SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
SCHEDULE 14D-9
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
- - - - - - - - - - - - - - - - - - - - - - - - - -
Great Eastern Energy and Development Corporation
------------------------------------------------
(Name of Subject Company)
Great Eastern Energy and Development Corporation
------------------------------------------------
(Name of Person(s) Filing Statement)
COMMON STOCK Par Value $.10
---------------------------
(Title of Class of Securities)
- - - - - - - - - - - - - - - - - - - - - - - - - -
390323 10 3
-------------------------------------
(CUSIP Number of Class of Securities)
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Great Eastern Energy and Development Corporation
5990 Greenwood Plaza Boulevard, Suite 127
Greenwood Village, Colorado 80111-4708
(303)773-6016
Attn: Donald G. Jumper, President
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
- - - - - - - -- - - - - - - - - - - - - - - - - -
COPY TO:
Dennis O. Laing, Esquire
Beale, Balfour, Davidson & Etherington, P.C.
701 East Franklin Street, Suite 1200
Richmond, VA 23219
(804)788-1500
and
Ivan Diamond, Esquire
Greenebaum Doll & McDonald, PLLC
3300 National City Tower
Louisville, KY 40202
(502)587-3534
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
Item 1. Security and Subject Company:
This statement relates to the common stock, $.10 par value, of Great
Eastern Energy and Development Corporation (the Company ). The executive offices
of the Company are located at 5990 Greenwood Plaza Boulevard, Suite 127,
Greenwood Village, Colorado 80111.
Item 2. Tender Offer of the Bidder:
The tender offer to which the statement relates is one being made by
Caprito Gas Corporation ( Caprito ), a Texas Corporation, with offices at 500 W.
Texas, Suite 955, Midland, Texas, 79701.
Item 3. Identity and Background:
A. The name and business address of the person filing this statement is
Great Eastern Energy and Development Corporation, 5990 Greenwood Plaza
Boulevard, Suite 127, Greenwood Village, Colorado 80111-4708.
B. In the latter part of 1994 the Company's Board directed management to
make an assessment of options available to the Company to maximize shareholder
value. On September 26, 1994, the Company retained the services of Kirkpatrick
Energy Associates, Inc. ( Kirkpatrick ), an investment banking firm, to evaluate
options available to the Company to maximize Shareholder value including the
possible sale or merger of the Company. Kirkpatrick undertook to canvas its
extensive network for parties who could have an interest in such a transaction
with the Company. During the latter part of 1995 and through 1996 preliminary
discussions were held with a number of interested parties identified by
Kirkpatrick. None of these discussions yielded any offer or proposed transaction
supported by a viable financial plan satisfactory to the Board. The Company's
agreement with Kirkpatrick was formally terminated on October 26, 1995.
<PAGE>
In early January, 1997, management was approached by Kevin O. Butler, the
sole principal of Caprito expressing an interest in a possible acquisition of
the Company. After Mr. Butler obtained a financial commitment in the spring of
1997, negotiations for a sale of the Company began in earnest. There followed
several meetings and numerous telephone conferences between management and
representatives of Caprito with the goal of fashioning a proposal that would be
acceptable to the Board. On June 12, 1997, the Executive Committee of the Board
of Directors met with counsel. As a result of that meeting, management was asked
to meet with Caprito s representatives and formulate a proposal that could be
presented to the entire Board. On June 16,1997, the Board met, with counsel in
attendance, and approved a standstill agreement under which in the Company
agreed for a period ending June 26, 1997, not to solicit proposals competitive
to Caprito s to allow Caprito to complete its due diligence. The Company also
agreed to pay Caprito a break up fee of $30,000 in the event that the Company
accepted another offer during the standstill period.
On June 26, 1997, the Company entered into a letter of intent with an
affiliate of Caprito, Kevin O. Butler & Associates, Inc. The letter of intent
contemplates that Caprito would make the tender offer. The tender offer filed on
Form 14D-1 contains the following significant provisions:
1. Caprito will pay $.22 cash per share for any
and all the outstanding shares of Great
Eastern Energy and Development Corporation
Common Stock. The tender offer will be in
full compliance with Securities and Exchange
regulations and shall file with the Securities
and Exchange Commission no later than July 11,
1997. Caprito has provided the Company with a
commitment from Texas Commerce Bank to fund
the acquisition of all the outstanding shares
of the Company at $.22 per share.
