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Schedule 14C Information
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
/ / Definitive Information Statement
(Name of Registrant as Specified in
Charter)
J. Michaels, Inc.
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Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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(2) Aggregate number of securities to which transaction applies:
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(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 is determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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/ / 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
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Preliminary Copy
J. MICHAELS, INC.
182 SMITH STREET
BROOKLYN, NEW YORK 11201
NOTICE OF METING AND
INFORMATION STATEMENT
This Information Statement is furnished by the Board of Directors of
J. Michaels, Inc., a New York corporation (the "Company"), in connection with
the taking of certain corporate action, as described below, at a meeting of the
Company's shareholders to be held at ___, New York, New York on October ____,
1996. This Information Statement is first being sent to the Company's
shareholders on or about October __, 1996.
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
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AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT
The Board of Directors of the Company approved on September __, 1996,
pursuant to Section 801 of the New York Business Corporation Law, an amendment
of the Company's Certificate of Incorporation to effect a one-for-seven reverse
stock split (the "Reverse Stock Split") of the Company's common stock, par value
$1.00 per share (the "Company Common Stock"), by converting each seven
outstanding shares of the Company Common Stock held ("Old Common Stock") into
one share of new common stock ("New Common Stock"). No fractional shares of
stock shall be issued in connection with the Reverse Stock Split, but, in lieu
thereof, each holder of Old Common Stock who would otherwise be entitled to
receive a fraction of a share of New Common Stock shall have the number of
shares rounded up to the closest number of whole shares of New Common Stock.
As of October __, 1996, the record date for the meeting (the "Record
Date"), there were 916,282 shares of Company Common Stock outstanding. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to approve the amendment of the Company's
Certificate of Incorporation. There are no cumulative voting rights and no
preemptive rights. Each outstanding share of Common Stock is entitled to one
vote on the proposal to adopt the amendment. James H. Michaels and members of
his family hold a majority of the Company Common Stock outstanding on the Record
Date and have the requisite power to approve the amendment by voting to approve
it. Under New York law, shareholders who do not vote in favor of the amendment
do not have appraisal rights with respect to the shares held by them.
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BACKGROUND
The Company has entered into a Plan and Agreement of Merger, dated as
of April 24, 1996, as amended as of June 28, 1996 and September __, 1996 (the
"Merger Agreement"), with Muriel Siebert Capital Markets Group Inc. ("MSCMG")
providing for the merger of MSCMG with and into the Company (the "Merger") on
the terms and conditions contained in the Merger Agreement, and, in connection
therewith, after a distribution concurrently with the consummation of the
Merger, to transfer all of the Company's remaining assets to a liquidating trust
(the "Liquidating Trust") pursuant to the Merger Agreement and to sell such
assets and distribute the proceeds thereof to the Company's shareholders. The
holders of the Company Common Stock immediately prior to the Effective Time of
the Merger (as defined below), other than those holders who have elected to
exercise their dissenters' right of appraisal, will receive at the Effective
Time of the Merger a cash payment equal to the available cash of the Company
less certain amounts to be held in escrow and by the Liquidating Trust and the
right to receive distributions from the Liquidating Trust. Such distributions
shall be unaffected by the Reverse Stock Split. As a result of the Merger, the
separate corporate existence of MSCMG will cease and the Company will continue
its corporate existence under the name of Siebert Financial Corp. (the
"Surviving Company") and will continue to be governed by the laws of the State
of New York.
The Merger Agreement requires that each share of MSCMG common stock,
no par value (the "MSCMG Common Stock"), outstanding immediately prior to the
Effective Time of the Merger be converted into the number of shares of Company
Common Stock that will result in the sole shareholder of MSCMG, Muriel F.
Siebert, owning 97.5% of the outstanding shares of the Company Common Stock.
Based on the number of shares outstanding on the Record Date, Ms. Siebert is
expected to receive approximately 35,734,995 shares of Company Common Stock upon
consummation of the Merger. In order to accommodate such issuance, the Company
proposed that its Certificate of Incorporation be amended to increase the number
of authorized shares of Company Common Stock from 1,500,000 to 49,000,000.
The Merger Agreement and proposal to amend the Certificate of
Incorporation to increase the number of authorized shares of Company Common
Stock were approved by the Board of Directors of the Company and thereafter
submitted to and approved by the Company's shareholders at the Special Meeting
of Shareholders held by the Company on September 19, 1996. The Merger will
become effective upon the filing of a Certificate of Merger, executed by MSCMG
and the Company, with the Secretary of the State of the State of New York and
the Secretary of State of the State of Delaware (the "Effective Time of the
Merger"). The amendment to the Certificate of Incorporation increasing the
number of authorized shares will become effective upon the filing of such
amendment with the Secretary of State of the State of New York, which will occur
immediately prior to the Effective Time of the Merger.
REASONS FOR THE REVERSE STOCK SPLIT
The conversion to Company Common Stock of MSCMG Common Stock as
required by the Merger Agreement will result in an increase in the number of
shares of the Company Common Stock outstanding as described above. The objective
of the Reverse Stock Split is to adjust the capital structure of the Company to
make the Company Common Stock a more attractive trading and investing vehicle,
which may be expected to increase the liquidity and broaden the marketability of
the Company Common Stock.
