PROXY STATEMENT
OF
GENERAL PACIFIC CAPITAL INC.
TO SHAREHOLDERS OF FOXMOOR INDUSTRIES, LTD.
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement is being furnished to holders of common stock
("Stockholders"), $.01 par value (the "Common Stock") of Foxmoor Industries,
Ltd. ("Foxmoor" or the "Company") in connection with the solicitation of proxies
by General Pacific Capital Inc., a Washington corporation ("Genpac") for use at
the Annual Meeting of Shareholders to be held at :00 p.m. on June 16, 1997, and
any adjournments thereof (the "Annual Meeting"). Genpac is soliciting proxies in
opposition to the Company's current Board of Directors and for election of
Genpac's nominees to the Board of Directors at the Annual Meeting.
At the Annual Meeting, holders of Company Common Stock will be asked to
vote for: (i) the election of directors of the Company to serve until the next
annual meeting; and (ii) such other business as may properly come before the
Annual Meeting. Genpac urges you to sign, date and return the enclosed BLUE
Proxy Card (the "Blue Proxy"). Unless otherwise indicated by you, the BLUE Proxy
authorizes the persons named therein to vote, and such persons will vote,
properly executed and duly returned proxies FOR the election of the Genpac
nominees for director. Genpac is not presently aware of any other matters to be
brought before the Annual Meeting. However, should other matters be brought
before the Annual Meeting, the persons named in the proxies will vote in
accordance with what they consider to be the best interests of the Stockholders
and the Company.
YOU MAY VOTE FOR ELECTION OF GENPAC'S NOMINEES BY SIGNING THE ENCLOSED
BLUE PROXY, MARKING, DATING, AND RETURNING IT IN THE POSTAGE PAID ENVELOPE
PROVIDED. IF YOU HAVE ALREADY SUBMITTED A PROXY TO THE BOARD OF DIRECTORS OF THE
COMPANY, YOU MAY CHANGE YOUR VOTE BY SIGNING, MARKING, DATING AND RETURNING THE
ENCLOSED BLUE PROXY, WHICH MUST BE DATED AFTER THE PROXY YOU SUBMITTED TO THE
BOARD OF DIRECTORS.
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Revocation of Proxy
This Proxy Statement is first being given or sent to Stockholders on or
about , 1997. Any Stockholder giving a proxy has the power to revoke it at any
time before it is voted. The proxy may be revoked by written notice to Genpac at
Suite 205 - 15225 Thrift Avenue, White Rock, British Columbia, Canada V4B 2K9,
on or before , 1997, by written notice to the Secretary of the Company at its
principal offices, or by delivery in person at the Annual Meeting to prior to
the commencement of the Annual Meeting. Attendance at the Annual Meeting will
not, in itself, constitute revocation of a previously granted proxy. The
principal offices of the Company are located at 3801 E. Florida Avenue, Suite
105, Denver, Colorado, 80210.
Record Date
The Company has established April 21, 1997 as the record date ("Record
Date") for the Annual Meeting. Only Stockholders of record at the close of
business on the Record Date are entitled to vote at the Annual Meeting. The
Company has disclosed that as of the close of business on the Record Date, there
were 1,918,150 shares of Common Stock outstanding, which represent all of the
voting securities of the Company. Each share of Common Stock is entitled to one
vote. Shareholders do not have cumulative voting rights in the elections of
directors.
Voting and Quorum
The holders of a majority of the Common Stock issued and outstanding
and entitled to vote at the Annual Meeting, if present in person or represented
by proxy, constitute a quorum for purposes of acting on the election of
directors. Abstentions and shares held by brokers that are present but not voted
because brokers were prohibited from exercising discretionary authority will be
counted as present for the purposes of determining if a quorum is present. Under
applicable law and the Company's articles of incorporation and bylaws, and
assuming that a quorum is present, the persons elected as directors of the
Company will be the three persons receiving the largest number of votes cast at
the Annual Meeting by shares present in person or by proxy. In the election of
directors, abstentions and broker non-votes will have no effect as they will not
have been cast in favor of any nominee.