2. Subject to receipt of a fairness opinion, in
the event that the Board declines to recommend
acceptance of the tender offer to be filed on
Form 14D-1 or takes any action to nullify the
tender offer of Caprito such as a merger, or
accepts another offer or if Caprito fails to
receive 80% or more of the shares in response
to the tender offer, the Company will pay to
Caprito a break-up fee of $75,000.00.
3. In the event that Caprito fails to consummate
the tender offer for reasons other than
failure to obtain a minimum of 80% of the
outstanding stock or acceptance by the Company
of a competing offer, Caprito will forfeit
$75,000 which was placed in escrow as a good
faith down payment on June 26, 1997.
4. In the 14D-1 Caprito proposes to follow a
successful tender offer with a cashout merger
of the Company with Caprito or an affiliate of
Caprito. The shareholders of the Company who
did not tender their shares during the tender
offer will receive cash of $.22 in the merger,
the same consideration to be received by the
tendering shareholders in the Tender Offer.
<PAGE>
This second transaction affecting the non
tendering shareholders will enable Caprito to
obtain 100% of the outstanding common stock of
the Company.
In response to the proposal from Caprito, the Company retained the services
of Huddleston & Co., Inc., ( Huddleston ), to assess the proposal in terms of
its fairness to the stockholders from a financial point of view.
On July 11, 1997, Huddleston formally issued a fairness opinion to the
Company opining that the Caprito tender offer was fair to the shareholders from
a financial point of view.
On July 15, 1997, the Board of Directors met with its counsel and
representatives from Huddleston to consider its response to the Caprito offer.
After due consideration and deliberation the Board unanimously decided to
recommend the Caprito proposal to the shareholders.
Item 4. The Solicitation or Recommendation:
The Board of Directors of Great Eastern Energy and Development Corporation
is advising the shareholders of the Company to accept the tender offer being
made by Caprito. All members of the Board, officers of the Company, and William
T. Young, a shareholder owning approximately 30% of the currently outstanding
shares, intend to tender all of their shares in response to Caprito s tender
offer.
The Board has based its recommendation on a number of factors including the
following:
1. The offer by Caprito represents a premium above the historical trading
range of the Company's stock. In recent weeks there have been isolated trades of
the Company's stock in small volumes for a price as high as $.25 per share. On
July 10, 1997, the bid price was $.17 and the asked price was $.25. Because the
Company's stock is thinly traded these sporadic trades may not be indicative of
prices that could be obtained in a more liquid market.
2. In its capacity as financial advisor to the Company, Huddleston has
opined that the tender offer being made by Caprito is fair to the shareholders
from a financial standpoint.
3. Since late 1994, the Company has actively sought out acquirors and
merger partners. These efforts continued though 1995 and 1996 resulting in
preliminary discussions with numerous interested parties without success. In
<PAGE>
each case this was due to the failure of such parties to present a financially
viable plan acceptable to the Board. With the filing of its tender offer,
Caprito has received a loan commitment from Texas Commerce Bank for the total
funding needed to acquire 100% of the outstanding stock at $.22 per share.
4. As an independent oil and gas company lacking the financial resources of
major and larger oil and gas companies, the Company has found itself at a
disadvantage in competing for the limited financing available for acquisition,
exploration, and development of oil and gas properties. The Board believes that
to remain viable in the future it is likely that a substantial infusion of
capital will be required to expand exploratory and development operations. In
this environment the Board believes that the best interest of the shareholders
is served by a cash sale of the Company at this time.
Item 5. Persons Retained, Employed or to be Compensated:
A. In connection with the negotiation with Caprito the Company retained the
services of Huddleston which has provided the Company with an opinion as to the
fairness of the offer to the shareholders. Huddleston will be compensated in the
amount of $4,000.00 for providing its fairness opinion.
B. In October of 1996, the Board of Directors adopted a severance policy
obligating the Company to pay to the chief executive officer, twice his annual
salary of $70,000 or One Hundred Forty Thousand Dollars in the event that there
is a change in control of the Company and the chief executive officer is not
retained as an employee by the Company upon completion of the tender. It is
anticipated that Mr. Jumper will terminate his employment with the Company and
receive the severance benefit.
Item 6. Recent Transactions and Intent with Respect to Securities:
A. To the best knowledge of the Company there are no transactions in the
securities referred to in Item 1 which were effected during the past 60 days by
the Company or by any executive officer, director, affiliate, or subsidiary of
the Company.
