the date was adopted after Aug. 4, Handleman's board may have violated Michigan law and the company's bylaws, it said in the letter.

The filing said Muoio and its clients beneficially own 15.92% of Handleman's issued and outstanding common stock and that the shares were acquired between Aug. 18 and Sept. 18 in open-market transactions.

Handleman is a Troy, Mich., category manager and distributor of prerecorded music to retailers.

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