SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[ ]
Filed by a Party other than the Registrant[X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Citadel Holding Corporation
(Name of Registrant as Specified In Its Charter)
Dillon Investors, L.P.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[X] $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:
____________________________________________________________
____________
2) Aggregate number of securities to which transaction
applies:
____________________________________________________________
____________
3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11:
____________________________________________________________
____________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
____________
[ ] 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:
________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________
3) Filing Party:
________________________________________________
4) Date Filed:
________________________________________________
PRELIMINARY COPY NOVEMBER ___, 1994
DILLON INVESTORS, L.P.
__________
PROXY STATEMENT
In Opposition to the Board of Directors of
Citadel Holding Corporation
___________
ANNUAL MEETING OF STOCKHOLDERS
OF CITADEL HOLDING CORPORATION
To be held on December 12, 1994
To the Stockholders of Citadel Holding Corporation:
INTRODUCTION
This Proxy Statement, the accompanying letter and the
enclosed GREEN proxy card are furnished in connection with the
solicitation of proxies (the "Proxy Solicitation") by and on behalf
of Dillon Investors, L.P., a Delaware limited partnership
("Dillon"), to be used in connection with the Annual Meeting of
Stockholders (the "Annual Meeting") of Citadel Holding Corporation,
a Delaware corporation (the "Company"), to be held on December 12,
1994, and at any and all adjournments or postponements thereof.
Dillon is soliciting proxies pursuant to this Proxy Statement to
elect the nominees of Dillon named herein (the "Dillon Nominees")
to the Board of Directors of the Company (the "Board") and to
oppose the authorization of additional shares of Common Stock of
the Company, as proposed by the Company. The Annual Meeting will
be held on December 12, 1994 at such time and place as specified
in the Company's Notice of Annual Meeting of Stockholders and Proxy
Statement (the "Company Proxy Statement"). This Proxy Statement
and the enclosed GREEN proxy card are first being furnished to
stockholders of the Company on or about November ___, 1994.
Based on the number of shares of common stock, par value
$.01 per share (the "Shares"), of the Company outstanding as of
November 4, 1994 (6,669,924) as reported in the preliminary copies
of the Notice of Annual Meeting of Stockholders and Proxy Statement
(the "Company Preliminary Proxy Statement") filed by the Company
with the Securities and Exchange Commission (the "Commission") on
October 28, 1994, Dillon, Roderick H. Dillon, Jr., Roderick H.
Dillon, Jr. - IRA and Roderick H. Dillon, Jr. Foundation (which are
sometimes referred to herein collectively as the "Dillon Entities")
hold 659,000 Shares or approximately 9.88% of the outstanding
Shares, which were purchased from March 17, 1993 through March 16,
1994 at prices ranging from $20.22 per share to $4.54 per share.
On November ___, 1994, the last reported sales price on the
American Stock Exchange for the Shares was $_______.
By letter dated October 13, 1994, Dillon asked the Board
to respond publicly to inquiries concerning the current business
strategy of the Company and the best course of action to maximize
stockholder value. The Board did not respond to Dillon's request.
Dillon now seeks your votes in support of an alternative slate of
nominees at the Annual Meeting. Dillon believes that you, the true
owners of the Company, should have the right to decide for
yourselves how the Company should be operated.
The Dillon Nominees are committed to maximizing
stockholder value. They believe that such value is not maximized
through the current operation of the Company as a real estate
company, as evidenced by the low sales price of $3.50 for the
Shares reported on September 7, 1994 (which was the lowest price
at which the Shares have traded in the past ten years) and the
price range for the Shares since that date. Instead, if elected,
the Dillon Nominees intend to propose, subject to their fiduciary
duties, that the Company (i) effect a pro rata distribution of the
shares of Fidelity Federal Bank, a Federal Savings Bank
("Fidelity"), currently held by the Company to the stockholders of
the Company (the "Distribution"), and (ii) thereafter promptly
dissolve and liquidate the Company's remaining assets at the best
available price (the "Dissolution and Liquidation").
DILLON URGES YOU TO SIGN, DATE AND RETURN TO DILLON THE
ENCLOSED GREEN PROXY CARD TO VOTE FOR THE ELECTION OF THE DILLON
NOMINEES AS DIRECTORS.
REASONS TO REPLACE THE PRESENT BOARD WITH THE DILLON NOMINEES
The Company has incurred significant operating losses
during recent years, primarily as a result of the poor performance
of Fidelity, a former wholly-owned subsidiary of the Company. The
Company reported a net loss of $92.0 million ($13.95 per share) for
the second quarter of 1994, and a loss of $106.8 million ($16.19
per share) for the six months ended June 30, 1994, as reported in
the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1994 (the "Form 10-Q"). As a result of such losses, the
Company commenced a series of steps to internally reorganize in
order to, among other things, strengthen Fidelity's operations.