B. To the best knowledge of the Company, the executive officers and
directors of the Company and a major shareholder controlling 30% of the
Company's outstanding shares intend to tender all of their shares in response to
the bidder's offer.
<PAGE>
Item 7. Certain Negotiations and Transactions by the Subject Company:
A. Except as set forth above, the Company is not engaged in any negotiation
in response to the tender offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or for the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
B. Except as described above, there are no transactions, Board resolutions,
agreements in principle or signed contracts in response to the tender offer that
would relate to or would result in one or more of the events referred to in Item
7A of this Statement.
Item 8. Additional Information to be Furnished: Not applicable.
Item 9. Material to be Filed as Exhibits:
1. Letter of Kevin O. Butler and Associates, Inc., an affiliate of Caprito
Gas Corporation to Great Eastern Energy and Development Corporation dated June
26, 1997.
2. Huddleston Fairness Opinion dated July 11, 1997.
3. Information Statement pursuant to Rule 14f-1 promulgated under the
Securities and Exchange Act of 1934.
After reasonable inquiring 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: July 22,1997
GREAT EASTERN ENERGY AND
DEVELOPMENT CORPORATION
\s\ Donald G. Jumper
--------------------
Donald G. Jumper, President
EXHIBIT 1
June 26, 1997
Board of Directors
Great Eastern Energy and Development Corporation
5990 Greenwood Plaza Boulevard, Suite 127
Greenwood Village, Colorado 80111-4708
Gentlemen:
The purpose of this letter is to set forth our current
intentions with respect to a proposed acquisition by Kevin O.
Butler & Associates, Inc., ("Butler") of all of the outstanding
capital stock of the Great Eastern Energy and Development
Corporation ("GEED").
1. Form of Transaction. It is currently contemplated that
the acquisition would be consummated in a two-step process. The
first step would be a tender offer by an affiliate of Butler for no
less than 80% of the outstanding shares of GEED (the "Tender
Offer") for a purchase price of $0.22 per share in cash (the
"Consideration"). The second step would be a merger of the
affiliated entity with GEED (the "Merger"), in which each
outstanding share of GEED would be converted into the right to
receive the Consideration. The Merger would take place after the
successful completion of the Tender Offer and would involve only
those shareholders, directors, and officers of GEED remaining after
the closing of the Tender Offer.
2. Consideration. The total consideration would be
$4,145,734 (computed by multiplying the 18,844,245 shares
outstanding of GEED times the Consideration) to be paid in cash.
3. GEED Agreements. GEED agrees to provide to Butler for
use in connection with the Tender Offer a shareholder list and
security position listing as of a date selected by Butler and to
provide such other information to Butler as Butler may reasonably
request in connection with the Tender Offer and preparation of
Tender Offer materials. In addition, the officers, directors, and
ten percent (10%) or greater shareholders of GEED hereby agree, by
the signature of their authorized representative below, to (i) sell
his or her shares pursuant to the Tender Offer, subject to the
filing of Tender Offer materials with the Securities and Exchange
Commission (the "SEC") containing the terms of the Tender Offer
substantially similar to those set forth herein, and (ii) resign as
officers and directors upon closing of the Tender Offer and after
appointing Kevin O. Butler as a director of GEED. GEED and its
<PAGE>
Board of Directors
Great Eastern Energy and Development Corporation
Page Two
June 26, 1997
board of directors also hereby agree to recommend acceptance of the
Tender Offer by the Shareholders of GEED pursuant to applicable
securities laws.
4. Conditions to Closing. The obligations of the parties to
close the acquisition would be subject to customary conditions in
transactions of this type, including (i) the Tender Offer
resulting in Butler beneficially owning in excess of eighty percent
(80%) of the outstanding capital stock of GEED; (ii) compliance
with and performance of the agreements set forth herein; (iii)
receipt of all required consents; (iv) the absence of a material
adverse change in the business, operations, or affairs of GEED; (v)
satisfaction or waiver of certain curative matters identified in
the Escrow Agreement (as hereinafter defined); and (vi)
satisfaction or waiver of the other conditions to be contained in
the Tender Offer materials, which will be substantially similar to
those on Exhibit "A" attached hereto.
