<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
(Amendment No. 3)
Andal Corp.
(Name of the Issuer)
Andal Corp.
Cafco Holding Corporation
Andrew J. Frankel
Alan N. Cohen
(Name of Person(s) Filing Statement)
Common Stock, par value $20 per share
(Title of Class of Securities)
636632-10-1
(CUSIP Number of Class of Securities)
Roy M. Korins, Esq.
Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10158
(212) 953-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. |X| The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. |_| The filing of a registration statement under the Securities
Act of 1933.
c. |_| A tender offer.
d. |_| None of the above.
Check the following box if the solicitation materials or information
statement referred to in checking box (a) are preliminary copies: |X|
Instruction: Eight copies of this statement, including all
exhibits, should be filed with the Commission.
[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.
Amount previously paid: $522.18
Form or Registration No.: Schedule 14C
Filing Party: Andal Corp.
Date Filed: Contemporaneously with this Schedule 13E-3.
Page 1 of 22 Pages
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Introduction.
The transaction (the "Transaction") subject to this Schedule 13E-3 (the
"Transaction") is the merger of Cafco Holding Corporation, a New York
corporation ("Cafco"), into Andal Corp., a New York corporation (the "Company")
pursuant to which (a) the stockholders of the Company, other than Cafco, will
receive cash in respect of their stock in the Company and (b) the shareholders
of Cafco will receive stock of the Company and will be the sole shareholders of
the Company. The Transaction is a transaction subject to Regulation 14C of the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The information contained in the Company's Information
Statement (the "Information Statement") filed pursuant to said Regulation 14C is
incorporated by reference into this Schedule 13E-3. Appendix A to this Schedule
13E-3 sets forth the location in the Information Statement of the information
included in this Schedule 13E-3.
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The Transaction relates to the common stock, par value $20.00 per share
("Common Stock"), of the Company. The principal executive offices of the Company
are located at 630 Fifth Avenue, New York, New York 10111.
(b) As of April 28, 1998, there were 286,094 shares of Common Stock
outstanding and approximately 1,100 holders of record of Common Stock.
(c) There is no active market in the Common Stock and there has not been an
active market since September 1995. The Common Stock is not included in the
Nasdaq OTC Bulletin Board. Based on information provided by the National
Quotation Bureau, Inc. ("NQB"), there was no quoted bid price for the Common
Stock during the period from October 1, 1995 until November 3, 1997. During the
period from November 3, 1997 until June 30, 1998, there was minimal trading, and
there was no reported trading from July 1 through July 13, 1998. Set forth below
is information provided by NQB as to the trading volume and the high and low
closing bid prices for the Common Stock during the such period.
<TABLE>
<CAPTION>
Period Volume Closing High Bid Closing Low Bid
- ------ ------ ---------------- ---------------
<S> <C> <C> <C>
1997
Third quarter (from Nov. 3) 6,400 20.00 17.00
1998
First quarter 8,500 21.625 17.00
Second quarter 5,300 22.00 21.625
Third quarter (through July 13) -0- 22.00 22.00
</TABLE>
The above prices represent prices between dealers and do not include retail
markups, markdowns or commission and do not represent actual transactions.
Furthermore, the volume information may not reflect the actual trading volume
and may include both the purchase by a buyer and sale by a seller as if there
were two transactions.
(d) The Company has never paid any dividends on the Common Stock. Although
the Company has funds to enable it to pay dividends, the Company proposes to use
a portion of such funds to make the cash payment to shareholders pursuant to the
Transaction.
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(e) During the past three years, the Company has not made an underwritten
public offering of its Common Stock which was either registered with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Securities Act") or was exempt from such
registration pursuant to Regulation A of the Commission under the Securities
Act.
(f) Since October 1, 1995, the Company has made the following
purchases of Common Stock.
Shares Average Purchase Value of Average
Quarter Ending Purchased Price Per Shares Purchase Price Per Share
- -------------- --------- ---------------- ------------------------
December 31, 1997 14,580 $25.00 $25.00
March 31, 1998 108,371 32.97 + noncash 35.18
consideration(1)
June 30, 1998 40,488 33.00 + noncash 36.79
consideration(1)
____________
(1) In connection with the purchase by the Company of 107,371 shares of
Common Stock purchased during the quarter ended March 31, 1998 and
all of the shares purchased during the quarter ended June 30, 1998,
the Company paid $33.00 per share plus .8125 shares of Integrated
Brands common stock which was owned by the Company. Integrated Brands
subsequently merged into Yogen Fruz World-Wide Inc. ("Yogen Fruz"),
as a result of which the .8125 shares of Integrated Brands became
.4754 shares of Yogen Fruz. Based on the average of the high and low
closing bid prices per share of Integrated Brands or Yogen Fruz on
the date of the contracts relating to the stock purchases, the value
of the noncash consideration was approximately $2.23 per share of
Common Stock with respect to the purchases during the March 31, 1998
quarter and $3.79 per share of Common Stock with respect to purchases
made during the June 30, 1998 quarter. Thus, the highest price paid
per share of Common Stock had a value of $36.79 per share,
representing $33.00 cash and noncash consideration valued at $3.79.
The shares purchased during the quarter ended March 31, 1998 included
100,232 shares of Common Stock purchased from Mr. Paul Milstein and other
shareholders who are affiliated with or otherwise related to Mr. Milstein who
together represented the second largest shareholder of the Company at the time
of the purchase.
Pursuant to a retirement agreement (the "Retirement Agreement") dated
August 31, 1996, among the Company and Andrew J. Frankel and Alan N. Cohen, the
Company issued 32,500 shares of Common Stock to each of Messrs. Frankel and
Cohen in September 1996. The Retirement Agreement is described in greater detail
under "Item 3. Past Contracts, Transactions or Negotiations."
See "Item 3. Past Contracts, Transactions or Negotiations" in connection
with certain other material transactions among the Company, Mr. Cohen, a
partnership of which Mr. Frankel is the managing general partner and Mr. Paul
Milstein, who was the Company's second largest stockholder.
Since October 1, 1995, except for the issuance of shares of Common Stock to
Messrs. Frankel and Cohen pursuant to the Retirement Agreement and to Frankhill
and Mr. Cohen pursuant
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to the Debt Cancellation Agreement, as described in "Item 3. Past Contracts,
Transactions or Negotiations," neither Cafco Holding Corporation ("Cafco") nor
any of its officers, directors or shareholders, including Messrs. Frankel and
Cohen, purchased any shares of the Company's Common Stock.
