SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Definitive Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14c- 5(d)(2))
SPINNAKER INDUSTRIES, INC.
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(Name of Registrant as Specified in Charter)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY INFORMATION STATEMENT
SUBJECT TO COMPLETION, DATED DECEMBER 8, 1997
SPINNAKER INDUSTRIES, INC.
600 N. PEARL STREET
SUITE 2160
DALLAS TEXAS 75201
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INFORMATION STATEMENT
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Pursuant to Regulation 14C Promulgated Under the
Securities Exchange Act of 1934, as amended.
This Information Statement, which is being mailed on or about December
__, 1997 to holders of record on December __, 1997, of shares of the Common
Stock, no par value (the "Common Stock") and shares of the Class A Common Stock,
no par value (the "Class A Common Stock") of Spinnaker Industries, Inc., a
Delaware corporation (the "Company"), is being furnished in connection with the
proposed adoption of a Certificate of Amendment to the Company's Certificate of
Incorporation (the "Amendment") pursuant to the written consent of the holders
of a majority of the Company's outstanding shares of Common Stock and Class A
Common Stock.
On December __, 1997, the Board of Directors of the Company approved
and recommended that the Company's Certificate of Incorporation be amended to
create a "blank check" preferred stock, consisting of 2,000,000 shares of
Preferred Stock having the terms set forth in Exhibit A (the "Preferred Stock").
Also on December __, 1997 (the "Record Date") Lynch Manufacturing Corporation
("Lynch"), which is the holder of more than a majority of the issued and
outstanding shares of Common Stock and Class A Common Stock (voting together as
a class) executed a written Consent to Corporate Action (the "Written Consent")
pursuant to which such holder approved the Amendment. The Written Consent has
since been filed with the Company. Such approval by the Board of Directors and
by the holder of a majority of the issued and outstanding shares of Common Stock
and Class A Common Stock (voting together as a class) is sufficient under
Delaware law to cause the Amendment to be adopted. The Amendment will become
effective upon the filing of the Amendment with the Secretary of the State of
Delaware. The Company anticipates such Amendment will be filed with the
Secretary of State of Delaware on or about December __, 1997.
This Information Statement is being provided for informational purposes
only. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
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OUTSTANDING STOCK AND VOTING RIGHTS
As of the Record Date, there were 6,684,749 shares of Common Stock
issued and outstanding, consisting of 3,347,181 shares of Common Stock, no par
value, and 3,337,568 shares of Class A Common Stock, no par value. Each holder
of a share of Class A Common Stock is entitled to one vote per share, while each
holder of a share of Common Stock is entitled to 1/10 of a vote per share. These
two classes of common stock vote together as a class on various matters such as
adoption of the Amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the capital stock of the Company by each person known to own more
than 5%, and by each director, as well as by all directors and executive
officers as a group, as of December __, 1997. For the purposes of reporting
beneficial ownership, a person is considered the beneficial owner of the shares
over which such person holds or shares voting or investment power, including the
power to direct the disposition of such shares, or over which such a person can
acquire such power within 60 days by, for example,the exercise of stock options
or the conversion of securities.
<TABLE>
<CAPTION>
I. GREATER THAN 5% HOLDERS
Class A Common Stock Common Stock
-------------------- ------------
Amount of Amount of
Name and Address Beneficial Percent Beneficial Percent
of Beneficial Owner Ownership of Class Ownership of Class
- ------------------- --------- -------- --------- --------
<S> <C> <C> <C> <C>
Lynch Manufacturing Corporation(1) . . . 2,259,063(1) 67.7% 2,237,203(1) 66.8%
100 Douglas Street
Yankton, S.D. 57078
Boyle, Fleming & Co., Inc.(2) . . . . . . 659,045(2)(3) 18.5% 659,045(2)(3) 18.4%
600 N. Pearl St., Suite 2160
Dallas, Texas 75201
</TABLE>
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(1) Mario J. Gabelli, of Corporate Center at Rye, Rye, New York 10580,
Chairman of the Board and Chief Executive Officer of Lynch, through
LMC, by virtue of his and certain affiliated parties' beneficial
ownership of 23.1% of the shares of common stock of Lynch. Mr. Gabelli,
however, specifically disclaims beneficial ownership of all shares of
the capital stock of the Corporation held by Lynch and LMC. See
"Certain Circumstances".
