<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.2)*
ERLY Industries Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
26883910
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(CUSIP Number)
Nanette N. Kelley, The Powell Group, P.O. Box 788, Baton Rouge, Louisiana 70821
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 13, 1997
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(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.
(Continued on following pages)
(Page 1 of 18 Pages)
*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).
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CUSIP NO. 26883910 PAGE 2 OF 18 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Powell Group
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b
[x]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
N/A
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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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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Louisiana
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SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
171,973
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
171,933
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
171,933
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
13
3.6%
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TYPE OF REPORTING PERSON*
14
CO,HC
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 26883910 [ ] PAGE 3 OF 18 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Farmers Rice Milling Company, Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b
[x]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
WC
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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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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Louisiana
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SOLE VOTING POWER
7
NUMBER OF 171,933
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
171,933
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 171,933
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
171,933
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
171,933
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
13
3.6%
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 26883910 [ ] PAGE 4 OF 18 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nanette N. Kelley
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b
[x]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
PF
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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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CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
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SOLE VOTING POWER
7
NUMBER OF 16,400
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
188,333
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 16,400
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
188,333
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
188,333
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12 [ ]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
13
3.9%
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TYPE OF REPORTING PERSON*
14
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 26883910 [ ] PAGE 5 OF 18 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Global Securities, Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b
[x]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
WC
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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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CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
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SOLE VOTING POWER
7
NUMBER OF 5
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
5
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 5
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
5
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12 [ ]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
13
Less than 1%
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TYPE OF REPORTING PERSON*
14
BD/IV
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 26883910 [ ] PAGE 6 OF 18 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Noble B. Trenham
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b
[x]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
PF
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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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CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
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SOLE VOTING POWER
7
NUMBER OF 7
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
12
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 7
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
12
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* [ ]
12
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
13
Less than 1%
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TYPE OF REPORTING PERSON*
14
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
This Amendment No. 2 ("Amendment No. 2") amends and supplements the
Schedule 13D ("Schedule 13D"), relating to the common stock, $.01 par value per
share, of ERLY Industries Inc., a California corporation (the "Company"),
previously filed by The Powell Group ("TPG"), Farmers Rice Milling Company, Inc.
("FRM"), Nanette N. Kelley, First Global Securities, Inc. ("Firt Global") and
Noble B. Trenham. TPG and FRM are collectively referred to herein as "Powell."
1. Item 2 of the Schedule 13D, "Purpose of Transaction," is hereby amended
and restated in its entirety as follows:
The Schedule 13D was filed on behalf of TPG and TPG's wholly-owned
subsidiary FRM, Ms. Kelley, Mr. Trenham and First Global. Powell, Ms.
Kelley, Mr. Trenham and First Global are collectively referred to herein as
the "Filing Persons."
The filing of the Schedule 13D was not required by Rule 13d-1 under
the Securities Exchange Act of 1934. None of the Filing Persons is the
owner of more than five percent of the number of shares of Common Stock
outstanding (the "Outstanding Common Stock"). Furthermore, if each of the
Filing Persons is deemed to have acquired beneficial ownership of the
Common Stock owned by each of the other Filing Persons, collectively the
Filing Persons would not own more than five percent of the Outstanding
Common Stock. However, as more fully described below, the Schedule 13D was
filed on behalf of the Filing Persons in anticipation of allegations by the
Company that the recent actions the Filing Persons have taken with respect
to the Common Stock require such filing.
A. THE POWELL GROUP
TPG's principal business address is P.O. Box 788, Baton Rouge,
Louisiana 70821. Powell is a holding company which owns and operates
subsidiaries (including without limitation FRM) engaged in the rice
milling, rice farming, rice hull-fired power generation, radio
broadcasting, travel management, commercial real estate development and
holdings, timber holdings and residential construction businesses. During
the last five years, TPG has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) and has not been a
party to a civil proceeding of a judicial 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.