The shares of Common Stock presently owned by Cafco were acquired by Cafco
in July 1998 for purposes of consummating the Transaction. At that time, the
shareholders of Cafco transferred to Cafco the 215,529 shares of Common Stock
owned by them in exchange for all of the capital stock of Cafco. As a result,
Cafco owns beneficially and of record 215,529 shares of Common Stock. Because of
their position as the only directors and officers of Cafco, Messrs. Frankel and
Cohen have joint power with respect to the voting and disposition of the shares
of Common Stock owned by Cafco.
(g) The information contained under the captions "General Information,"
"Summary" and "The Merger" in the Information Statement is incorporated by
reference in this Item 1.
Item 2. Identity and Background.
This Statement is being filed jointly by the Company, Cafco and Messrs.
Andrew J. Frankel and Alan N. Cohen. Messrs. Frankel and Cohen are filing as
control persons of the Company and Cafco.
Cafco is a New York corporation with executive offices at 630 Fifth Avenue,
New York, New York 10111. Cafco was formed for the purpose of acquiring all of
the Company's Common Stock owned by its shareholders and engaging in the
Transaction. Cafco owns 215,529 shares of Common Stock, representing 75.3% of
the outstanding shares of Common Stock.
The officers and directors of Cafco are as follows:
Name and Address Position with Cafco; Principal Occupation
- ---------------- -----------------------------------------
Andrew J. Frankel Chairman of the board, chief executive officer and a
c/o Andal Corp. director of Cafco; chairman of the board and chief
630 Fifth Avenue executive officer of the Company
New York, New York 10111
Alan N. Cohen President and a director of Cafco; president of the
c/o Andal Corp. Company
630 Fifth Avenue
New York, New York 10111
Andrew J. Frankel has been chairman of the board, chief executive officer
and a director of Cafco since its organization in July 1998. He has been
chairman of the board and chief executive officer of the Company since 1971
except for the period from September 1, 1996 through September 30, 1997, when he
served only as a director.
Alan N. Cohen has been president and a director of Cafco since its
organization in July 1998. He has been a director of the Company since 1979 and
president of the Company since 1981
Page 4 of 22 Pages
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except for the period from September 1, 1996 through September 30, 1997, when he
served only as a director.
All of the shareholders of Cafco are related or otherwise affiliated with
either Mr. Frankel or Mr. Cohen.
During the past five years, neither Andal, Cafco, Mr. Frankel nor Mr. Cohen
(a) was convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in, or is otherwise
subject to, a judgment, decree or final order enjoining further violations of,
or prohibiting activities subject to federal or state securities laws or finding
any violation of such laws.
Messrs. Frankel and Cohen are citizens of the United States of America.
The information contained under the captions "Certain Relationships and
Related Transactions" and "The Merger" in the Information Statement is
incorporated by reference in this Item 2.
Item 3. Past Contracts, Transactions or Negotiations.
The Retirement Agreement
On August 31, 1996, the board of directors effected a change in management,
and elected the individuals who were the executive officers of Multi-Arc, Inc.,
a majority-owned subsidiary of the Company, as officers of the Company, and the
Company moved its executive offices to New Jersey, where Multi-Arc maintained
its executive offices. At that time, the Company's business was conducted almost
exclusively through Multi-Arc, and neither Mr. Frankel nor Mr. Cohen was
actively involved in the management of Multi-Arc.
As part of this management change, Mr. Andrew J. Frankel resigned as
chairman and chief executive officer of the Company, and Mr. Alan N. Cohen
resigned as president of the Company. Messrs. Frankel and Cohen continued to
serve as directors. In connection with their resignation as officers of the
Company, Messrs. Frankel and Cohen entered into an agreement (the "Retirement
Agreement"), pursuant to which the Company agreed to maintain the Company's New
York office and pay the compensation due to the employees at such office, and
Messrs. Frankel and Cohen agreed to reimburse the Company for such expenses. The
agreement also provided for the issuance of 32,500 shares of Common Stock to
each of Messrs. Frankel and Cohen and the continuation of health insurance
benefits for Messrs. Frankel and Cohen and members of their families at the
Company's expense. The Company's obligation to pay such insurance benefits is an
ongoing obligation of the Company.
In September 1997, following the sale of Multi-Arc, the Company relocated
its offices from New Jersey to New York City, and Messrs. Frankel and Cohen were
reelected as chairman of the board and chief executive officer and president,
respectively.
Loan Transactions with Related Parties
On July 5, 1990, the Company borrowed an aggregate of $5 million from Mr.
Alan N. Cohen, president and a director of the Company, Mr. Paul Milstein, who
was then a director of the
Page 5 of 22 Pages
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Company, and Frankhill Associates, a limited partnership of which Mr. Andrew J.
Frankel, chairman of the board and a director of the Company, is a general
partner and the holder of a significant beneficial interest (collectively, in
such capacity, the "Option Lenders"). The proceeds of the loan (the "Option
Loan") were used by the Company to reduce then-outstanding bank indebtedness and
for general corporate and working capital purposes.
The Option Loan was secured by a pledge of the capital stock of UBC
Virginia Corp. ("UBC Corp."), a subsidiary of the Company which held an option
(the "Option") to purchase certain real estate in New York City (the "UBC
Property") for approximately $3.0 million in cash. The Option did not become
exercisable until the death of the second to die of the two principals of the
corporation that owned the UBC Property. The Option was exercisable during the
90 days following such death, after which time it expired. If exercised, the
Company was required to pay the purchase price for the UBC Property within 30
days of the date of exercise. The Option became exercisable in September 1995.
The closing date was postponed until May 1996. The Option Loan required the
Company to exercise the Option when it became exercisable. The failure of the
Company to exercise the Option would be a default under the terms of the Option
Loan, and the Option Lenders would have the right to exercise the Option on
behalf of the Company and declare the Option Loan to be due and payable.
UBC Corp. was merged into the Company in March 1996, as a result of which
the Option became an asset of the Company.
In connection with the Option Loan, the Company paid the Option Lenders a
$50,000 commitment fee and issued to them warrants to purchase an aggregate of
25,000 shares of Common Stock at $80.00 per share. The closing market price of
the Common Stock on July 5, 1990 was $65.00 per share. The warrants were
exercisable from December 31, 1990 until July 5, 1995, at which time they
expired unexercised. The Option Loan was due on the earlier of March 31, 1997 or
the day after the Company's bank loans have been paid in full.
In May 1992, the Company restructured the Option Loan, as well as its loans
with Chemical Bank and Fleet Bank. Most of the Company's bank obligations had
been incurred prior to 1976. Under the terms of such restructuring, (a) the
interest rate on all such loans was reduced to the prime rate, (b) accrued
interest on the Option Loan from October 1, 1991 through March 31, 1993, in the
amount of $571,285, was added to the principal, thereby increasing the principal
balance of the Option Loan to $5,571,285, and (c) the Company was required to
prepay the Option Loan (i) in the event of a sale of the Company's interest in
the UBC Property or (ii) in the event the Company obtains cash recoveries on
various claims relating to its discontinued construction contracting operations,
or (iii) if the Company's cash flow from operations exceeds a specified amount.