The Company ultimately entered into a restructuring and
recapitalization transaction (the "Restructuring and
Recapitalization"), major aspects of which were consummated on
August 4, 1994.
Pursuant to the Restructuring and Recapitalization,
Fidelity transferred certain of its real estate assets to a newly-
formed subsidiary of the Company and made a public offering which
resulted in the reduction of the Company's equity interest in
Fidelity from 100% to approximately 16.18%. The Board announced
that, following the Restructuring and Recapitalization, the Company
would become a real estate company and focus on the servicing and
enhancement of its real estate portfolio.
Unfortunately, as noted by the Company in the Form 10-
Q, the results of the Restructuring and Recapitalization were
materially less favorable to the Company than had previously been
anticipated. In light of such results, by letter dated October 13,
1994, Dillon asked the Board to respond publicly to inquiries
concerning the current business strategy of the Company, the action
required to effect a pro rata distribution to the stockholders of
the Company of the shares of Fidelity currently held by the
Company, whether a dissolution of the Company and liquidation of
its assets would be the best strategy to maximize stockholder
value, and why, in light of the consummation of the Restructuring
and Recapitalization, the Company is still registered with the
Office of Thrift Supervision (the "OTS") as a savings and loan
holding company.
The Board did not respond to Dillon's inquiries and
appears unwilling to consider proposals to operate the Company in
any manner other than as a real estate company. Dillon is
concerned that the Board may dispose of the shares of Fidelity held
by the Company and may use the proceeds of such disposition in
furtherance of its stated plans to develop the Company as a real
estate company.
Dillon's investment of over $3.8 million in the Company
was not made for the purpose of investing in a real estate company.
Dillon further believes that most other stockholders did not intend
to invest in a real estate company. Dillon now seeks your votes
in support of an alternative slate of nominees at the Annual
Meeting. Dillon believes that you, the true owners of the Company,
should have the right to decide for yourselves how the Company
should be operated. Our nominees are committed to maximizing
stockholder value by establishing the stockholders' direct
investment in Fidelity through the Distribution and eliminating the
remaining real estate operations of the Company through the
Dissolution and Liquidation, as described below.
YOU CAN TAKE SOME IMMEDIATE STEPS TO HELP OBTAIN THE
MAXIMUM VALUE FOR YOUR SHARES BY SIGNING, DATING AND RETURNING YOUR
GREEN PROXY CARD FOR THE ELECTION OF THE DILLON NOMINEES TO THE
BOARD.
THE DISTRIBUTION
In connection with the Restructuring and
Recapitalization, the Company's equity interest in Fidelity was
reclassified into 4,202,243 shares of Fidelity's non-voting Class
B Common Stock, representing approximately 16.18% of the
outstanding shares of Fidelity.
Dillon believes that, to maximize stockholder value and
establish the stockholders' direct investment in Fidelity, the
Board should effect a pro rata distribution of the shares of
Fidelity currently held by the Company to the stockholders of the
Company (the "Distribution"). The value of such shares of Fidelity
are apparently being discounted by the market due to the operation
of the Company as a real estate company, wherein such shares are
mixed with the Company's real estate assets. Dillon therefore
believes that the shares of Fidelity would be more valuable to the
stockholders of the Company if held by them directly, as opposed
to being held by the Company.
If elected, the Dillon Nominees intend to fix a record
date for the Distribution as soon as practicable after the Annual
Meeting and distribute to each holder of Shares on such record
date, on a pro rata basis, shares of Fidelity. As a result of the
Distribution, stockholders of the Company would hold shares in both
the Company and Fidelity.
Shares of Fidelity's non-voting Class B Common Stock
received by any stockholders of the Company who are not affiliates
of the Company will automatically be converted into shares of
Fidelity's voting Class A Common Stock. Furthermore, since all
remaining shares of Fidelity's non-voting Class B Common Stock
would then likely represent less than 10% of the total outstanding
Common Stock of Fidelity on a fully diluted basis, all remaining
shares of Fidelity's Class B Common Stock would also be converted
into shares of Fidelity's Class A Common Stock. Dillon therefore
believes that, following the Distribution, each of the Company's
stockholders will most likely receive shares of Fidelity's Class
A Common Stock.
The exact timing and details of the Distribution will
depend on a variety of factors and legal requirements, including
determination by the Dillon Nominees that the Fidelity shares
received in the Distribution by the Company's stockholders (other
than affiliates, if any, of Fidelity) will be freely transferable.
This may require registration of the Fidelity shares pursuant to
existing registration rights for such shares which are not
exercisable by the Company until March 31, 1995.