TPG is a successor to Powell Lumber Company, organized in 1896. Since
1917, FRM, formerly a company with common stockholders with TPG and
subsequent to 1992 a subsidiary of TPG, has been in the rice milling
business. Mr. Willis Page Weber, Ms. Kelley's great-grandfather, was the
President of Powell Lumber until his retirement in 1951. Ms. Kelley was
elected as a director and subsequently President and Chief Executive
Officer in 1991 to succeed her father, A.W. Noland, who resigned. As
President and Chief Executive Officer, Ms. Kelley led a restructuring of
TPG's business
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which occurred over the course of three years. After the restructuring was
completed, Ms. Kelley implemented a strategic plan which included selling
unprofitable assets, integrating TPG's rice business and real estate
business and acquiring positions in the radio broadcast industry. As noted
above, TPG's subsidiaries operate presently in the rice milling, rice
farming, rice hull-fired power generation, radio broadcasting, travel
management and real estate development and holdings, timber holdings and
residential construction businesses.
Nanette N. Kelley is TPG's President and Chief Executive Officer, John
M. Spain is TPG's Managing Director and Mary E. Stampley is Powell's
secretary. Ms. Kelley, Mr. Spain and David Pitts are the directors of TPG.
The following information is supplied with respect to Ms. Kelley, Mr.
Spain, Ms. Stampley and Mr. Pitts.
I. (a) Nanette N. Kelley
(b) Ms. Kelley's business address is P.O. Box 788, Baton Rouge,
Louisiana 70821.
(c) Ms. Kelley's principal occupation or employment is serving as
TPG's President and Chief Executive Officer. Ms. Kelley is also the
President and Chief Executive Officer of FRM.
(d)-(e) During the last five years, Ms. Kelley has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a
judicial 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) Ms. Kelley is a citizen of the United States.
II. (a) John M. Spain
(b) Mr. Spain's business address is P.O. Box 788, Baton Rouge,
Louisiana 70821.
(c) Mr. Spain's principal occupation or employment is serving as TPG's
Managing Director. Mr. Spain is also the Managing Director of FRM.
(d)-(e) During the last five years, Mr. Spain has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a
judicial 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.
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(f) Mr. Spain is a citizen of the United States.
III. (a) Mary E. Stampley
(b) Ms. Stampley's business address is P.O. Box 788, Baton Rouge,
Louisiana 70821.
(c) Ms. Stampley's principal occupation or employment is serving as
TPG's Secretary. Ms. Stampley is also the Secretary of FRM.
(d)-(e) During the last five years, Ms. Stampley has not been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and has not been a party to a civil proceeding
of a judicial 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) Ms. Stampley is a citizen of the United States.
IV. (a) David Pitts
(b) Mr. Pitts' business address is P.O. Box 788, Baton Rouge,
Louisiana 70821.
(c) Mr. Pitts' principal occupation or employment is serving as
President of Pitts Management Associates, a consulting firm.
(d)-(e) During the last five years, Mr. Pitts has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a
judicial 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) Mr. Pitts is a citizen of the United States.
B. FARMERS RICE MILLING COMPANY, INC.
FRM's principal business address is P.O. Box 788, Baton Rouge,
Louisiana 70821. FRM's principal business is the purchase of rough rice and
the milling and sale of rice and rice by-products. During the last five
years, FRM has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) and has not been a party to a
civil proceeding of a judicial 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.
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Ms. Kelley is FRM's President and Chief Executive Officer, Mr. Spain
is FRM's Managing Director and Ms. Stampley is FRM's Secretary. Ms.
Kelley, Mr. Spain and Mr. Pitts are the directors of FRM. Information
required to be disclosed in the Schedule 13D about Ms. Kelley, Mr. Spain,
Ms. Stampley and Mr. Pitts is contained in A.I. through A.IV. above.
C. FIRST GLOBAL SECURITIES, INC./NOBLE B. TRENHAM
First Global's principal business address is 790 East Colorado
Boulevard, Suite 500, Pasadena, California 91101. First Global is a broker
dealer. During the past five years, First Global has not been convicted in
a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a judicial
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.
Noble B. Trenham is First Global's Co-Chairman and Chief Investment
Officer. Susan W. Trenham is First Global's Chief Executive Officer and
Co-Chairman. The following information is supplied with respect to Mr.
Trenham and Ms. Trenham.
I. (a) Noble B. Trenham
(b) Mr. Trenham's business address is 790 East Colorado Boulevard,
Suite 500, Pasadena, California 91101.
(c) Mr. Trenham's principal occupation of employment is Co-Chairman
and Chief Investment Officer of First Global.
(d)-(e) During the last five years, Mr. Trenham has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a
judicial 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.