5. Operations Prior to Closing Date. From the date of your
acceptance of this letter until closing of the Tender Offer, the
business of GEED will be conducted in the ordinary course, and GEED
shall not, without the consent of Butler; (i) make any material
commitments or any material operations changes; (ii) enter into any
material leases; (iii) incur or guarantee any material obligations
for borrowed money; (iv) issue, sell, or redeem any capital stock
or other securities; (v) declare or pay any dividends or other
distributions in respect to its outstanding capital stock; (vi)
enter into any material employment or deferred compensation
contract or materially increase or announce any material increase
of salaries, wages, incentive compensation, bonus, or other
employee benefits or programs for employees or retirees; (vii) sell
or otherwise dispose of, outside the ordinary course of business,
any assets, including its cash, in excess of $10,000; or (viii)
prepay any existing indebtedness. Provided, however, that GEED may
expend up to a total of $60,000 for a valuation or fairness opinion
or assessment in connection with the Tender Offer and for attorneys
fees, filing costs, copying, mailing, and similar expenses related
to the Tender Offer. In addition, GEED will attempt to file of
record in Montgomery County, Kansas, a memorandum, affidavit, or
similar notice regarding the restriction on the transfer of certain
properties owned by Great Lakes Chemical Corporation pursuant to
the Asset Purchase Agreement between GEED and Great Lakes, and/or
GEED will, upon Butler's request, file of record that certain
Mortgage and Security Agreement executed by Great Lakes in favor of
GEED.
<PAGE>
Board of Directors
Great Eastern Energy and Development Corporation
Page Three
June 26, 1997
6. Escrow Funds. Butler shall place $75,000 (the "Escrow
Funds") in escrow pursuant to an escrow agreement between Butler
and GEED (the "Escrow Agreement"). Subject to the terms of the
Escrow Agreement, the Escrow Funds (i) will be paid to GEED in the
event the Tender Offer materials are not filed with the SEC on or
before July 11, 1997, with certain exceptions provided in the
Escrow Agreement, or if such materials are filed but the Tender
Offer is not closed for any reason other than those set forth in
Sections 4 and 7 hereof; (ii) will be used to pay a portion of the
Consideration, subject to the satisfaction or waiver of all
conditions to closing of the Tender Offer; or (iii) will be paid to
Butler if the Tender Offer materials are filed with the SEC on or
before July 11, 1997, and the Tender Offer is terminated as a
result of a failure to satisfy the conditions described in Section
4 hereof or upon the occurrence of any event described in Section
7 hereof.
7. Limitation on Other Offers; Break-up Fee. Until this
letter is terminated in accordance with Section 8 below, you agree
that neither you nor GEED will solicit offers to purchase any
shares of the capital stock of GEED, to purchase a material amount
of assets of GEED, or to merge or combine GEED with any other
entity. If (a) the Tender Offer materials have been filed with the
SEC by July 11, 1997, and the Tender Offer has commenced as soon as
reasonably practicable thereafter and is to be consummated on or
before forty (40) days after commencement; and (b) either (i) you
fail to recommend that the shareholders of GEED accept the Tender
Offer; (ii) the Tender Offer is not closed either because fewer
than 80% of the outstanding shares of GEED are tendered or the
failure of any condition precedent to the Tender Offer; (iii) any
failure to perform or any breach of the agreements set forth
herein, or (iv) GEED consummates any transaction other than those
allowed under Section 5 hereof, including acceptance of another
offer, a merger, acquisition, reorganization, or sale of a
substantial part of GEED's assets; then, in any such event, GEED
shall pay Butler $75,000 within ten (10) days of the occurrence of
such event.
8. Termination. If the Tender Offer materials have not been
filed with the SEC on or before July 11, 1997, then either party
may, subject to the terms of the Escrow Agreement, terminate both
this letter of intent and any further acquisition negotiations by
written notice to the other party, without incurring any liability,
penalty or obligations.
<PAGE>
Board of Directors
Great Eastern Energy and Development Corporation
Page Four
June 26, 1997
9. Confidentiality. No party to this letter or any agent or
representative thereof will make any public announcement or other
disclosure of the terms of this proposed transaction without the
approval of the other party. However, upon acceptance of this
letter by you, GEED may make such disclosure if it is advised by
counsel that such disclosure is advisable in light of its prior
disclosure practice or that such disclosure is otherwise advisable
in light of applicable securities laws.