In connection with the 1992 restructuring, the banks consented to the
Company's grant to the Option Lenders of a second lien on those assets of the
Company which served as collateral for the bank loans, and the Option Lenders
consented to the Company's grant to the banks of a second lien on the stock of
UBC Corp.
In 1994, Fleet Bank advised the Company that it desired to dispose of its
portion of the bank loan. In March 1994, after discussions initiated by Fleet
Bank, Frankhill Associates, Alan N. Cohen, and Paul Milstein (collectively, in
such capacity, the "Fleet Assignees") each purchased a one-third interest in the
Company's indebtedness to Fleet Bank (the "Fleet Indebtedness"), which
indebtedness totaled $3,042,000. The terms of such indebtedness did not change
as a result of this purchase. In
Page 6 of 22 Pages
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November 1994, Peter D. Flood, who was then a director of the Company and chief
executive officer of Multi-Arc, purchased 6.4% of the Fleet Indebtedness from
the Fleet Assignees.
In September 1994, in order to facilitate the restructuring and refinancing
of Multi-Arc, the Fleet Assignees agreed to subordinate their lien on
Multi-Arc's assets and to defer the approximately $1.6 million payment to which
they would have otherwise been entitled. In consideration for the concessions
agreed to by the Fleet Assignees, the Company's board of directors, with Messrs.
Frankel and Cohen not voting, approved a payment of $255,000 by the Company to
the Fleet Assignees. The 1992 restructuring agreement was amended to provide for
principal payments on the Fleet Indebtedness at the rate of $250,000 per quarter
beginning March 31, 1995, with the remaining principal balance becoming due on
March 31, 1997. Furthermore, the Company was required to make prepayments to the
extent that it sells any of its capital assets or receives capital distributions
from Multi-Arc.
In September 1994, Chemical Bank agreed to accept a $255,000 discount for
payment of the Company's outstanding debt to it. After such repayment, the
Company's remaining obligation to Chemical Bank was $941,000, representing
obligations due under outstanding letters of credit issued by Chemical Bank in
connection with an appeal bond and in connection with the Company's discontinued
real estate development activities. Because of the Company's inability to fund
the liabilities represented by the letters of credit, in order to secure the
release of collateral held by Chemical Bank so that Multi-Arc could obtain a
term loan and revolving credit facility from another bank, Messrs. Frankel,
Milstein, and Cohen each personally guaranteed one-third of the letter of credit
liabilities, for which the Company agreed to pay them an aggregate annual
guarantee fee equal to 2% of the letters of credit outstanding.
At September 30, 1996, the Company owed approximately $1.6 million to the
Fleet Assignees. At that time, the Company and the Fleet Assignees entered into
an agreement (the "Debt Cancellation Agreement") pursuant to which the Company
paid approximately $91,500 to each of the three Fleet Assignees and issued
15,000 shares of Common Stock to each of the three Fleet Assignees in full
satisfaction of the Fleet Indebtedness.
As discussed above, the Option became exercisable in September 1995 and the
Company was obligated to exercise the Option. At the time the Option became
exercisable, the Company did not have the cash required to exercise the Option,
and it could not raise the necessary funds from unrelated parties or from the
sale of assets other than the Option. Since the Option Loan agreement required
the Company to exercise the Option, the Company exercised the Option in October
1995, and the Company purchased the Property on May 8, 1996. In order to make
the purchase, on May 7, 1996, the Company borrowed $3.3 million (the "Demand
Loan") from the Option Lenders and issued its 10% demand note, which was secured
by a mortgage on the UBC Property.
The Company's failure to exercise the Option and pay the purchase price for
the Property would have resulted in an event of default under the Option Loan,
which would have given the Option Lenders the right to exercise the Option on
the Company's behalf and to declare the Option Loan immediately due and payable.
In 1984, the Company had entered into an agreement with a nonaffiliated
real estate developer pursuant to which such real estate developer agreed to
purchase the Option. The developer was unable to obtain financing to consummate
the purchase. As a result, the contract was terminated. Upon termination of the
agreement, the Company attempted to sell the Option to other
Page 7 of 22 Pages
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nonaffiliated parties. In addition, after the Company received notice that the
Option had become exercisable and the Company had 90 days to exercise the
Option, the Company made contact with several brokers who were not able to
identify a buyer. The Company's attempts to sell the Option did not result in
any bona fide offer from a third party to purchase the Option.
Once the Option became exercisable, the Option Lenders expressed an
interest in acquiring the UBC Property in satisfaction of the amount outstanding
on the Option Loan. The board of directors (with the Option Lenders not
participating), after considering the difficulties entailed in the Company's
exercise of the Option, including the Company's lack of cash flow, diminished
borrowing power, debt structure and difficulties in raising funds through a
private placement of Multi-Arc's securities, authorized the officers of the
Company to engage an independent appraiser to conduct an appraisal of the
Property and seek to negotiate a transaction with the Option Lenders.
On November 21, 1995, the Company received a report from the independent
appraiser it had retained which concluded that the range for the market value of
the UBC Property was between $9.9 million and $11.9 million (before deducting
the $3 million exercise price), depending on the ultimate cost of complying with
zoning restrictions and other costs that would be incurred in the development of
the Property. The appraiser's conclusion was based on a number of assumptions,
including the assumption that a sale would occur after a reasonable exposure in
a competitive market under all conditions requisite for a fair sale, with the
buyer and seller acting prudently, knowledgeably, for self-interest, and not
under undue duress.
On March 4, 1996, the Company's board of directors, with the Option Lenders
not participating, authorized the officers of the Company to engage in
negotiations with the Option Lenders to reach an agreement to sell the Option to
them. On July 10, 1996, the Company entered into a contract to sell the UBC
Property to FAM, LLC ("FAM"), a Delaware limited liability company owned by
Frankhill Associates, the Alan N. Cohen Family Company, LLC, a Delaware limited
liability company of which Alan N. Cohen is manager, and Builtland Associates, a
New York general partnership of which Paul Milstein is a general partner.
Builtland Associates is the managing director of FAM and, as such, controlled
its activities.
On August 1, 1996, FAM purchased the Property for approximately $9.4
million, paid for as follows:
(a) Cancellation of the principal balance of the Option Loan in the amount
of $5,571,285, which has been acquired by FAM from the Option Lenders.
(b) Cancellation of the Demand Loan of $3.3 million due Frankhill
Associates, the Alan N. Cohen Family Company, LLC, and Paul Milstein, which loan
has also been acquired by FAM.
(c) Forgiveness of interest in the amount of $283,000 due on the Option
Loan and the Demand Loan.