On July 23, 1987, the Securities and Exchange Commission filed a civil
injunctive action against Mr. Trenham, First Wilshire Securities
Management Inc. ("First Wilshire") and Frederick Astman, alleging
violations of (i) Section 13(d) of the Securities Exchange Act of 1934
and Rules 13d-1 and 13d-2 promulgated thereunder as a result of First
Wilshire's failure to properly and timely disclose its purpose or
effect of changing or influencing the control of at least eight public
companies while it beneficially owned at least five percent of the
outstanding shares of such companies, (ii) Section 206(2) of the
Investment Advisers Act of 1940 (the "Advisers Act") regarding (A) the
aggregate concentrations of shares accumulated by the defendants in
their clients' accounts and failing to disclose to their clients the
adverse consequences of such concentrations and (B) the
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defendants' failure to disclose multiple instances of conflicts and
potential conflicts of interest between First Wilshire and its clients
as a result of seeking and, in certain instances, receiving fees from
various issuers and entities in which the defendants had invested
client funds and (iii) Section 206(3) of the Advisers Act by effecting
transactions between a charitable foundation and the foundation's
president, both of whom were clients, without statutorily required
disclosure or permission. Without admitting or denying the allegations
of the complaint, Mr. Trenham, First Wilshire and Mr. Astman each
submitted consents to the entry of final judgments permanently
enjoining and restraining them from further violations of those
provisions of the federal securities laws which they were alleged to
have violated. In connection with the entry of the judgment, Mr.
Trenham waived, and the court did not enter, any findings of fact or
conclusions of law.
(f) Mr. Trenham is a citizen of the United States.
II. (a) Susan W. Trenham
(b) Ms. Trenham's business address is 790 East Colorado Boulevard,
Suite 500, Pasadena, California 91101.
(c) Ms. Trenham's principal occupation of employment is Chief
Executive Officer and Co-Chairman of First Global.
(d)-(e) During the last five years, Ms. Trenham has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a
judicial 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) Ms. Trenham is a citizen of the United States.
11 of 18
<PAGE>
2 . Item 4 of the Schedule 13D, "Purpose of Transaction," is hereby
amended and restated in its entirety as follows:
On February 12, 1997, Mr. Trenham contacted Ms. Kelley at FRM, as a
producer in the rice milling industry, to explore whether Ms. Kelley or FRM
would be interested in making an investment in the Company through a private
purchase of shares of Common Stock of the Company which Mr. Trenham understood
would become available in the near future. Mr. Trenham and First Global have
followed the Company for an extended period of time and Mr. Trenham had
recommended that a number of his clients invest in the Company.
Ms. Kelley ultimately decided to proceed with the purchase and on
March 10, 1997 FRM purchased 171,933 shares and Ms. Kelley purchased 16,400
shares. None of TPG, FRM or Ms. Kelley owned shares of Common Stock prior to
March 10, 1997. Mr. Trenham and Ms. Kelley also discussed the long term
performance of the Company, the possibility of enhancing shareholder value under
new management and the extent of shareholder dissatisfaction with current
management and its performance. In March 1997, Powell engaged the services of
First Global to provide investment banking and financial services in connection
with Powell's consideration of a possible consent and/or proxy solicitation with
respect to the Common Stock (as described below).
During the period from June 9, 1997 through June 16, 1997, Powell and
Mr. Trenham met with certain shareholders of the Company to discuss the
Company's performance and to ascertain the level of support for a consent/proxy
solicitation to replace the board of directors of the Company, if Powell decided
to undertake one. Although certain of those shareholders indicated they were
inclined to support Powell if it undertook a consent/proxy solicitation, no
agreement, arrangement or understanding was reached between Powell and any such
shareholders with respect to such support or with respect to any other matters
pertaining to the Company or the Common Stock. Each of the Filing Persons
expressly disclaims beneficial ownership of any shares of Common Stock other
than its, his or her own. A list of names of such shareholders was attached to
the Schedule 13D as Annex A.
On July 17, 1997 and July 18, 1997, Powell and Mr. Trenham met with or
contacted certain shareholders of the Company solely for the purpose of asking
them to join Ms. Kelley and
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FRM in a request to the Company for a list of shareholders and for a special
meeting of shareholders to be held on September 9, 1997. Although certain of
those shareholders elected to submit requests to the Company for the list of
shareholders and/or for the calling of a special meeting, no agreement,
arrangement or understanding was reached between Powell and any such
shareholders with respect to acquiring, holding, voting or disposing of Common
Stock or any other matters pertaining to the Company or the Common Stock.
