Securities and Exchange Commission
Washington, D.C. 20549
Schedule 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Andersen Group, Inc.
...............................................................................
(Name of Registrant as Specified in Its Charter
...............................................................................
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
10 1/2% Convertible Subordinated Debentures Due 2002
.......................................................................
<PAGE>
2) Aggregate number of securities to which transaction applies:
Approximately $6,385,000 Aggregate Principal Amount of Debentures
........................................................................
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
N/A
........................................................................
4) Proposed maximum aggregate value of transaction:
N/A
........................................................................
5) Total fee paid:
N/A
........................................................................
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
N/A
.......................................................................
2) Form, Schedule or Registration Statement No.:
N/A
.......................................................................
3) Filing Party:
N/A
.......................................................................
4) Date Filed:
N/A
.......................................................................
<PAGE>
ANDERSEN GROUP, INC.
Ney Industrial Park
Bloomfield, CT 06002
(860) 242-0761
CONSENT SOLICITATION
To: Holders of 10 1/2% Convertible Subordinated Debentures Due 2002 (the
"Debentures") of Andersen Group, Inc. (the "Company")
Re: Act of Debentureholders by Written Consent To Permit Capital Stock
Purchase Program
INTRODUCTION
In accordance with the General Provisions of the Indenture dated as of
October 15, 1982 (the "Indenture") relating to the Debentures, the Company
hereby requests Holders of the Debentures to take action by written consent to
waive compliance by the Company with the applicable provisions of that certain
covenant (the "Restrictive Covenant") set forth in Section 5-8 of the Indenture
solely to permit (1) the purchase by the Company, from time to time, from or
through brokers or dealers, through direct negotiated transactions, in the open
market, in block transactions, by tender offer or otherwise, of shares of (a)
the Company's Series A Cumulative Convertible Preferred Stock, without par value
(the "Preferred Stock"), and (b) (i) if no shares of the Preferred Stock are
outstanding, shares of the Company's Common Stock, without par value (the
"Common Stock"), or (ii) if any shares of the Preferred Stock are outstanding,
shares of the Common Stock with the consent of the holders of the Preferred
Stock; in each case for such purchase prices as determined by the Company, but
not to exceed $6.0 million in the aggregate for all such purchases (the "Capital
Stock Purchase Program"); and (2) the payments by the Company therefor. The
Company is seeking this one-time waiver (the "Waiver") because the Restrictive
Covenant would preclude the Company from making payment on account of the
purchases of stock of the Company and would preclude the Company from paying for
such shares after a relevant "Computation Date" (as defined in the Indenture).
The Company believes that the Capital Stock Purchase Program is in the best
interests of the Company as well as its Debentureholders and stockholders,
respectively.
Under Section 5-9 of the Indenture, the Holders of a majority in
principal amount of the Debentures at the time Outstanding is required in order
to permit the Waiver to become effective. A copy of Sections 5-8 and 5-9 of the
Indenture are attached hereto and incorporated herein by reference. Capitalized
terms used in this Consent Solicitation and not defined herein but which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture. The Company requests that all consents be submitted in the enclosed
postage prepaid envelope for receipt by the Trustee no later than 5:00 p.m.,
eastern time, on Friday, November 15, 1996 (the "Consent Time"), which is
subject to extension at the election of the Company as set forth under the
heading "Procedure for Giving Consent."
This Consent Solicitation is being furnished to Debentureholders whose
ownership is reflected in the Debenture Register as of the close of business on
September 25, 1996. As of that date, approximately $6,385,000 principal amount
of Debentures were outstanding. As required by the terms of the Indenture, for
purposes of determining the requisite principal amount of Debentures
Outstanding, Debentures owned by the Company and any Affiliate of the Company
shall be disregarded and deemed not Outstanding. Accordingly, of that aggregate
principal amount of $6,385,000, based on information provided to the Company by
its Affiliates, such Affiliates beneficially own approximately $1,820,000
principal amount of Debentures, and those Debentures will not be considered
Outstanding. The Company does not own any Debentures. As a result, in order for
the Waiver to become effective, holders of Outstanding Debentures in the
aggregate principal amount of approximately $2,283,000 must be received pursuant
to this Consent Solicitation. The Company has been advised by the Affiliates
that they will not give written consents to the requested Waiver because their
Debentures are not considered Outstanding under the terms of the Indenture. Only
"Written Consents" (as defined below) of Debentureholders (other than
Affiliates) that are duly signed and witnessed or notarized as indicated on the
enclosed form of Written Consent will be considered in determining whether the
Waiver has become
<PAGE>
effective. Any unsigned Written Consents and broker "non-votes" will not be
counted for purposes of determining the principal amount of Debentures
consenting to the Waiver. Written Consents received by the Trustee in the proper
form may not be revoked at any time once received by the Trustee.
