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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )
BRC Holdings, Inc.
(Name of Issuer)
Common Stock
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(Title of Class of Securities)
227174109
(CUSIP Number)
David Fink Carolyn S. Reiser, Esq.
Matador Capital Management Corporation Shartsis, Friese & Ginsburg LLP
200 1st Ave. North, Suite 206 One Maritime Plaza, 18th Floor
St. Petersburg, FL 33701 San Francisco, CA 94111
(813) 898-9300 (415) 421-6500
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
November 19, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box / /.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
SEC 1746 (10-97)
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SCHEDULE 13D
CUSIP No. 227174109 Page 2 of 11 Pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Matador Capital Management Corporation
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 496,050
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 467,800
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 496,050
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10 SHARED DISPOSITIVE POWER
467,800
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
963,850
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
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14 TYPE OF REPORTING PERSON*
CO and IA
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
CUSIP No. 227174109 Page 3 of 11 Pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Jeffrey A. Berg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES 496,050
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 467,800
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 496,050
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10 SHARED DISPOSITIVE POWER
467,800
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
963,850
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
CUSIP No. 227174109 Page 4 of 11 Pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to Common Stock (the "Stock") of BRC Holdings, Inc.,
a Delaware corporation ("BRCP"). The principal executive office of BRCP
is located at 1111 West Mockingbird Lane, Suite 1400, Dallas, TX 75247.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in Instruction
C of Schedule 13D and, where applicable, their respective places of
organization, general partners, directors, executive officers and
controlling persons, and the information regarding them, are as follows:
(a) Matador Capital Management Corporation, a Delaware corporation
("MCMC"); Jeffrey A. Berg ("Berg"); David R. Fink ("Fink"); William W.
Wright ("Wright"); and Steven A. Kohl ("Kohl").
(b) The business address of MCMC, Berg, Fink, Wright and Kohl is 200
First Ave. North, Suite 206, St. Petersburg, FL 33701.
(c) MCMC is an investment advisor. Berg is the President, sole
director and controlling shareholder of MCMC. Fink is the Chief Operating
Officer of MCMC. Wright is the Treasurer of MCMC. Kohl is the Vice
President of MCMC.
(d) During the last five years, none of such persons has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of such persons was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Berg, Fink, Wright and Kohl are citizens of the United States of
America.
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SCHEDULE 13D
CUSIP No. 227174109 Page 5 of 11 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as
follows:
Purchaser Source of Funds Amount
MCMC Funds Under Management $18,344,178
ITEM 4. PURPOSE OF TRANSACTION.
On October 30, 1996, MCMC filed a complaint in the Court of Chancery of the
State of Delaware seeking injunctive relief in connection with the tender
offer disclosed in a Tender Offer Statement on Schedule 14D-l, dated
October 23, 1998, of ACS Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Affiliated Computer Services, Inc., a
Delaware corporation, for 8,704,238 shares of Stock (the "Tender Offer").
The complaint alleges, among other things, that appropriate disclosure
under Delaware law has not been made to BRCP's stockholders in connection
with a proposed merger between BRCP and ACS Acquisition Corporation and
that BRCP's Board has not taken the steps required by Delaware law to be
taken prior to agreeing to a sale of control.
The reporting persons have had discussions with senior management of BRCP
over the past 18 months, and may in the future have additional discussions
with senior management, concerning various operational and financial
aspects of BRCP's business. The reporting persons may solicit indications
of interest from potential purchasers of BRCP and have retained one and may
retain more investment banking firms to assist them and to explore ways of
maximizing long-term shareholder value. The reporting persons have had
and may in the future have discussions with other shareholders regarding
various ways of maximizing long-term shareholder value. The reporting
persons may also seek to obtain financing for a bid by the reporting
persons alone or with other investors.
The reporting persons intend continuously to review their investment in
BRCP and may in the future change their present course of action. The
reporting persons may determine to acquire additional Stock or to dispose
of all or a portion of the Stock which they now own or may hereafter
acquire. In reaching any decision as to their investment, the reporting
persons will take into consideration various factors, such as BRCP's
business and prospects, other developments concerning BRCP (including, but
not limited to, actions of the Board of Directors and management of BRCP),
other investment opportunities available to the reporting persons,
developments with respect to the other investments of the reporting
persons, general economic conditions, and money and stock market
conditions.