(d) Cash payment to the Company of $228,715.
FAM also assumed the cost of terminating then existing occupancy
arrangements at the UBC Property, the cost of which was estimated at
approximately $500,000. As a result the effective cost of the UBC Property was
approximately $9.9 million.
Page 8 of 22 Pages
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In addition, the Company was entitled to a contingent additional payment
if, within one year from the date of sale to FAM, all or any portion of the
Property is further transferred to a bona fide third party or if FAM enters into
an agreement to transfer all or any portion of the Property to a bona fide third
party and such transfer ultimately occurs. In either of such events, the Company
would have been entitled to 50% of the amount by which the net proceeds of the
sale, as defined, of all or any portion of the Property exceeds $10 million. In
no event can such additional consideration exceed $3 million.
The Company reported a gain of approximately $6 million from the sale of
the UBC Property to FAM.
The Merger Agreement
On July 15, 1998, the Company and Cafco entered into an agreement (the
"Merger Agreement"), which set forth the terms of the Transaction. The terms of
the Merger Agreement are set forth in Item 4.
The information conatined under the captions "Certain Relationships and
Related Transactions" and "The Merger" in the Information Statement is
incorporated by reference in this Item 3.
Item 4. Terms of the Transaction.
On July 15, 1998, the Company and Cafco entered into the Merger Agreement.
Pursuant to the Merger Agreement, Cafco agreed to merge (the "Merger") with and
into the Company, subject to the approval of the Merger Agreement by the
Company's shareholders. Under the New York Business Corporation Law ("NYBCL"),
the merger requires the votes of the holders of two-thirds of the outstanding
Common Stock. Cafco owns 75.3% of the outstanding Common Stock and has the power
to approve the Merger without the approval of any other shareholders. The
Company has scheduled a meeting of shareholders for November 1998. The Company
does not intend to solicit proxies for such meeting, but will provide
shareholders with an information statement (the "Information Statement")
pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). At the meeting, Cafco will vote to approve the Merger.
Pursuant to the Merger Agreement, at the effective time of the Merger:
(a) Each share of Common Stock, other than shares of Common Stock held by
Cafco and shareholders who exercise their rights of appraisal, would receive the
right to receive $37 (the "Merger Consideration").
(b) Each option to purchase one share of Common Stock shall become a right
to receive the difference between the Merger Consideration and the exercise
price of the option.
(c) Each share of common stock of Cafco would become and be converted
into one share of Common Stock of the Company.
Payment of the Merger Consideration to the shareholders of the Company,
other than Cafco and shareholders exercising dissenters' rights pursuant to
Sections 910 and 623 of the NYBCL, shall be made as soon as possible after the
effective time of the Merger, but not later than 15 business days
Page 9 of 22 Pages
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after such effective time. Payment shall be made to the record holders of Common
Stock as of the close of business on the day immediately preceding the date on
which the effective time of the Merger occurs.
The information contained under the caption "The Merger" in the
Information Statement is incorporated by reference in this Item 4.
Item 5. Plans or Proposals of the Issuer or Affiliate.
Following the completion of the Transaction, the Company will (a) operate
as a privately owned corporation, with the only shareholders being the present
shareholders of Cafco and (b) terminate the Company's registration under the
Exchange Act pursuant to Section 12(g)(4) of the Exchange Act. Following the
termination of the Company's registration under the Exchange Act, the Company
will not be required to file reports pursuant to Section 12 or 15(d) of the
Exchange Act.
The information contained under the caption "The Merger" in the
Information Statement is incorporated by reference in this Item 5.
Item 6. Sources and Amounts of Funds or Other Consideration.
All of the funds to be used to pay the Merger Consideration pursuant to the
Merger Agreement shall be provided by the Company. At June 30, 1998, the Company
had cash of approximately $12.3 million, as reflected in the Company's Form 10-Q
Quarterly Report for the quarter ended June 30, 1998. Substantially all of the
Company's cash at June 30, 1998, resulted from the sale by the Company of its
84% interest in Multi-Arc, which generated net cash to the Company of
approximately $17.9 million.
At September 30, 1997, following completion of the Multi-Arc sale, the
Company had cash of $17,875,000. At June 30, 1998, the Company's cash position
was $12,281,000. The following table shows the use of cash during the nine
months ended June 30, 1998. Reference is made to the Statement of Cash Flows for
the nine months ended June 30, 1998, which is included in the Company's Form
10-Q for the quarter ended June 30, 1998.
(In thousands)
Cash at September 30, 1998 $17,875
Net cash used by operating activities (1,577)
Proceeds from sale of Yogen Fruz stock(1) 1,247
Purchase of Common Stock from shareholders(2) (5,264)
-------
Cash at June 30, 1998 $12,281
=======
_____________
(1) Following the transfer of shares of Integrated Brands (which
subsequently merged into Yogen Fruz) in connection with the purchase
of shares of Common Stock, the Company owned 136,078 shares of Yogen
Fruz, which were sold in May 1998 for approximately $1.2 million.
(2) This amount reflects the cash consideration paid by the Company and
the value of the common stock of Integrated Brands that was
transferred in connection with the purchase by the Company of shares
of Common Stock during the nine months ended June 30, 1998.
Page 10 of 22 Pages
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Since June 30, 1998, the Company has continued to incur operating expenses.
In addition, in connection with the sale of Multi-Arc, an aggregate of $3.0
million is held in escrow (the "Multi-Arc Escrow") as security for certain
obligations under the agreement relating to the sale of Multi-Arc, including
obligations which may arise as a result of breaches of representations and
warranties and for taxes. Although the Company does not believe that its
liability for such breaches or such taxes will be material, there can be no
assurance that any of the funds held in escrow will be paid to the Company. The
possible recovery from the Multi-Arc Escrow is offset by a reserve in the same
amount in the Company's financial statements. See "Item 7. Purposes,
Alternatives, Reasons and Effects" for a description of the Multi-Arc Escrow and
certain reserves against any distribution to the Company from the Multi-Arc
Escrow.
The expenses for the Transaction will be paid by the Company. The Company
estimates that the expenses of the Transaction, including legal, accounting and
filing fees, printing expenses and other related expenses, will be approximately
$150,000.
None of the money required for either the payment of expenses or the
payment of the Merger Consideration will be borrowed by the Company.
The information contained under the caption "The Merger" in the
Information Statement is incorporated by reference in this Item 6.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
Purposes, Alternatives, Reasons and Effects
(a) Existence of Pending Litigation
Although the Company is not presently engaged in any business activities,
final resolution of issues involved in the Multi-Arc sale remain open and could
possibly result in litigation. In addition, the Company is a defendant in at
least three pending lawsuits arising from its discontinued subcontracting
business. Accordingly, the Company's directors believe that the Company should
continue in existence until such issues are resolved, and such issues are likely
to remain unresolved for up to four years and possibly longer.