The cost of the solicitation of the Written Consents will be borne by
the Company. Written Consents may be solicited by additional mailings or
communications, personal interviews, telephone and telegram by the directors,
officers and employees of the Company at no additional compensation. Upon
request, the Company will reimburse brokers, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in forwarding
the Consent Solicitation materials to Debentureholders.
The date of this Consent Solicitation is October 1, 1996. This Consent
Solicitation and the related form of Written Consent is first being mailed to
Debentureholders on or about October 4, 1996.
Background of Request
At September 12, 1996, the Company had 289,475 shares of Preferred
Stock (of which approximately 131,000 are held by affiliates of the Company) and
1,934,478 shares of Common Stock, respectively, issued and outstanding. See
"Security Ownership of Certain Beneficial Owners and Management." In January,
1996, the Company consummated a self tender offer and purchased for cash (the
"Offer to Purchase") 299,561 shares of Preferred Stock for a purchase price of
$12.25 per share, or approximately $3.67 million in the aggregate. Of that
purchase price, approximately $1.50 per share of the consideration for the
Preferred Stock represented an amount that was approximately equivalent to the
eight quarterly dividends that the Company had not been able to declare and pay
on its Preferred Stock since April 15, 1993, the last date on which the Company
was able to declare and pay dividends on the Preferred Stock. At May 8, 1995,
prior to commencement of the Offer to Purchase, 589,036 shares of Preferred
Stock had been outstanding. The Company paid for the shares of Preferred Stock
purchased pursuant to the Offer to Purchase with a portion of the net cash
proceeds received from the sale of its Ney Dental Division (the "Dental
Divestiture") to Phoenix Shannon p.l.c. ("Phoenix Shannon").
The Company was able to consummate its Offer to Purchase at $12.25 per
share, in part, because the Holders of a majority in principal amount of the
Debentures at the time Outstanding waived compliance with Section 5-8 of the
Indenture effective as of January 12, 1996.
Beginning March 1, 1996, and on each succeeding anniversary thereof,
the Company is required to redeem 160,000 shares of its Preferred Stock (to the
extent that the Company has funds legally available therefor and subject to the
Restrictive Covenant) at a price of $18.75 per share plus accrued and unpaid
dividends up to the date of payment. Under that formula, at March 1, 1996, the
Company would have been required to redeem those 160,000 shares of Preferred
Stock at a price in the aggregate amount of approximately $21.03 per share
including the accrued and unpaid dividends up to that date, assuming that
aggregate dividends of $0.75, $0.75 and $0.78 per share of Preferred Stock had
been accrued for the fiscal years ended February 28, 1994 and 1995 and February
29, 1996, respectively.
As a result of its purchase of 299,561 shares of Preferred Stock
pursuant to the Offer to Purchase as well as other open market purchases to date
(approximately 180,000 shares), the Company is entitled to a share-for-share
credit against the Company's mandatory redemption obligations of 160,000 shares
of Preferred Stock scheduled for each of March 1, 1996 and March 1, 1997 and for
substantially all of
- 2 -
<PAGE>
its 160,000 share March 1, 1998 mandatory redemption obligation. Moreover, by
purchasing Preferred Stock pursuant to the Offer to Purchase, the Company was
able to realize substantial cash savings against the $18.75 per share mandatory
redemption obligations (plus accrued but unpaid dividends) which otherwise would
have become due (subject to the provisions of Section 5-8 of the Indenture and
to having funds legally available therefor).
The Company has been contacted from time to time since consummation of
the Offer to Purchase by holders of Preferred Stock who have inquired as to
whether the Company would purchase their shares. In order for the Company to
respond to such inquiries and to negotiate or otherwise seek to purchase
additional shares of its Preferred Stock, the Company must obtain the consent of
the Debentureholders to the Waiver requested hereby. As of September 12, 1996,
the Company had approximately 42 holders of Preferred Stock of record, including
4 affiliates who own approximately 131,000 shares of the Preferred Stock in the
aggregate.
When it was considering the advisability of purchasing additional
shares of the Preferred Stock, the Board of Directors of the Company broadened
the scope of its analysis and determined that due consideration should be given
to purchasing shares of Common Stock because, among other things, the Board
believes that the Common Stock currently is undervalued. The Board appointed a
Special Committee of disinterested Directors to consider the matter. After due
consideration by that Special Committee and consideration of a number of
factors, the Board, by approval of disinterested Directors only, authorized the
Capital Stock Purchase Program, subject to obtaining the consent of
Debentureholders as set forth herein and the consent of the holders of the
Company's industrial development bonds (the "IDBs") and the Connecticut
Development Authority (the "CDA"). The consent of each of the holders of the
IDBs and the CDA also will be required to implement the Capital Stock Purchase
Program. On or before the date of this Consent Solicitation, the Company has
requested the consent of the holders of the IDBs and the CDA. The Company
expects to be able to obtain the consent of the holders of the IDBs and the CDA
at or before the date of payment of the purchase price for shares purchased
pursuant to the Capital Stock Purchase Program, assuming the Holders of a
majority in principal amount of the Debentures Outstanding grant the waiver
requested hereby.