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SCHEDULE 13D
CUSIP No. 227174109 Page 6 of 11 Pages
ITEM 4. (continued)
Other than as described above, the reporting persons have no present plans
or proposals which relate to or would result in: (i) the acquisition by any
person of additional securities of BRCP, or the disposition of securities
of BRCP, (ii) an extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving BRCP or any of its subsidiaries;
(iii) a sale or transfer of a material amount of assets of BRCP or any of
its subsidiaries (iv) any change in the present Board of Directors or
management of BRCP including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the Board; (v) any
material change in the present capitalization or dividend policy of BRCP;
(vi) any other material changes in BRCP's business or corporate structure;
(vii) changes in BRCP's charter, by-laws, or other instruments
corresponding thereto or other actions which may impede the acquisition of
control of BRCP by any persons; (viii) causing a class of securities of
BRCP to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (ix) a class of equity securities of BRCP
becoming eligible for termination of registration pursuant to Section
l2(g)(4) of the Securities Exchange Act of 1934; or (x) any action similar
to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock of the persons named in Item 2 of
this statement is as follows at the date hereof:
Aggregate
Beneficially
Owned Voting Power Dispositive Power
Name Number Percent Sole Shared Sole Shared
MCMC 963,850 6.8% 496,050 467,800 496,050 467,800
Berg 963,850 6.8% 496,050 467,800 496,050 467,800
The persons filing this statement effected the following transactions in
the Stock on the dates indicated, and such transactions are the only
transactions in the Stock by the persons filing this statement since August
26, 1998:
Purchase Number Price
Name or Sale Date of Shares Per Share
MCMC P 9/1/98 10,000 $15.250
MCMC P 9/3/98 25,000 $14.881
MCMC P 9/30/98 250 $17.100
MCMC P 10/28/98 15,000 $18.543
MCMC P 10/30/98 10,000 $18.627
MCMC P 11/2/98 20,000 $18.688
All transactions were executed on the Nasdaq National Market.
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SCHEDULE 13D
CUSIP No. 227174109 Page 7 of 11 Pages
ITEM. 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to investment management agreements, MCMC is authorized, among
other things, to invest funds of its investment advisory clients in
securities, and to vote and dispose of those securities. Such investment
management agreements may be terminated by either party on notice as
provided in such agreements. The investment management agreements provide
for fees payable to MCMC based on assets under management and realized and
unrealized gains.
MCMC is also a member of RJ Matador, L.L.C., a Delaware limited liability
company and registered investment adviser. RJ Matador, L.L.C. and MCMC are
the general partners of an investment limited partnership, whose limited
partnership agreement provides to MCMC and RJ Matador, L.L.C., as general
partners, the authority, among other things, to invest the funds of the
partnership in Stock and to vote and dispose of Stock. Pursuant to such
limited partnership agreement, the general partners are entitled to
allocations based on assets under management and realized and unrealized
gains.
Berg is also the President of Everglades Capital Corporation
("Everglades"). Everglades is the general partner of Matador Capital
Management, L.P. ("MCM"), a Delaware limited partnership that is the
general partner of several investment limited partnerships. Pursuant to
those partnerships' agreements of limited partnership, MCM has the
authority to invest the partnerships' funds in Stock and to vote and
dispose of Stock and is entitled to allocations based on assets under
management and realized and unrealized gains. MCM has delegated its
investment management responsibilities with respect to those partnerships
to MCMC.
Pursuant to an agreement dated as of November 13, 1998, MCMC retained
Jefferies & Company, Inc. ("Jefferies") to act as exclusive financial
advisor to MCMC in connection with its investment in BRCP, including, but
not limited to, any actions which MCMC may take to (i) solicit indications
of interest from potential purchasers of BRCP or any of BRCP's material
assets, (ii) obtain financing for a bid to acquire BRCP by MCMC alone or
with any other investors, or (iii) any other actions by MCMC to maximize
the value of its investment in BRCP.