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(2) Includes 228,499 shares of Class A Common Stock and Common Stock,
respectively, issuable upon exercise of the A Warrant (as defined) (as
adjusted for two 3-for-2 stock splits that occurred in December 1994
and December 1995, respectively, and the Stock Split). BF, an
investment and management firm, is an affiliate of Richard J. Boyle and
Ned N. Fleming, III who each own 50% of the outstanding capital stock
of BF. Messrs. Boyle and Fleming may be deemed to share voting and
dispositive power over these shares; however, Mr. Fleming and Mr. Boyle
specifically disclaim beneficial ownership of such shares. See "Certain
Transactions".
(3) Determined in accordance with Rule 13d-3(d)(1)(i) of the Securities
Exchange Act of 1934, as amended.
II. DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
<TABLE>
<CAPTION>
Amount of Class A Amount of Common
Common Stock Shares Stock Beneficially
Beneficially Owned (1)(2)
------------ ------------
Owned(1)(2)
-----------
Number Number
NAME OF Shares Percent of Shares Percent
- ---- --------- ------- --------- -------
<S> <C> <C> <C> <C>
Richard J. Boyle................................... 659,045(3) 18.5% 659,517(3) 18.4%
Ned N. Fleming, III................................ 659,045(3) 18.5% 659,045(3) 18.4%
Philip Wm. Colburn................................. 10,000(4) * 10,000(4) *
Robert E. Dolan.................................... 1,225 * 1,225 *
Anthonie C. van Ekris.............................. 10,000(4) * 10,000(4) *
Joseph P. Rhein.................................... 12,250(4) * 12,250(4) *
Frank E. Grzelecki................................. -- -- 5,000(5) *
All Directors and Officers of the
Corporation as a group (twelve
persons, including those named
above).......................................... 692,520(3) 19.3% 697,992 19.3%
</TABLE>
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*Less than one percent.
(1) A person is considered to "beneficially own" the shares over which such
person holds or shares voting power or investment power or over which
such person can acquire such
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power within 60 days (for example, through the exercise of stock
options or conversion of securities).
(2) Except as otherwise noted, each director and officer has sole voting
and investment power with respect to the shares of common stock of the
Corporation and Lynch.
(3) Includes 228,499 shares of Class A Common Stock and Common Stock,
respectively, issuable upon the exercise of the A Warrant granted to BF
in June 1994 (as adjusted for two 3-for-2 stock splits that occurred in
December 1994 and December 1995, respectively, and the Stock Split).
BF, an investment and management firm, is in affiliate of Richard J.
Boyle and Ned N. Fleming, III, who each own 50% of the outstanding
capital stock of BF. Messrs. Boyle and Fleming, together with former
shareholders of BF, may be deemed to share voting and dispositive power
over these shares of Common Stock and Class A Common Stock; however,
Mr. Fleming and Mr. Boyle specifically disclaim beneficial ownership of
such shares. See "Certain Transactions."
(4) Includes 10,000 shares issuable upon exercise of stock options granted
pursuant to the Spinnaker Industries, Inc. Directors Stock Option Plan.
(5) Includes 5,000 shares issuable upon exercise of stock options granted
pursuant to the Spinnaker Industries, Inc. Directors Stock Option Plan.
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO AUTHORIZE UP TO
2,000,000 SHARES OF PREFERRED STOCK
The Board of Directors unanimously adopted, and a majority of the
stockholders acting by written consent have approved the Amendment, which
provides for the authorization to issue up to 2,000,000 shares of preferred
stock (the "Preferred Stock"). The text of the Amendment is attached hereto as
Exhibit A and is incorporated herein by reference.
The Board of Directors believes that the authorization of the Preferred
Stock is in the best interest of the Company and its stockholders and believes
that it is advisable to authorize such shares and have them available in
connection with possible future transactions, such as financings, strategic
alliances, corporate mergers, acquisitions, possible funding of new product
programs or businesses and other uses not presently determinable and as may be
deemed to be feasible and in the best interest of the Company. In addition, the
Board of Directors believes that is desirable that the Company have the
flexibility to issue shares of Preferred Stock without further stockholder
action, except as otherwise provided by law.