10. Effect of this Letter. This letter is intended by the
parties to be an expression of our current mutual intentions
concerning a proposed acquisition of GEED by Butler. This letter
is not to be construed as a contract or an offer to enter into a
contract with respect to the proposed acquisition, and, except for
the provisions of this Section and of Sections 3, 5, 6, 7, 8, and
9 which the parties expressly declare to be enforceable, it is not
intended to be binding upon the parties or create any legal
obligations.
Our willingness to proceed on the basis of the terms of this
letter of intent is contingent upon (i) you having returned a
signed copy of this letter to the undersigned not later than 5:00
p.m., Mountain Time, on June 26, 1997; and (ii) there having been
no disclosure of this letter or any of its terms by you or on your
behalf to anyone else for the purpose of soliciting an offer from
another party to purchase your stock in GEED or the assets of GEED.
This letter of intent may be signed in counterparts so long as each
party signs at least one (1) counterpart and faxed signatures shall
be treated as original signatures.
KEVIN O. BUTLER & ASSOCIATES, INC.
By: \s\ Kevin O. Butler
--------------------------
Kevin O. Butler, President
ACCEPTED and AGREED to this 26th day of June, 1997.
\s\ Donald G. Jumper
- ---------------------------------------
Donald G. Jumper, as President of GEED,
and authorized representative of the
Board of Directors, Officers and ten percent
or greater shareholders of GEED
<PAGE>
EXHIBIT "A"
TO LETTER OF INTENT DATED JUNE 26, 1997,
FROM KEVIN O. BUTLER & ASSOCIATES, INC., TO
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION
Certain Conditions of the Offer:
Notwithstanding any other provision of the Offer, Butler shall not be
required to accept for payment, purchase, or pay for any Shares tendered, and
may terminate or amend the Offer if at any time after _______________, and at or
before the Expiration Time, any of the following events shall have occurred (as
determined by Butler in good faith) which makes it inadvisable for Butler, in
its reasonable judgment, to proceed with the Offer or with such purchase or
payment:
(a) There shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign, or
before any court or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, or any judgment, order, or injunction
entered, enforced or deemed applicable by any such court, authority, agency or
tribunal, which:
(1) challenges the making of the Offer, the acquisition of Shares
pursuant to the Offer or otherwise related in any manner to the offer; or
(2) could materially affect the business, condition (financial or
other), income, operations or prospects of GEED, or otherwise materially
impair in any way the contemplated future conduct of the business of GEED;
or
(b) There shall have been any action threatened or taken, or approval
withheld, or any statute, rule or regulation proposed, sought, promulgated,
enacted, entered, amended, enforced or deemed to be applicable to the Offer,
Butler or GEED by any government or governmental, regulatory or administrative
authority or agency or tribunal, domestic or foreign, which would or might
directly or indirectly:
(1) make the acceptance for payment of, or payment for, some or all of
the Shares illegal or otherwise restrict or prohibit consummation of the
Offer;
(2) delay or restrict the ability of Butler, or render Butler unable,
to accept for payment or pay for some or all of the Shares;
(3) materially impair the contemplated benefits of the Offer to
Butler; or
(4) materially affect the business, condition (financial or other),
income, operations or prospects of GEED, or otherwise materially impair in
any way the contemplated future conduct of the business of GEED; or
(c) There shall have occurred the declaration of any banking moratorium or
suspension of payments in respect of banks in the United States; or
(d) Any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of GEED which is or may be
material to GEED; or
(e) A tender or exchange offer for any or all of the Shares (other than the
Offer), or any merger, business combination or similar transaction with or
involving GEED or any subsidiary, shall have been proposed, announced or made by
any person; or
(f) Any entity, "group" (as that term is used in Section 13(d)(3) of the
Exchange Act) or person (other than entities, groups or persons, if any, who
have filed with the Commission on or before _____________, a Schedule 13G or a
Schedule 13D with respect to any of the Shares) shall have acquired or proposed
to acquire beneficial ownership of more than 5% of the outstanding Shares.
The foregoing conditions are for Butler's sole benefit and may be asserted
by Butler regardless of the circumstances giving rise to any such condition
(including any action or inaction by Butler) or may be waived by Butler in whole
or in part. Butler's failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which maybe asserted at any time and from time to time.