Certain of the shareholders described in this paragraph are clients of First
Global, and therefore, from time to time, call upon Mr. Trenham for advice with
respect to matters relating to their shares of Common Stock. Neither Mr. Trenham
nor First Global has any discretionary accounts. First Global and Mr. Trenham
expressly disclaim beneficial ownership of any Common Stock other than the
shares owned by First Global and Mr. Trenham.
On July 17, 1997, Powell and Mr. Trenham met with Mr. Gerald D. Murphy, the
chief executive officer of the Company, to discuss Powell's desire to enhance
shareholder value for the benefit of all shareholders of the Company, the
actions taken by Powell, as described above, and Powell's interest in engaging
in a consent/proxy solicitation to remove the existing directors and to replace
them with Powell's nominees. Mr. William H. Burgess, a director of the Company
and the owner of 208,735 shares of Common Stock, was also present at the
meeting. Mr. Trenham and Powell had previously met with Mr. Burgess on several
occasions regarding the possibility of his supporting Powell's efforts to
enhance shareholder value and replace management either by acquiring his shares
or by his joining with the Filing Persons in their efforts to achieve these
purposes. Mr. Burgess expressed unwillingness to sell his shares or to join with
the Filing Persons until a meeting could be held with Mr. Murphy. At the meeting
with Mr. Murphy, Ms. Kelley expressed the willingness of Powell to facilitate a
sale of the Common Stock owned by Mr. Murphy and his son, Douglas A. Murphy, the
President and Chief Operating Officer of the Company. Ms. Kelley also outlined
various other terms and conditions including Powell's willingness to allow the
Murphys to remain in a consulting capacity for a period of time in order to
effect an orderly transition of the Board in the event that the Board and
management decided not to resist the proposed consent/proxy solicitation. Mr.
Murphy asked for a three week period to consider the proposals and to talk to
shareholders. Ms. Kelley indicated that they were prepared to move forward
promptly and requested another meeting on July 18, 1997 at 9:00 a.m. At the
meeting, Powell also delivered written demands, executed by FRM, Ms. Kelly and
certain other shareholders for a list of the Company's shareholders to permit
Powell to communicate with other shareholders of the Company and a written
consent, with respect to the matters described below, from FRM with respect to
171,933 shares of Common Stock, or 3.6% of the shares outstanding at June 15,
1997, thereby establishing July 17, 1997 as the record date for the consent
solicitation described below under applicable California law.
On July 18, 1997, Powell and Mr. Trenham met again briefly with Mr.
Murphy, who was also accompanied by his lawyer, Mr. Robert H. Goon of Jeffer,
Mangels, Butler & Marmaro LLP, and delivered a request to the Company, on behalf
of FRM, Ms. Kelley and other shareholders of the Company who in the aggregate
own at least ten percent of the outstanding Common Stock, to hold a special
meeting of shareholders on September 9, 1997. Mr. Goon, on behalf of Mr.
Murphy, stated Mr. Murphy's rejection of Powell's proposals to nominate and/or
elect Powell's nominees as directors of the Company and any desire to sell his
shares of Common Stock. Mr. Goon, on behalf of the Company, also rejected the
form in which the request for the list of
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shareholders and request for a special meeting were submitted on the basis that
the persons executing the requests, while perhaps beneficial holders, were not
the record holders of the shares. Mr. Goon also expressed his view that it
appeared that the Filing Persons had violated the federal securities laws.
After the meetings on July 17 and 18, through intermediaries, Mr. Murphy
indicated a possible willingness to sell to his shares in the Company at a price
of $25.00 per share more than twice the stock's trading price. Powell
disregarded Mr. Murphy's offer in the belief that it represented neither a
realistic proposal (in light of the then current trading price for the stock)
nor a good faith offer to sell his shares. As a result, Powell determined to
proceed with the consent and proxy solicitation described below.
Powell intends to solicit consents from the Company's shareholders in order
to remove all members of the present board of directors, amend the Company's
bylaws to require the Company to call a special meeting of shareholders to elect
directors and make other changes to the bylaws in furtherance of the foregoing.