The Reverse Stock Split is specifically intended to facilitate the
listing of the Company Common Stock on The Nasdaq Stock Market, Inc. ("Nasdaq")
National Market System, which has a minimum bid price requirement of $3.00 per
share, by attempting to cause the per share price of the New Common Stock to
satisfy the minimum bid price requirements of the Nasdaq National Market.
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Currently, the Company Common Stock is traded on the Nasdaq SmallCap Market,
which has a lower minimum bid price requirement.
There can be no assurance that the price of the shares of Company
Common Stock after the Reverse Stock Split will be greater proportionately
relative to the decrease in the number of outstanding shares.
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT
The principal effects of the Reverse Stock Split will be:
1. The Reverse Stock Split will decrease the outstanding shares of
Company Common Stock outstanding upon the effectiveness of the Merger by
approximately 85.7%. Rather than the 36,651,277 shares of Old Common Stock which
would have been outstanding upon the effectiveness of the Merger and after the
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Company Common Stock, there will be approximately
5,235,897 shares of New Common Stock outstanding upon the effectiveness of the
Merger and the Reverse Stock Split.
2. Upon the effectiveness of the amendment to the Company's
Certificate of Incorporation increasing the number of authorized shares, the
Company will be authorized to issue up to 49,000,000 shares of Common Stock. The
Company is not proposing to reduce the number of shares of Company Common Stock
authorized. When the Reverse Stock Split is effected, the New Common Stock
issued and outstanding will represent approximately 10.7% of such authorized
Company Common Stock whereas the Old Common Stock to be issued and outstanding
would represent approximately 74.8% of such authorized Company Common Stock.
After giving effect to the Reverse Stock Split, 43,764,103 shares of Company
Common Stock will be available for future issuance by the Board of Directors
without further action by the shareholders.
Except for minor increases in the number of shares outstanding
resulting from the round up provisions in favor of existing shareholders, the
Reverse Stock Split by itself will not affect the shareholders' proportionate
equity interest in the Company or the rights of shareholders with respect to
each share of Company Common Stock as to voting, dividends and other matters.
Since there is no consideration received by the Company in connection with the
Reverse Stock Split, the overall capital of the Company will not change as a
result of the Reverse Stock Split.
EFFECTIVE DATE; DELIVERY OF NEW CERTIFICATES
The Reverse Stock Split will become effective (the "Effective Time of
the Reverse Stock Split") upon the filing of a Certificate of Amendment to the
Company's Certificate of Incorporation with the Secretary of State of the State
of New York, which will occur no earlier than October __, 1996, which is 20 days
after the mailing of this Information Statement, and in any event immediately
after the filing of the Certificate of Amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares to 49,000,000 and
immediately after the Effective Time of the Merger.
As soon as practicable after the Effective Time of the Reverse Stock
Split and the Effective Time of the Merger, shareholders will be notified and
requested to surrender their Old Common Stock certificates for new certificates
representing the number of shares of New Common Stock they are entitled to after
the Reverse Stock Split. Until so surrendered, each current certificate
representing shares of Old Common Stock will be deemed for all corporate
purposes after the Effective Time of the Reverse Stock Split to evidence
ownership of New Common Stock in the appropriately reduced number. American
Stock Transfer and Trust Company, 40 Wall Street, New York, New York 10005, will
be
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appointed exchange agent to act for shareholders in effecting the exchange of
their certificates. The Reverse Stock Split is not expected to cause a
significant change in the number of shareholders. The Company has no plans for
the cancellation or purchase of its shares from individuals holding a nominal
number of shares after the Reverse Stock Split is effected. Rather, the Company
has been advised that following the Effective Time of the Merger, the Surviving
Company intends to offer the Company shareholders the right to round up to 100
shares any holdings of less than that amount. THIS INFORMATION STATEMENT DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO PURCHASE ANY
ADDITIONAL SHARES OF COMPANY COMMON STOCK. Any such offers will be made by means
of a prospectus sent or given to the Surviving Company's shareholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax
consequences of the Reverse Stock Split. This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers and tax-exempt entities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
and proposed regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service ("IRS"), all of which are subject
to change, possibly with retroactive effect, and assumes that the New Common
Stock will be held as a "capital asset" (generally, property held for
investment) as defined in the Code. Holders of Old Common Stock are advised to
consult their own tax advisers regarding the federal income tax consequences of
the Reverse Stock Split in light of their personal circumstances and the
consequences under state, local and foreign tax laws.
1. The Reverse Stock Split will qualify as a recapitalization
described in Section 368(a)(1)(E) of the Code.
2. No gain or loss will be recognized by the Company in connection
with the Reverse Stock Split.
3. No gain or loss will be recognized by a shareholder who
exchanges all of his shares of Old Common Stock solely for shares of New Common
Stock.
4. The aggregate basis of the shares of New Common Stock to be
received in the Reverse Stock Split will be the same as the aggregate basis of
the shares of Old Common Stock surrendered in exchange therefor.