Any determination by Butler concerning the events described in this Section and
any related judgment by Butler regarding the inadvisability of proceeding with
the purchase of or payment for any Shares tendered shall be final and shall be
binding on all parties.
EXHIBIT 2
July 11, 1997
Board of Directors
Great Eastern Energy and Development Corporation
5990 Greenwood Plaza Boulevard, Suite 127
Greenwood Village, Colorado 80111-4708
Gentlemen:
You have requested our opinion with respect to the fairness, from a
financial point of view, to the shareholders of Great Eastern Energy and
Development Corporation ("Company"), of the terms of the proposed offer
("Offer") to purchase outstanding shares of common stock of the Company by
Caprito Gas Corporation ("Caprito"). Under the terms of the Offer, Caprito will
tender for all of the issued and outstanding common stock of the Company at
$0.22 per share.
In arriving at our opinion we have:
1. Reviewed certain publicly-available financial statements and and reports
regarding the Company;
2. Analyzed certain internal financial statements and other financial and
operating data concerning the Company;
3. Reviewed certain reserve information provided by the Company relating to
the producing properties of the Company, including reserve reports prepared by
third- party independent petroleum engineers for the Company;
4. Reviewed additional engineering data which was provided by the Company;
5. Discussed with management of the Company the operations of and future
business prospects for the Company;
6. Conducted such other analyses and provided such other services as we
have deemed appropriate.
<PAGE>
Great Eastern Energy and Development Corporation
Board of Directors
July 11, 1997
Page Two
In preparing our opinion, we have relied upon the accuracy and completeness
of, and have not independently verified, the information supplied to us by the
Company. We have not made any on-site inspections of any oil and gas properties
and have not reviewed any leases or other oil and gas contracts. With respect to
reserves, we have relied exclusively on the reserve report prepared by Resource
Services International, Inc., which was furnished by the Company. The evaluation
of proved reserves was as of January 1, 1997. The Company has advised us that
there has been no material change in production subsequent to the date of the
evaluation. With respect to the current interim financial statement of the
Company, we have assumed that it is accurate, complete, and has been prepared in
conformity with generally accepted accounting principles. We have inquired into
the reliability of such information and financial data only to the limited
extent necessary to provide a reasonable basis for our opinion, recognizing that
we are rendering only an informed opinion and not an appraisal or certificate of
value.
Our opinion is based on economic, market, financial, and other conditions
as they exist at the time of this letter. Events occurring after the date
hereof, including changes in the markets for oil and gas, could materially
affect the conclusions reached in this opinion.
As part of our business, we are continually engaged in the valuation of
companies and their securities in connection with business reorganizations,
private placements, mergers and acquisitions, and valuations for estate,
corporate, and other purposes.
Based on the foregoing and subject to the various assumptions and
limitations set forth herein, it is our opinion that on the date hereof that the
consideration to be received by the current shareholders of the Company in the
Offer is fair to them from a financial point of view.
Yours very truly,
\s\ B. P. Huddleston
--------------------
B. P. Huddleston, P.E.
BPH:klh
EXHIBIT 3
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION
5990 GREENWOOD PLAZA BLVD., SUITE 127
GREENWOOD VILLAGE, COLORADO 80111-4708
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about July 22, 1997, as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9")of Great Eastern Energy and Development Corporation (the
"Company") with respect to the tender offer by Caprito Gas Corporation (the
"Caprito") to the holders of the Company's common stock, par value $.10 per
share ("Common Stock"), commenced on July 11, 1997. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the Schedule
14D-9. You are receiving this Information Statement in connection with the
possible election of Kevin O. Butler, the sole shareholder of Caprito, to be the
sole Director of the Company. The Company, promptly after purchase by Caprito of
all of the shares of the Common Stock pursuant to the tender offer, will cause
Mr. Butler to be elected to the Board of Directors of the Company. This
Information Statement is required by Section 14(f) of the Securities Exchange
Act of 1934 (the "Exchange Act") and Rule 14f-1 thereunder. You are urged to
read this Information Statement carefully. You are not, however, required to
take any action.
Caprito commenced the tender offer on July 11, 1997. The tender offer is
scheduled to expire at 5:00 p.m., Midland, Texas time on August 11, 1997, unless
the tender offer is extended.