On July 25, 1997, TPG, FRM and Ms. Kelley filed with the Securities and
Exchange Commission (the "Commission") a preliminary consent statement on
Schedule 14A (the "Consent Statement"), which consent statement solicits consent
to action by shareholders of the Company in lieu of a meeting which would:
(1) remove all current members of the board of directors of the
Company;
(2) amend the bylaws of the Company to require the Company to call a
special meeting of shareholders to be held forty-five (45) days after the
date the bylaw amendment is adopted (the "Special Meeting") for the purpose
of electing directors and to prohibit the use of corporate funds in
connection with the Special Meeting except as necessary for the conduct of
the Special Meeting;
(3) amend the bylaws of the Company to set the authorized number of
directors at seven; and
(4) amend the bylaws of the Company to limit the power of the officers
of the Company to take certain actions during the pendency of the Special
Meeting.
A copy of the Consent Statement was attached to the Schedule 13D as Exhibit
1 to the Schedule 13D and was incorporated therein by reference.
Powell, while disagreeing with the Company's position regarding the request
for a special meeting of shareholders to be held on September 9, 1997, intends
to correct any technical deficiencies in the requests for the special meeting
and to resubmit the requests in due course. Powell intends to file with the
Commission a preliminary proxy statement on Schedule 14A (the "Proxy
Statement"), pursuant to which Powell intends to solicit proxies from the
Company's shareholders, in connection with such special meeting or the special
meeting of shareholders to be called by the Company pursuant to the Consent
Statement (i) to remove all of the current members of the board of directors of
the Company, (ii) to amend the bylaws of the Company to set the number of
directors of the Company at seven and (iii) to fill vacancies on the board
created by such removal. In the event that the consent solicitation is not
successful and the special
14 of 18
<PAGE>
meeting of shareholders on September 9, 1997 is not held, Powell may solicit
proxies with respect to the foregoing matters in connection with the Company's
Annual Meeting of Shareholders, which the Company has indicated would be held on
or about September 22, 1997. Powell believes that under cumulative voting which
will be applicable to the election of the Company's directors at such special
meeting of shareholders, Messrs. Gerald and Douglas Murphy will own or control
sufficient shares of Common Stock to insure their election to the Board of
Directors if they so desire, as Powell expects they will.
William D. Blake, Robert Arthur Seale, Ms. Kelley, Eugene A. Cafiero and
Mr. Spain are Powell's nominees (the "Nominees") to fill the five vacancies that
would be created by the removal of the Company's current directors. Certain
information about each of the Nominees (except for Ms. Kelley and Mr. Spain
about whom information was provided as required in Item 2 of the Schedule 13D)
was attached to the Schedule 13D as Annex B.
On July 24, 1997, FRM filed a derivative complaint on behalf of the Company
and ARI against Gerald D. Murphy, Douglas A. Murphy, the Company and ARI in the
United States District Court, Central District of California. In the complaint,
FRM alleges (1) breach of fiduciary duty, (2) waste of corporate assets and (3)
illegal corporate loan. The derivative complaint further requests injunctive
relief prohibiting the Company and ARI from making on-going payments on behalf
of the Murphys and requiring on-going indemnification by the Murphys to the
Company and ARI. A copy of the complaint was attached to the Schedule 13D as
Exhibit 2 to the Schedule 13D.
In the event the consent and proxy solicitations are successful, the new
board of directors of the Company intends to restructure the Company's
management. The new board intends to elect Ms. Kelley as President and Chief
Executive Officer of the Company and John M. Spain as Managing Director of the
Company. Powell generally intends to reorganize the Company and ARI to reduce
their combined annual operating costs, expand their global sales, stabilize
relations with major customers and enter into new markets. Powell believes that
under new management it will be possible to refinance ARI's $100 million
principal amount of 13% Mortgage Notes at more favorable interest rates thereby
further reducing the Company's combined expenses. Powell expects to consider
elimination of the Company's non-core business operations through the possible
sale of such operations, although Powell at present has not identified any
specific assets or operations for elimination. Powell further expects to
consider combining the Company's operations with that of Powell, with FRM as a
wholly-owned subsidiary, but has no present plans to do so. In the event that
any such plan were proposed in the future, the combination of Powell, with FRM
as a wholly-owned subsidiary, with ARI would be subject to approval of
disinterested ERLY shareholders, if required, or, if required, approval of
Company directors not financially interested in any such plan. Except for the
election of officers described above, Powell does not currently have any
specific plans to implement its objectives and will require additional
information and time to analyze and understand fully the existing operations of
the Company before proposing any specific plans.