Important
Carefully review the Proxy Statement and the enclosed materials. YOUR
PROXY IS IMPORTANT. IF YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON
YOUR PROXY IS THE ONLY MEANS AVAILABLE FOR YOU TO VOTE. No matter how may or how
few shares you own, please vote FOR Genpac nominees for director by so
indicating and by signing, marking, dating and mailing the enclosed BLUE Proxy
promptly. If you own shares of the Company but your stock certificate is held
for you by a brokerage firm, bank or other institution, it is very likely that
the stock certificate is actually in the name of such brokerage firm, bank or
other institution. If so, only it can execute a BLUE Proxy and vote your shares
of Common Stock. The brokerage firm, bank or other institution holding the
shares for you is required to forward proxy materials to you and solicit
instructions
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with respect to the granting of proxies; it cannot vote your shares unless it
receives your specific instructions.
If you have any questions about giving your proxy or require assistance
in voting your shares, please call Ray Welt, General Pacific Capital, Inc., at
604-538-2221.
ELECTION OF DIRECTORS
Genpac and its officer, directors and shareholders are the primary
solicitor of this Proxy Statement. Related individuals and parties are described
below under "Other Participants, Certain Agreements and Related Additional
Information." The current directors of the Company are W. Ross C. Corace, H.
James Nerlin, and Norvell Rose. Mr. Corace has been a director since 1981, Mr.
Nerlin has been a Director since 1983 and Mr. Rose has been a director since
1989. According to the Bylaws of the Company, the Board of Directors serve until
the next Annual Meeting of Shareholders. The current Board, however, has served
intact since 1989, due largely to the fact that there has been no Annual Meeting
since August 25, 1992.
Genpac's nominees for director are Paul H. Eagland, John R. Lefebvre
and Michael J. Smith. Biographical information of the nominees is set forth
below.
John R. Lefebvre, Jr.
Mr. Lefebvre, 42, has performed investor relations services for the
Company since February, 1990. Mr. Lefebvre has also owned Shareholder Relations,
a financial public relations firm that has represented over thirty public
companies, from August 1988 to the present. From March 1986 to August 1988, he
served as Vice President of Finance for American Pain and Stress, Inc., a
publicly-held company specializing in physical therapy. From June 1981 until
March 1986 he served as an Account Executive with Thomson McKinnon Securities.
Mr. Lefebvre also was an Account Executive with Merrill Lynch between October
1978 until March 1986.
Paul H. Eagland
Mr. Eagland, 42, has served as the President of General Pacific
Holdings, Inc., a Canadian company, since 1991. General Pacific Holdings invests
in public securities of other Canadian and overseas companies involved in real
estate, oil and gas operation, consumer building products, brewery, and dairy
industries.
Michael J. Smith
Mr. Smith, 48, has been a Director and Officer of MFC Bancorp Ltd.
(formerly Arbatax International Inc.) from 1986 to the present. From 1986 to
1996, he served as a Director and Officer of Mercer International Inc. Mr. Smith
was also a co-founder of the Prentiss Howard Group in 1980, and served as a
Director and Officer until 1985. Currently, Mr. Smith serves
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as a Director and Officer of Logan International Corporation, Drummond Financial
Corporation, and Beta Well Service, Inc.
Each of the nominees has consented to serve as a director, and, if
elected, intends to discharge his duties as director of the Company in
compliance with all applicable legal requirements, including the general
fiduciary obligations imposed upon corporate directors. By executing a BLUE
Proxy, each Stockholder will revoke any prior proxy and will not be voting his
or her shares for the nominees of the Company's management.
Genpac's Opposition to the Current Board
The Company, and by association, the current directors, have performed
poorly in the decade of the 1990's and have not even attempted to explain the
disappointing performance to Stockholders. The Company has not held an Annual
Meeting since August 25, 1992. The Company's Stockholders have been denied the
opportunity to voice their opinions on the directions of the Company and denied
access to information typically contained in the Annual Report.