Purchases of the Preferred Stock and the Common Stock pursuant to the
Capital Stock Purchase Program will be made in accordance with federal
securities laws and applicable Connecticut law. Such federal securities laws
impose certain volume and price limitations with respect to the Common Stock to
be purchased and the manner and time of effecting such Common Stock purchases.
In general, the price for shares of the Common Stock (other than shares of
Common Stock acquired in unsolicited private transactions) will be the mean
between the then current bid and asked prices for the Common Stock on the Nasdaq
National Market System. At the close of business on September 17, 1996, the last
sale price for the Common Stock on such market was $6.00 per share. Further,
shares of Preferred Stock and Common Stock will only be purchased under the
Capital Stock Purchase Program if, in the judgment of a Special Committee of
disinterested members of the Company's Board of Directors, it would be in the
best interests of the Company to purchase such shares at that time and at the
then current market or negotiated price.
Any shares of Preferred Stock acquired in the Capital Stock Purchase
Program will be retired. Shares of Common Stock so acquired will be held as
treasury shares and subject to resale for any valid corporate purpose or
retirement at such time or times as the Company's Board of Directors, in its
discretion, may deem advisable.
- 3 -
<PAGE>
The Company expects to fund acquisitions of Preferred Stock and Common
Stock under the Capital Stock Purchase Program out of available cash (including
up to $3,500,000 of cash which may be received from the Company's wholly-owned
subsidiary, The J.M. Ney Company ("Ney"), plus dividends from Ney in any fiscal
year ending on or after February 28, 1997, in the amount of 50% of Ney's net
income, all in accordance with and pursuant to the terms of a bank loan which
Ney is in the process of closing, provided that no event of default exists under
such facility) and, if required, out of the proceeds of sales of marketable
securities.
The Company believes that it is in its best interests and the best
interests of its Debentureholders and stockholders to implement the Capital
Stock Purchase Program as quickly as possible in order to maximize the benefits
to all such constituencies. Accordingly, the Company desires to obtain the
consent of the Debentureholders to the Waiver.
Certain Relationships
The Company expects to enter into negotiations with Directors and other
Affiliates of the Company regarding purchase of shares of Common Stock and/or
Preferred Stock in connection with the Capital Stock Purchase Program. Any such
purchases of shares from Directors and other Affiliates will be on terms that
the Company believes will be fair and no less favorable to the Company than
those which the Company could have negotiated with unaffiliated parties.
However, such negotiations and purchases may create actual or potential
conflicts of interest on the part of these Directors and Affiliates.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of Common Stock and Preferred Stock, as of September 25, 1996 by each
director and, by persons who beneficially own 5% or more of the outstanding
shares of Common Stock and/or Preferred Stock. The beneficial ownership
information described and set forth below is based on information furnished by
the specified persons and is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended. It does not constitute an admission
of beneficial ownership for any other purpose.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED
STOCK
NUMBER AND NUMBER AND
NATURE OF NATURE OF
BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS OWNERSHIP OF CLASS
<S> <C> <C> <C> <C>
Francis E. Baker
8356 Sego Lane
Vero Beach, FL (1) 145,039 7.4% -- --
Estate of Oliver R. Grace, Sr.
49 Cove Neck Road
Oyster Bay, NY (2) 101,596 5.3 -- --
- 4 -
<PAGE>
COMMON STOCK PREFERRED
STOCK
NUMBER AND NUMBER AND
NATURE OF NATURE OF
BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS OWNERSHIP OF CLASS
Lorraine G. Grace
49 Cove Neck Road
Oyster Bay, NY (3) 131,317 6.7 -- --
Oliver R. Grace, Jr.