Dillon and the Dillon Nominees can give no assurance that
the Distribution will be consummated or as to the timing of the
Distribution if it is consummated. Although the Dillon Nominees
currently intend to propose the Distribution generally on the terms
described above, it is possible that, as a result of substantial
delays in the ability of the Dillon Nominees to effect such a
transaction, information hereafter obtained by the Dillon Nominees,
changes in general economic or market conditions or in the business
of the Company, or other presently unforeseen factors, the
Distribution may not be so proposed, may be delayed or abandoned,
or may be proposed on different terms. Although it has no current
intention to do so, Dillon and the Dillon Nominees expressly
reserve the right not to propose the Distribution or to propose a
distribution on terms other than those described above, if they,
in the exercise of their fiduciary duties, believe such action to
be appropriate.
THE DISSOLUTION AND LIQUIDATION
Following the consummation of the Distribution, the
Dillon Nominees intend to dissolve the Company and liquidate the
Company's remaining assets for the best available price as promptly
as practicable (the "Dissolution and Liquidation").
Dillon's recommendation to effect the Dissolution and
Liquidation is based on its determination that no reasonable
business alternatives will exist for the Company following the
Distribution. Therefore, Dillon believes that, at such time, the
Dissolution and Liquidation, rather than the operation of the
Company as a real estate company, is the most appropriate course
of action.
To effect the Dissolution and Liquidation, the Dillon
Nominees intend to adopt a plan of dissolution and liquidation
promptly following the consummation of the Distribution. Pursuant
to Section 275 of the Delaware General Corporation Law (the
"DGCL"), such a plan will require the approval of stockholders
owning a majority of the Common Stock. If elected, the Dillon
Nominees intend to promptly seek such approval. Dillon and its
affiliates intend to vote any Shares owned by them in favor of the
Dissolution and Liquidation.
In the Dissolution and Liquidation, the Company will take
all necessary steps to dissolve pursuant to the provisions of the
DGCL, including the filing of a Certificate of Dissolution with the
Delaware Secretary of State. Upon such a filing, the Company will
cease business operations. The Company's corporate existence will
continue thereafter, but solely for the purpose of liquidating its
assets, winding up its business affairs, paying its liabilities and
distributing any cash remaining to stockholders. Based upon
statements made by the Company in the Form 10-Q, Dillon believes
that the Company's real estate assets (including assets on which
the Company holds purchase options) have a market value in excess
of their purchase price or option exercise price.
The exact timing and details of the Dissolution and
Liquidation will depend on a variety of factors and legal
requirements. Dillon and the Dillon Nominees can give no assurance
that the Dissolution and Liquidation will be consummated or as to
the timing of the Dissolution and Liquidation if it is consummated.
Although the Dillon Nominees currently intend to propose the
Dissolution and Liquidation generally on the terms described above,
it is possible that, as a result of substantial delays in the
ability of the Dillon Nominees to effect such a transaction,
information hereafter obtained by the Dillon Nominees, changes in
general economic or market conditions or in the business of the
Company, or other presently unforeseen factors, the Dissolution and
Liquidation may not be so proposed, or may be delayed or abandoned
(whether before or after stockholder authorization or consent).
Although it has no current intention to do so, Dillon and the
Dillon Nominees expressly reserve the right not to propose the
Dissolution and Liquidation or to propose a dissolution and
liquidation on terms other than those described above, if they, in
the exercise of their fiduciary duties, believe such action to be
appropriate.
REGULATORY APPROVALS
Because the Company is registered with the OTS, on
November 4, 1994, the Dillon Entities filed with the OTS a request
for interpretive advice and advice with respect to the enforcement
of the OTS' regulations governing acquisitions of savings
associations and savings and loan holding companies set forth in
Part 574 of Title 12 of the Code of Federal Regulations (the "OTS
Control Regulations"). The Dillon Entities are requesting a
determination by the OTS that the OTS will refrain from initiating
or recommending enforcement action against the Dillon Entities if
the Dillon Entities acquire proxies or otherwise obtain votes from
stockholders of the Company enabling the Dillon Entities to elect
the Dillon Nominees without first filing a change of control notice
or rebuttal of control submission pursuant to the OTS Control
Regulations. If the OTS does not provide the determination sought
by the Dillon Entities, the Dillon Entities may elect to (i) not
proceed with the proxy solicitation, (ii) file with the OTS a
change of control notice or rebuttal of control submission, or
(iii) proceed with the proxy solicitation without submitting a
change of control notice or rebuttal of control submission on the
basis that the Company no longer has conclusive or rebuttable
control of Fidelity, notwithstanding the Company's savings and loan
holding company registration status.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Proposal 1: Election of Directors
Dillon proposes that the Dillon Nominees named below be
elected as directors of the Company, to serve until the next Annual
Meeting of Stockholders and until their successors shall have been
duly elected and qualified.