5. The holding period of the shares of New Common Stock to be
received in the Reverse Stock Split will include the holding period of the
shares of Old Common Stock surrendered in exchange therefor.
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PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE COMPANY
The following table sets forth information concerning each person or group
of affiliated persons known by management to own beneficially more than five
percent (5%) of the Company Common Stock as of October __, 1996. The information
given is based on information furnished to the Company by such persons or groups
and statements filed with the Securities and Exchange Commission (the
"Commission").
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS(1)
------------------------------------ ----------------------- ----------
<S> <C> <C>
Phyllis Michaels 168,396 18.4%
182 Smith Street
Brooklyn, NY 11201
James H. Michaels 353,393(2)(4) 38.6%
182 Smith Street
Brooklyn, NY 11201
Doris Rosenson 149,658(3)(4) 16.3%
1822 Lathrup
Saginaw, Mich. 48603
Tweedy Browne, Inc. 54,253(5) 5.9%
TBK Partners
52 Vanderbilt Avenue
New York, NY 10017
</TABLE>
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(1) Percentages computed on the basis of 916,282 shares of Company Common
Stock outstanding as of October __, 1996.
(2) Includes (i) 94,862 shares of which Mr. Michaels is the record and
beneficial owner, (ii) 101,532 shares owned by a trust for the benefit
of Richard H. Michaels of which James H. Michaels is sole trustee, (iii)
139,449 shares held by him as a co-trustee (together with Doris
Rosenson) under the will of Jules Michaels, and (iv) 17,550 shares owned
by the Michaels Philanthropic Foundation of which Mr. Michaels and his
wife are directors.
(3) Includes (i) 10,209 shares of which Mrs. Rosenson is the record and
beneficial owner, and (ii) 139,449 shares held by her as a co-trustee
(together with James H. Michaels) under the will of Jules Michaels.
(4) Except in the case of the 17,550 shares owned by the Michaels
Philanthropic Foundation where the power to vote and dispose of the
shares is shared by the directors and in the case of the 139,449 shares
owned by the trust under the will of Jules Michaels where the power to
vote and dispose of the shares is shared by the trustees, all other
beneficial owners listed in the table have the sole power to vote and
dispose of the shares shown as beneficially owned by them.
(5) Based on filings with the Commission.
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SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth information concerning the
beneficial ownership of the Company Common Stock by each Director and executive
officer and by all executive officers and Directors as a group as of October __,
1996. The information given is based on information furnished to the Company by
such persons and statements filed with the Commission.
<TABLE>
<CAPTION>
SHARES OF COMPANY PERCENT OF
COMMON STOCK CLASS (1)
------------ ---------
<S> <C> <C>
James H. Michaels 353,393(2)(3) 38.6%
Edward P. Sullivan 5,000 *
John Pagano 0 *
Directors and Executive Officers 358,393 39.1%
as a group (3 persons)
</TABLE>
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* Less than 1%
(1) Percentages computed on the basis of 916,282 shares of Common Stock
outstanding as of October __, 1996.
(2) See Note (2) under "PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE
COMPANY."
(3) See "PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE COMPANY" and the
notes thereto. Mr. Michaels may be deemed a person in control of the
Company.
CHANGE IN CONTROL OF THE COMPANY
The Company has entered into the Merger Agreement with MSCMG, a New
York corporation wholly-owned by Muriel F. Siebert, providing for the merger of
MSCMG with and into the Company on the terms and conditions contained in the
Merger Agreement, and, in connection therewith, after a distribution
concurrently with the consummation of the Merger, to transfer all of the
Company's remaining assets to a liquidating trust pursuant to the Merger
Agreement and to sell such assets and distribute the proceeds thereof to the
Company's shareholders. Upon consummation of the Merger, Muriel F. Siebert will
own 97.5% of the outstanding shares of Company Common Stock and will therefore
be deemed a person in control of the Company. After the consummation of the
Merger, James H. Michaels and members of his family will no longer own a
controlling interest in the Company. The Merger Agreement was approved by the
Board of Directors of the Company and submitted to and approved by the
shareholders of the Company at the Special Meeting of Shareholders held on
September 19, 1996. See "AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO EFFECT
THE REVERSE STOCK SPLIT -- Background," above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (a) the Annual Report on Form 10-K for the
fiscal year ended March 31, 1996; (b) the Proxy Statement furnished to the
Company's shareholders for use at the Special Meeting of Shareholders of the
Company held on September 19, 1996; (c) the Current Report on Form 8-K dated
February 2, 1996; (d) the Current Report on Form 8-K dated April 25, 1996; and
(e) the Current Report on Form 8-K dated October __,
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1996. Copies of such documents may be obtained without charge (except for
exhibits thereto which will be furnished upon payment of the Company's
reasonable expenses in furnishing such exhibits) by any person solicited
hereunder by writing to: John Pagano, Secretary, J. Michaels, Inc., 182 Smith
Street, Brooklyn, New York 11201.
By Order of the Board of Directors
John Pagano
Secretary
October __, 1996
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