(b) Absence of Market for Common Stock; Illiquid Nature of Investment in
Common Stock
The public float for the Common Stock (i.e., the shares of Common Stock not
owned by Cafco) is 70,565 shares, and there is no active market for the Common
Stock, as a result of which shareholders are not able sell their shares of
Common Stock. For these reasons, the Company and Cafco do not believe that it is
in the interest of either the Company or its shareholders for the Company to
continue to be a reporting company under the Exchange Act and for the
approximately 1,100 shareholders to have little or no liquidity for their stock.
Furthermore, more than 1,050 shareholders of record hold 100 or fewer shares,
including more than 940 shareholders of record who hold ten or fewer shares. The
purpose of the Transaction is to pay such shareholders a fair value for their
shares and to operate the Company as a privately-owned company, with the present
shareholders of Cafco as its only shareholders.
Page 11 of 22 Pages
<PAGE>
(c) Investment Company Act Considerations
Following the Multi-Arc sale in September 1997, the Company's board of
directors adopted a resolution which provided that, within one year from the
completion of the Multi-Arc sale, it would engage in a transaction such that the
Company is not engaged in the business of an investment company, as defined in
Section 3 of the Investment Company Act of 1940 (the "Investment Company Act").
As of June 30, 1998, the Company did not have any agreement with any
company or other entity pursuant to which the Company would acquire such company
or its business and assets, and no discussions were pending. Although the
Company had received an inquiry about the possibility of a merger or similar
corporate transaction, such discussions did not result in any formal or informal
agreement and no discussions are continuing.
As a result of the sale of Multi-Arc, the Company may have come within the
technical definition of an investment company as defined in Section 3 of the
Investment Company Act. However, Rule 3a-2 of the Commission under the
Investment Company Act treats a so-called transient investment company as a
company which is not engaged in the business of an investment company. In order
for a corporation to be a transient investment company, it must have a bona fide
intent, during a period of time not to exceed one year, to be engaged primarily,
as soon as is possible, in a business other than that of investing, reinvesting,
owning, holding or trading in securities. Thus, the Company could not be a
transient investment company subsequent to September 30, 1998.
The board of directors does not believe that it is in the interests of
either the Company or its shareholders for the Company to become an investment
company. The operation of the Company as an investment company would subject the
Company to considerably greater expenses of operations as well as increased
regulation under the Investment Company Act. Considering the Company's
relatively modest cash position and the absence of an operating business, the
expenses of operating an investment company, including the engagement of
additional staff and the increased regulatory burden, could result in losses
from operations, which would not be in the interest of the Company or its
shareholders.
The Investment Company Act permits the Company to own government securities
and certain other classes of securities without being classified as an
investment company. Accordingly, the Company has not engaged in any transaction
which would cause it to come within the definition of an investment company.
Except for cash necessary to meet the Company's cash requirements, all of the
Company's cash is and, as long as it continues to be a public corporation, will
be invested in assets which will not make it an investment company. However, the
board of directors does not believe that it would be in the interest of either
the Company or its shareholders for the Company's principal business to be a
holder of such securities, including government securities. The operation of the
Company as a holder of such securities would not solve the problems of an
illiquid stock, which is currently faced by the Company's shareholders since the
public float is only 70,565 shares and there is no meaningful trading market in
the Common Stock.
In order to provide the shareholders with liquidity in their stock and to
eliminate the problems raised by the need to structure the Company's holdings in
a manner such that it is not subject to the Investment Company Act, in July
1998, the Company's board of directors approved the Merger Agreement. The board
of directors of the Company is comprised of the same individuals as the board of
directors of Cafco.
Page 12 of 22 Pages
<PAGE>
(d) Consideration of Liquidation; Tax Effects on Cafco Shareholders and
Other Shareholders
The Company considered the possibility of a liquidation of the Company by a
distribution of substantially all of the available cash to its shareholders,
including, the present shareholders of Cafco (the "Cafco Shareholders") who
owned 75.3% of the Common Stock which they transferred to Cafco. Because of the
open litigation issues described above and also because such a distribution
would have adverse tax consequences to the Cafco Shareholders since it would
result in a taxable distribution to such shareholders, the directors felt that
liquidation would not be appropriate. In addition a significant portion of the
Multi-Arc Escrow, if received by the Company, would not be received until
October 2002 or later. By retaining their stock ownership in the Company instead
of receiving the cash in the form of a distribution, the Cafco Shareholders will
continue to own their stock in the Company and there would be no taxable
transaction to them and, following the completion of the Merger, the Cafco
Shareholders will have continuing control of a corporation which may, under
certain circumstances, have the ability to use certain substainial tax loss
carryforwards. Such tax loss carryforward could be as much as $13.8 million,
although there are restrictions and limitations on the ability of the Company
to use such tax loss carryforward.
The economic effect and tax treatment to the other shareholders of the
Transaction is essentially the same as a liquidation distribution. In either
case, as long as the shares of the Company's Common Stock held by the other
shareholders constitute capital assets in their hands, both the Transaction and
a liquidation would result in a capital gain or loss. Whether the gain or loss
would be long-term or short-term would depend upon their respective holding
periods.
As discussed above, although the Company is a reporting company pursuant to
the Exchange Act, there is no active market for the Common Stock and the public
float consists of 70,565 shares of Common Stock, which are held by approximately
1,100 shareholders of record, of which more than 1,050 shareholders hold 100 or
fewer shares, including more than 940 shareholders who hold ten or fewer shares.
Since September 30, 1997, the Company has purchased an aggregate of 164,039
shares of Common Stock in private transactions. The Company continues to receive
inquiries from shareholders who expressed an interest in selling their shares of
Common Stock to the Company. The Company believes that the Transaction would
benefit the nonaffiliated shareholders by providing them with cash now at a fair
value not obtainable in the market. The termination of the public market for the
Common Stock will not be disadvantageous to the nonaffiliated shareholders,
since there is no active public market and the shareholder will receive more
than the market price for the Common Stock, which, as reflected in Item 1, has
been both minimal and sporadic.
(e) Consideration of Multi-Arc Escrow; Anticipated Contingent Obligation;
Potential Premium to Cafco Shareholders
At June 30, 1998, there was $3.0 million in the Multi-Arc Escrow. At such
date the Company also had a reserve in the same amount, which is reflected as
deferred income on the balance sheet. The Multi-Arc Escrow was established to
protect the purchaser of Multi-Arc from any loss, liability, damage or expense,
including legal expense, it may incur as a result of any breaches by Multi-Arc
of its representations and warranties and to provide for payment for certain tax
liabilities. It is anticipated that a substantial portion of the Multi-Arc
Escrow may be made
Page 13 of 22 Pages
<PAGE>
available to the Company in March 1999 provided that there are no claims against
the escrow at that time. The Company does not know of any claims against the
Multi-Arc Escrow as of the date of this Schedule 13E-3.