The accompanying GREEN proxy card will be voted in
accordance with the stockholder's instructions on such GREEN proxy
card. As to the election of directors, stockholders may vote for
the election of the entire slate of Dillon Nominees or may withhold
their votes by marking the proper box on the GREEN proxy card.
Stockholders also may withhold their votes from any of the Dillon
Nominees by writing the name of such Dillon Nominee in the space
provided on the GREEN proxy card. If the enclosed GREEN proxy card
is signed and returned and no direction is given, it will be voted
FOR the election of each of the Dillon Nominees.
The directors are to be elected by a plurality of the
votes cast. Withheld votes and broker non-votes (i.e., Shares held
by a broker or nominee which are represented at the Annual Meeting,
but with respect to which such broker or nominee is not empowered
to vote on a particular proposal) will not be counted toward a
nominee's achievement of a plurality.
Each of the Dillon Nominees has consented to serve as a
director of the Company, if elected. Dillon does not expect that
any of the Dillon Nominees will be unable to stand for election,
but in the event that one or more vacancies in the slate of Dillon
Nominees should occur unexpectedly, Shares represented by the
accompanying GREEN proxy card will be voted for a substitute
candidate or candidates selected by Dillon, provided that Dillon
does not intend to vote proxies received for any substitute for an
unaffiliated Dillon Nominee who is not also unaffiliated with
Dillon.
Delaware law provides, in effect, that the Board shall
consist of such number of persons as is fixed by, or in the manner
provided in, the Company's By-Laws. The By-Laws of the Company
provide that there shall be five directors. In the event the Board
acts to reduce the number of directors to fewer than five, the
persons named as proxies on the enclosed GREEN proxy card will vote
in favor of the appropriate number of Dillon Nominees (or
substitute nominees as provided above). Should the Board act to
increase the number of directors to greater than five, such proxies
will vote in favor of the five Dillon Nominees (or substitute
nominees as provided above) and will abstain as to any remaining
positions, since the proxies named on the enclosed GREEN proxy card
cannot vote for more than five nominees. In such event, Dillon
presently intends to nominate additional nominees and distribute
new proxy cards in compliance with the rules of the Commission.
Of the five Dillon Nominees, one (Mr. Dillon) is employed
by or otherwise affiliated with Dillon, and the remaining four are
neither employed by nor affiliated with Dillon. None of the Dillon
Nominees is affiliated with or has or has had any business
relationship with the Company, other than as a stockholder.
The Dillon Nominees are listed below and have furnished
to Dillon the following information concerning their principal
occupations, business addresses and certain other matters. All
Dillon Nominees are citizens of the United States.
Dillon Nominees
Roderick H. Dillon, Jr., 38, has served as Chief
Investment Officer of Dillon Capital Management Limited
Partnership, an investment advisory and management firm, since July
1993. From June 1986 through June 1993, Mr. Dillon was Vice
President of Loomis, Sayles & Co., Inc., an investment advisory
firm. Mr. Dillon's business address is Suite 1410, 21 East State
Street, Columbus, Ohio 43215-4228.
Bradley C. Shoup, 36, is a partner in Batchelder &
Partners, Inc., a financial advisory firm, and has held such
position for more than the past five years. Mr. Shoup's business
address is 4180 La Jolla Village Drive, Suite 560, La Jolla,
California 92037.
Timothy M. Kelley, 36, is Secretary, Treasurer and
General Counsel of Donald W. Kelley & Associates, Inc., a real
estate consulting and development firm, and has held such position
for more than the past five years. Mr. Kelley's business address
is 250 E. Broad Street, 11th Floor, Columbus, Ohio 43215.
Ralph V. Whitworth, 39, has served as President of
Whitworth & Associates, a corporate consulting firm, since 1988.
From 1986 until 1993, Mr. Whitworth was President of United
Shareholders Association, a prominent shareholder rights group.
Mr. Whitworth's business address is 801 Pennsylvania Avenue, N.W.,
Suite 747, Washington, D.C. 20004.
Jordan M. Spiegel, 32, is Executive Vice President of A.
B. Laffer, V. A. Canto & Associates, an economic consulting firm,
and has held such position for more than the past five years. Mr.
Spiegel's business address is Regents Square One, 4275 Executive
Square, Suite 330, La Jolla, California 92037.
Dillon has agreed to indemnify each of the Dillon
Nominees against all liabilities, including liabilities under the
federal securities laws, in connection with this proxy solicitation
and such person's involvement in the operation of the Company,
including the Distribution and the Dissolution and Liquidation, and
to reimburse such Dillon Nominee for his out-of-pocket expenses.