Upon a change in control of the Company which also results in a change
in control of ARI or in the event of certain changes in the composition of the
board of directors of ARI, the holders of ARI's 13% Mortgage Notes due 2002
shall have the right to require ARI to repurchase the Notes at a purchase price
of 101% of the accreted value of the notes as defined. In such event,
15 of 18
<PAGE>
Powell may seek a waiver from lenders not to exercise such rights. Powell may
also seek, to the extent possible, to refinance such debt; however, the notes by
their terms are not redeemable prior to July 31, 1999 and then only at a
redemption price of 107% of par declining to 100% of par on July 31, 2001 and
thereafter.
On July 30, 1997, FRM and Ms. Kelley delivered to the Company a request to
inspect the accounting books and records of the Company on August 6, 1997. A
copy of the request was attached to Amendment No. 1 to the Schedule 13D as
Exhibit 1. The Company denied this request.
On August 13, 1997, FRM and Ms. Kelley filed a petition for writ of mandate
against the Company to compel inspection of the accounting books and records of
the Company in Los Angeles Superior Court. A copy of the petition is attached to
this Amendment No. 2 as Exhibit 1 and is incorporated herein by reference.
On August 15, 1997, FRM and Ms. Kelley delivered to the Company a request
for a list of non-objecting beneficial owners of shares of common stock of the
Company. FRM also requested a Cede or similar list showing the identities of
holders of common stock of the Company. A copy of the request is attached to
this Amendment No. 2 as Exhibit 2.
Except as described above, the Filing Persons do not presently have any
other proposals or plans which would result in any event listed in items (a)
through (j) of Item 4 of Schedule 13D, although the Filing Persons reserve the
right to develop such plans or proposals.
2. Item 5 of the Schedule 13D, "Interest in Securities of the Issues," is
hereby amended to correct the number of shares beneficially owned by Noble B.
Trenham. Mr. Trenham beneficially owns twelve shares of common stock of the
Company, including seven shares held of record by Mr. Trenham and five shares
held by First Global. Such amount represents less than one percent of the number
of outstanding shares of common stock.
3. Item 7 of the Schedule 13D, "Material to be Filed as Exhibits," is
hereby amended to add the following:
1. Petition filed by Farmers Rice Milling Company, Inc. and Nanette
N. Kelley on August 13, 1997 in the Los Angeles Superior Court.
2. Request to ERLY Industries, Inc., dated August 15, 1997, for NOBO
and Cede lists, from Farmers Rice Milling Company, Inc. and
Nanette N. Kelley.
4. Except as specifically provided herein, this Amendment No. 2 does not
modify any of the information previously reported on the Schedule 13D.
16 of 18
<PAGE>
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 and
correct.
Date: August 15, 1997 The Powell Group
By: /s/ Nanette N. Kelley
-----------------------------------
Name: Nanette N. Kelley
Title: President and Chief Executive
Officer
Date: August 15, 1997 Farmers Rice Milling Company, Inc.
By: /s/ Nanette N. Kelley
-----------------------------------
Name: Nanette N. Kelley
Title: President and Chief Executive
Officer
Date: August 15, 1997 /s/ Nanette N. Kelley
----------------------------------
Nanette N. Kelley
Date: August 15, 1997 First Global Securities, Inc.
By: /s/ Noble B. Trenham
------------------------------
Name: Noble B. Trenham
Title: Co-Chairman
Date: August 15, 1997 /s/ Noble B. Trenham
----------------------------------
Noble B. Trenham
17 of 18
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Petition filed by Farmers Rice Milling Company, Inc. and Nanette N.
Kelley on August 13, 1997 in the Los Angeles Superior Court.
2. Request to ERLY Industries, Inc., dated August 15, 1997, for NOBO and
Cede lists, from Farmers Rice Milling Company, Inc. and Nanette N.
Kelley.
18 of 18
<PAGE>
EXHIBIT 1
GIBSON, DUNN & CRUTCHER LLP
DANIEL S. FLOYD, SBN 123819
KEVIN S. ROSEN, SBN 133304
DANIEL N. SHALLMAN, SBN 180782
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071-3197
(213) 229-7000
Attorneys for petitioners FARMERS RICE MILLING COMPANY, INC., A Louisiana
Corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
<TABLE>
<S> <C>
FARMERS RICE MILLING COMPANY, INC., a Louisiana CASE NO.