The Merger Consideration reflects the value of the Company's net liquid
assets, net of reserves reflected on the Company's balance sheet. Since the
balance sheet reflects a reserve of $3.0 million, which is the amount of the
Multi-Arc Escrow, in determining the Merger Payment, the Multi-Arc Escrow was
fully reserved against, and therefore, the amount of the Merger Consideration
does not give any value to the contingent payment from the Multi-Arc Escrow. As
of the date of this Schedule 13E-3, to the best of the Company's knowledge, no
claims have been made against any of the escrow accounts. The amount of the
Merger Consideration is greater than the highest amount paid to shareholders in
negotiated transactions with the Company in 1998. Such purchase price, including
the value of the non-cash consideration, was $36.79. To the extent that the
amount received from the Multi-Arc Escrow exceeds the amount of any contingent
liabilities or other ongoing expenses incurred by the Company, the Cafco
Shareholders would receive a premium over the Merger Consideration. In
addition, following the completion of the Merger, the Cafco Shareholders will
have continuing control of a corporation which may, under certain circumstances,
have the ability to use certain substantial tax loss carryforwards.
Although a substantial portion of the Multi-Arc Escrow may be released as
early as March 1999, the balance of the Multi-Arc Escrow would not be available
until September 2002, and, accordingly, any distribution of such funds to
shareholders could not be made prior to October 2002.
If the Company receives the full $3.0 million from the Multi-Arc Escrow in
March 1999 and September 2002 and its contingent obligations and ongoing
expenses are $1.5 million, which is in the lower range of the presently
anticipated amount, the Cafco Shareholders would receive approximately $6.96, or
18.8%, more per share than the other shareholders of the Company. If such money
were paid pro rata to all shareholders of the Company, including the Cafco
Shareholders, the unaffiliated shareholders would receive approximately $5.24,
or approximately 15.8%, per share more, which would result in a total payment of
$42.24.
As a result of the Transaction, the Company's book value will be reduced by
the amount of the Merger Consideration paid to the shareholders other than
Cafco, the expenses of the Transaction and any payments made to shareholders
exercising their rights of appraisal.
Relative Benefits and Detriments of the Transaction
The following is a discussion of the benefits and detriments of the
consummation of the Transaction to the Company, the Cafco Shareholders and the
unaffiliated shareholders.
(a) The Company
The Transaction will benefit the Company by eliminating the costs of
maintaining its status as a public company and complying with applicable
securities regulations. Such costs would be increased if the Company is required
to register under the Investment Company Act. Although the Company can continue
to operate as an owner of government securities and certain other securities
without registering under the Investment Company Act, the Company does not
believe that it is in the interest of the shareholders for its principal
business to be the ownership of such securities. The Company believes that the
legal and accounting costs of maintaining its status as a public company
Page 14 of 22 Pages
<PAGE>
is approximately $100,000 per year in addition to operating expenses such as
rent, compensation and other administrative expenses.
If the Transaction is consummated, the Company will be a private company
and will not have any value as a so-called public shell. Although the board of
directors does not believe that it is in the best interest of the Company or its
shareholders for it to maintain its status as a public company, it is possible
that, if the Company continued in existence as a public company, it would be
able to acquire a company seeking to become a public company through a merger
with the Company. However, the Company believes that the absence of any
significant public float or market for the Common Stock would have a material
adverse effect upon the terms on which a merger could be affected. Furthermore,
the Company would incur significant cost negotiating such a transaction with no
assurance that a transaction beneficial to the Company would be consummated. The
Company engaged in preliminary discussions with one unaffiliated party, and such
discussions did not result in any proposal.
(b) The Cafco Shareholders
The Cafco Shareholders would benefit from the Transaction since, as a
result of the Transaction, they would own all of the issued and outstanding
Common Stock of the Company. Furthermore, to the extent that the Company
receives money from the escrow fund in excess of the Company's contingent
obligations, the Cafco Shareholders would receive all of such proceeds, and the
unaffiliated shareholders would receive no portion of such proceeds. If the
amount received by the Company from the escrow accounts, net of payments to be
made with respect to contingent obligations, is $1.5 million, the Cafco
Shareholders would receive approximately $6.96, or 15.8%, more per share than
the other shareholders of the Company. However, the Cafco Shareholders would
bear the responsibility for payment of the ongoing expenses of the operation of
the Company. Furthermore, as a result of the Transaction, the Cafco Shareholders
would have 100% (rather than 75.3%) interest in the Company's net book value and
net earnings. In addition, following the completion of the Merger, the Cafco
Shareholders will have continuing control of a corporation which may, under
certain circumstances, have the ability to use certain substantial tax loss
carryforwards.
The Cafco Shareholders, as the holders of all of the outstanding stock of
the Company, would be adversely affected to the extent that the Company's
obligations, including its ultimate obligations with respect to contingent
liabilities, are greater than presently contemplated.
(c) Unaffiliated Shareholders
The unaffiliated shareholders (i.e., the shareholders other than the Cafco
Shareholders) would benefit from receiving a fair price in cash for an
investment which is presently an illiquid investment. As discussed above, there
is no active market for the Company's Common Stock and there is no significant
float. The Company has received inquiries from shareholders who are interested
in obtaining cash for their shares but are unable to sell the shares in the
market.
Because of the structure of the Transaction, the unaffiliated shareholders
will receive a price per share which may be less than they would receive if the
Company liquidated. If the Company liquidates and distributes cash, net of
reasonable reserves, to the shareholders, it is possible that the price per
share would be increased by approximately $5.24, or 12.4%, per share, a
significant portion
Page 15 of 22 Pages
<PAGE>
of which would not be distributed until October 2002 or later. In addition, the
unaffiliated shareholders will no longer hold an equity interest in the Company.
The factors described in this Item 7 were considered by all of the
reporting persons.
The information contained udner the captions "Summary," "The Merger" and
"Material Federal Income Tax Considerations" in the Information Statement is
incorporated by reference in this Item 7.
Item 8. Fairness of the Transaction.
Each of the Company, Cafco and Messrs. Frankel and Cohen believes that the
Transaction is fair to the nonaffiliated shareholders. In determining the
fairness of the Transaction, the reporting persons considered the following
factors.