32 Wellington Road
Locust Valley, NY (4) 123,790 6.0 6,000 2.1%
John S. Grace
55 Brookville Road
Glen Head, NY (5) 122,525 6.0 22,571 7.8
Peter N. Bennett
6 Battersea High St.
London SW11 3RA
ENGLAND (6) 165,065 7.9 85,150 29.4
Bank of Butterfield
Rose Bank Center
14 Bermudiana Road
Hamilton, Bermuda (7) 296,675 15.1 16,863 5.8
First United Securities Limited
Exchange House
P.O. Box 16
54-58 Athol Street
Douglas, Isle of Man (8) 135,844 7.0 -- --
Louis A. Lubrano (9) 5,618 (10) -- --
James J. Pinto (11) 13,000 (10) -- --
Ronald N. Cerny (12) 5,000 (10) -- --
Steven T. Newby
6116 Executive Blvd.
Suite 701
Rockville, MD (13) 142,417 7.4 -- --
All directors and officers
as a group (10 and 7 Persons,
including certain of the
above-named individuals, for
Common Stock and Preferred
Stock, respectively) 485,326 21.5 113,721 39.3
</TABLE>
- 5 -
<PAGE>
- ---------------------
(1) Francis E. Baker has direct beneficial ownership of an aggregate of
145,039 shares of Common Stock and no shares of Preferred Stock. Of
this amount, 120,001 shares of Common Stock are owned directly. The
figure set forth in the above table includes 10,400 shares of Common
Stock with respect to which Mr. Baker has shared voting power as
co-trustee under the Oliver R. Grace Grandchildren Trust U/R dated
December 27, 1976 and 4,638 shares which such Trust owns by virtue of
its ability to convert $75,000 principal amount of the Debentures to
Common Stock within a 60-day period. Mr. Baker disclaims beneficial
ownership of such shares held in trust. Also included in the figure set
forth in the above table are 10,000 shares of Common Stock which may be
issued to Mr. Baker within 60 days hereof upon the exercise of his
existing exercisable stock option. In addition to the shares reported
above, Mr. Baker is the settlor of four irrevocable trusts dated March
31, 1970 and created for the benefit of certain of his children. Fleet
National Bank (as successor to Shawmut Bank, N.A.) acts as trustee
under each of these trusts, which hold an aggregate of 68,306 shares of
Common Stock. Mr. Baker does not exercise any control over these four
trusts and disclaims beneficial ownership.
(2) The Estate of Oliver R. Grace, Sr. has direct beneficial ownership of
an aggregate of 101,596 shares of Common Stock and no shares of
Preferred Stock.
(3) Lorraine G. Grace has beneficial ownership of 131,317 shares of Common
Stock and no shares of Preferred Stock. Of this amount, 13,638 shares
are held by Mrs. Grace directly; 2,475 shares are held by Mrs. Grace,
as trustee of a trust for the benefit of her children; 13,608 shares
are held by virtue of the ability of Mrs. Grace to convert $220,000
principal amount of the Debentures to Common Stock within a 60-day
period; and 101,596 shares are held by virtue of Mrs. Grace's
appointment as executrix of the Estate of Oliver R. Grace, Sr.
(4) Oliver R. Grace, Jr. has beneficial ownership of an aggregate of
123,790 shares of Common Stock and 6,000 shares of Preferred Stock. Of
the Common Stock amount, 56,054 shares are held by Oliver R. Grace, Jr.
directly, including 40,144 shares by virtue of Mr. Grace's ability to
convert $649,000 principal amount of the Debentures to Common Stock
within a 60-day period and 11,610 shares by virtue of Mr. Grace's
ability to convert 6,000 shares of the Preferred Stock of the Company
to Common Stock within a 60-day period; 7,592 shares are held by
Carolyn Grace, the spouse of Oliver R. Grace, Jr., of which 7,112
shares are held by Mrs. Grace by virtue of her ability to convert
$115,000 principal amount of the Debentures within a 60-day period and
58,144 shares are held by virtue of the ability of The Anglo American
Security Fund L.P. (of which Oliver R. Grace, Jr. is a general partner)
to convert $940,000 principal amount of the Debentures to Common Stock
within a 60-day period. Mr. Grace, Jr. has a stock option to acquire an
additional 2,000 shares of Common Stock. Oliver R. Grace, Jr. disclaims
beneficial ownership of all shares owned by him as trustee for the
benefit of family members and by The Anglo American Security Fund, L.P.
described herein. The 6,000 shares of Preferred Stock are owned
directly.
(5) John S. Grace has beneficial ownership of 122,525 shares of Common
Stock and 22,571 shares of Preferred Stock. Of the Common Stock amount,
17,706 are held by John S. Grace directly, including 1,856 shares held
by virtue of Mr. Grace's ability to convert $30,000 principal amount of
the Debentures to Common Stock within a 60-day period; 58,144 shares
are held by virtue of the ability of The Anglo American Security Fund
L.P. (of which John S. Grace is a general partner) to convert $940,000
principal amount of the Debentures to Common Stock within a 60-day
period; and 43,675 shares are held by virtue of the ability of Sterling
Grace Capital Management, L.P. (John S. Grace is Chairman and President
of Sterling Grace Corporation, the General Partner of Sterling Grace
Capital Management, L.P.) to convert 22,571 shares of the Preferred
Stock to Common Stock within a 60-day period. Mr. Grace has a stock
option to acquire an additional 3,000 shares of Common Stock. John S.