The terms of the tender offer, a summary of certain events leading up to
the tender offer and certain other information concerning the tender offer are
contained in the Offer to Purchase for Cash All Outstanding Shares of Common
Stock of Great Eastern Energy and Development Corporation at $.022 Net Per Share
by Caprito Gas Corporation (the "Offer"), the related Letter of Transmittal and
the Schedule 14D-9, copies of which are being delivered to the Company
shareholders contemporaneously herewith.
The information contained in this Information Statement concerning Caprito
and Mr. Butler has been furnished to the Company by Caprito, and the Company
assumes no responsibility for the accuracy or completeness of such information.
The Common Stock is the only class of voting securities of the Company
outstanding. Each share of Common Stock has one vote and as of December 31,
1996, there were 18,844,245 shares of Common Stock outstanding.
<PAGE>
Board of Directors and Executive Officers
General
The board currently consists of six (6) members, with each member serving a
one year term and until his successor is elected and qualified, or until his
earlier death, resignation, or removal.
Right To Designate Directors: The Designee
Pursuant to the Offer, promptly upon the acquisition by Caprito of all of
the Common Stock, and at all times thereafter, Caprito is entitled to designate
all of the members of the Board of Directors. The Company has agreed to cause
Mr. Butler to be elected to the Board and promptly obtain the resignations of
the present directors. Mr. Butler has consented to act as Director. The business
address of Purchaser is 500 W. Texas, Suite 955, Midland, Texas 79701.
It is expected that Mr. Butler will assume office immediately following
Caprito's purchase of all of the Company's Common Stock, which purchase cannot
be earlier than August 11, 1997. Upon assuming office, Mr. Butler will
thereafter constitute the sole Member of the Board.
Set forth below is the name, business address, principal occupation or
employment, and five-year employment history of Mr. Butler. Mr. Butler does not
own any shares of the Company's Common Stock.
Present Principal
Occupation and Five-Year
Name and Current Business Address Age History of Employment
- --------------------------------- --- ---------------------
Kevin O. Butler 36 Private oil and gas
Caprito Gas Corporation investor and operator,
P. O. Box 1171 both individually
Midland, Texas 79702 and through Kevin O.
Butler & Associates,
Inc.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table shows the number and percentage of shares held as of
March 14, 1997 by each Director of the Company, beneficial owner of more than
five percent (5%) of the voting securities of the Company and all Officers and
Directors as a group. Except as otherwise indicated, each shareholder has sole
investment and voting power over the shares listed.
Shares Beneficially Owned
----------------------------
Name and address Number Percent
- ---------------- ------ -------
1
Mr. Edward S. Barr................ 271,300 1.4
390 Andover Dr.
Lexington, Kentucky 40502
2
Mr. Alex G. Campbell, Jr.......... 6,771,365 35.9
P. O. Box 223
Lexington, Kentucky 40584
Mr. John I. Crews, Jr............. 172,720 0.9
P. O. Box 15299
Richmond, Virginia 23227
Mr. Donald G. Jumper.............. 270,004 1.4
5990 Greenwood Plaza Blvd.
Suite 127
Greenwood Village, Colorado 80111
3
Mr. S. Buford Scott............... 519,480 2.8
P.O. Box 1575
Richmond, Virginia 23213
4
Mr. William T. Young.............. 5,642,000 29.2
P. O. Box 1110
Lexington, Kentucky 40589
Mr. William T. Young, Jr.......... 37,300 0.2
2225 Young Drive
Lexington, Kentucky 40505
All officers and directors as a
group (7 individuals)............. 7,849,018 41.7
<PAGE>
1 The shares listed for Edward S. Barr include 6,000 shares held
indirectly by Mr. Barr in Camco, a general partnership, 261,000 shares held
by various trusts which Edward S. Barr, Alex G. Campbell, Jr. and Elizabeth
A. Campbell serve as trustees. Mr. Barr directly owns 4,300 shares.
2 The shares listed for Alex G. Campbell, Jr. include 9,000 shares
held indirectly by Mr. Campbell in Camco, a general partnership, 261,000
shares held by various trusts which Edward S. Barr, Alex G. Campbell, Jr.
and Elizabeth A. Campbell serve as trustees. Also included in Mr.
Campbell's listed shares are 300 shares held in custody for Frances Fox II
and 6,000 shares held as trustee for the children of Philip W. Powell.
3 Mr. Scott holds 1,000 shares as trustee.
4 The shares listed for William T. Young are held in trust by Mr.
Young, as trustee, for the benefit of Mr. Young under a trust agreement
dated January 10, 1985.
