SCHEDULE 13E-4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Issuer Tender Offer Statement
(Pursuant to Section l3(e)(1) of the
Securities Exchange Act of l934)
LINCOLN INTERNATIONAL CORPORATION
---------------------------------
(Name of the Issuer)
LINCOLN INTERNATIONAL CORPORATION
---------------------------------
(Name of Person(s) Filing Statement)
Common, Non-Voting
(Title of Class of Securities)
533716106
______________________
(CUSIP Number of Class of Securities)
Robert P. Ross
3 Riverfront Plaza - Suite 329
Louisville, Kentucky 40202
(502) - 56l-l673
----------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of
Person(s) Filing Statement)
NOT UNTIL COMMENTS FROM STAFF ARE RECEIVED
(Date Tender Offer First Published, Sent or
Given to Security Holders)
Calculation of Filing Fee
_________________________________________________________________
Transaction Amount of Filing Fee
Valuation* $350,000 $70
__________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
1<PAGE>
[x] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
This fee is off-set by the $70 fee paid for filing a Schedule l3E-3
this date by the Company.
Amount Previously Paid ............................ Not Applicable
Form or Registration No.: ......................... Not Applicable
Filing Party: ..................................... Not Applicable
Date Filed: ....................................... Not Applicable
2<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) Lincoln International Corporation is the issuer, with principal
executive offices at Suite 6, 120 Village Square, Middletown, Kentucky, 40243.
(b) As of ________ __, l995, there were l,537,26l shares of the issuer's
common, non-voting stock outstanding held of record by 1,795 stockholders as of
that date. This Offer seeks l,000,000 of such shares at an Offer Price of
$0.35 per Share, and no such Shares will be purchased from any officer,
director or affiliate of the issuer. The information set forth in "The Offer"
in the Offer to Purchase is incorporated herein by reference.
(c) There is no established trading market for such shares and the
information set forth in "Special Factors - Background of the Transaction" of
the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The issuer will use funds it now has available, in the maximum amount
of $350,000, for this Offer.
(b) No such funds will be borrowed.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS FOR PROPOSALS OF THE ISSUER
OR AFFILIATE.
The information set forth in "Special Factors - Purpose and Structure of
the Transaction; Plans for the Company" and "Effect of Offer on Non-Tendering
Common Non-Voting Shareholders" in the Offer to Purchase is incorporated herein
by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
No transaction in the subject securities of the Issuer was effected within
the past 40 days by the issuer or any person referred to in its Instruction C
of this Schedule, or by an associate or subsidiary of any such person,
including an executive officer or director of any such subsidiary.
3<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
No such contract, arrangement, understanding or relationships relating to
the Tender Offer exists.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons are to be employed, retained or to be compensated in connection
with this Offer, as the issuer will not utilize any outside or unaffiliated
persons in this Offer. The issuer's officers and employees may make telephone
calls or oral solicitations under the Offer, but no compensation will be
provided to them for such services.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth at pages F-2 through F-l6, F-2l through F-
24 and F-28 in the Offer to Purchase is incorporated herein by reference.
(b) Not applicable as not material.
ITEM 8. ADDITIONAL INFORMATION.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Offer to Purchase materials.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
SIGNATURE
After due inquiry and to the best of my knowledge and belief,
4<PAGE>
I certify that the information set forth in this statement is true, complete
and correct.
6/21/95 /s/Lee Sisney
____________________________ ___________________________________
(Date) (Signature)
Lee Sisney, President
___________________________________
(Name and Title)
5<PAGE>
EXHIBIT 17(d)
OFFER TO PURCHASE FOR CASH
l,000,000 Shares
Of Common Stock, Non-Voting
Of
LINCOLN INTERNATIONAL CORPORATION
At $0.35 Per Share
By
LINCOLN INTERNATIONAL CORPORATION
_________________________________________________________________
THE OFFER, WITHDRAWAL RIGHTS, AND THE PRO-RATION PERIOD
WILL EXPIRE AT _____ O'CLOCK PM, LOUISVILLE, KENTUCKY TIME,
ON ___________________ __, 1995, UNLESS THE OFFER IS EXTENDED
_________________________________________________________________
LINCOLN INTERNATIONAL CORPORATION (the "COMPANY") IS OFFERING TO
PURCHASE UP TO l,000,000 SHARES OF ITS COMMON, NON-VOTING SHARES FOR CASH
AT $0.35 PER SHARE (the "OFFER"). THE OFFER IS NOT CONDITIONED UPON A
MINIMUM NUMBER OF SHARES BEING TENDERED. IF MORE THAN l,000,000 SHARES
(65% OF THE OUTSTANDING SHARES) ARE VALIDLY TENDERED, THE COMPANY WILL
ACCEPT ONLY l,000,000 SHARES, WITH SUCH SHARES PURCHASED, WITH CERTAIN
EXCEPTIONS, ON A PRO-RATA BASIS.
THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR THE COMPANY'S BOARD OF DIRECTORS NOR ANY
AFFILIATE, OFFICER OR DIRECTOR OF THE COMPANY MAKES ANY RECOMMENDATION AS
TO WHETHER ANY SHAREHOLDER SHOULD TENDER OR REFRAIN FROM TENDERING SHARES
PURSUANT TO THE OFFER, AND EACH SHAREHOLDER MUST MAKE HIS OR HER OWN
DECISION AS TO WHETHER TO TENDER SHARES.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY NOR ADEQUACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
_______________ _______, 1995.
1<PAGE>
INTRODUCTION
TO THE HOLDERS OF COMMON, NON-VOTING
STOCK OF THE COMPANY
The Company hereby offers to purchase up to l,000,000 shares of its
Common, Non-Voting stock, (the "Shares") at $0.35 per share, net to the
seller in cash and without interest, (the "Offer Price") upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal. Each person tendering Shares hereunder will
be responsible for paying any stock transfer taxes due in connection with
the purchase of their Shares hereunder. Each stockholder who tenders
hereunder must tender all Shares that he or she owns. Tenders of less than
all Shares owned by the Tenderer will not be accepted.