Grace disclaims beneficial ownership of all shares held by trustees for
the benefit of members of his family and The Anglo American
- 6 -
<PAGE>
Security Fund L.P. As described above, the 22,571 shares of Preferred
Stock are held by Sterling Grace Capital Management, L.P.
(6) Peter N. Bennett directly owns 300 shares of Common Stock and 85,150
shares of Preferred Stock. The figure set forth in the above table
includes shares held by virtue of the ability of Mr. Bennett to convert
85,150 shares of the Preferred Stock to 164,765 shares of Common Stock
within a 60-day period.
(7) The Bank of Butterfield (the "Bank") has beneficial ownership of an
aggregate 296,675 shares of Common Stock and 16,863 Shares of Preferred
Stock as trustee of various trusts. Of the Common Stock amount, 264,045
shares are held by the Bank directly and 32,630 shares are held by
virtue of the Bank's ability, as trustee, to convert 16,863 shares of
the Preferred Stock to Common Stock within a 60-day period. The
Preferred Stock also is beneficially owned by the Bank as trustee of
various trusts.
(8) First United Securities Limited ("FUSL") has beneficial ownership of an
aggregate of 135,844 shares of Common Stock and no shares of Preferred
Stock as trustee of various trusts. Of the Common Stock amount, 124,710
shares are held directly and 11,134 shares are held by virtue of the
ability of FUSL to convert $180,000 principal amount of the Debentures
to Common Stock within a 60-day period.
(9) Louis A. Lubrano has beneficial ownership of 5,618 shares of Common
Stock and no shares of Preferred Stock. Of the Common Stock amount,
618 shares are held by virtue of Mr. Lubrano's ability to convert
$10,000 principal amount of the Debentures to Common Stock within a
60-day period. Mr. Lubrano has stock options to acquire 5,000 shares of
Common Stock within a 60-day period.
(10) Represents less than one percent (1%) of the Common Stock.
(11) James J. Pinto has beneficial ownership of 13,000 shares of Common
Stock and no shares of Preferred Stock. Of the Common Stock amount,
8,000 shares are held directly. Mr. Pinto has stock options to acquire
5,000 shares of Common Stock within a 60-day period.
(12) Ronald N. Cerny does not own any shares of Common Stock directly. The
figure set forth in the above table represents a stock option to
acquire 5,000 shares of Common Stock within a 60-day period.
(13) Steven T. Newby owns 142,417 shares of Common Stock directly.
- 7 -
<PAGE>
Consideration for Written Consents
The Company will pay to each Debentureholder (other than Affiliates of
the Company whose Debentures will not be considered Outstanding for purposes of
permitting the Waiver) who gives the Written Consent requested hereby at or
before the Consent Time (a "Consenting Debentureholder") the sum of $10.00 per
$1,000 principal amount of Debentures covered by such Written Consent, provided
that Holders of a majority in principal amount of the Debentures at the time
Outstanding give their consent to the Waiver. "See Introduction." Payments will
be made to all Consenting Debentureholders, including those Consenting
Debentureholders whose consents are received after the requisite majority in
principal amount of Debentures has been obtained. The Company will make payment
to each Consenting Debentureholder promptly after the date that the Company
receives the requisite Written Consents approving the Waiver and the Waiver duly
signed by the Trustee. Neither the Company, the Trustee, nor any other person
will be under any duty to give notification of any defects or irregularities in
any Written Consent or incur any liability for failure to give any such
notification.
Summary Historical Financial Data
The following tables set forth, in summary form, certain consolidated
historical financial data for the Company and its subsidiaries. The historical
financial information at and for the quarters ended May 31, 1996 and 1995 has
been summarized from the Company's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1996. The following summary historical financial information
should be read in conjunction with, and is qualified in its entirety by
reference to, such Quarterly Report on Form 10-Q and should be read in
conjunction with the Company's audited consolidated financial statements for the
fiscal year ended February 29, 1996 and the related notes thereto.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 31, May 31,
1996 1995
------- -------
(unaudited and dollars in
thousands, except per
share amounts)
<S> <C> <C>
Consolidated Statements of Earnings Data:
Net sales....................................... $7,389 $6,851
Investment and other income..................... 661 348
----- -----
Total revenues............................... 8,050 7,199
----- -----
Cost of sales................................... 4,656 4,582
Selling, general and administrative expenses 1,804 2,124
Research and development expenses............... 361 664
Interest expense................................ 198 296
----- -----
Total costs and expenses..................... 7,019 7,666
----- -----
Income (loss) from continuing operations
before income taxes......................... 1,031 (467)
Income tax expense (benefit).................... 412 (148)
----- -----
Income (loss) from continuing operations........ 619 (319)
Income from discontinued operations
net of income taxes........................... - 99
----- -----
Net income (loss)............................... 619 (220)
Preferred dividend requirement.................. (142) (147)
----- -----
Income (loss) applicable to common shares....... $ 477 $ (367)
===== =====
Earnings (loss) Per Common Share:(A)
Continuing operations........................... $0.25 $(0.24)
Discontinued operations......................... - 0.05
---- ----
Income (loss) per common share.................. $0.25 $(0.19)
==== =====
Ratio of earnings to fixed charges(B)........... 357% (36.7)%
</TABLE>
(A) The average number of shares of Common Stock outstanding (including
Common Stock equivalents) during the period in 1996 was 1,946,051 and
during the period in 1995 was 1,934,205.