Dillon strongly encourages you to vote on the enclosed
GREEN proxy card FOR each of the Dillon Nominees listed above.
Proposal 2: Authorization of Additional Shares of Common Stock
The Company Preliminary Proxy Statement indicates that
the Company's current Board has approved and is seeking the
approval of the Company's stockholders of an amendment to the
Company's Restated Certificate of Incorporation to double the
authorized number of Shares from the 10,000,000 currently
authorized to 20,000,000. The Company Preliminary Proxy Statement
indicates that only 6,669,924 Shares are outstanding.
Dillon believes that the Company's stockholders should
not approve such an increase in the authorized number of Shares.
The Dillon Nominees believe that, since the Shares are currently
trading at near all-time low levels and the current actions of the
Board are not maximizing stockholder value, the Company's
stockholders should not authorize additional Shares for sale at
this time. The Company Preliminary Proxy Statement does not
describe any specific uses for which such additional Shares are
needed and does not offer any rationale for such proposal other
than to "have flexibility in acquiring working capital in the
future." Dillon and the Dillon Nominees have already indicated
above their plans for the Company in the event the Dillon Nominees
are elected. The Distribution and the Dissolution and Liquidation
will not require any additional Shares to be issued.
Furthermore, though Dillon is unaware of any specific
plans of the Company or its Board in this regard, authorized but
unissued Shares could be used in the future by the Company in ways
that would make it more difficult to effect a change in control of
the Company or replace the Company's Board of Directors, for
instance through a private sale to purchasers allied with
management or by diluting the stock ownership of the person seeking
to gain control of the Company. Any such action could also have
the effect of deterring an offer for the Shares at a substantial
premium over the then current market price, even if such an offer
were favored by a majority of the Company's stockholders not
affiliated with the Company. Dillon notes that on October 21,
1994, the Company sold 74,300 Shares to Craig Corporation
("Craig"), a company affiliated with two of the Company's Board
members, which resulted in Craig's owning more than 10% of the
outstanding Shares. The agreed upon purchase price was the lesser
of the average trading price for the Shares on (a) the three
trading days preceding October 21, 1994 or (b) the five trading
days following October 21, 1994. Dillon believes the actual price
paid in such transaction was $3.85 per share. The issuance of
additional Shares may have, among others, a dilutive effect on
earnings per Share and on the equity and voting rights of holders
of Shares in addition to the effect of discouraging a change in
control or unsolicited business combination proposals.
The accompanying GREEN proxy card will be voted in
accordance with the stockholder's instruction on such GREEN proxy
card. As to the Company's Proposal 2, stockholders may vote for
or against or abstain from voting on such Proposal. If the
enclosed GREEN proxy card is signed and returned and no direction
is given, it will be voted AGAINST Proposal 2. In order to become
effective, Proposal 2 would require the affirmative vote of a
majority of the Shares outstanding. Withheld votes and broker non-
votes will, therefore, have the same effect as a vote against
Proposal 2.
Dillon intends to vote AGAINST the Company's Proposal 2
and strongly recommends that all other stockholders also vote
AGAINST such Proposal.
VOTING AND PROXY PROCEDURES
Shares represented by properly executed GREEN proxy cards
will be voted as directed or, if no direction is indicated, will
be voted FOR the election of each of the Dillon Nominees (Proposal
1) and AGAINST the authorization of additional Shares (Proposal 2).
A GREEN proxy card will not be voted for the election of all the
Dillon Nominees as directors if authority to do so is specifically
withheld on the GREEN proxy card and will not be voted for the
election of any Dillon Nominee whose name is written in the
indicated space on the GREEN proxy card. If any other matters are
properly brought before the Annual Meeting, such proxies will be
voted on such matters as Dillon, in its sole discretion and
consistent with the federal proxy rules, may determine. Unless
voted or revoked in the manner provided below, such proxy will
expire twelve months from the date executed.
For the proxy solicited hereby to be voted, the enclosed
GREEN proxy card must be signed, dated and returned to Dillon, c/o
Garland Associates, Inc., P.O. Box 3355, Grand Central Station, New
York, New York 10163-3355, in time to be voted at the Annual
Meeting. Execution of a GREEN proxy card will not affect your
right to attend the Annual Meeting and to vote in person. Any
proxy may be revoked at any time prior to the Annual Meeting by
delivering written notice of revocation or a later dated proxy to
Dillon, c/o Garland Associates, Inc., or to the Secretary of the
Company at Citadel Holding Corporation, 600 North Brand Boulevard,
Glendale, California 91203, or by voting in person at the Annual
Meeting. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL
MEETING.
