SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. 3)
______________
BRC HOLDINGS, INC.
(Name of Subject Company)
______________
MATADOR CAPITAL MANAGEMENT CORPORATION
EVERGLADES PARTNERS, L.P.
JEFFREY A. BERG
(Name of Person(s) Filing Statement)
______________
COMMON STOCK, $.10 PAR VALUE
(Title of Class of Securities)
227174-10-9
(CUSIP Number of Class of Securities)
______________
David Fink
Matador Capital Management Corporation
200 1st Avenue North
Suite 206
St. Petersburg, FL 33701
(813) 898-9300
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
WITH COPIES TO:
Leon P. Gold, Esq. Carolyn S. Reiser, Esq.
Proskauer Rose LLP Shartsis, Friese & Ginsburg LLP
1585 Broadway One Maritime Plaza
New York, New York 10036 18th Floor
(212) 969-3480 San Francisco, CA 94111
(415) 421-6500
This Amendment No. 3 amends the Solicitation/Recommendation Statement on
Schedule 14D-9 filed on November 4, 1998 by Matador Capital Management
Corporation ("MCMC") and Jeffrey A. Berg, as previously amended (the "Schedule
14D-9"), in connection with a tender offer made by ACS Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of
Affiliated Computer Services, Inc., a Delaware corporation, to purchase
8,704,238 shares of common stock, par value $.01 per share (the "Shares"), of
BRC Holdings, Inc. ("BRCP") disclosed in a Tender Offer Statement on Schedule
14D-1, dated October 23, 1998 (the "Offer").
The following information supplements the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND
On November 20, 1998, Everglades Partners, L.P. ("Everglades"), a
beneficial owner of Shares of BRCP, acting through its nominee, demanded a
copy of BRCP's stockholder list and related materials for the purpose of
communicating with stockholders regarding the Offer and for other proper
purposes. Everglades is an investment limited partnership. Everglades'
business address is 103 Foulk Road, Suite 202, Wilmington, Delaware 19803.
Jeffrey A. Berg is the President of the general partner of the general
partner of Everglades. The general partner of Everglades has the authority to
invest Everglades' funds in Shares and to vote and dispose of Shares and is
entitled to allocations based upon assets under management and realized and
unrealized gains. The general partner of Everglades has delegated its
investment management responsibilities to MCMC.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
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 a greater value for shareholders than the Offer provides. The letter
included several analyses of a recapitalization prepared by MCMC with the
assistance of Jefferies & Company, Inc. A copy of the letter is filed as
Exhibit 3 hereto.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 3. Letter, dated November 19, 1998, from MCMC to the Board of
Directors of BRCP.
SIGNATURE
AFTER REASONABLE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND
BELIEF, I CERTIFY THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS
TRUE, COMPLETE ANDCORRECT.
MATADOR CAPITAL MANAGEMENT CORPORATION
By:
Jeffrey A. Berg, President
Jeffrey A. Berg
EVERGLADES PARTNERS, L.P.
By: Matador Capital Management, L.P.,
its general partner
By: Everglades Capital Corporation,
its general partner
By:_______________________________
Jeffrey A. Berg, President
Date: November 23, 1998
<PAGE>
Exhibit 3
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 shares at the current Offer price of $19 per share.
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 Corporation. We have determined that
the trimmed mean 1999E 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:
<TABLE>
<S> <C> <C> <C>
Value of Weighted
# Shares Repurchase Remaining Value per % Increase
Repurchased Price Shares Share(3) over Offer(4)
3.5 million(1) $20.50 $20.85-$21.45 $20.78-$21.26 9.4%-11.9%
3.0-4.0 million(1) $20-$22 $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%
</TABLE>
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 rate 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
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