(B) Earnings for the three month period ended May 31, 1995, were inadequate
to cover fixed charges and preferred stock dividends by approximately
$614,000.
- 9 -
<PAGE>
<TABLE>
<CAPTION>
May 31, February 29,
------- ------------
1996 1996
---- ----
(unaudited) (audited)
(dollars in thousands, except
per share amounts)
<S> <C> <C>
Consolidated Balance Sheet Data:
Total assets............................................ $38,241 $38,798
Total current liabilities............................... 7,977 9,204
Long-term debt, less current maturities................. 7,531 7,349
Other long-term obligations............................. 1,139 1,143
Deferred income taxes................................... 2,197 2,197
Redeemable cumulative convertible preferred stock....... 5,295 5,280
Common stock............................................ 2,103 2,103
Retained earnings....................................... 8,841 8,364
Total common and other stockholders' equity............. 14,102 13,625
Book value per common share................................ $ 7.29 $ 7.04
========= ========
</TABLE>
Pro Forma Data
The following table sets forth certain financial information of the Company at
May 31, 1996, and as adjusted to give effect to the consummation of the Capital
Stock Purchase Program, assuming that (i) all 289,475 shares of Preferred Stock
outstanding are purchased at an assumed average purchase price of $13.50 per
share (based on the price of $12.25 per share used in the Offer to Purchase plus
accrued and unpaid dividends anticipated through May 31, 1996), or an aggregate
of $3,907,913, (ii) approximately 348,681 shares of Common Stock are purchased
at an average purchase price of $6.00 per share (based on the last reported
sales price for the Common Stock on the Nasdaq National Market System on
September 17, 1996) or an aggregate of $2,092,087, (iii) those transactions had
occurred on May 31, 1996, (iv) the Holders of a majority in principal amount of
the Debentures at the time Outstanding waived compliance with Section 5-8 of the
Indenture, and (v) the consent of each of the holders of the IDBs and the CDA
was obtained.
- 10 -
<PAGE>
<TABLE>
<CAPTION>
As of May 31, 1996
-------------------
Pro forma
---------
Actual Adjustments Pro forma
------ ----------- ---------
(in thousands)
<S> <C> <C> <C>
Total assets................................ $38,241 $(6,040)(1) $32,201
Total liabilities........................... 18,844 (787)(2) 18,057
Working capital............................. 11,967 (5,253)(3) 6,714
Long-term debt, less current maturities,
and other obligations.................... 10,867 10,867
Redeemable cumulative convertible preferred
stock, authorized 800,000 shares; issued
789,625 shares; 289,475 shares
outstanding at May 31, 1996; and -0-
pro forma outstanding at May 31, 1996.... 5,295 (5,295)(4) -0-
Common stock, authorized 6,000,000 shares;
1,934,478 shares outstanding at
May 31, 1996 and 1,585,797 pro forma
outstanding at August 31, 1996........... 2,103 -- 2,103
Additional paid-in capital.................. 3,248 1,003(5) 4,251
Retained earnings........................... 8,841 1131(6) 9,972
Treasury Stock.............................. (90) (2,092)(7) (2,182)
------ ----- --------
Total common and other stockholders'
equity................................... $14,102 $ 42 $14,144
======= ===== =======
Book value per common share................. $7.29 $1.63 (8) $8.92
===== ===== =====
</TABLE>
- --------------------
Notes To Pro Forma Data
(1) Pro Forma Total Asset Adjustments:
Total Assets: $38,241
less: purchase of 289,475 shares of
preferred stock at $13.50 per share (3,908)
- 11 -
<PAGE>
purchase of 348,681 shares of
common stock at $6.00 per share (2,092)
transaction costs (40)
-------
Pro forma total assets $32,201
=======
(2) Pro Forma Total Liabilities Adjustment:
Total Liabilities $18,844
less: preferred stock dividend
reduction (787)
--------
Pro forma total liabilities $18,057
=======
(3) Pro Forma Working Capital Adjustments:
Total Working Capital $11,967
less: preferred stock purchase (3,908)
common stock purchase (2,092)
transaction costs (40)
add: preferred stock dividend
reduction 787
-------
Total pro forma working capital $ 6,714
=======
(4) Pro Forma Redeemable Cumulative Convertible Preferred Stock Adjustment:
Adjustment to reflect purchase of 289,475 shares of preferred stock.