Only holders of record as of the close of business on
November [4], 1994 (the "Record Date") will be entitled to vote at
the Annual Meeting. If you sold your Shares before the Record Date
(or acquired them without voting rights attached after the Record
Date), you may not vote such Shares. If you were a stockholder of
record on the Record Date, you will retain the voting rights in
connection with the Annual Meeting even if you sell or sold such
Shares after the Record Date. Accordingly, it is important that
you vote the Shares held by you on the Record Date or grant a proxy
to vote such Shares whether or not you still own such Shares.
If your Shares are held in the name of a brokerage firm,
bank or nominee on the Record Date, only it can vote your Shares
and only upon receipt of your specific instructions. Accordingly,
please contact the person responsible for your account and give
instructions for your Shares to be voted.
According to the Company Preliminary Proxy Statement,
6,669,924 Shares were outstanding as of November 4, 1994 and
eligible to vote. Each Share outstanding is entitled to one vote
on each matter to be voted at the Annual Meeting.
SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling, printing and
mailing this Proxy Statement and the accompanying form of proxy,
and the cost of soliciting proxies, will be borne by Dillon.
Dillon intends to seek reimbursement from the Company for these
expenses if the Dillon Nominees are elected to the Board, and such
reimbursement will not be submitted to a vote of the stockholders
of the Company.
In addition to the use of the mails, proxies may be
solicited by the Dillon Nominees and certain employees or
affiliates of Dillon by telephone, telegram, personal solicitation,
and live or prerecorded audio or video presentations, for which no
compensation will be paid to such individuals. Banks, brokerage
houses and other custodians, nominees and fiduciaries will be
requested to forward the solicitation material to the customers for
whom they hold Shares, and Dillon will reimburse them for their
reasonable out-of-pocket expenses.
Dillon has retained Garland Associates, Inc. for
advisory, information agent and proxy solicitation services, for
which Garland Associates, Inc. will be paid a fee of $4,000, and
will be reimbursed for its expense charges, which are anticipated
to be approximately $2,500. Dillon has also agreed to indemnify
Garland Associates, Inc. against certain liabilities and expenses
in connection with its engagement, including certain liabilities
under the federal securities laws. Garland Associates, Inc. will
solicit proxies from individuals, brokers, bank nominees and other
institutional holders. Approximately _______ persons will be
utilized by Garland Associates, Inc. in its solicitation efforts,
which may be made by telephone, telegram, facsimile and in person.
Dillon estimates that total expenditures relating to the
Proxy Solicitation will be approximately $__________, including
fees payable to Garland Associates, Inc. directly attributable to
the Proxy Solicitation. To date, Dillon has spent approximately
$__________ of such total estimated expenditures.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any proposal of a stockholder to be presented at the 1995
Annual Meeting of Stockholders must be received in the Office of
the Secretary of the Company by the date specified in the Company
Proxy Statement in order to be considered for inclusion in the
Board's Proxy Statement and form of proxy relating to that Meeting.
VOTING YOUR SHARES
Whether or not you plan to attend the Annual Meeting, we
urge you to vote FOR the election of the DILLON NOMINEES (Proposal
1) and AGAINST the authorization of additional Shares (Proposal 2)
by so indicating on the enclosed GREEN proxy card and immediately
mailing it in the enclosed envelope. You may do this even if you
have already sent in a different proxy solicited by the Board. It
is the latest dated proxy that counts. Execution and delivery of
a proxy by a record holder of Shares will be presumed to be a proxy
with respect to all Shares held by such record holder unless the
proxy specifies otherwise.
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE GREEN PROXY CARD TODAY.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE BOARD, YOU
MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE DILLON
NOMINEES AND AGAINST PROPOSAL 2 BY SIGNING, DATING AND MAILING THE
ENCLOSED GREEN PROXY CARD.
<PAGE>
SCHEDULE I
PARTICIPANTS IN THE PROXY SOLICITATION
Set forth below is the name, business address and present
occupation or employment or business of the "participants" in the
Proxy Solicitation, other than the Dillon Nominees. None of the
participants has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) during the past ten
years.
Participant
Business Address Description of Business or
Present Principal Occupation
Dillon
Investors, L.P.
Suite 1410
21 East State Street
Columbus, OH 43215-4228
A limited partnership,
of which Roderick H.
Dillon, Jr. is the sole
general partner,
principally engaged in
the purchase and sale of
securities for its own
account.
Roderick H.
Dillon, Jr.
- IRA
Suite 1410
21 East State Street
Columbus, OH 43215-4228
An individual retirement
account, of which
Roderick H. Dillon, Jr.
is the sole beneficiary.
Roderick H. Dillon,
Jr. Foundation
Suite 1410
21 East State Street
Columbus, OH 43215-4228
A charitable foundation,
of which Roderick H.
