<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/ / Definitive Information Statement
AMERICAN COUNTRY HOLDINGS INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Its 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):
-----------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
<PAGE>
AMERICAN COUNTRY HOLDINGS INC.
222 NORTH LASALLE STREET, SUITE 1600
CHICAGO, ILLINOIS 60606
INFORMATION STATEMENT
---------------------
This Information Statement is being furnished to stockholders of American
Country Holdings Inc., a Delaware corporation, to advise them of corporate
action taken without a meeting by less than unanimous written consent of
stockholders in accordance with the provisions of Section 228 of the Delaware
General Corporation Law to amend our Certificate of Incorporation to effect a
one-for-four reverse stock split (the "Reverse Stock Split") of the currently
issued shares of our Common Stock, $.01 par value per share.
Our Board of Directors fixed the close of business on March 13, 2000 as the
record date for the determination of stockholders entitled to receive notice of
the amendment to our Certificate of Incorporation described above. On March
13th, there were 32,097,371 shares of our Common Stock issued and outstanding.
The proposed amendment to our Certificate of Incorporation requires the
affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote thereon. Each share of Common Stock is entitled to one vote on
the proposed amendment.
The Board of Directors, at a meeting on February 25, 2000, has approved and
stockholders holding 24,571,011 shares (approximately 76.55%) of the outstanding
shares of our Common Stock on March 13, 2000, have consented in writing to the
amendment. Accordingly, all corporate actions necessary to authorize the
amendment have been taken. In accordance with the regulations promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
authorization of the amendment to our Certificate of Incorporation by the Board
of Directors and the stockholders holding approximately three-quarters of our
outstanding shares of Common Stock will not become effective until 20 days after
we have mailed this Information Statement to our stockholders. Promptly
following the expiration of this 20-day period, we intend to file the amendment
to our Certificate of Incorporation with the Delaware Secretary of State. The
Reverse Stock Split will become effective as of 5:00 p.m., Eastern Standard
Time, on the date of such filing. Our executive offices are located at 222 North
LaSalle Street, Suite 1600, Chicago, Illinois 60601.
PLEASE BE ADVISED THAT THIS IS ONLY AN INFORMATION STATEMENT. WE ARE NOT
ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is first being sent or given to the holders of
our outstanding Common Stock, our only class of voting securities outstanding,
on or about April ____, 2000. Each holder of record of shares of our Common
Stock at the close of business on March 13, 2000 is entitled to receive a copy
of this Information Statement.
<PAGE>
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT
GENERAL
Our Board of Directors and stockholders holding approximately
three-quarters of our outstanding shares of Common Stock have approved the
amendment to our Certificate of Incorporation to effect the Reverse Stock Split.
The complete text of the Certificate of Amendment which reflects the amendment
is set forth in Appendix A. However, such text is subject to change to the
extent required by the Delaware Secretary of State. Upon filing of the
Certificate of Amendment with the Delaware Secretary of State, the Reverse Stock
Split will be effective, and each certificate representing shares of Common
Stock outstanding immediately prior to the Reverse Stock Split ("Old Shares")
will be deemed, automatically and without any action on your part, to represent
one-fourth the number of shares of common stock, $.01 par value per share, after
the Reverse Stock Split ("New Shares"); provided that no fractional New Shares
will be issued as a result of the Reverse Stock Split. In lieu thereof, if your
Old Shares are not evenly divisible by four, you will receive cash equal to the
average of the closing bid and ask prices for Old Shares for the five successive
trading days immediately preceding the day the Reverse Stock Split is effected
for the fractional New Share that you would otherwise be entitled to receive.
After the Reverse Stock Split becomes effective, you will be asked to surrender
certificates representing your Old Shares in accordance with the procedures set
forth in a letter of transmittal that we will send. Upon such surrender, a
certificate representing the New Shares will be issued and forwarded (together
with any payment in lieu of fractional shares) to you. However, each certificate
representing Old Shares will continue to be valid and represent New Shares equal
to one-fourth the number of Old Shares until surrendered. The Common Stock
issued pursuant to the Reverse Stock Split will be fully paid and nonassessable.