(a) The liquidation value per share of Common Stock was based on the
Company's most recent balance sheet at the time the Merger Agreement was
approved by the board of directors, which is the balance sheet as of March 31,
1998, net of appropriate reserves set by the board of directors for ongoing
expenses, including potential future litigation and retirement benefits for
employees other than Messrs. Frankel and Cohen and insurance benefits for
Messrs. Frankel and Cohen. However, in accordance with generally accepted
accounting principles, the March 31, 1998 balance sheet reflected the value of
the Company's stock ownership of Yogen Fruz at its cost. The board of directors
believed that, for purposes of determining the liquidation value, the Yogen Fruz
shares should be valued at their then current value. After taking all such
factors into consideration, the liquidation value per share of Common Stock
would be $37.00.
At June 30, 1998, the amount of the Multi-Arc Escrow was $3.0 million. At
such date the Company also had a reserve in the same amount, which is reflected
as deferred income on the balance sheet. Accordingly, for purposes of
determining the Merger Consideration, the $3.0 million Multi-Arc Escrow was
fully reserved against.
(b) The price at which the Company purchased shares of Common Stock in
recent transactions was a major factor in determining the amount of the Merger
Consideration. Such purchases were made from knowledgeable investors, including
Mr. Paul Milstein and parties affiliated or otherwise related to him, who were,
in the aggregate, the second largest shareholder of the Company. The purchase
price paid resulted from negotiations with the sellers and reflected an
approximation at the time of the liquidation value of the Common Stock.
(c) Although it is possible that the nonaffiliated shareholders may receive
less per share of Common Stock than the Cafco Shareholders, to the extent that
there is a premium to the Cafco Shareholders, a significant portion of such
premium would not be received until October 2002 or later, and the Cafco
Shareholders bear all of the risk that (i) there will be claims against the
escrow reserves and (ii) the contingent liabilities will exceed the amount
presently contemplated by the Company.
The reporting persons do not believe that the market price of the
Common Stock represents any indicia of value, since there is a very thin market
for the Common Stock. However, the Merger Consideration exceeds the most
recently reported bid prices for the Common Stock prior to the execution of the
Merger Agreement.
Page 16 of 22 Pages
<PAGE>
The reporting persons do believes that, because the Company is not
engaged in any business activities, valuations based on a multiple of earnings
are not relevant. The Company's main asset is cash and cash equivalents.
Since the Company in not engaged in any business activities, the reporting
persons do not believe that it has any value as a going concern.
In considering the various factors to determine fair value, the directors
gave the greatest weight to the price at which the stock was purchased by the
Company from shareholders, which approximated the liquidation value. In February
1998, the Company purchased an aggregate of 107,370 shares, or approximately
24.7% of the Company's Common Stock, of which an aggregate of 100,232 shares of
Common Stock were owned by Messrs. Paul and Seymour Milstein and related parties
(collectively, the "Milstein Group"). The price per share was $33 in cash plus
.8125 shares of Integrated Brands. The price was the result of substantial arms
length negotiation between the Company and the representatives of Milstein
Group. Mr. Paul Milstein is a former director of the Company and was one of the
Fleet Assignees and Option Lenders. Messrs. Paul and Seymour Milstein are
experienced investors and were familiar with the Company and its financial
condition and the terms of the Multi-Arc sale, including the Multi-Arc Escrow
and the extent of the Company's contingent liabilities. In April 1998, the
Company purchased 40,488 shares of Common Stock from other shareholders,
including an investment banking firm, at the same price as had been negotiated
by the Milstein Group. No event has occurred subsequent to the purchase of the
stock from the Milstein Group and the other shareholders which would affect the
value of the Company's Common Stock either positively or negatively.
Because the Company's assets are substantially all liquid assets and the
Company has no independent value as a going concern, the price paid to the
selling shareholders approximated the estimated liquidation value. The Merger
Payment being paid to the unaffiliated shareholders reflects a modest premium
over the amount paid to the Milstein Group and other selling shareholders. In
addition, following the completion of the Merger, the Cafco Shareholders will
have continuing control of a corporation which may, under certain circumstances,
have the ability to use certain substantial tax loss carryforwards.
The Transaction requires the approval of the holders of two-thirds of the
outstanding shares of Common Stock on the record date for determining
shareholders entitled to vote on the Merger. Since Cafco holds 75.3% of the
outstanding shares, it has the ability to approve the transaction without the
votes of any other shareholder. The agreement does not require the approval of
any specified percentage of non-affiliated shareholders.
Because the Company's assets are substantially all liquid assets and the
Company has no independent value as a going concern, the price paid to the
selling shareholders approximated the estimated liquidation value, with the
amount of the Multi-Arc Escrow being offset by a reserve in the amount of the
asset. The estimated liquidation value being paid to the unaffiliated
shareholders reflects a modest premium over the amount paid to the Milstein
Group and other selling shareholders. However, in the event that the Company's
obligations are less than the amount reflected as a reserve on the Company's
June 30, 1998 balance sheet, which is included in the Company's Form 10-Q for
the quarter ended June 30, 1998, the Cafco Shareholders may realize a premium of
up to 18.8% above the Merger Payment being made to the nonaffiliated
Shareholders. In approving the terms of the Merger, the directors of the
Company, who are also the directors of Cafco, recognized that the Cafco
Shareholders may realize such premium. However,
Page 17 of 22 Pages
<PAGE>
to the extent that there is a premium to the Cafco Shareholders, a significant
portion of such premium would not be received until October 2002 or later, and
the Cafco Shareholders bear all of the risk that (a) there will be claims
against the escrow reserves and (b) the contingent liabilities will exceed the
amount presently contemplated by the Company. Accordingly, the board determined
that the terms of the Merger are fair to the nonaffiliated shareholders.
The fairness of the terms of the Merger were determined by the Company's
board of directors, which is comprised of the same individuals as the board of
directors of Cafco, without the engagement of any representative of the
nonaffiliated shareholders. In addition, the board did not engage any third
party to evaluate the terms of the Merger from a fairness point of view.
Furthermore, since Cafco owns 75.3% of the outstanding Common Stock, it will be
able to approve the Merger without the votes of any other shareholders.
Notwithstanding the foregoing, the board of directors believes that, for the
reasons described above, the terms of the Merger are fair to the nonaffiliated
shareholders. The directors believe that the arms-length negotiations with
knowledgeable major shareholders to determine a price at which the Company would
purchase the shares of such holders provided the Company with a basis for
evaluating the fairness of the transaction to the Company's shareholders. The
New York Business Corporation Law sets forth a procedure whereby shareholders
who do not believe that the terms of the Merger are fair can exercise their
rights of appraisal. The other reporting persons concur with the Company as to
the fairness of the transaction to the nonaffiliated persons and the basis for
the determination of such fairness.
The information contained under the caption "The Merger" in the Information
Statement is incorporated by reference in this Item 8.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
The Company has not obtained a report, opinion or appraisal from any
outside party relating directly or indirectly to either the Transaction or
recent purchases by the Company from shareholders.