Corporation, and NANETTE N. KELLEY VERIFIED PETITION FOR WRIT OF MANDATE TO COMPEL
Petitioners, INSPECTION OF ACCOUNTING BOOKS AND RECORDS
v.
ERLY INDUSTRIES INC., a California Corporation, [CODE OF CIVIL PROCEDURE (S)(S) 1085, 1086;
and DOES 1 through 100, inclusive, CORPORATIONS CODE (S) 1603]
Respondents.
- ------------------------------------------------
</TABLE>
Petitioners allege as follows:
PRELIMINARY STATEMENT
---------------------
1. This action is brought by Petitioners Farmers Rice Milling Company,
Inc. and Nanette N. Kelley ("Petitioners"), substantial shareholders of
Respondent ERLY Industries, Inc. ("ERLY" or "the Company"), to enforce
Petitioners' right, as shareholders of the Company, to inspect and copy the
accounting books and records of the Company.
<PAGE>
FIRST CAUSE OF ACTION
---------------------
FOR ISSUANCE OF WRIT OF MANDATE TO ALLOW ACCESS TO ACCOUNTING BOOKS AND RECORDS
------------------
BY SHAREHOLDERS
---------------
2. ERLY is a corporation duly organized and existing under the laws of the
State of California, having its principal executive offices and keeping its
accounting books and records in the City and County of Los Angeles, State of
California.
3. Gerald D. Murphy is, and at all times herein mentioned was, Chairman of
ERLY.
4. Douglas A. Murphy is, and at all times herein mentioned was, President
and Chief Operating Officer of ERLY.
5. The true names and capacities, whether individual, corporate, associate
or otherwise of the Respondents named herein as Does 1 through 100, inclusive,
are unknown to Farmers, which therefore sues such Respondents by their
fictitious names. Farmers will amend this Petition to insert the true names and
capacities of such Respondents, when such names and capacities become known to
them. Petitioners are informed and believe and based thereon allege that each
such fictitiously named Respondent is responsible on some manner, for the acts
and omissions hereinafter alleged.
6. At all times herein mentioned, Petitioners are informed and believe
that each of the respondents was the agent and employee of each of the remaining
respondents, and, in doing the things hereinafter alleged, was acting within the
course and scope of such agency.
7. Petitioner Farmers Rice Milling Company, Inc. is the owner of record of
171,933 shares of common stock of ERLY. Petitioner Nanette N. Kelley is the
owner of record of 16,400 share of common stock of the Company. On July 30,
1997, Petitioners made written demand on respondents to make available to
petitioner for inspection and the making of copies and extracts therefrom ERLY's
accounting books and records. A true and correct unsigned copy of Petitioners'
inspection demand is attached hereto as Exhibit A and made a part hereof. The
Company has failed and refused and continues to fail and refuse to provide
Petitioners with access to the accounting books and records requested by
Petitioners. A true and correct copy of ERLY's response is attached hereto as
Exhibit B.
8. Petitioners' purpose in demanding inspection is reasonably related to
its interest as a
2
<PAGE>
shareholder in ERLY for the following reasons:
(a) To adequately assess the value of their current holdings in ERLY
to determine whether to increase their investment in the Company;
(b) To evaluate the fairness, significance, and extent of transactions
involving ERLY and its subsidiaries in which Gerald D. Murphy and Douglas A.
Murphy have a personal financial interest
9. Petitioners have no plain, speedy, and adequate remedy in the ordinary
course of law, other than the relief sought in this Petition, in that
Petitioners have no means by which to otherwise discover the condition of ERLY,
the value of its shares in the corporation and to evaluate the transactions
involving ERLY and its subsidiaries in which Gerald D. Murphy and Douglas A.
Murphy have a financial interest.
10. Pursuant to California Corporations Code Section 1601, "[t]he
---------- ------------ ----
accounting books and records . . . of any domestic corporation . . . shall be
open to inspection upon the written demand on the corporation of any shareholder
or holder of a voting trust certificate at any reasonable time during usual
business hours, for a purpose reasonably related to such holder's interests as a
shareholder . . . ." Similar rights are recognized under the common law of the
state of California.
11. Petitioners are entitled to the inspection rights afforded it under
Corporations Code Section 1601, and under the common law, but have been denied
them by Respondents.