The Preferred Stock will have such designations, preferences,
conversion rights, cumulative, relative, participating, optional or other
rights, including voting rights, qualification, limitations or restrictions
thereof as are determined by the Board of Directors, except that the Board of
Directors will be limited in issuing any shares or series of Preferred Stock so
long as Lynch Corporation directly or indirectly owns more than 35% of the
issued and outstanding
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shares of Common Stock or Class A Common Stock of the Corporation. In that
event, any resolution providing for the issue of such Preferred Stock will first
be subject to the approval of the Executive Committee of the Board of Directors
of Lynch Corporation or a designee of such Committee prior to adoption of any
such resolution by the Board of Directors of the Company. Furthermore, in the
event the resolution finally adopted by the Board of Directors varies in any
respect from the terms previously approved by Lynch Corporation, then the re-
approval of the Executive Committee of the Board of Directors of Lynch
Corporation or a designee would then be required before that resolution could be
filed or become effective.
It is not possible to determine the actual effect of the Preferred
Stock on the rights of the stockholders of the Company until the Board of
Directors determines the rights of the holders of a series of the Preferred
Stock. However, such effects might include (i) restrictions on the payment of
dividends to holders of the Common Stock or Class A Common Stock; (ii) dilution
of voting power to the extent that the holders of shares of Preferred Stock are
given voting rights; (iii) dilution of the equity interests and voting power if
the Preferred Stock is convertible into Common Stock or Class A Common Stock;
and (iv) restrictions upon any distribution of assets to the holders of the
Common Stock or Class A Common Stock upon liquidation or dissolution and until
the satisfaction of any liquidation preference granted to the holders of
Preferred Stock.
The Board of Directors is required by Delaware law to make any
determination to issue shares of Preferred Stock based upon its judgment as to
the best interests of the stockholders and the Company. Although the Board of
Directors has no present intention of doing so, it could issue shares of
Preferred Stock (within the limits imposed by applicable law) that could,
depending on the terms of such series, make more difficult or discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means. When in the judgment of the Board of Directors
such action would be in the best interests of the stockholders and the Company,
the issuance of shares of Preferred Stock could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company, for example, by the sale of Preferred Stock to purchasers favorable to
the Board of Directors. In addition, the Board of Directors could authorize
holders of a series of Preferred Stock to vote either separately as a class or
with the holders of Common Stock, on any merger, sale or exchange of assets by
the Company or any other extraordinary corporate transaction. The existence of
the additional authorized shares could have the effect of discouraging
unsolicited takeover attempts. The issuance of new shares could also be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company should the Board of Directors consider the action of such entity or
person not to be in the best interests of the stockholders and the Company. Such
issuance of Preferred Stock could also have the effect of diluting the earnings
per share and book value per share of the Common Stock or Class A Common Stock.
The Company recently announced an agreement to acquire the assets of
the pressure sensitive division of S.D. Warren Company. One component of the
financing for this transaction is contemplated to include the issuance of
approximately $15 million of a new series of Preferred Stock, which would be
issued to third parties. The terms of that new series of Preferred Stock
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have not been definitively agreed upon; however, through the use of "blank
check" authorization available under the Preferred Stock, the Board (and the
Lynch Corporation Executive Committee or its designee) will have the flexibility
to determine the actual terms at the time that acquisition is completed.
Financial and other information with respect to this transaction will be made
publicly available in a Form 8-K filing following the completion of that
transaction. There can be no assurance that any Preferred Stock will be issued
in connection with the financing of this transaction. Except as just described,
the Company has no present plans to issue any shares or series of Preferred
Stock.
Pursuant to the DGCL, the Company's stockholders are not entitled to
dissenters' rights of appraisal with respect to the Amendment.
By Order of the
Board of Directors
Richard J. Boyle
Chairman of the Board
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<PAGE>
EXHIBIT A
"RESOLVED, that in order to effectuate such amendment, the first
paragraph of Article Fourth of the Certificate of Incorporation of the
Corporation be, and hereby is, amended to read as follows:
FOURTH: The total number of shares that the Corporation is authorized
to issue is twenty seven million (27,000,000), of which twenty five million
(25,000,000) shall be Common Stock and two million (2,000,000) shall be
Preferred Stock.