This Offer was approved by the Directors of the Company, Mr. Lee
Sisney and Mr. Charles Hamilton, on March l5, l995. The Board of Directors
determined to make no recommendation to its shareholders with respect to
this Offer, and each stockholder should make their own decision as to
whether to tender Shares in this Offer, and should review the totality of
this Offer to Purchase, and ask such additional questions of the Company as
they deem appropriate, in making that decision.
Messrs. Sisney and Hamilton are equal owners of Drivers & Drovers
Diversified, Inc. ("D&D"), a Kentucky corporation, which owns 9l,469
(91.5%) and 287,429 (l8.9%) of the outstanding Voting, and Non-voting,
Shares of the Common stock of the Company, respectively. D&D purchased
these securities between October l9, l994, and February 2, l995, from
sixteen (16) individuals, some of whom were officers and directors of the
Company at the time of the purchase.
The Board of Directors of the Company is making this Offer in an
effort to decrease the number of Common, Non-Voting shareholders of the
Company to less than 300, with the objective of terminating the Company's
registration under the Securities Exchange Act of l934. There are
l,537,26l Common, Non-Voting Shares outstanding held by approximately 1,800
shareholders. Such a termination of registration would entail the
termination of the obligation of the Company to file reports with the
Securities and Exchange Commission and to provide certain information,
financial and otherwise, to its stockholders. Therefore, stockholders
should consider whether they wish to continue to remain stockholders of a
company that may not provide this type of information to the public and its
stockholders.
2<PAGE>
At the termination of this Offer, various alternatives are available
to the Company with respect to the non-tendering Shares. The Company
could, among other things, take no action, effect another Offer, buy Shares
in the sporadic public market, or in negotiated transactions or engage in a
reorganization of the Company pursuant to which cash consideration would be
given to all shareholders in the reorganization in exchange for their
Shares, with the exception of D&D. The result of such a reorganization
would be that D&D would become the sole shareholder of the Company, and
each shareholder would receive cash in an amount not determined for their
Shares. Prices that might be paid for Shares in these procedures could be
higher, or lower, than the Offer Price. The Company has not made a
decision as to whether to take any action and such a decision will not be
made until the termination of this Offer to Purchase. In any such
reorganization, stockholders of the Company would have dissenters' rights
available to them as a part of that procedure.
Since Messrs. Sisney and Hamilton have become directors of the
Company, the Company's sole remaining consumer finance unit and the Ice
Cream Churn store franchise business have been sold. Additionally, the
Company has negotiated a non-binding Letter of Intent with Michigan
Livestock Exchange ("MLE") to enter into an arrangement whereby MLE will
operate the livestock auction business at the Company's facilities in
Louisville, Kentucky, with the Company to receive a percentage of the pre-
tax profit from that auction business. The Company's Board of Directors
will attempt to negotiate that the revenues it would receive under such an
arrangement will be comparable to the net revenues it has historically
recognized from its livestock auction operation, but no assurance can be
given that this will occur. Management believes that his Letter of Intent
will be formalized in a final agreement with MLE in the near future, but no
assurance of such fact can be given. The Board of Directors has made no
decision with respect to the manner in which the remainder of the assets of
the Company, including the real estate owned in Louisville, Kentucky, will
be used in the future. (See "Purpose and Structure of the Transaction;
Plans for the Company").
Any stockholder desiring to tender Shares in this Offer, should either
(i) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions therein and deliver it with the Shares and
all other required documents to the Company; or (ii) request his broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for him. A stockholder having Shares registered in the name of
a broker, dealer, commercial bank, trust company or other nominee must
contact such person if the stockholder desires to tender such Shares.
Questions and requests for assistance or additional copies of this Offer
may be directed to the Company at Suite 6, l20 Village Square, Middletown,
Kentucky, 40243; (502) 245-8814.
Stockholders are urged to read this Offer to Purchase carefully before
deciding whether to tender their Shares.
3<PAGE>
SPECIAL FACTORS
BACKGROUND OF THE TRANSACTION.
The Shares of the Common Non-Voting stock of the Company have never
paid a dividend and are not traded nor listed on any stock exchange or
public market system. The Common Non-Voting Shares are occasionally quoted
in the "pink sheets" by two non-Kentucky brokerage firms with a "bid" and
"asked" prices. To management's knowledge, only 947 Shares were reported
as traded in l994, at a price of six and one-quarter cents. No Shares have
been traded in l995. Since August l, l992, the high and low bid prices in
the pink sheets for Shares of the Company's Common Non-Voting stock were as
follows:
Price
------
Period Low Bid High Bid
------- ------- --------
Quarter ended October 3l, l992 $0.0625 $0.l25
Quarter ended January 3l, l993 0.0625 0.l25
Quarter ended April 30, l993 0.0625 0.l25
Quarter ended July 3l, l993 0.0625 0.l25
Quarter ended October 3l, l993 0.0625 0.0625
Quarter ended January 3l, l994 0.0625 0.0625
Quarter ended April 30, l994 0.0625 0.l25
Quarter ended July 3l, l994 0.0625 0.l25
Quarter ended October 3l, l994 0.0625 0.l25
Quarter ended January 3l, l995 0.0625 0.l25
Quarter ended April 30, l995 0.0625 0.l25
4<PAGE>
In approximately June of l993, Mr. Sisney and Mr. Hamilton, directors
of the Company, and owners of D&D, considered purchasing a significant
portion of the Company's assets. In that effort, these persons, along with
four other persons, established a Kentucky general partnership in l993, and
made an offer to the then management of the Company in January, l994, to
purchase the livestock auction assets of the Company, along with the real
estate on which it is operated in Louisville, Jefferson County, Kentucky,
for the sum of $2,400,000. That offer was contingent, among other things,
on the general partnership obtaining suitable financing to effect the
purchase and upon the financial condition of this portion of the Company's
business being acceptable after due diligence investigation. Management of
the Company at that time retained the services of Galloway Appraisal, an
independent unaffiliated real estate organization, to appraise the assets
of the Company. Galloway provided an Appraisal Report dated December 7,
l993, to the Company which concluded that, in its opinion, the subject
assets had a fair market value of $2,800,000 (See "Special Factors -
Purpose and Structure of the Transaction; Plans for the Company"). On
January 26, l994, the Board of Directors considered the offer of the
general partnership and voted to decline that offer, based upon the
Appraisal Report. No further efforts were made by the general partnership
to acquire assets from the Company.