The voting and other rights that presently characterize the Old Shares of Common
Stock will not be altered by the amendment to our Certificate of Incorporation.
The amendment to our Certificate of Incorporation will be effected by means
of filing the Certificate of Amendment with the Delaware Secretary of State. In
accordance with the regulations promulgated under the Exchange Act, the
authorization of the amendment by the Board of Directors and the stockholders
holding approximately 76.55% of our outstanding shares of Common Stock shall not
become effective until 20 days after we have mailed this Information Statement
to our stockholders. Promptly following the expiration of this 20-day period, we
intend to file the Certificate of Amendment with the Delaware Secretary of State
and the Reverse Stock Split will become effective as of 5:00 p.m., Eastern
Standard Time, on the date of such filing. Without any further action on our
part or the stockholders, after the Reverse Stock Split, a certificate
representing Old Shares will be deemed to represent one-fourth the number of New
Shares. Pursuant to the Delaware General Corporation Law, you are not entitled
to dissenters' rights of appraisal with respect to the amendment of our
Certificate of Incorporation.
PRINCIPAL EFFECTS OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
2
<PAGE>
We had approximately 250 stockholders of record on March 13, 2000. This
number does not include an indeterminate number of stockholders of record whose
shares are held by brokers in "street name." We have no plans for the
cancellation or purchase of our shares from individuals holding a nominal number
of such shares after the Reverse Stock Split or to deregister the Common Stock
under the Exchange Act.
Our Common Stock is currently registered under Section 12(g) of the
Exchange Act and, as a result, we are subject to the periodic reporting and
other requirements of the Exchange Act. The Reverse Stock Split may reduce the
number of our stockholders and thereby adversely affect the registration of the
Common Stock under the Exchange Act. After the Reverse Stock Split is effected,
trades of the New Shares will continue to be reported on The Nasdaq Small Cap
Market under the symbol "ACHI."
The principal effects of the amendment to our Certificate of Incorporation
will be:
1. Based upon 32,097,371 Old Shares outstanding as of March 13, 2000, the
Reverse Stock Split will decrease the outstanding shares of Common
Stock by approximately seventy-five percent (75%), and thereafter
approximately 8,024,342 New Shares will be outstanding. The Reverse
Stock Split will not affect any stockholder's proportionate equity
interest in American Country, subject to the provisions for the
elimination of fractional shares.
2. After the Reverse Stock Split, the Common Stock issued and outstanding
will represent approximately 13.37% of our authorized Common Stock.
There are no shares of Preferred Stock outstanding. After the Reverse
Stock Split, approximately 51,975,658 shares of Common Stock and
2,000,000 shares of Preferred Stock will be available for future
issuance by the Board of Directors without further action by the
stockholders.
3. By effecting the Reverse Stock Split without a corresponding decrease
in the number of authorized shares, American Country is in effect
increasing the number of our authorized shares available for future
issuance. The increase in the authorized number of shares of our
Common Stock could have an anti-takeover effect, although that is not
its intention. If our Board of Directors desired to issue additional
shares in the future, such issuance could dilute the voting power of a
person seeking control of American Country, thereby deterring or
rendering more difficult a merger, tender offer, proxy contest or an
extraordinary corporate transaction opposed by American Country. The
availability of this defensive strategy to American Country could
discourage unsolicited takeover attempts, thereby limiting the
opportunity for American Country's stockholders to realize a higher
price for their shares than might be generally available in the public
markets. The Board of Directors is not aware of any attempt, or
contemplated attempt, to acquire control of American Country, and this
amendment is not being effectuated with the intent that it be used as
a type of anti-takeover device. There are currently no plans,
understandings, arrangements or agreements concerning the issuance of
additional shares of our Common Stock.
