Txi Chiefs Counter Dissident Shareholder’s Board Realignment Campaign

TXI Chairman Robert Rogers and CEO Mel Brekhus have informed shareholders that management will not be discouraged by distractions from the Shamrock Activist Value Fund (SAVF), whose principals seek a board shake up through a series of motions at the company’s annual meeting, October 22 in Dallas

Sources: Texas Industries, Inc., Dallas; Shamrock Activist Value Fund, Burbank, Calif.; CP staff

TXI Chairman Robert Rogers and CEO Mel Brekhus have informed shareholders that management will not be discouraged by distractions from the Shamrock Activist Value Fund (SAVF), whose principals seek a board shake up through a series of motions at the company’s annual meeting, October 22 in Dallas.

With a 10.2 percent company stake, SAVF is TXI’s third-largest shareholder. It has nominated an opposition slate of director candidates as an alternative to three current directors whose terms expire this year but have been nominated by the board for reelection. SAVF principals also aim to declassify the current nine-member board through a motion requiring annual director elections. That would replace an existing, staggered cycle where three directors are elected or reelected to three-year terms at each annual meeting.

In statements to fellow shareholders, SAVF principals indicate their intent to raise the board motions, and have questioned TXI’s a) timing of a $427 million Oro Grande cement mill overhaul in southern California, which opened earlier this year; and, b) financial performance against NYSE-traded peer companies Eagle Materials, Martin Marietta Materials and Vulcan Materials. The Oro Grande upgrade was questioned because it coincided with a sharp drop in cement demand. Concurrent with SAVF’s recent actions, Brekus announced that a $350 million expansion of TXI’s Hunter cement plant in New Braunfels, Texas, was on indefinite hold. The upgrade would have taken Hunter from 900,000 to 2.3 million tons/year annual capacity; its early-May suspension conserves $40 millionÒ$60 million in FY 2010 payments to complete the project on schedule, according to Brekhus.

SAVF is the third investor in the past four years to indicate a major TXI holding in advance of the annual meeting. In October 2006, Longleaf Partners, citing an interest in undervalued companies, disclosed a 12.7 percent stake, since reduced to about 9.1 percent. Last year, TXI top investor (14.9 percent) Egyptian billionaire Nassef Sawiris, director of NNS Holding, unsuccessfully encouraged shareholders to withhold votes for two directors, citing the company’s lackluster performance. Leading up to the 2008 annual meeting, Sawiris noted the stock’s drop to $26 from a 52-week high of $81. In the past year, TXI shares have traded in the $12.50 to $55.50 range.