In or around June of l994, Mr. Sisney spoke with Mr. DeCoursey Combs,
then President and Chairman of the Board of the Company, concerning the
possibility of buying Mr. Combs' stock in the Company. Mr. Combs'
indicated his willingness to consider selling, because of his age and
recent illnesses in his family. Thereafter, Messrs. Sisney and Hamilton
formed D&D to acquire control of the Company and individually spoke with
the other two directors of the Company at that time, and with thirteen (13)
additional shareholders, negotiating the purchase of their stock in the
Company by D&D. D&D is equally owned by Messrs. Sisney and Hamilton. On
October l9, l994, D&D purchased 8l,469 (81.5%) and 269,029 (17.6%) of the
Common Voting and Common, Non-Voting Shares of the Company for an aggregate
purchase price of $471,967. On February 2, l994, D&D bought l0,000 Voting,
and l8,400 Non-Voting Common Shares for an aggregate price of $38,400. In
these transactions in which D&D obtained control of the Common stock of the
Company, the average price paid for each Common Voting Share was $2.00 and
for each Common, Non-Voting Share was $l.00.
The Company, at that time, also entered into an Agreement with Mr.
Combs to retain him as a consultant for one (l) year at an annual salary of
$25,000 to provide his assistance and advice to the Company in the
disposition of its remaining finance operation located in Greensburg,
Kentucky, and its interest in the Ice Cream Churn franchise. Mr. Combs'
health insurance benefits were continued, as were the lease payments on an
automobile for that same period of time. Upon the acquisition of the stock
by D&D on October l9, l994, the then directors of the Company resigned and
were replaced by Mr. Sisney and Mr. Hamilton. Mr. Combs also resigned as
President on that date.
Since October l9, l994, no officer, director or affiliate of the
Company, or D&D has purchased any Shares of the Company, except for the
February, l995 purchase by D&D referred to above.
Preceding October l9, l994, Messrs. Sisney and Hamilton had reviewed
the operations of the Company and its business segments. As a result, as
directors of the Company, they voted on December l, l994, to sell the
remaining finance business assets of the Company to an unaffiliated third
party for $673,000. On December 9, l994, the Board of Directors voted to
dispose of the Company's interest in its Ice Cream Churn business, due to
the amount of capital that would be required to meet the requirements of
the Franchise Agreement that additional stores be opened and operating
within various timeframe segments. As a result, on May 5, l995, the Ice
Cream Churn business assets and franchise rights of the Company were
5<PAGE>
returned to the franchisor in exchange for $5,000, and a total release of
the Company of all future obligations under the Agreement. On March l5,
l995, the Board of Directors of the Company determined to make this Offer
to its stockholders holding Common Non-Voting Shares, with the objective of
terminating its registration under the Securities Exchange Act of l934, as
amended (the "Act"), and to pay for Shares tendered in this Offer from
funds of the Company (See "Special Factors - Purpose and Structure of the
Transaction; Plans for the Company"). Expenses anticipated to be incurred
in this Offer are as follows:
Expenses Amount
--------- -------
Attorneys' fees ........................ $l3,000
Accounting fees ........................ l,000
Printing fees .......................... ______
Filing fees ............................ 70
Mailing expense ........................ ______
Other .................................. ______
Total $______
In connection with D&D's acquisition of stock of the Company on
October l9, l994, D&D borrowed $490,000 from Producers Association, an
unaffiliated Kentucky agribusiness cooperative ("Producers"). Producers is
managed by MLE. As a part of that borrowing, D&D executed a Promissory
Note to Producers which provided that the obligation be secured by 50,001
shares of the Common Voting stock of the Company. D&D could effect payment
of the obligation at any time by assigning to Producers one-third (l/3) of
the issued and outstanding Shares of D&D at the time of payment, if the
consent of Producers was obtained to that manner of payment. If such
payment procedure was not implemented by September 30, l996, and the
indebtedness had not been paid, then the obligation would convert to a term
note with a twenty (20) year amortization of principal with interest
payable at eight (8%) percent per year, with all remaining payments being
due and payable on September 30, 2006. D&D additionally agreed with
Producers to negotiate a good faith contract for MLE to serve as the sole
manager of the livestock auction function of the Company within ninety (90)
days of October l9, l994.
On May l5, l995, D&D agreed to execute an Amended Promissory Note, and
Pledge Agreement, with similar terms, except that maturity will occur on
May l5, 2005. Also, on May l5, l995, the Company entered into a non-
binding Letter of Intent with MLE to lease the livestock auction assets of
the Company to MLE for ten (l0) years. The Company is to receive the
indicated percentage of
6<PAGE>
pre-tax profits from these operations for the years specified below:
Years Percentage
l and 2 75%
3 and 4 25%
5 through l0 50%
MLE will receive a monthly administrative fee of between $2,500 and $3,000
and the Company and MLE will agree upon annual budget and capital
expenditures for the operation and will agree to non-compete covenants
covering an area within a radius of fifty (50) miles of the facilities.