* * * * *
8. DESIGNATION OF CLASSES, RELATIVE RIGHTS OF PREFERRED STOCK
The designation, relative rights, preferences and limitations of the shares of
preferred stock are as follows:
The shares of Preferred Stock may be issued from time to time
in one or more series of any number of shares, provided that the aggregate
number of shares issued and not canceled of any and all such series shall not
exceed the total number of shares of Preferred Stock hereinabove authorized, and
with all distinctive serial designations, all as shall hereafter be stated and
expressed in the resolution or resolutions providing for the issue of such
shares of Preferred Stock from time to time adopted by the Board of Directors
pursuant to authority so to do which is vested in the Board of Directors, such
authority to be limited to the extent that for so long as the Lynch Corporation
directly or indirectly owns more than 35% of the issued and outstanding shares
of Common Stock or Class A Common Stock of the Corporation, any resolution or
resolutions providing for the issue of such Preferred Stock will first be
subject to the approval of the Executive Committee of the Board of Directors of
Lynch Corporation or a designee of such Committee prior to adoption of any such
resolution or resolutions by the Board of Directors of the Corporation.
Furthermore, in the event any such resolution or resolutions finally adopted by
the Board of Directors of the Corporation varies in any respect from the terms
previously approved by the designee of Lynch Corporation, then the re-approval
by the Executive Committee of the Board of Directors of Lynch Corporation or its
designee would then be required before such resolution or resolutions would
become effective.
Each series of shares of Preferred Stock (a) may have such
voting powers, full or limited, or may be without voting powers; (b) may be
subject to redemption at such time or times and at such prices; (c) may be
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and payable in
preference to, or in such relation to , the dividends payable on any other class
or classes or series of stock; (d) may have such rights upon the dissolution of,
or upon any distribution of the assets of, the Corporation; (e) may be made
convertible into or exchangeable for, shares of any other class or classes or of
any other series of the same or any other class or classes of shares
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of the Corporation at such price or prices or at such rates of exchange and with
such adjustments; (f) may be entitled to the benefit of a sinking fund to be
applied to the purchase or redemption of shares of such series in such amount or
amounts; (g) may be entitled to the benefit of conditions and restrictions upon
the creation of indebtedness of the Corporation or any subsidiary, upon the
issue of any additional shares (including additional shares of such series or of
any other series) and upon the payment of dividends or the making of other
distributions on, and the purchase, redemption or other acquisition by the
Corporation or any subsidiary of, any outstanding shares of the Corporation and
(h) may have such other relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof; all as shall be
stated in said resolution or resolutions providing for the issue of such shares
of Preferred Stock. Shares of Preferred Stock of any series that have been
redeemed (whether through the operation of a sinking fund or otherwise) or that
if convertible or exchangeable, have been converted into or exchanged for shares
of any other class or classes shall have the status of authorized an unissued
shares of Preferred Stock of the same series and may be reissued as part of a
new series of shares of Preferred Stock to be created by resolution or
resolutions of the Board of Directors (in accordance with the approval
procedures set forth above) or as part of any other series of shares of
Preferred Stock, all subject to the conditions or restrictions on issuance set
forth in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of shares of Preferred Stock (in
accordance with the approval procedures set forth above).
Subject to the provisions of any applicable law or of the
By-laws of the Corporation as from time to time amended, with respect to the
closing of the transfer books or the fixing of a record date for the
determination of stockholders entitled to vote and except as otherwise provided
by law or by the resolution or resolutions providing for the issue of any series
of shares of preferred stock, the holders of outstanding shares of Common Stock
and Class A Common Stock shall exclusively possess voting power for the election
of directors and for all other purposes. Except as otherwise provided by the
resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock or Class A Common Stock
shall be entitled, to the exclusion of the holders of shares of Preferred Stock
of any and all series, to receive such dividends as from time to time may be
declared by the Board of Directors.
Subject to the provisions of this Certificate of Incorporation
and except as otherwise provided by law, the stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
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