3
<PAGE>
4. On March 13, 2000, the closing bid price of our Common Stock on Nasdaq
was $1.00 per share. By decreasing the number of shares of Common
Stock without altering the aggregate economic interest in American
Country represented by the outstanding shares, the Board of Directors
believes that the market price will increase to a price that will
enable us to meet the $1 minimum bid price required by The Nasdaq
Small Cap Market, as described below.
5. As of March 13, 2000, there were outstanding options to purchase an
aggregate of 1,706,893 shares of Common Stock under our Amended and
Restated Stock Option Plan, with per share exercise prices ranging
from $0.60 per share to $3.75 per share. All of the outstanding
options include provisions for a proportional downward adjustment in
the number of shares covered thereby and a corresponding increase in
the exercise price thereof, in the event of a reverse stock split.
Each outstanding option after the Reverse Stock Split will evidence
the right to purchase twenty-five percent (25%) of the shares of
Common Stock previously covered thereby, and the exercise price per
share will be four times the previous exercise price.
6. As of March 13, 2000, there were outstanding 2,054,129 common stock
purchase warrants entitling the holders thereof to purchase 2.9 shares
of Common Stock per warrant at a price of $1.83 per share through
August 31, 2000. All of the outstanding warrants include provisions
for a proportional downward adjustment in the number of shares covered
thereby and a corresponding increase in the exercise price thereof, in
the event of a reverse stock split. After the Reverse Stock Split,
each outstanding warrant will evidence the right to purchase, through
August 31, 2000, .725 shares of Common Stock per warrant at a price of
$7.32 per share.
There can be no assurance that the Reverse Stock Split will result in an
increase in the market price of the Common Stock or that the Reverse Stock Split
will have any of the effects otherwise described herein.
REASONS FOR THE REVERSE STOCK SPLIT
We have received notice from The Nasdaq Small Cap Market that our Common
Stock has failed to maintain a minimum bid price greater than or equal to $1.00
per share over a period of 30 consecutive trading days as required by Nasdaq
rules. Nasdaq has notified us that if we fail to demonstrate compliance with
this requirement on or before May 3, 2000, our securities may be delisted from
Nasdaq.
The principal purpose of the Reverse Stock Split is to reduce the number of
shares of Common Stock outstanding and thereby increase the market price in
order to comply with the Nasdaq requirements and thereby maintain our Nasdaq
listing. The Board believes that a decrease in the number of outstanding shares
of Common Stock should increase the trading price of the outstanding shares,
although no assurance can be given that the market price of the Common Stock
will rise in proportion to the reduction in the number of outstanding shares
resulting from the
4
<PAGE>
Reverse Stock Split or that any increase in the market price will be maintained
for a substantial period.
The Board also believes that the Reverse Stock Split may enhance the
acceptability of the Common Stock as an investment by the financial community
and investing public. Theoretically, the market price level of a security should
not affect its marketability, the type of investor that acquires it or the
reputation of the issuer in the financial community. In practice, however, this
is not necessarily the case, as many investors look upon a stock trading below a
minimum level as speculative in nature and, as a matter of policy, avoid
investment in such stocks. In addition, many leading brokerage firms are
reluctant to recommend lower-priced securities to their clients, and many have
policies and practices that discourage individual brokers within firms from
dealing in lower-priced stocks.
There can be no assurance, however, that any or all of these effects
will occur, including, without limitation, (i) that the market price of the New
Shares will be four times the market price per Old Share of Common Stock before
the Reverse Stock Split or (ii) that the market price will either exceed or
remain in excess of the current market price or the $1.00 minimum bid price
required by Nasdaq. Further, there can be no assurance that the quality of the
trading market for the Common Stock will be improved.