Management will have the right to terminate the arrangement and, upon
termination, D&D's obligation to Producers shall be paid in full. No
statement can be made as to when an agreement will be finally executed, and
until that time, the Company intends to continue its current operational
methods.
DIVERGENT INTEREST WITH RESPECT TO THE OFFER.
The Board of Directors, consisting of Messrs. Sisney and Hamilton,
have divergent interest with respect to the Offer. For example, as
directors of the Company, and as the sole shareholders of D&D, these
persons have an interest in the Company purchasing Shares at a low price.
Whereas, Common Non-Voting shareholders who desire to sell have an interest
in selling their Shares at a high price. Additionally, D&D's equity
ownership in the Company will increase to the extent that Shares are
purchased by the Company in this Offer.
CONSIDERATION BY THE BOARD OF DIRECTORS; FAIRNESS.
The Board of Directors of the Company, consisting of Messrs. Sisney
and Hamilton, unanimously voted in favor of the transaction and has
determined that the terms of the Offer are fair to, and in the best
interest of, the Company's shareholders. No opinions, analyses or reports
by independent parties were solicited or obtained in connection with the
Offer. Though the Board determined that it considers the Offer to be fair
to the Company's share- holders, the Board of Directors voted to make no
recommendation with respect to the Offer. Shareholders should make their
own decisions as to whether to accept or reject this Offer.
In considering the fairness of the Offer to the shareholders, the
Board of Directors based its decision upon, among other things, the
following factors:
(l) The relationship of the Offering Price and the historical sales
prices for the Common Non-Voting Shares, as described in "Background of the
Transaction", including the fact that the Offer Price of $0.35 per Share
represents a premium of approximately 600% to the $.0.06 per Share sales
prices of the Common Non-Voting Shares over the last two years; and
(2) The fact that Common Non-Voting shareholders will be able to sell
their Shares to the Company without brokers' commissions or other expenses
that would typically be incurred in the sale of such Shares through a
broker; and
(3) The fact that there is no active public market for the Shares;
and
(4) The fact that, to the knowledge of present management of the
Company, no other offer, other than that described under "Background of the
Transaction", has been made or furnished to the Company to purchase its
7<PAGE>
assets or its securities by any person; and
(5) The fact that, currently, almost all revenue production of the
Company arises from an inner-city livestock auction business, one of the
few remaining in the Country. Its future in such business is uncertain as
changes occur in this market. The Company's real estate is currently for a
highly specialized use, and costs attendant to changing the nature of such
use are thought to be very significant; and
(6) The fact that the Offering Price approximates the net book value
of a Share, as of April 30, l995.
(7) The fact that no dividends have ever been paid on the Shares.
In considering the fairness of the transaction, the Board of Directors
did not find it practical to, and did not, quantify or otherwise assign
relevant weights to specific factors considered in reaching its decision.
Common Non-Voting stockholders should note that the Offer Price has
been established by the Company, which is controlled by Messrs. Sisney and
Hamilton, and is not the result of arm's-length negotiations.
Additionally, such stockholders should note that the book value of the
Company's Shares would be greater if the Company's assets could be sold at
the amount specified in the Appraisal Report. However, no facts exist to
evidence that these assets could be disposed of for the amount specified in
the Appraisal Report.
PURPOSE AND STRUCTURE OF THE TRANSACTION; PLANS FOR THE COMPANY.
The primary purpose of the Offer is to reduce the number of holders of
record of Common Non-Voting Shares to less than 300 to enable the Company
to terminate the registration of its stock under Section l2(g) of the
Securities Exchange Act of l934, as amended, and thereby cease to be
obligated to file periodic reports under the Act, such as annual reports on
Form 10-K and quarterly reports on Form 10-Q. Being a reporting company
subject to the reporting and other requirements of the Act imposes
significant costs, which the Company seeks to eliminate through the Offer.
The Company estimates that it spends approximately $35,000 annually in
direct costs complying with the Act's periodic reporting requirements and
other requirements associated with Section l2(g) registration. Such direct
costs include, among other things, legal fees for periodic reports, legal
and printing costs for annual and other reports and certain personnel
costs. Such costs and expenses do not include substantial indirect costs
in the form of the time and attention of the financial personnel of the
Company and other Company officers needed to prepare and review such
filings and to comply with other requirements. The Company would expect to
no longer to incur these direct expenses if the stock is de-registered. As
of _______ __, l995, there were l,537,26l Shares of Common Non-Voting stock
outstanding and 1,795 stockholders of record. On the same date, the
Company believes there were 643 shareholders who owned less than l00 Shares
of the Common Non-Voting stock and l,337 shareholders who owned less than
500 Shares of the Common Non-Voting stock.
The Offer is not conditioned upon enough Shares being tendered to
reduce the number of stockholders to less than 300. Thus, it is possible
that after the Offer is terminated, the Company will still be unable to de-
register its stock and will still be required to incur the expenses of
preparing periodic reports and complying with other requirements of the
Act. In such a case, the Company will then determine if other acceptable
means are available to reduce the number of its stockholders to less than
300, including the purchase of additional Shares through the brokerage
firms who periodically provide a bid and asked price for the Shares,
through a reorganization or in privately negotiated transactions. Such
8<PAGE>
additional purchases could be at prices that may be higher or lower than
the Offer Price.
The Company believes that the Offer is the best means available to
reduce its number of shareholders to less than 300, before its fiscal year
ends on July 3l, l995, and it is required to prepare, based upon
regulations promulgated under the Securities Exchange Act of l934, an
annual report relating to the l994-l995 fiscal year.