There may be legitimate reasons for denying Stockholder opinion and
access. This much, however, is clear: Since the quarter ended September 30,
1991, the Company's shares have traded between $.75/share and $3.38/share. On
March 3, 1997, the Company's shares were trading at $.75/share. In one of the
greatest "Bull" markets of the 20th century, Common Stock of the Company has
performed poorly and the financial situation of the Company is not improving.
Since 1991, the NASDAQ Stock Market Index has risen 214% and the Russell 3000
Index has risen 212% (See Appendix A, Stock Performance). Genpac believes that
most, if not all, of the Company's poor performance must be attributed to
current management.
On or about October 16, 1996, Mr. Paul Eagland, a principal
shareholder, director and officer of Genpac, contacted Mr. Ross Corace, the
President, Treasurer and a director of the Company to express interest in the
Company's performance. Mr. Eagland offered to provide financial support for the
Company through a purchase of common shares and offered other services,
including board representation. On November 18, 1996, Mr. Corace met with Mr.
Eagland and Mr. Michael J. Smith, a director of Genpac and the CEO of MFC
Bancorp Ltd., concerning a purchase of treasury shares of the Company. Mr.
Corace requested that a written proposal be made to the Company outlining the
details of any offer. On December 2, 1996, Genpac offered to purchase 750,000
shares of the Company's Common Stock at a price of $.75 per share.
The terms of the offer were based on the financial condition of the
Company, its recent operational history and the market price of the Common Stock
at the time of the offer. This transaction would have raised $562,500 for the
Company at a time when the Company's revenues and net income were falling
sharply. On February 14, 1996, Mr. Corace declined Genpac's offer, but instead
offered to allow Genpac to purchase 200,000 shares of the Company from its
treasury at a price of $1.00 per share.
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On March 20, 1997, Genpac filed suit in Chancery Court in Delaware to
compel the Company to hold an Annual Meeting. As a result of a settlement of
that suit, the Company has scheduled its Annual Meeting for June 16, 1997.
Questionable Transactions of Current Management
As stated earlier, Genpac's initial offer was premised on the poor
performance of the Company's stock and the Company's deteriorating financial
position. The initial offer, however, was also a response to mismanagement by
current officers and directors. Consider the following transactions included in
the Form 10-KSB for the year ended June 30, 1996:
o The single largest customer of the Company is First Quality Distribution, Inc.
("First Quality"). As of June 30, 1996, First Quality owed the Company
$1,166,000, a sum equivalent to 30 percent of the Company's net assets
($3,035,910) at that time. First Quality has owed this amount, or amounts of
similar magnitude, for some time and recovery of any part of this debt is
uncertain. Current management has been unable to adequately collect on this
debt, and has not adjusted its balance sheets to reflect the uncertain
collection of the debt. Hence, the Company's current financial position, already
precarious, may actually be overstated.
o The Company made an unsecured loan of $1,035,000 to a company "consultant" --
Genpac questions the use of such a large amount of the Company's liquid capital
where the identity of the consultant and his or her relationship to the Company
has not been disclosed to Stockholders. Moreover, no discussion of the terms and
conditions of repayment has been published.
o The Company repurchased 25,000 Common Shares from an "Officer" of the Company
in the fiscal year ended June 30, 1995 at a cost of $115,000 or $4.60 per share.
The repurchase allowed the Officer to repay a loan to the Company. The Officer,
however, was not named nor was any reason given as to why the Officer was
allowed to sell Common Shares back to the Company at a price of $4.60 per Share
when the highest bid price for the Shares in the open market during the period
of July 1, 1994 to June 30, 1995 was only $2.75 per share.
o During the fiscal year ended June 30, 1995, the Company wrote off $472,540 in
Assignments Receivable and Advances to Contractors, an amount equal to 17.6% of
the Company's net assets at that time. These debtors were not named. Similarly,
the Company listed $190,000 of Assignments Receivable under an allowance for
Doubtful Accounts. The total sum lost and potentially lost under Assignments
Receivables was $662,540.
