An Open Letter to Stockholders from GrafTech’s Board of Directors

GrafTech International Ltd. (NYSE: EAF) (“GrafTech” or “the Company”) made an announcement today regarding the submission of its definitive proxy statement and WHITE proxy card to the Securities and Exchange Commission (SEC) in relation to the 2024 Annual Meeting of Stockholders scheduled for May 9, 2024. Stockholders as of March 13, 2024, are eligible to vote at the Annual Meeting. Concurrent with this filing, GrafTech’s Board of Directors has issued a letter to the Company’s stockholders. Below is the full text of the letter:

April 2, 2024

Dear Fellow GrafTech Stockholders,

As we approach the upcoming Annual Meeting, we want to draw your attention to a crucial decision regarding the composition of the Company’s Board, which could significantly impact the Company’s future and your investment. Nilesh Undavia, a private investor, has self-nominated for election to the Board. However, the Board does not endorse his candidacy and strongly encourages you to vote “FOR” the nominees recommended by the Board (Ms. Debra Fine and Mr. Anthony R. Taccone) using the WHITE proxy card. Additionally, we urge you to DISCARD any blue proxy cards or materials received from Mr. Undavia.

In response to the challenging market conditions affecting our industry and business, both the Board and management have taken decisive measures.

We acknowledge the cyclical nature of our industry and the current challenges therein. GrafTech has been transparent about falling short of expectations and has implemented actions to address this, following a strategic review by the Board. Under the Board’s guidance, the management team is executing initiatives to navigate current challenges and position GrafTech for long-term growth opportunities post-market recovery.

In 2023, we:

  • Actively managed production levels in line with customer demand.
  • Implemented cost reductions resulting in a 10% decline in period costs.
  • Effectively managed working capital, leading to over $100 million reduction in inventory levels and positive free cash flow.
  • Proactively refinanced our term loan, extending remaining debt maturities to December 2028.

Furthermore, in February 2024, we announced additional measures including:

  • Indefinite suspension of most production activities at our St. Marys facility, anticipating $15 million in annualized fixed cost savings.
  • Overhead structure reduction aiming for $10 million in selling and administrative expense savings.
  • Indefinite idling of certain production assets, achieving a proactive 12% reduction in production capacity.
  • Reduction of anticipated 2024 capital expenditures by over 25% compared to 2023.

These actions, undertaken with Board oversight, demonstrate our proactive approach to address industry challenges.

Recently, we appointed Timothy Flanagan as CEO, bringing over a decade of steel industry experience. Mr. Flanagan’s leadership has been instrumental in guiding GrafTech through this critical period. We believe his experience and leadership qualities are well-suited to lead GrafTech’s future growth.

Despite near-term challenges, we remain confident in our ability to restore revenue growth. Our focus on customer relationships, product innovation, and market differentiation positions us to capitalize on industry trends such as the shift towards electric arc furnace steelmaking and the growing demand for lithium-ion batteries.

Moreover, under the Board’s direction, we are exploring opportunities in the EV battery supply chain, leveraging our existing production capacity.

Your Board comprises experienced, independent directors possessing diverse skills necessary for GrafTech’s future success. We unanimously recommend Ms. Fine and Mr. Taccone for election at the Annual Meeting.

Ms. Fine brings over 30 years of institutional investing experience, with a strong track record in the steel industry. Mr. Taccone’s extensive consulting experience in the global steel industry further strengthens the Board’s expertise.

In contrast, Mr. Undavia lacks relevant sector experience and has not presented differentiated views on GrafTech’s strategy. The Board finds his candidacy lacking in several key areas, including industry expertise and judgment.

We urge you to vote “FOR” the Board-recommended nominees, Ms. Fine and Mr. Taccone, using the WHITE proxy card.

In conclusion, the Board advises against endorsing Mr. Undavia’s candidacy for several compelling reasons outlined in the letter. We believe in GrafTech’s long-term potential and are committed to delivering shareholder value.

Thank you for your continued support.


The GrafTech Board of Directors

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