WHEREFORE, Petitioners prays for judgment as follows:
1. That the Court issue an alternative writ of mandate commanding
Respondents and each of them to make available to Petitioners and/or their
agents and attorneys, for inspection, copying, and making of extracts therefrom,
all of the books and records of the Company, or to show cause before this Court,
at a time specified by the Court, why they have not done so, and why a
peremptory writ should not issue.
2. That on the return of the alternative writ and the hearing of this
Petition, the Court issue a peremptory writ of mandate commanding Respondents
and each of them to make available to Petitioners and/or their agents and
attorneys, for inspection, copying, and making of extracts therefrom, all of the
books and records of the Company;
3. For an award of costs herein incurred;
3
<PAGE>
4. For an award to Petitioners of reasonable accountant, expert and
attorney's fees incurred in this action;
5. For such further and other relief as this Court shall deem just and
proper.
DATED: August 11, 1997
GIBSON, DUNN & CRUTCHER LLP
DANIEL S. FLOYD
KEVIN S. ROSEN
DANIEL N. SHALLMAN
BY: /s/ Daniel S. Floyd
--------------------------------------
DANIEL S. FLOYD
Attorneys for Petitioner FARMERS RICE MILLING
COMPANY, INC., a Louisiana Corporation
4
<PAGE>
VERIFICATION
------------
I, Daniel S. Floyd, have read the foregoing PETITION FOR WRIT OF MANDATE TO
COMPEL ACCESS TO ACCOUNTING BOOKS AND RECORDS, and know its contents. I am the
President of Petitioner Farmers Rice Milling Company, Inc, a party to this
action, and am authorized to make this verification for and on its behalf, and I
make this verification for that reason. I am also a party to this action, and
further make this verification on my own behalf. The matters stated in the
foregoing document are true of my own knowledge except as to those matters which
are stated on information and belief, and as to those matters I believe them to
be true.
I declare under penalty of perjury that the foregoing is true and correct
and that this declaration was executed on August 11, 1997, at Baton Rouge,
Louisiana.
/s/ Nanette N. Kelley
---------------------
Nanette N. Kelley
<PAGE>
[THE POWELL GROUP LETTERHEAD]
EXHIBIT 2
August 15, 1997
Mr. Gerald D. Murphy
Chairman of the Board
ERLY Industries, Inc.
10990 Wilshire Boulevard, #1800
Los Angeles, California 90024
Re: ERLY Industries Inc. - Request for NOBO and Cede Lists
Dear Mr. Murphy:
The undersigned, record shareholders holding at least one percent (1%) in
the aggregate of the outstanding voting shares of ERLY Industries Inc. (the
"Company"), who have filed, on July 25, 1997 (as amended on August 14, 1997), a
Schedule 14A with the Securities and Exchange Commission, hereby request that
the Company, in connection with the satisfaction of its duties under Section
1600 of the California General Corporation Law, make available to the
undersigned, within 5 days, a copy of a list of Non-Objecting Beneficial Owners
("NOBO List") of shares of Common Stock of the Company. The undersigned
understand that the Company has recently come into possession of a NOBO List as
of a recent date.
Additionally, the undersigned request from the Company a copy of a Cede
list, any listing from The Depository Trust Company or any similar depository
listing showing the identities of holders of Common Stock of the Company,
whether presently in the possession of the Company or which comes into
possession of the Company in connection with the forthcoming Annual Meeting of
Shareholders, scheduled to be held on September 26, 1997. If such a list is
presently in the possession of the Company, the undersigned request that the
Company make available a copy of such list within 5 days. If such a list comes
into possession of the Company on a date after the date hereof, the undersigned
request that the Company make available a copy of such list within 5 days of the
Company's receipt of such list.
<PAGE>
Mr. Gerald D. Murphy
Page 2
August 15, 1997
Please call Nanette Kelley at 504-922-4664 when the copies of the lists may
be picked up. If you have any questions concerning the foregoing, please
contact Bradford P. Weirick at 213-229-7765 on Peter F. Ziegler at (213) 229-
7595.
Very truly yours,
FARMERS RICE MILLING COMPANY
By: /s/ Nanette N. Kelley
-----------------------
Nanette N. Kelley
President
NANETTE KELLEY
/s/ Nanette N. Kelley
-----------------------------------------
Nanette N. Kelley