Financial Performance
The questionable practices of Company management are magnified by the
Company's financial performance. The Company is clearly not moving in the right
direction. Consider the following negative facts and trends included in the
Company's Form 10-KSB for the 1996 fiscal year and the Form 10Q-SB for the six
months ended December 31, 1996:
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The Company was delisted from NASDAQ in the first quarter of the fiscal year
ended June 30, 1991 as a result of its stock price falling below 1/32. At that
point the company did not have the necessary assets to meet the initial
inclusion requirement of NASDAQ. The stock was not relisted until the Company
enacted a One for Twenty Reverse Stock Split. Since the stock was relisted in
the third quarter of the fiscal year ended June 30, 1991, the stock has hovered
between $1.50 and $3.00 per share. As of March 3, 1997, the stock is trading at
$.75 per share. The Company's lagging stock price comes at a time when all major
stock indices have reached all time highs.
Assignment Revenues attributable to the Company's Planned Interim Funding
Program decreased to $369,016 for fiscal 1996 compared to $742,490 for the
previous fiscal year. Moreover, as stated in the Company's Annual 10KSB report,
"The Company experienced a substantial loss in total revenue, decreasing from
$786,843 for [the year ending] June 30, 1995 to $463,928 [for the year ending]
June 30, 1996, a decrease of $322,915 or 41%.
Net earnings have fallen from $323,099 (1994) to $70,558 (1995) to $16,594
(1996). Similarly, earnings per share fell from $.18/share (1994) to $.03/share
(1995) to $.01/share (1996).
For the six months ended December 31, 1996, gross revenues fell to $177,000 from
$249,000 for the same period in the prior year. Management provided no
explanation for this decrease. In fact, management stated in the Form 10Q-SB
that "...gross revenues increased compared to last year..." Genpac believes that
management of a publicly traded company should be more concerned with the
accuracy of its public disclosure than the Company's current management appears
to be.
The Genpac Nominees Course of Action
The current members of the Board of Directors have no incentive to
improve the performance of the Company -- Mr. H. James Nerlin and Mr. Norvell
Rose, who act as directors of Foxmoor alongside Mr. Corace, only own 6,000
Common Shares and 3,000 Common Shares of the Company, respectively. Not only has
the Company been underperforming the stock market as a whole, the current
directors do not have the proper incentive to reverse the negative trends
documented above. Genpac does not believe that stock options are the proper
motivation for managers in that stock option plans provide no risk to the
holder. Instead, Genpac believes that managers and directors should be owners of
stock so that they enjoy gains or suffer losses as do the outside shareholders
and therefore have the same interests as those shareholders in the long-term
performance of the company.
Genpac's nominees, if elected to office, intend to accept Genpac's
offer to purchase 750,000 shares of Common Stock at $1.00 per share. This
transaction would give the Company a much needed infusion of cash at a time when
all relevant financial indicators of the Company are headed in the wrong
direction. The transaction would also give Genpac a 30 percent ownership
position in the Company and provide the new directors with adequate incentive to
improve Company performance.
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At the date hereof, Genpac beneficially owns 33,500 shares of the
Company's Common Stock. Genpac purchased 1,000 shares on February 20, 1997 for a
price of $1.125, 2,000 shares on February 26, 1997 and 5,000 shares on March 5,
1997 at $0.75 per share, 5,000 shares on March 17, 3,000 shares on March 18,
1,000 shares on March 19, 4,700 shares on March 26, 4,300 shares on April 1, and
8,500 shares on April 3 all at a price of $1.00 per share These purchases
represent the only transactions in the securities of the Company by Genpac, MFC
Bancorp Ltd., or Genpac's nominees. None of Genpac's nominees individually own
any shares of the Common Stock, other than John Lefebvre who owns 18,000 shares
which were purchased in at a price of $ .