Additionally, Jefferies may assist the filing persons in communicating to
other BRCP shareholders a recommendation not to tender in the Tender Offer
made by ACS Acquisition Corporation and described in Item 4 above.
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SCHEDULE 13D
CUSIP No. 227174109 Page 8 of 11 Pages
ITEM. 6. (continued)
In consideration for Jefferies' services, MCMC has paid Jefferies a
retainer and has agreed to pay an additional success fee. MCMC has also
agreed to reimburse Jefferies for its out-of-pocket expenses incurred in
connection with its services and to indemnify Jefferies for certain
liabilities.
The filing persons have continued to have discussions with other BRCP
shareholders regarding various ways to maximize long-term shareholder
value.
MCMC sent a letter, dated November 19, 1998, to the Board of Directors of
BRCP proposing that the Board consider a recapitalization of BRCP to
achieve greater value for shareholders than the Tender Offer provides. The
letter included several analyses of a recapitalization prepared by MCMC
with the assistance of Jefferies. A copy of the letter is filed as Exhibit
A hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A -- Letter from MCM to the Board of Directors of BRCP dated
November 19, 1998.
November 19, 1998
VIA FACSIMILE & FEDERAL EXPRESS
BOARD OF DIRECTORS
c/o Mr. Paul Stoffel, Chairman of the Board
c/o Jerrold Morrison, President, Chief Operating Officer
BRC HOLDINGS, INC.
1111 W. Mockingbird Lane, Suite 1400
Dallas, Texas 75247-5014
Dear Sirs:
As representative of holders of approximately 7% of the outstanding common
stock of BRC Holdings, Inc. ("BRC" or the "Company"), we do not believe
that the $19 per share tender ("Tender Offer" or "Offer") maximizes the
value of our holdings. We were gratified to read in your amended 14D-9 that
our view of BRC's value is shared by BRC's President and Chief Operating
Officer, Jerry Morrison. Moreover, the amended 14D-9 provided by BRC
indicates that in the recent past you have received several indications of
interest in a business combination by several potential acquirers at levels
in excess of $19 per share. We appreciate this further disclosure which we
believe underscores our position that the BRC shareholders are being
deprived of the full value of their BRC chares at the current Offer price
of $19 per share.
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SCHEDULE 13D
CUSIP No. 227174109 Page 9 of 11 Pages
ITEM 7. Exhibit A (continued)
The purpose of this letter is to not only share our disappointment that the
BRC Board of Directors did not appear to pursue the alternatives to
maximizing shareholder value presented by outside parties, but to also
question whether the Board considered alternatives utilizing the Company's
internal resources. Since your recent disclosure does not provide any
analysis of a recapitalization performed by BRC or its financial advisors,
we have felt compelled to undertake such an analysis on behalf of the
shareholders. As part of its role as our exclusive financial advisor,
Jefferies & Company, Inc. has assisted Matador in developing a
recapitalization analysis for BRC. The conclusion we have drawn from this
analysis is that the Company has the means to provide immediate value to
its shareholders in excess of the $19 per share currently being offered by
Affiliated Computer Services, Inc. ("Affiliated"). As such, it is clear
that the BRC shareholders are being offered a discount to the underlying
value of their shares rather than a premium which is normally required in a
change of control transaction.
Recapitalization Analysis
Matador has closely followed BRC's financial results over the last 18
months. Based on guidance from both the senior management and operating
management of BRC, we have built a detailed financial model to project the
company's financial results through the year 2000. According to our
earnings model, we estimate that net income and earnings per share will be
$15.4 million and $1.07, respectively, in 1999 and $17.8 million and $1.24,
respectively, in 2000. Both analyses assume 14.33 million fully diluted
shares. Applying the $19 offer to these forward EPS estimates yields an
implied P/E multiple of approximately 17.8x in 1999 and approximately 15.3x
in 2000.
The recapitalization analysis that we undertook with Jefferies assumes the
Company deploys its excess cash to repurchase common stock through a Dutch
Tender Offer (the "Dutch Tender"). In our analysis, we examined alternative
Dutch Tender scenarios whereby: (i) the aggregate amount of shares being
repurchased ranged from 3.0 to 4.0 million shares and (ii) the repurchase
price ranged from $20.00 to $22.00 per share. We also focused on one
possible Dutch Tender scenario within the aforementioned range whereby the
company would repurchase 3.5 million shares at a price of $20.50 per share.