Another intended purpose of the Offer is to provide a means by which
the Common Non-Voting stockholders of the Company may dispose of their
Shares at a price the Board of Directors considers to be fair. In view of
the lack of an active trading market for the Shares, and the range of
brokerage firms' periodic bid and ask prices, the Offer provides such a
alternative in the opinion of management of the Company. If the Offer is
successful in allowing the Company to terminate the registration under the
Act, it is believed that the brokerage firms' bid and asked pricing for the
Shares that has occurred in the past will cease, which would have the
effect of limiting further the non-tendering Common Non-Voting
stockholders' ability to dispose of their Shares in the future.
Additionally, such registration termination will have the effect of
reducing the public information available regarding the Company, because it
will not longer be required to file reports under the Act.
To the extent that Common Non-Voting Shares are tendered in the Offer,
the percentage of ownership of the Shares by the Company's directors and by
D&D will increase.
The Offer does not require approval of shareholders of the Company.
The Offer was approved by the two directors of the Company, Messrs. Sisney
and Hamilton, the only directors of the Company. Mr. Sisney is also an
employee of the Company. No unaffiliated representative or person was
retained by the Company to analyze the Offer, or to represent the interests
of the unaffiliated shareholders for purposes of negotiating or determining
the terms of the Offer or for preparing a report concerning the fairness of
the transaction. At the conclusion of the Offer, the Company will continue
to be managed by its current Board of Directors and officers. The
Company's business now principally consists of the livestock auction
business, which is conducted from its facilities in Louisville, Jefferson
County, Kentucky. Traditionally, the Company has used its contacts with
farmers and cattlemen, and its reputation in the industry, as the means of
obtaining livestock to be marketed through its auction process at those
facilities. The Company used a number of commissioned agents whose
function was to use their contacts and relationships with farmers to induce
them to utilize the Company's services. At present, the Company is
continuing to operate in this manner.
However, as indicated under "Special Factors - Background of the
Transaction", the Company has entered into a non-binding Letter of Intent
with MLE, an unaffiliated cooperative organization, under which that
Organization would assume control of the auction services of the Company,
paying the Company a commission upon a percentage of pre-tax profits from
the auction business. The number of head of livestock utilizing the
Company's facility has decreased over the last two years. MLE is located
in East Lansing, Michigan, and has extensive experience and contacts in the
cattle business, managing over 50 livestock auctions or buying stations.
Management believes that MLE has the ability to increase the number of
livestock utilizing the Company's auction facilities. No final agreement
has yet been entered into with MLE, and the Company cannot give any
assurance of the terms of any such agreement as it will finally exist, or
that it will ever be reached between the parties.
The Company's livestock auction facilities occupy approximately l4
acres of the 22 acres owned by the Company in Louisville, Kentucky. The
9<PAGE>
facility consists of a two-story building with a two-story livestock
storage and auction facility at the back of it, and one warehouse. The
building and auction facilities are principally constructed of concrete,
concrete-block and brick, with some wood improvements. The building and
livestock facilities were erected between l908 and l924.
Most of the remaining acres were purchased from a railroad company and
are gravel road-bed and transit areas. Portions of the property are
located in a Zone B flood plain area.
As indicated in "Special Factors - Background of the Transaction",
prior management of the Company obtained an Appraisal Report of the
properties which now compose the Company's sole properties from Galloway
Appraisal, an unaffiliated real estate appraisal organization located in
Louisville, Kentucky. This Appraisal was conducted by Ronald L. Galloway,
MAI, a Kentucky certified general appraiser and Patricia G. Brown, SRA, a
Kentucky certified general appraiser. Current management is not aware of
the process by which this Galloway Appraisal was selected.
Current management has reviewed that Appraisal Report and considered
its conclusion that such property has a fair market value of $2,800,000 at
the time of the issuance of the Report in making their determination that
the Offer is fair to shareholders. Current management is of the opinion
that due to the special character of the Company's property, the conclusion
of the Report that the property has a fair market value of $2,800,000 is
subject to question. The Report utilized an income and comparable sales
approach in reaching its conclusion. The Report utilized comparable sales
for the Company's offices and warehouses and an income approach was for the
livestock pens and holding areas, no comparables being available. The
income approach portion was based upon the operations of the Company in
late l993, which have decreased since that time. The amount of space
rented in the Company's property and the number of head of livestock
utilizing the Company's auction facility has decreased. In fact, there is
an increasing trend within the livestock industry for farmers to sell their
livestock directly to slaughter houses or dealers, by-passing the auction
process. Management believes that its livestock "handle" will continue to
decrease, unless some means can be arrived at to encourage persons within
the industry to utilize the Company's auction facilities, for which no
assurance can be given. Rental occupancy has decreased as the demand for
such real estate in the area softens.
10<PAGE>
Management believes that most of the Company's facilities are now
singularly suited only for the purpose for which they are currently
utilized. That is, a livestock auction business. While a portion of the
facilities might be rented or used for storage, or similar purposes, a
great percentage are of concrete or concrete block or brick construction
which do not suit them to any other purpose. Management has not solicited
any bids or indications of interest from any other persons in the industry
with respect to these facilities.
As to alternative use, management believes that the cost of demolition
and excavation of the present facilities in order to construct alternative
facilities could approximate $l,500,000 to $2,000,000. Management has
obtained no independent report or analysis for such a demolition and
excavation project, but because of the entrenched and disbursed character
of the facilities, management believes the process would be labor and time
intensive, thereby entailing significant expense.
With respect to the approximate 5-l/2 acres of vacant land located at
the Company livestock auction facilities, a portion are adjacent to
Beargrass Creek and within a flood plain. The property was formally a
railway roadbed for numerous tracks and is now used for parking, ingress
and egress and a turn around area for vehicles.
Management has not undertaken to determine whether there are potential
purchasers of either its improved or unimproved properties, nor has it had
conducted another appraisal of the properties themselves. Various
unrelated parties have previously expressed unsolicited interest in either
utilizing or acquiring portions of the Company's properties, but no
definitive arrangements have been proposed or negotiated.