Dillon, Jr. is the sole
trustee.
Bradley C.
Shoup-IRA
Suite 560
4180 LaJolla Village
Drive
LaJolla, CA 92037
An individual retirement
account, of which
Bradley C. Shoup is the
sole beneficiary.
SCHEDULE II
BENEFICIAL OWNERSHIP OF
COMPANY SHARES BY PARTICIPANTS IN THE SOLICITATION
On the date hereof, Dillon is the record holder of
647,000 Shares, and together with the other Dillon Entities
beneficially owns, directly or indirectly, an aggregate of 659,000
Shares, including the Shares held of record by Dillon (representing
in the aggregate approximately 9.88% of the 6,669,924 Shares
outstanding as of November 4, 1994, according to the Company
Preliminary Proxy Statement).1. Mr. Shoup, through an IRA for
which he is the sole beneficiary, beneficially owns 2,000 Shares
(representing approximately .03% of the outstanding Shares).
Messrs. Kelley, Whitworth and Spiegel do not own any Shares. The
Shares now owned by each "participant" in the Proxy Solicitation
were purchased in the transactions described in Schedule IV hereto.
Except as otherwise set forth in this Schedule II, none
of Dillon, the Dillon Nominees or any associate of any of the
foregoing persons or any other person who may be deemed a
"participant" in the Proxy Solicitation is the beneficial or record
owner of any Shares. Except as otherwise set forth in this
Schedule II or in Schedule IV, none of Dillon, the Dillon Nominees
or any associate of any of the foregoing persons or any other
person who may be deemed a "participant" in the Proxy Solicitation
has purchased or sold any Shares within the past two years,
borrowed any funds for the purpose of acquiring or holding any
Shares, or is or was within the past year a party to any contract,
arrangement or understanding with any person with respect to any
Shares. There is not any currently proposed transaction to which
the Company or any of its subsidiaries was or is a party, in which
any of Dillon, the Dillon Nominees or any associate or immediate
family member of any of the foregoing persons or any other person
who may be deemed a "participant" in the Proxy Solicitation had or
will have a direct or indirect material interest. None of Dillon,
the Dillon Nominees or any associate or any of the foregoing
persons or any other person who may be deemed a "participant" in
the Proxy Solicitation has any arrangement or understanding with
any person with respect to any future employment by the Company or
its affiliates, or with respect to any future transactions to which
the Company or its affiliates will or may be a party.
____________________________
1. The 659,000 Shares include (i) 647,000 Shares held by Dillon,
(ii) 5,000 Shares held by Roderick H. Dillon, Jr., (iii) 5,000
Shares held by Roderick H. Dillon Jr. - IRA, and (iv) 2,000 Shares
held by Roderick H. Dillon, Jr. Foundation, as reported in Dillon's
Schedule 13D dated March 17, 1994, as amended by Amendment No. 1
dated September 8, 1994, and as further amended by Amendment No.
2 dated October 17, 1994 and Amendment No. 3 dated November 3,
1994.
SCHEDULE III
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AS A GROUP
The following table sets forth, based solely on the Company
Preliminary Proxy Statement, the security ownership of certain
persons, other than the participants in the Proxy Solicitation, who
have advised the Company that as of November 4, 1994, each
"beneficially" owned more than 5% of the outstanding Shares, and
the beneficial ownership of Shares by all directors and officers
of the Company as a group as of November 4, 1994.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percentage
Name and Address Ownership 1. of Class 2.
<S> <C> <C>
Craig Corporation
116 North Robertson Boulevard
Los Angeles, CA 90048 667,012 10.0%
All directors and
executive officers
as a group (5 persons) 667,012 10.0%
</TABLE>
Except as otherwise noted, the information concerning the
Company contained in this Proxy Statement has been taken from or
is based upon documents and records on file with the Commission and
other publicly available information. Although Dillon does not
have any knowledge that would indicate that any statements
contained herein based upon such documents and records are untrue,
Dillon does not take any responsibility for the accuracy or
completeness of the information contained in such documents and
records, or for any failure by the Company to disclose events that
may have occurred and may affect the significance or accuracy of
any such information but which are unknown to Dillon.
____________________________
1. Except as otherwise indicated, the persons listed as beneficial
owners of the Shares have the sole voting and investment power with
respect to such Shares.
2. All Shares subject to options granted by the Company are deemed
to be outstanding for the purpose of computing the percentage of
outstanding Shares.
SCHEDULE IV
TRANSACTIONS IN SHARES OF CITADEL HOLDING CORPORATION
BY PARTICIPANTS IN THE SOLICITATION
Purchases since November ___, 1992 were made as shown below.
All transactions were effected in open market transactions and,
unless otherwise indicated, entered into by Dillon.