In the first part of our analysis, we based our calculations on BRC's
implied P/E multiple. However, after effecting such a recapitalization, the
Company, without being burdened by such a large amount of excess cash,
should begin to be valued more closely to its peer group of comparable
companies. So we also performed our calculations using the representative
P/E for BRC's comparable universe. To perform a comparable company
analysis, we reviewed the results of the following companies which we
believe to be comparable to BRC: Affiliated Computer Services, Inc.,
American Management Systems, Computer Management Sciences, F.Y.I.
Incorporated, Keane, Inc., Lason, Inc., Maximus, Inc., SPR, Inc., Superior
Consultant Holdings Corporation and Systems & Computer Technology
<PAGE>
SCHEDULE 13D
CUSIP No. 227174109 Page 10 of 11 Pages
ITEM 7. Exhibit A (continued)
Corporation. We have determined that the trimmed mean l999E P/E for the
comparable universe is approximately 20.5x (note: the trimmed mean excludes
the highest and the lowest values of the group).
The general results of our recapitalization analysis follow:
Value of Weighted
# Shares Repurchase Remaining Value per % Increase
Repurchased Price Shares Share(3) over Offer(4)
3.5 million(l) $20.50 $20.85-$21.45 $20.78-$21.26 9.4%-11.3%
3.0-4.0 million(1) $20-S22 $20.15-$22.14 $20.11-$22.11 5.9%-16.4%
3.0-4.0 million(2) $20-$22 $23.03-$24.90 $22.50-$24.22 18.4%-27.5%
Notes:
{1) Value of Remaining Shares is based on the pro forma EPS (which takes
into account both the decrease in the fully diluted shares and the decrease
in cash following the recapitalization) and the implied P/E multiples of
17.8x in 1999 and 15.3x in 2000.
(2) Value of Remaining Shares is based on the pro forma EPS and the trimmed
mean P/E multiple for the comparable universe of 20.5x.
(3) Weighted Value per Share assumes all shareholders participate in the
repurchase on a pro rata basis. The Weighted Value is the weighted average
of the Repurchase Price and the Value of Remaining Shares.
(4) Based on Weighted Value per Share.
You should note that all of our recapitalization scenarios assumed that the
current cash balance is reduced by the merger termination fees and expenses
totaling $13 million which are potentially due to Affiliated in the event
of a recapitalization transaction.
Conclusion
Did the Board consider a recapitalization scenario such as the one outlined
above or any other comparable scenario prior to making the decision to sell
the Company? We believe that if the Board had considered such an
alternative, it would have reached a much different conclusion as to how to
maximize shareholder value. The Offer of $19 per share is clearly not a
maximization of shareholder value. Rather than providing a premium to the
shareholders, which is generally the case in change of control
transactions, the shareholders are being asked to accept a substantial
discount from the value that can be realized by the Company via a
recapitalization, the minimum value a shareholder should be asked to
accept.
Since this recapitalization scenario is a viable alternative to the current
Offer, we request that you amend your schedule 14D-9 to include the full
text of this letter and distribute it so all shareholders can benefit from
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SCHEDULE 13D
CUSIP No. 227174109 Page 11 of 11 Pages
ITEM 7. Exhibit A (continued)
this information. We have discussed the highlights of this analysis with
other large shareholders and intend to make the results of this analysis
public if your schedule 14D-9 is not amended as requested.
We would be happy to discuss this and other alternatives for maximizing
shareholder value with you. Thank you for your prompt attention to this
matter.
Sincerely,
Matador Capital Management Corporation
By: /s/ Jeffrey A. Berg
Jeffrey A. Berg, President
SIGNATURES
After reasonable inquiry and to the best of my knowledge, I certify
that the information set forth in this statement is true, complete and
correct.
DATED: November 25, 1998.
MATADOR CAPITAL MANAGEMENT CORP. /s/ Jeffrey A. Berg
Jeffrey A. Berg
By: /s/ Jeffrey A. Berg
Jeffrey A. Berg, President
4267.11\1018064