On June 17, 1995, the Company received an unsolicited communication
from a local banking organization expressing interest in negotiating a
lease to the Company's main office building for a period of six months at
an unspecified rental amount, with an option to purchase the facility
during that period for $800,000 cash. Though no negotiations have
occurred, management believes that the Company could obtain rental terms
for its continued use of a portion of these facilities, should they be sold
to this organization. Management has determined to duscuss the proposal
with this organization with a view to assessing the totality of such a
transaction and its impact upon the Company. No dates have been set for
any meetings on the matter and no statements of any nature can be made as
to the ultimate outcome of this unsolicited proposal.
While it might be possible to lease or sell portions of the real
estate to persons having need of property with a specialized location, or
for warehouse or other specialized purposes, management is of the opinion
that, considering their construction, and the costs of renovation or
removal, a large percentage of its properties are now being utilized in
their best use. Therefore, management intends to continue to provide a
livestock auction facility to the extent that a reasonable demand exists
for that facility, unless other acceptable alternatives exist.
A copy of the Appraisal Report will be made available for inspection
and copying at the principal executive offices of the Company during its
regular business hours by any interested shareholder, or his representative
designated in writing, or a copy of such Report will be provided to any
such person upon written request and at the expense of the requesting
person(s).
11<PAGE>
THE OFFER
TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, (including,
if the Offer is extended or amended, the terms of any such extension or
amendment), the Company will accept for payment and pay for up to 1,000,000
Shares validly tendered on or prior to the Expiration Date, and not
withdrawn in accordance with the Offer. The term "Expiration Date" shall
mean _________ o'clock PM, Louisville, Kentucky time, on __________________
__, l995, unless the Company in its sole discretion shall have extended the
period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by the Company, shall expire.
The Offer Price is $.35 per Share.
The Offer is conditioned on satisfaction of certain conditions as set
forth herein. The Company reserves the right (but shall not be obligated),
in its sole discretion and for any reason, to waive any and all of such
conditions. If by the Expiration Date, any or all of such conditions have
not been satisfied or waived, the Company reserves the right (but shall not
be obligated) to (i) decline to purchase any of the Shares tendered and
terminate the Offer; (ii) waive all of the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, purchase all Shares validly tendered;
(iii) extend the Offer and, subject to the right of Common Non-Voting
stockholders to withdraw Shares until the Expiration Date, retain the
Shares that have been tendered during the period or periods for which the
Offer is extended; or (iv) amend the Offer.
Drivers & Drovers Diversified, Inc., a controlling corporation for the
Company which is owned equally by Messrs. Sisney and Hamilton, owns 287,429
(l8.9%) of the Common Non-Voting Shares and has indicated that it does not
intend to tender those Shares in the Offer. Also, Mr. Hamilton owns 600 of
the Shares and has indicated that he does not intend to tender these
Shares.
PRO-RATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
If the number of Shares validly tendered prior to the Expiration Date
and not withdrawn is not more than l,000,000, the Company, upon the terms
and subject to the conditions of the Offer, will accept for payment all
Shares so tendered.
If the number of Shares validly tendered and not withdrawn prior to
the Expiration Date is more than l,000,0000 Shares, the Company, upon the
terms and subject to the conditions of the Offer, unless the Offer is
amended or extended, will accept for payment only l,000,000 Shares, with
such Shares purchased on a pro-rata basis; provided, however, that all
persons tendering all Shares owned by them and who own less than l00 Shares
of the Company shall have all of their Shares purchased before pro-ration
is applied to the remaining tendering shareholders.
In the event that pro-ration of tendered Shares is required, the
Company will determine the final pro-ration factor as promptly as
practicable after the Expiration Date.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any
extension or amendment), the Company will accept for payment, and will pay
for, Shares validly tendered and not withdrawn in accordance with the
12<PAGE>
Offer, as promptly as practicable following the Expiration Date. In all
cases, payment for Shares purchased to the Offer will be made only after
timely receipt by the Company of a properly completed and duly executed
Letter of Transmittal and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Company shall be deemed to have
accepted for payment (and thereby purchase) tendered Shares when, as and
if, the Company, by action of its Board of Directors, votes for the
acceptance for payment of such Shares pursuant to the Offer. Upon the
terms and subject to the conditions of the Offer, payment for Shares
pursuant to the Offer will in all cases be made by forwarding the requisite
purchase price to the tendering shareholder. Under no circumstances will
interest be paid on the purchase price by reason of any delay in making
payment.
If, prior to the Expiration Date, the Company shall increase the
consideration offered to shareholders pursuant to the Offer, such increase
shall be paid for all Shares accepted for payment pursuant to the Offer,
whether or not such Shares were tendered prior to such increase.
The Company reserves the right to transfer or assign, at any time, and
from time to time, in whole or in part, to one or more affiliates or direct
or indirect subsidiaries of the Company, the right to purchase Shares
tendered pursuant to the Offer, but no such transfer or assignment will
relieve the Company of its obligations under the Offer or prejudice the
rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
13<PAGE>
If any Shares are not properly tendered, the Company will attempt to
contact the stockholder in order to assist him or her to make a proper
tender. The Company can give no assurance however, that it will have the
time or personnel to contact each shareholder who may not properly tender
Shares. Any Shares not properly tendered by the Expiration Date, will be
returned to the tendering stockholder as promptly as practicable after the
expiration of the Offer.
PROCEDURE FOR TENDERING SHARES.
For Shares to be properly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal, and any other documents
required by the Letter of Transmittal, must be received by the Company at
Suite 6, l20 Village Square, Middletown, Kentucky, 40243, on or prior to
the Expiration Date. In order for a tendering stockholder to participate
in the Offer, Shares must be validly tendered and not withdrawn prior to
the Expiration Date, which is ________ o'clock PM, Louisville, Kentucky
time, on _______ ___, l995 (unless extended).