NO DISSENTERS' RIGHTS
Under the Delaware General Corporation Law, holders of Common Stock are not
entitled to dissenters' rights with respect to the Reverse Stock Split.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Reverse Stock Split is effected, we will
send you a letter of transmittal which will contain instructions for the
surrender of your certificate(s) representing Old Shares. When you complete and
sign the letter of transmittal and return it to us, together with the
certificate(s) representing your Old Shares, you will be entitled to receive a
certificate representing the number of New Shares into which your Old Shares
have been reclassified as a result of the Reverse Stock Split. YOU SHOULD NOT
SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO. No new certificate will be
issued to you until you have surrendered your outstanding certificate(s)
together with the properly completed and executed letter of transmittal. Until
so surrendered, each current certificate representing Old Shares will be deemed
for all corporate purposes after the Reverse Stock Split is effected to evidence
ownership of New Shares in the appropriately reduced number.
Stockholders whose shares are held of record by their brokerage firm or
other nominees need not take any action to exchange such shares. The brokerage
firm or other nominee, as the record holder of such shares, will receive the
letter of transmittal and will be required to surrender the certificates
representing the Old Shares, together with the completed and executed letter of
transmittal, in order to receive certificate(s) representing New Shares.
5
<PAGE>
No service charge will be payable by holders of shares of Common Stock for
exchanging certificates of Old Shares for certificates representing New Shares.
We will bear all such expenses.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code"), the applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this
Information Statement. The discussion is for general information only and does
not discuss consequences which may apply to special classes of taxpayers (E.G.,
non-resident aliens, broker-dealers or insurance companies). This summary does
not discuss any consequences of the Reverse Stock Split under any state, local
or foreign tax laws. You are urged to consult your own tax advisors to determine
the particular consequences to you.
The Reverse Stock split will qualify as a recapitalization described in
Section 386(a)(1)(E) of the Code. We will not recognize any gain or loss in
connection with the Reverse Stock Split.
1. You will not recognize any gain or loss in the exchange of all of your
Old Shares for New Shares, except to the extent of any cash received in lieu of
a fractional share.
2. The aggregate basis of the New Shares to be received in the Reverse
Stock Split (including any fractional share deemed received) will be the same as
the aggregate basis of the Old Shares surrendered in exchange therefor.
3. The holding period of the New Shares to be received in the Reverse Stock
Split (including any fractional share deemed received) will include the holding
period of the Old Shares surrendered in exchange therefor.
4. If you receive cash in lieu of a fractional share, you will be treated
as receiving the payment in connection with a redemption of the fractional
share, with the tax consequences of the redemption determined under Section 302
of the Code. As such, you will generally recognize gain or loss upon such
payment equal to the difference, if any, between your basis in the fractional
share (as described in 2 above) and the amount of cash received. Such gain or
loss will be capital gain or loss and will be long-term capital gain or loss if
your holding period (as described in 3 above) exceeds one year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 13, 2000, with
respect to the beneficial ownership of shares of Common Stock (1) by (i) each
person known by us to be the owner of more than 5% of the outstanding shares of
Common Stock, (ii) each Director, and (iii) all executive officers and Directors
as a group:
- --------
(1) The Common Stock is American Country's only outstanding class of
voting securities.
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NAME OF AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(2) OF CLASS(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Martin L. Solomon, Chairman of the Board,
President and Chief Executive Officer 8,550,343(4) 26.63
- -----------------------------------------------------------------------------------------------
Wilmer J. Thomas, Jr., Director 8,256,343(5) 25.72
- -----------------------------------------------------------------------------------------------
William J. Barrett, Director 884,196(6) 2.75
- -----------------------------------------------------------------------------------------------
Edwin W. Elder, Director, Executive Vice
President and Chief Operating Officer 36,300(7) *
- -----------------------------------------------------------------------------------------------
John G. McMillian, Director 100,000(8) *
- -----------------------------------------------------------------------------------------------
Karla Violetto, Vice President and Chief
Financial Officer 0 *
- -----------------------------------------------------------------------------------------------
Frontier Insurance Group, Inc. 8,000,343 24.92
- -----------------------------------------------------------------------------------------------
All directors and executive officers as a group
(6 persons) 25,827,525 80.46%
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------
(2) Unless otherwise noted, the Company believes that all persons named in
the table have sole investment power with respect to all shares of Common Stock
beneficially owned by them.