(5) Pro Forma Additional Paid in Capital Adjustment:
Adjustment to additional paid in capital to record the difference
between the purchase price and the original issue price of the
Preferred Stock.
(6) Pro Forma Retained Earnings:
Total retained earnings $ 8,841
less: Transaction costs (40)
add: Preferred stock dividend
reduction 787
Gain on repurchase of preferred
stock 384
-------
Total pro forma retained earnings $ 9,972
========
(7) Pro Forma Adjustment to Treasury Stock:
Adjustment to reflect purchase of 348,681 shares of common stock at a
cost of $6.00 per share.
- 12 -
<PAGE>
(8) Pro Forma Book Value Per Share:
Total common and other stockholders' equity $14,102
add: Preferred stock dividend reduction 787
Addition to additional paid in capital
for preferred stock repurchase 1003
Gain on repurchase of preferred stock 384
less: Transaction costs (40)
Purchase of common stock (2,092)
Pro forma common and other stockholders' equity $14,144
=======
Number of shares of common stock outstanding 1,586
------
Pro forma book value per share $8.92
=====
If the Capital Stock Purchase Program is consummated, but the Company purchases
fewer than all of the shares of the Preferred Stock and/or more or less shares
of the Common Stock or if the average price paid for either the Common Stock or
the Preferred Stock differs from that used in the Pro Forma Adjustments, then
the increases and decreases indicated above would be proportionately adjusted to
reflect the number of shares of Preferred Stock or Common Stock that the Company
purchases and the prices at which such purchases are made.
- 13 -
<PAGE>
Re-Affirmation of Other Terms and Conditions of the Indenture
Except as expressly provided for in the Written Consent -- which
pertains only to the one-time request to permit the Capital Stock Purchase
Program and payment therefor -- all other terms and conditions of the Indenture
remain in full force and effect.
Procedure for Giving Consent
In order to give the consent for the Waiver, each Debentureholder
should duly execute the form of consent that is enclosed herewith (the "Written
Consent") in the manner indicated thereon, having such execution either
witnessed or acknowledged before a notary public or other officer authorized to
take acknowledgments, and return the Written Consent to the Trustee, The Chase
Manhattan Bank, at the address indicated thereon. A stamped addressed envelope
has been included with the Written Consent in order to facilitate return to the
Trustee. The close of business on September 25, 1996 has been fixed as the
record date for the determination of Debentureholders entitled to consider and
take action as requested hereunder.
It is requested that Written Consents be received by the Trustee at the
address set forth on the Written Consent by the Consent Time (i.e., at or before
5:00 p.m., eastern time, on November 15, 1996). The Company reserves the right
to extend the date and time by which all consents should be submitted, in which
event the term "Consent Time" shall mean the date and time designated by the
Company as the extended Consent Time. Any such extension shall be made by
written notification (which may be effected by facsimile transmission) to the
Trustee and the Debentureholders.
Requests for Additional Information
Requests for information concerning this request and procedures for
giving the Written Consent should be directed to the Company or the Trustee. For
further information from the Company, please contact either Franklin R. Stoner
or Bernard F. Travers, III, Esq., Assistant Secretary and Director of Law and
Taxation, at (860) 242-0761. For further information from the Trustee, please
contact Terrence Fitzsimons at (212) 946-3074.
- 14 -
<PAGE>
We thank you in advance for your consideration of this request and your
prompt return of the Written Consent.
Very truly yours,
ANDERSEN GROUP, INC.
By:/s/ Francis E. Baker
----------------------
Francis E. Baker, President and
Chief Executive Officer
Dated: October 1, 1996
PLEASE SIGN WITH YOUR SIGNATURE WITNESSED OR NOTARIZED, DATE AND
MAIL OR RETURN YOUR WRITTEN CONSENT IN THE ENVELOPE PROVIDED FOR
YOUR CONVENIENCE
- 15 -
<PAGE>
SECTIONS 5-8 AND 5-9 OF THE INDENTURE
ss. 5-8. Dividend, Repurchase and Redemption Restrictions.