<TABLE>
<CAPTION>
Transaction Number Per Share
Date of Shares Price (1) Total Price
<S> <C> <C> <C>
03/17/93 (2) 5,000 $20.22 $101,104
03/17/93 (3) 1,000 20.22 20,224
05/04/93 (4) 5,000 12.72 63,604
05/04/93 (5) 1,000 12.72 12,724
01/27/94 27,500 6.27 172,299
01/28/94 75,000 7.05 528,775
02/04/94 10,000 6.43 64,275
02/04/94 75,000 6.55 491,275
02/04/94 8,000 6.55 52,425
02/07/94 7,500 6.31 47,350
02/08/94 7,500 6.19 46,412
02/09/94 10,000 6.30 63,025
02/09/94 200 6.43 1,285
02/15/94 700 6.34 4,435
02/16/94 5,800 6.44 37,348
02/22/94 20,800 6.38 132,789
02/23/94 10,000 6.55 65,525
02/24/94 11,200 6.18 69,185
02/25/94 15,000 6.18 92,650
03/02/94 1,200 5.95 7,135
03/04/94 28,000 6.05 169,425
03/08/94 30,000 5.80 174,025
03/14/94 55,100 5.00 275,729
03/16/94 248,500 4.54 1,128,215
04/22/94 (6) 2,000 6.07 12,140
TOTALS: 661,000 $3,833,378
(1) Rounded to the nearest cent.
(2) Purchased by Roderick H. Dillon, Jr.-IRA
(3) Purchased by Roderick H. Dillon, Jr. Foundation.
(4) Purchased by Roderick H. Dillon, Jr.
(5) Purchased by Roderick H. Dillon, Jr. Foundation.
(6) Purchased by Bradley C. Shoup-IRA.
</TABLE>
If your Shares are held in the name of a brokerage firm,
bank or bank nominee, only they can vote your Shares and only upon
your specific instructions. Accordingly, please contact the
persons responsible for your account and instruct them to execute
the GREEN proxy card.
_________________________________________________________________
______________________
WE URGE YOU TO VOTE FOR THE ELECTION OF THE DILLON NOMINEES AND
AGAINST
PROPOSAL 2 BY SIGNING, DATING AND MAILING THE ENCLOSED GREEN PROXY
CARD.
THE FAILURE TO DO SO MAY BE THE EQUIVALENT OF A VOTE AGAINST
MAXIMIZING
STOCKHOLDER VALUE.
_________________________________________________________________
______________________
If you have any questions or require any additional
information concerning the vote of your Shares at the Annual
Meeting, please contact:
Garland Associates, Inc.
PROXY SOLICITORS
________
(212) 966-0095
PRELIMINARY COPY
[front of proxy card]
PROXY - Citadel Holding Corporation - Solicited by Dillon
Investors, L.P.
for Annual Meeting December 12, 1994
The undersigned, revoking all other proxies heretofore given,
appoints Roderick H. Dillon, Jr. and Bradley C. Shoup, and each of
them, with full power of substitution, as proxy or proxies, to vote
all shares of the undersigned of Common Stock of Citadel Holding
Corporation at the Annual Meeting of Stockholders on December 12,
1994, and at any adjournment or postponement thereof, as instructed
below upon the proposals which are more fully set forth in the
Proxy Statement of Dillon Investors, L.P., dated November ____,
1994 (receipt of which is acknowledged) and in their discretion
upon any other matters as may properly come before the meeting,
including but not limited to, any proposal to adjourn or postpone
the meeting.
Dillon Investors, L.P. Recommends a Vote FOR all Nominees listed
and AGAINST Proposal 2
1. ELECTION OF
DIRECTORS: ___ FOR all nominees listed below (except as marked to
the contrary below)
___ WITHHOLD AUTHORITY to vote for all nominees
listed below
Roderick H. Dillon, Jr., Bradley C. Shoup, Timothy M. Kelley, Ralph V.
Whitworth and Jordan M. Spiegel
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name in the space below):
2. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION:
FOR ___ AGAINST ___ ABSTAIN ___
(Continued on reverse side)
[REVERSE OF PROXY CARD]
The shares represented hereby will be voted in accordance with
the directions given in this proxy. If not otherwise directed
herein, shares represented by this proxy will be voted FOR Proposal
1 and AGAINST Proposal 2.
Dated: , 1994
(Signature)
(Signature if jointly held)
Title:
Please sign exactly
as name appears
herein. When shares
are held by joint
tenants, both should
sign; when signing as
an attorney, executor,
administrator, trustee
or guardian, give full
title as such. If a
corporation, sign in
full corporate name
by President or other
authorized officer.
If a partnership, sign
in partnership name
by authorized partner.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE ENCLOSED.