Genpac's nominees, if elected, also intend to explore alternatives to
enhance shareholder value, including but not limited to (i) increasing the
Company's revenues, earnings and assets through strategic acquisitions and
partnerships; (ii) adopting a stock repurchase program; and (iii) aggressively
working to collect existing receivables of the Company. No assurance can be
given that Genpac's nominees, if elected will prove successful or that Genpac
will purchase additional shares.
Genpac believes that the sector in which Foxmoor operates, that is the
financial services industry, providing work in progress funding (short-term
construction loans) for the home- remodeling industry, is an excellent business.
We believe there are considerable opportunities for growth in this industry.
Foxmoor is limited in that it does not employ an executive team with
national experience in the sector and its financial resources are insufficient
for corporate development. If Genpac's nominees are elected directors of the
Company, they intend to hire managers with solid track records in the financial
services industry and provide them with appropriate compensation including
salaries normal in the industry as well as performance bonuses related to the
increase in company profitability as opposed to the stock price. We believe that
managers should be focused on revenue and profit growth and not on an increasing
share price, an increase which may have nothing to do with the managers'
abilities but rather with overheated stock markets.
Stock options will only be considered in the event that the Company has
the chance to hire personnel of extraordinary ability and history. Even then,
the Genpac nominees will be highly reluctant to issue options unless and until
those personnel have proven their worth to Foxmoor's owners.
Genpac also intends to seek more substantive financial capability for
Foxmoor by way of lines of credit, additional equity over time, stronger
supplier financing and other means that will provide increases in earnings per
share. We have no desire to burden Foxmoor with debt but we will consider the
issuance of debt instruments in the event that we can secure long-term financing
at attractive rates from lenders with knowledge of the industry, its upturns and
downturns.
Genpac nominees and their employees have strong records in acquisitions and
divestitures. We believe that there are similar companies to Foxmoor which may
need financial support and, in some cases, owners seeking liquidity for
privately held companies. Acquisitions
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can provide an entry into geographic or demographic areas which are unavailable
for the Company due to lack of management strength or barriers to entry as a
result of mature markets without room for new competition.
The strategy we wish to follow is to increase the long-term value of
Foxmoor. The implementation of this strategy places considerable importance on
the current financial and operational status of Foxmoor. While it is possible to
review publicly disclosed information about the Company, Genpac's nominees can
not be certain of current events at the Company. For instance, Foxmoor's news
release on April 1, 1997 stating that its Tacoma warehouse has discontinued
sales of metal siding due to "slow demand" causes some concern. In private
discussions with Mr. Corace in December, 1996, Mr. Corace stated that this
warehouse was producing pre-tax income of 32% on sales of approximately $930,000
per year. Genpac's nominees are concerned at the rapid degradation of this
market and are therefore also concerned about all operations at the Company. The
Company can not experience growth in its sector unless it provides a strong
base. If its markets are slowing or the sector is proving difficult, it make
take some time to rectify the situation with the help of new and experienced
managers. In concert with Genpac's nominees to the board of directors, it may be
decided that the Company can not grow in its current environment and may seek to
change direction.
As stated previously, Genpac believes that the short-term funding of
house remodeling is a good business. However, an internal review of the
Company's affairs may prove that belief to be incorrect and Genpac nominees may
find it necessary to change the Company's mandate. If so, Genpac commits to
advising the owners of the Company in a timely and straightforward manner of its
decision.
Expenses of Solicitation
Proxies may be solicited by members of Genpac and by its nominees by
mail, telephone, telegraph, and personal solicitation. Banks, brokerage houses,
and other custodians, nominees and fiduciaries will be requested to forward
solicitation materials to the beneficial owners of the Common Stock that such
institutions hold of record. Genpac will reimburse such institutions for their
reasonable out of pocket expenses.