Board Of Directors
The name and additional information for each Director is set forth below.
All Directors of the Company have consented to be named herein.
EDWARD S. BARR, 37, was first elected to the Board in December 1990. Mr.
Barr is President of E. S. Barr & Company, Investment Management, Lexington,
Kentucky. Prior to September 1992, Mr. Barr was a Vice President for First
Security Corporation in Lexington, Kentucky serving as an assistant to its Chief
Executive Officer having responsibilities for corporate investment portfolio.
(1) (2)
ALEX G. CAMPBELL, JR., 68, has been a Director since 1980 and Chairman of
the Board since May, 1991. Mr. Campbell may be deemed to be a control person of
the Company. He is a private investor in Lexington, Kentucky involved in a
number of local enterprises. (1)
JOHN I. CREWS, JR., 46, has been a Director since 1978. He is President of
Marine Development Corporation, which manufactures air conditioning equipment
for pleasure water craft. (2) (3)
DONALD G. JUMPER, 61, President, Chief Executive Officer and Chief
Accounting and Financial Officer has been a director since May, 1982. Mr. Jumper
may be deemed a control person of the Company. Mr. Jumper is the Chairman of the
Board of Patton Oil Co., a wholly-owned subsidiary of Great Eastern. (1)
<PAGE>
S. BUFORD SCOTT, 64, has been a Director since 1978. He is Chairman of the
Board of Scott and Stringfellow Investment Corp., an investment banking firm in
Richmond, Virginia and served as co-manager of the Company's public offering.
Mr. Scott may be deemed a control person of the Company. He is also a Director
of Ethyl Corporation. (2) (3)
WILLIAM T. YOUNG, JR., 48, has been a Director since May, 1991. He is the
president of W. T. Young, Inc., a private enterprise located in Lexington,
Kentucky which engages in public warehousing, trucking, real estate development
and thoroughbred horse breeding and racing. (1) (2) (3)
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
The Board has three standing committees: the Executive Committee, the Audit
Committee and the Compensation Committee. During 1996, there were three meetings
of the Board of Directors. The Executive, Audit, and Compensation Committees
each met one time.
The Executive Committee is empowered, with certain limitations, to exercise
all the powers of the Board of Directors when the full Board is not in session.
The functions of the Audit Committee are to recommend the independent
accountants and review the overall audit plan. It evaluates the report of the
independent accountants and their performance. It is also a duty of this
Committee to review the Company's internal accounting procedures and the annual
financial statements.
The function of the Compensation Committee is to review salaries for the
Company's officers, to adopt compensation plans in which officers and directors
are eligible to participate, and to allot shares, options or other benefits
under any such plan.
PRINCIPAL OFFICERS OF THE COMPANY
The following table lists the Executive Officers of the Company.
Year First
Name Age Position Elected
---- --- -------- -------
Donald G. Jumper 61 President, Chief Executive 1982
Officer and Chief Financial and
Accounting Officer
Dennis O. Laing 51 Secretary and General Counsel 1978
<PAGE>
Mr. Laing is with the law firm of Beale, Balfour, Davidson, Etherington &
Parker, P.C., Richmond, Virginia. He has served as Corporate Secretary and
General Counsel to the Company since its formation.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
of each of the Executive Officers or Directors of the Company whose annual
compensation exceeded $100,000 during 1996.
Name Principal Position Year Annual Compensation
- ----------- ------------------ ---- -------------------
Salary
------
Donald G. Jumper President and Chief 1996 $ 70,000
Executive Officer, 1995 94,209
Chief Financial and 1994 100,000
Accounting Officer
Mr. Jumper also receives certain other benefits which in the aggregate do
not exceed the lesser of $50,000 or 10% of the total annual compensation
reported in the table.
In December of 1996 the Board of Directors approved a severance benefit for
Mr. Jumper which provides for the payment of $140,000 to him in the event that
the Company is acquired and the chief executive officer is not retained as an
employee of the acquiror. The Company does not presently have any other plans
for its executive officers involving stock appreciation rights, long-term
incentives, employment contracts, and change in control agreements. Stock
options held by officers of the Company have expired unexercised.
Directors Compensation
Directors are not compensated for their services. Directors are currently
reimbursed travel expenses and the cost of overnight accommodations incurred in
connection with attendance at directors' meetings.