The method of delivery of the Letter of Transmittal and all other
required documents is at the option and risk of the tendering shareholder,
and delivery will be deemed to be made only when actually received by the
Company. If delivery is by mail, registered mail, with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to insure timely delivery.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares pursuant to the
procedures described above, will be determined by the Company, in its sole
discretion, which determination shall be final and binding. The Company
reserves the absolute right to reject any and all tenders if not in proper
form or if acceptance of, or payment for, the Shares tendered may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves
the right to waive any defect or irregularity in any tender with respect to
any particular Shares of any particular stockholder, and the Company's
interpretation of the terms and conditions of the Offer (including the
Letter of Transmittal and the Instructions thereto), will be final and
binding.
A tender of Shares pursuant to any of the procedures described above
will constitute a binding agreement between the tendering shareholder and
the Company upon the terms and subject to the conditions of the Offer,
including the tendering shareholder's representation and warranty that such
shareholder owns the Shares being tendered.
14<PAGE>
WITHDRAWAL RIGHTS.
Except as provided in the Offer, all tenders of Shares pursuant to the
Offer are irrevocable, provided that Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
accepted for payment as provided in this Offer to Purchase, may also be
withdrawn at any time after forty (40) business days from the commencement
of this Offer.
For withdrawal to be effective, a written or facsimile transmission of
Notice of Withdrawal must be timely received by the Company at Suite 6, l20
Village Square, Middletown, Kentucky, 40243. Any such Notice of Withdrawal
must specify the name of the person who tendered the Shares to be withdrawn
and must be signed by the person(s) who signed the Letter of Transmittal in
the same manner as the Letter of Transmittal was signed. The signature(s)
on the Notice of Withdrawal must be guaranteed by an eligible
signature guaranty institution (a bank, stock brokerage firm, savings and
loan association or credit union with membership in an approved signature
guaranty medallion program).
EXTENSION OF TENDER PERIOD; TERMINATION AND AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at
any time and from time to time: (i) To extend the period of time during
which the Offer is open and thereby delay acceptance for payments of, and
the payment for, any Shares by giving oral or written notice of such
extension to all Common Non-Voting shareholders (during any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer); (ii) determine to terminate the Offer and not accept for payment
any Shares not theretofore accepted for payment or paid for by giving oral
or written notice of such termination to Common Non-Voting shareholders;
(iii) upon the occurrence of any of the conditions specified in the Offer,
delay the acceptance for payment of, or payment for, any Shares not
theretofore accepted for payment or paid for, by giving oral or written
notice of such termination or delay to Common Non-Voting shareholders; and
(iv) to amend the Offer in any respect (including, without limitation by
increasing or decreasing the number of Shares being sought in the Offer) by
giving oral written notice of such amendment to Common Non-Voting
shareholders.
If the Company extends the Offer, or if the Company (whether before or
after its acceptance for payments of Shares) is delayed in its payment for
Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then without prejudice to the Company's rights under the Offer, the Company
may retain the Shares, and such Shares may not be withdrawn except to the
extent tendering shareholders are entitled to withdrawal rights as
described in the Offer. However, the ability of the Company to delay
payment for Shares that the Company has accepted for payment is limited by
Rule l4e-1(c) under the Securities Exchange Act of l934, as amended, which
requires that the Company pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly
after the termination or withdrawal of the Offer.
In effecting a material change in the Offer, or the information
concerning the Offer, the Company will comply with the Securities and
Exchange Commission's Rules and Regulations. Those Rules require that,
among other things, the minimum period during which an Offer must remain
open following a material change in the terms of the Offer or information
concerning the Offer, other than a change in price or percentage of
securities sought, will depend upon the facts and circumstances, including
the relative materiality of the change in the terms or information. With
15<PAGE>
respect to a change in price or percentage of securities sought, a minimum
of ten (10) business days is required to allow for adequate dissemination
to security holders and appropriate response.
Following the termination of the Offer, the Company may make an Offer
for Shares not tendered in this Offer, which may be on terms similar or
different to those described in the Offer. There is no assurance that,
following the Expiration Date, the Company will make another offer for
Shares not tendered in the Offer.
SOURCE OF FUNDS.
The Company intends to use funds which it now holds to effect this
Offer, and to pay for Shares, and no borrowings for this purpose are
intended. If l,000,000 Shares are tendered, total consideration paid will
be $350,000.
CONDITIONS ON THE OFFER.
The obligation of the Company to complete the purchase of tendered
Shares is subject to each and all the following conditions which, in the
sole judgment of the Company with respect to each and every matter referred
to below and regardless of the circumstances (including any action or
inaction by the Company) giving rise to such condition, makes it advisable
to proceed with the Offer or with such acceptance for purchase.
(i) There shall not be threatened, instituted or pending any
action or proceeding before any domestic or foreign court or
governmental agency or other regulatory or administrative agency
or commission;
(a) challenging the acquisition by the Company of the
Shares, seeking to restrain or prohibit the making or
consummation of the Offer, seeking to obtain any material
damages or otherwise directly or indirectly relating to the
transactions contemplated by the Offer;
(b) seeking to prohibit or restrict the Company's ownership
or operation of any material portion of the Company's
business or assets, to compel the Company to dispose of or
hold separate all or any portion of its business or assets
as a result of the Offer;
(c) seeking to make the payment of, or payment for, some or
all of the Shares illegal;
(d) resulting in a delay of the ability of the Company to
accept for payment or pay for some or all of the Shares;
(e) imposing material limitations on the ability of the
Company effectively to acquire or hold or exercise full
ownership of the Shares;
(f) which, in the sole judgment of the Company, could
materially or adversely effect the treatment of the Offer
for Federal income tax purposes;
(g) which otherwise is reasonably likely to materially
effect in an adverse manner the Company or the value of the
Shares or;
(h) which imposes any material condition unacceptable to the
16<PAGE>
Company;
(ii) No statute, rule, regulation or order shall be enacted,
promulgated, entered or deem applicable to the Offer, no
legislation shall be pending and no other action shall have been
taken, posed or threatened or any domestic governmental authority
or by any court, domestic or foreign, which in the sole judgment
of the Company, is likely, directly or indirectly, to result in
any of the consequences referred to in paragraph (i) above; and
(iii) There shall not have occurred any declaration of a banking
moratorium or any suspension of payments with respect to banks in
the United States, or the commencement of a war, armed
hostilities or other international or national calamity effecting
the United States.