So long as any of the Debentures shall be Outstanding, the Company will
not declare any dividends (other than dividends payable solely in stock of the
Company or in rights or warrants entitling them to subscribe for or to purchase
stock of the Company) on any stock of the Company or make, or permit any
Subsidiary to make, any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make, or permit any Subsidiary to
make, any distribution in respect thereof, either directly or indirectly, unless
such dividends are declared to be payable not more than 90 days after the date
of declaration and unless, after giving effect to such proposed dividend or
other payment or distribution and to any other dividend declared but not paid,
at the date (herein called the "Computation Date") of such declaration (in the
case of a dividend) or of such other payment or distribution, (1) there exists
no Event of Default (as defined herein) and (2) the sum of the aggregate amount
of all dividends declared and all such other payments and distributions made
during the period commencing October 15, 1982 to and including the Computation
Date shall not exceed the sum of:
(i) the aggregate Consolidated Net Income computed for the
period commencing September 30, 1982, to and including the end of the
last fiscal quarter of the Company next preceding the date 45 days
prior to the Computation Date;
(ii) the aggregate net cash proceeds received by the Company
from sales subsequent to October 21, 1982, of shares of its stock for
cash; and
(iii) the aggregate net cash proceeds received by the Company
from sales subsequent to October 21, 1982, of indebtedness of the
Company convertible into stock of the Company to the extent such
indebtedness has been converted into such stock.
For the purposes of any computation under this ss. 5-8, the amount of
any dividend declared or other payment or distribution made in property other
than cash shall be deemed to be the fair value (as determined by the Board of
Directors) of such property at the time of declaration (in the case of
dividends) or at the time of payment or distribution.
Notwithstanding the foregoing provisions, the Company may purchase,
acquire or issue cash in respect of any fractional shares resulting from any
stock dividend, stock split, stock combination, recapitalization or
reorganization, provided that the aggregate amount so paid shall be included as
a payment in any calculation under the provision of this ss. 5-8.
<PAGE>
ss. 5-9. Waiver of Covenants
The Company may omit in any particular instance to comply with any
covenant or condition set forth in ss.ss. 5-6, 5-7 or 5-8, if before or after
the time for such compliance the Holders of a majority in principal amount of
the Debentures at the time Outstanding shall, by Act of such Debentureholders,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
<PAGE>
WRITTEN CONSENT
OF
DEBENTUREHOLDERS
I/We, the undersigned, holder of 10 1/2% Convertible Subordinated
Debentures Due 2002 (the "Debentures") of ANDERSEN GROUP, INC., a Connecticut
corporation (the "Company"), issued under that certain Indenture dated as of
October 15, 1982 (the "Indenture") CONSENT to waive compliance by the Company
with the applicable provisions of that certain covenant (the "Restrictive
Covenant") set forth in Section 5-8 of the Indenture solely to permit (1) the
purchase by the Company, from time to time, through direct negotiated
transactions, from or through brokers or dealers, in the open market, in block
transactions, by tender offer or otherwise, of shares of (a) the Company's
Series A Cumulative Convertible Preferred Stock, without par value (the
"Preferred Stock"), and (b) (i) if no shares of the Preferred Stock are
outstanding, shares of the Company's Common Stock, without par value (the
"Common Stock"), or (ii) if any shares of the Preferred Stock are outstanding,
shares of the Common Stock with the consent of the holders of the Preferred
Stock; in each case for such purchase prices as determined by the Company, but
not to exceed $6.0 million in the aggregate for all such purchases (the "Capital
Stock Purchase Program"); and (2) to permit payment by the Company therefor, as
requested in the Company's Consent Solicitation dated October 1, 1996, as
amended or supplemented from time to time.
Please be sure to sign and date this Written Consent below.
Date:
------------------------
- -------------------------------------------------------------
Debentureholder sign above/Co-holder (if any) sign above
(AFFIX CORPORATE SEAL)*
Attest:
---------------------------------------------------------
Name:
----------------------------------------------------------
Title:Secretary or Assistant Secretary
- ----------------------------------------------------------------
*to be used only by Corporations
PRINT
- -----
Debentureholder Name(s):
--------------------------------------
Debentureholder Address:
--------------------------------------
Aggregate Principal Amount of Debentures:$
---------------------
Please be sure to have your signature Witnessed or Notarized below:
- ------------------------------------------------------------
WITNESS
OR
NOTARY ACKNOWLEDGEMENT:
State of )
County of ) ss.
On this _____ day of _____________, 1996, personally appeared the
above-named _________________________, as an individual, trustee, corporate
officer, partner or in such other capacity as indicated, and he or she
acknowledged the foregoing instrument to be his or her free act and deed as
Debentureholder, or the free act and deed of the Debentureholder so named, as
aforesaid, before me,
-------------------------------------------
Notary Public:
My Commission Expires:
PLEASE RETURN THIS WRITTEN CONSENT IN THE ENCLOSED POSTAGE PAID ENVELOPE FOR
RECEIPT BY THE TRUSTEE NOT LATER THAN 5:00 P.M., EASTERN TIME, ON FRIDAY,
NOVEMBER 15, 1996 (SUBJECT TO EXTENSION AS SET FORTH IN THE COMPANY'S CONSENT
SOLICITATION).
TRUSTEE: The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
Attn: Terrence Fitzsimons