(3) Percentages less than one percent are indicated by an asterik.
(4) Includes options to purchase 500,000 shares of Common Stock.
(5) Includes options to purchase 250,000 shares of Common Stock.
(6) Includes (i) options to purchase 250,000 shares of Common Stock, (ii)
405,136 shares owned by Mr. Barrett's qualified retirement plan, and (iii)
120,214 shares beneficially owned of record by Mr. Barrett's spouse, with
respect to which Mr. Barrett disclaims beneficial ownership.
(7) Includes options to purchase 36,300 shares of Common Stock.
(8) Includes options to purchase 100,000 shares of Common Stock.
7
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
AMERICAN COUNTRY HOLDINGS INC.
American Country Holdings Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
("DGCL") (the "Corporation"), does hereby certify:
FIRST: That, on February 25, 2000, the Board of Directors of the
Corporation duly adopted resolutions by unanimous written consent in lieu of a
meeting in accordance with the provisions of Section 151(f) of the DGCL
proposing and declaring the following amendment of the Certificate of
Incorporation of the Corporation to be advisable and recommending the adoption
of such amendment by the stockholders of the Corporation.
SECOND: That, in lieu of a meeting and vote of the stockholders of the
Corporation, the requisite stockholder approval was obtained by written consent
to the following amendment in accordance with the provisions of Section 228 of
the DGCL, and prompt notice of the taking of corporation action without a
meeting has been duly given in accordance with Section 228(d) of the DGCL.
THIRD: The Certificate of Incorporation of the Corporation is amended
by deleting Article IV thereof and replacing in lieu and instead thereof a new
Article IV, reading in its entirety as follows:
"The total number of shares of stock which the Corporation
shall have the authority to issue is sixty-two million
(62,000,000) shares, of which sixty million (60,000,000)
shall be shares of Common Stock of the par value of $.01 per
share ("Common Stock"), and two million (2,000,000) shall be
shares of Preferred Stock of the par value of $.10 per share
("Preferred Stock").
"Effective as of the close of business on the day of the
filing of the Certificate of Amendment, which contains this
provision, with the Secretary of State of the State of
Delaware, each share of Common Stock, par value $.01 per
share ("Old Common Stock"), issued at such time shall be and
hereby is automatically reclassified and changed into
one-fourth of one share of Common Stock, par value $.01 per
share, without any action by the holder thereof, provided
that no fractional shares shall be issued pursuant to such
reclassification and change.
<PAGE>
"Effective as of the close of business on the day of the
filing of the Certificate of Amendment, which contains this
provision, with the Secretary of State of the State of
Delaware, each certificate outstanding and previously
representing shares of Old Common Stock shall, until
surrendered and exchanged, be deemed, for all corporate
purposes, to constitute and represent the number of whole
shares of Common Stock of the Corporation into which the
outstanding shares of Old Common Stock previously
represented by such certificate were converted by virtue of
the reverse stock split."
FOURTH: That the amendment was duly adopted in accordance with the
provisions of Sections 228 and 242 of the DGCL.
FIFTH: This Certificate of Amendment shall become effective at the
close of business on the day of the filing hereof in the office of the Secretary
of State of the State of Delaware.
IN WITNESS WHEREOF, American Country Holdings Inc. has caused this
Certificate of Amendment to Certificate of Incorporation to be signed by Martin
L. Solomon, its President, this _______ day of April, 2000.
AMERICAN COUNTRY HOLDINGS INC.
By:
-------------------
Martin L. Solomon
President
2