The information contained under the caption "The Merger" in the
Information Statement is incorporated by reference in this Item 9.
Item 10. Interest in Securities of the Issuer.
(a) Cafco presently owns 215,529 shares of Common Stock, representing 75.3%
of the outstanding shares of Common Stock. Messrs. Andrew J. Frankel and Alan N.
Cohen, are affiliates of both the Company and Cafco, and they may be deemed
beneficial owners of such shares to the extent of their economic interest in
Cafco. The shareholders of Cafco are Messrs. Frankel and Cohen, members of their
families, including adult children, and entities, including Frankhill, which are
affiliated with either Mr. Frankel or Mr. Cohen.
(b) During the 60 days prior to the date of this Schedule 13E-3, neither
Cafco nor Messrs. Frankel and Cohen engaged in any transactions involving the
Common Stock other than the transfer in July 1998 of the Common Stock owned by
the Cafco Shareholders (including Messrs. Frankel and Cohen) to Cafco in
contemplation of the Merger.
Page 18 of 22 Pages
<PAGE>
The information contained under the captions "Beneficial Ownership of
Securities" and "The Merger" in the Information Statement is incorporated by
reference in this Item 10.
Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities.
Neither the Company, Cafco or Messrs. Frankel or Cohen has any agreement,
understanding or relationship in connection with the Transaction, other than the
Merger Agreement, except that Cafco intends to vote its shares of Common Stock
in favor of the Transaction.
The information contained under the captions "Summary" and "The Merger" in
the Information Statement is incorporated by reference in this Item 11.
Item 12. Present Intention and Recommendation of Certain Persons with Regard to
the Transaction.
Cafco intends to vote its shares of Common Stock in favor of the
Transaction.
The information contained under the captions "Summary" and "The Merger" in
the Information Statement is incorporated by reference in this Item 12.
Item 13. Other Provisions of the Transaction.
Pursuant to Sections 910 and 623 of the NYBCL, holders of Common Stock who
object to the Merger may exercise their appraisal rights in the manner set forth
in said Sections 910 and 623.
No contractual provision has been made by the Company or Cafco to allow
unaffiliated shareholders to obtain access to corporate files of the Company or
to obtain counsel or appraisal services at the expense of the issuer. Section
624 of the NYBCL provides shareholders with certain rights of inspection. The
Company will permit any shareholder who complies with said Section 624 to
examine and make extracts from the corporate records covered by such section.
The information contained under the caption "Rights of Dissenting
Shareholders" in the Information Statement is incorporated by reference in this
Item 13.
Item 14. Financial Information.
The financial statements and other financial information is incorporated by
reference to the Information Statement as follows:
Location in
Description Information Statement
----------- ---------------------
(a) Audited financial statements for the fiscal Financial Statements(1)
years ended September 30, 1997 and 1996
(b) Unaudited financial statements for the six Financial Statements(1)
months ended March 31, 1998 and 1997
(c) Ratio of earnings to fixed charges Not Applicable
(d) Book value per share Selected Financial Data
- ---------------
(1) The Company's Form 10-K for the fiscal year ended September 30, 1997 and
Form 10-Q for the quarter ended June 30, 1998 are included in the Information
Statement as Appendices A and B, respectively.
Page 19 of 22 Pages
<PAGE>
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The Company will pay the expenses of the Transaction, which are
estimated at $150,000.
(b) No persons have been engaged by the Company to make solicitations or
recommendations in connection with the Transaction.
The information contained under the caption "General Information" in the
Information Statement is incorporated by reference in this Item 15.
Item 16. Additional Information.
Not Applicable.
Item 17. Material to be Filed as Exhibits.
(a) None.
(b) None.
(c) (i) Agreement of Merger dated July 15, 1998, by and among Cafco and
the Company, which is filed as Appendix C to the Information
Statement.
(ii) Stock Purchase Agreement, dated as of February 13, 1998, by and
among the Company and Milstein Group.(1)
(iii) Stock Purchase Agreement, dated as of February 13, 1998, by and
among the Company and SO Charitable Trust.(1)
(iv) Stock Purchase Agreement, dated as of February 20, 1998, by and
among the Company and Henry Benach and Benhome Associates L.P.(1)
(v) Stock Purchase Agreement, dated as of April 17, 1998, by and
among the Company and Glenn F. Woo, Spear Leeds & Kellogg and
Jonathan Blaustein.(2)
(d) The Information Statement.
(e) Rights of Appraisal, which is included under the caption "Rights of
Dissenting Shareholders" in the Information Statement.
(f) None.
Page 20 of 22 Pages
<PAGE>
_____________
(1) Filed as an exhibit to the Company's Form 8-K Current Report, with a
report date of February 13, 1998, and incorporated hereby by
reference.
(2) Previously filed.
Page 21 of 22 Pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
October 27, 1998 ANDAL CORP.
By:/s/ Andrew J. Frankel
-----------------------------------------
Andrew J. Frankel
Chairman and CEO
CAFCO HOLDING CORPORATION
By:/s/ Andrew J. Frankel
-----------------------------------------
Andrew J. Frankel
Chairman and CEO
/s/ Andrew J. Frankel
-----------------------------------------
Andrew J. Frankel
/s/ Alan N. Cohen
-----------------------------------------
Alan N. Cohen
Page 22 of 22 Pages
<PAGE>
Appendix A
Cross Reference Sheet*
<TABLE>
<CAPTION>
Caption in Schedule 13E-3 Caption in Information Statement
- ------------------------- --------------------------------
<S> <C>
Issuer and Class of Security Subject to the General Information; Summary; The Merger
Transaction
Identity and Background Certain Relationships and Related
Transactions; The Merger
Past Contracts, Transactions and Negotiations Certain Relationships and Related
Transactions; The Merger
Terms of the Transaction The Merger
Plans or Proposals of the Issuer or Affiliate The Merger
Source and Amounts of Funds or Other The Merger
Consideration
Purpose(s), Alternatives, Reasons and Effects Summary; The Merger; Material Federal
Income Tax Consideration
Fairness of the Transaction The Merger
Reports, Opinions, Appraisals and Certain The Merger
Negotiations
Interest in Securities of the Issuer Beneficial Ownership of Securities;
The Merger
Contracts, Arrangements or Understandings with Summary; The Merger
Respect to the Issuer's Securities
Present Intention and Recommendation of Certain Summary; The Merger
Persons with Regard to the Transaction
Other Provisions of the Transaction Rights of Dissenting Shareholders
Financial Information Financial Statements
Persons and Assets Employed, Retained or General Information
Utilized
Additional Information Not Applicable
Material to be Filed as Exhibits Not Applicable
</TABLE>
__________
* The information contained in the Information Statement in incorporated by
reference in this Schedule 13E-3.