The entire expense of preparing and mailing this Proxy Statement and
any other soliciting material and the total expenditures relating to the
solicitation of proxies (including, without limitation, costs, if any related to
advertising, printing, fees of attorneys, financial advisors, solicitors,
consultants, accountants, public relations, transportation and litigation) will
be borne by Genpac.
Genpac estimates that its total expenditures relating to the
solicitation of proxies will be approximately $50,000. Total cash expenditures
to date relating to this solicitation have been approximately $16,000. In
addition to the use of the mails, officers and regular employees of Genpac may
also, without being additionally compensated, solicit proxies by mail,
telephone, telegram, facsimile or personal contact.
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Other Participants, Certain Agreements and Related Additional Information
Genpac is a corporation formed by Mr. Paul Eagland and MFC Bancorp Ltd. to
own shares of the Company. It is presently not engaged in any active business
activities. Mr. Eagland and MFC Bancorp Ltd. each own 50% of the shares of
Genpac. Mr. Eagland is President of Genpac. The directors of Genpac are Mr. Paul
Eagland and Mr. Michael J. Smith. The business address of Genpac is Suite 205 -
15225 Thrift Avenue, White Rock, British Columbia, Canada V4B 2K9.
MFC Bancorp Ltd. (formerly Arbatax International Inc.) is a company
headquartered in Geneva, Switzerland, that operates in the financial service
industry and, in particular, in private and merchant banking operations
internationally. The business address of MFC Bancorp Ltd. is 13 Route de
Florissant, 7th Floor, CH1211 Geneva 12 Switzerland. MFC Bancorp Ltd.'s shares
are registered under Section 12(g) of the Securities Exchange Act of 1934.
Michael J. Smith is President of MFC Bancorp and Chairman of the Board of
Directors.
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Appendix A -- Stock Performance
The following graph compares the cumulative total shareholder return
(stock price appreciation plus reinvested dividends) on the Common Stock against
the cumulative total return of the NASDAQ Total U.S. Index and the Russell 3000
Index for the five years ending December 31, 1996. The graph assumes that $100
was invested on January 1, 1992 and in each of the Common Stock, the NASDAQ
Total U.S. Index and the Russell 3000 Index, and that all dividends were
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, RUSSELL 3000 INDEX AND NASDAQ MARKET INDEX
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Foxmoor Industries Ltd. 100 158.97 174.35 241.02 189.74 169.22
Russell 3000 Index 100 114.72 133.12 134.44 167.93 211.61
Nasdaq Market Index 100 107.75 132.27 145.04 170.11 214.14
</TABLE>
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PROXY FOR THE JUNE 16, 1997 ANNUAL MEETING OF SHAREHOLDERS
OF FOXMOOR INDUSTRIES LTD.FOXMOOR INDUSTRIES, LTD.
This Proxy is solicited by General Pacific Capital, Inc.
The undersigned shareholder(s) of Foxmoor Industries, Ltd. (the
"Company") hereby appoints Paul H. Eagland and Michael J. Smith, and each of
them, as proxies, each with the power of substitution to represent and to vote,
as designated below, all the shares of Common Stock of the Company held of
record by the undersigned on April 21, 1997 at the Annual Meeting of
Shareholders to be held on June 16, 1997, and at any and all adjournments
thereof.
1. ELECTION OF DIRECTORS
Nominees:
Paul H. Eagland Michael J. Smith John R. Lefebvre
|_| FOR all nominees listed above
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
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Shares represented by properly executed proxies will be voted in accordance
with instructions appearing on the proxy and in the discretion of the proxy
holders as to any other matter that may properly come before the Annual Meeting
of Shareholders. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM 1, AND IN THE DISCRETION OF THE
PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OF SHAREHOLDERS:
Dated: ____________________________________, 1997
__________________________________________________
Signature(s)
__________________________________________________
Please sign as name(s) appears on this proxy and date this proxy. If a
joint account, each joint owner must sign. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the capacity in which
you are signing.
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