The foregoing conditions are for the sole benefit of the Company. The
conditions may be waived by the Company at any time, and from time to time,
in its sole discretion. Any determination by the Company will be final and
binding on the parties.
FEES AND EXPENSES.
Assuming l,000,000 Shares are tendered and accepted for payment,
expenses of the Offer (exclusive of the purchase price of the Shares) are
estimated at $_________: including legal and accounting fees and expenses
($l4,000), printing ($_______), filing fees ($70.00), distribution of Offer
materials ($_______), and miscellaneous ($___________).
NO DISSENTERS' RIGHTS.
Under Kentucky law, no stockholder has any right to have their Shares
appraised or redeemed in connection with or as a result of the Offer. Each
stockholder has the opportunity to make an individual decision on whether
or not to accept the Offer. Under applicable law, each stockholder has a
right, upon reasonable written request, to inspect and copy the corporate
documents, if for a valid and proper purpose.
FEDERAL INCOME TAX CONSEQUENCES.
The tender of Shares for cash will be treated for Federal income tax
purposes as a taxable sale of the tendered Shares. The particular tax
consequences of a tender for a stockholder will depend upon factors
relating to that stockholder's tax situation, including the stockholder's
tax basis in his or her Shares and whether the stockholder will be able to
utilize any capital losses that might result from the sale of the Shares.
To the extent that a stockholder recognizes a capital loss, such loss can
be applied to offset capital gains from other sources. Any capital losses
that are not currently used can be carried forward and used in subsequent
years. BECAUSE THE INCOME TAX CONSEQUENCES TO A TENDER OF SHARES WILL NOT
BE THE SAME FOR ALL SHAREHOLDERS, SHAREHOLDERS CONSIDERING TENDERING THEIR
SHARES SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR OWN
TAX SITUATIONS, AND RELY SOLELY UPON THEIR ADVICE.
MISCELLANEOUS
-------------
This Offer is being made to all stockholders of Common Non-Voting
Shares of the Company; provided, however, that the Offer is not being made
(or tenders being accepted from or on behalf of) to shareholders in any
jurisdiction in which the making of the Offer or the acceptance thereof
17<PAGE>
would not be in compliance with the laws of such jurisdiction. The Company
is not aware of any jurisdiction within the United States in which the
making of the Offer or the acceptance thereof would be illegal. However,
if any such jurisdiction exists, the Company may, in its discretion, take
such actions as it deems necessary to make the Offer in such jurisdiction.
EFFECT OF OFFER OF NON-TENDERING
COMMON NON-VOTING SHAREHOLDERS
CONTROL OF THE COMPANY - D&D will continue to control the Company, at the
termination of the Offer, through its ownership of over fifty (50%) percent
of the Voting stock of the Company.
EFFECT ON TRADING MARKET - No public market for the Shares exists, but the
Shares are sporadically listed on the pink sheets by one or two brokerage
firms. If the Offer is successful in reducing the number of Common Non-
Voting shareholders to less than 300 at July 3l, l995, then it is believed
that the pink sheet listing will cease to exist.
COMPANY BUSINESS - The Offer will not materially effect the operation of
the properties owned by the Company since the Company will continue to own
those properties regardless of the outcome of the Offer. At the
termination of the Offer, the Company will have various options available
to it for future action with respect to shareholders, including other
purchases either in the open market or on a negotiated basis, or additional
offers to shareholders. Additionally, the Company could affect a
reorganization pursuant to which all shareholders cease to be shareholders
of the Company and instead had the right to receive cash for their Shares.
The Company is aware of its options in this respect but has made no
decision to utilize any particular action, or any action. Subsequent to
this Offer, if the Company determines to pursue any of these alternatives,
the prices at which any additional offer or purchases, or which a
shareholder could receive for his Shares in a reorganization, cannot be
determined at this time, and could be more than, or less than, the price of
this Offer. In any reorganization that the Company might undertake,
shareholders would have dissenters' rights available to them, pursuant to
which they could utilize the procedure of voting against and dissenting
from such a reorganization and seeking a determination as to the "Fair
Value" of their Shares under Kentucky law.
18<PAGE>
RELATED TRANSACTIONS
--------------------
CONTROL OF THE COMPANY.
The Company is controlled by Drivers & Drovers Diversified, Inc., a
Kentucky Corporation, that is equally owned by Lee Sisney and Charles
Hamilton, who serve as Directors of the Company, and as President and
Chairman of the Board of the Company, respectively. See "Special Factors -
Background of the Transaction".
COMPENSATION BY THE COMPANY.
Mr. Sisney, who, along with Mr. Hamilton, controls D&D, serves as an
employee of the Company, and receives annual compensation from the Company
in the amount of $55,000. No other compensation or remuneration is
received by either person from the Company.
No person has been authorized to give any information or to make any
representation on behalf of the Company not contained herein or in the
Letter of Transmittal and if given or made, such information or
representation must be not be relied on as having been authorized.
LINCOLN INTERNATIONAL CORPORATION
Suite 6 - l20 Village Center
Middletown, Kentucky 40243
By ________________________________
Lee Sisney, President
_____________________ __, l995.
19<PAGE>
