SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section
240-14a-11(c) or Section 240.14a-12
Rodman & Renshaw Capital Group, Inc.
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(Name of Registrant as Specified in Its Charter)
Rodman & Renshaw Capital Group, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii),
14a-8(i)(1), or 14a-6(j)(2).
[ ] $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:
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(2) Aggregate number of securities to which
transaction applies:
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(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule 0-11:
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(4) Proposed maximum aggregate value of
transaction:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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COMMON
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ITEMS 1 AND 2.
- --------------------------------------------------
FOR AGAINST ABSTAIN
ITEM 1 - APPROVAL OF / / / / / /
CONVERSION OF
PREFERRED STOCK
ITEM 2 - RATIFICATION / / / / / /
OF AUDITORS
COMMENTS/ADDRESS CHANGE
Please mark this box if you
have written comments/address
change on the reverse side. / /
RECEIPT IS HEREBY ACKNOWLEDGED
OF THE RODMAN & RENSHAW CAPITAL
GROUP, INC. NOTICE OF MEETING AND
PROXY STATEMENT.
Signature(s)
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Date
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- ----------------
Note: Please sign as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
RODMAN & RENSHAW CAPITAL GROUP, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1994
P THIS PROXY IS SOLICITED ON BEHALF OF THE RODMAN
& RENSHAW CAPITAL GROUP, INC. BOARD OF DIRECTORS
R
The undersigned hereby appoints James D.
Van De Graaff and John T. Hague, and each of
them, proxies for the undersigned, with full
O power of substitution, to vote all shares of
Rodman & Renshaw Capital Group, Inc. Common
Stock which the undersigned may be entitled
to vote at the Special Meeting of Stockholders
X of Rodman & Renshaw Capital Group, Inc., Chicago,
Illinois, on Thursday, November 17, 1994 at
9:00 A.M., or at any adjournment thereof,
upon the matters set forth on the reverse side
and described in the accompanying Proxy
Y Statement.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE
SIDE TO VOTE ON ANY ITEM. IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS
RECOMMENDATION, PLEASE SIGN THE REVERSE SIDE;
NO BOXES NEED TO BE CHECKED.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS/ADDRESS
BOX ON REVERSE SIDE
(Continued and to be
signed on the other side)
PRELIMINARY COPY
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 South LaSalle Street
Chicago, Illinois 60603
(312) 977-7800
To Our Stockholders:
You are cordially invited to attend the Special
Meeting of Stockholders (the "Special Meeting") of
Rodman & Renshaw Capital Group, Inc. (the "Company"),
to be held on November 17, 1994, at 9:00 A.M., Central
Standard Time, at the Stouffer Riviere Hotel, 1 West
Wacker Drive, Chicago, Illinois.
At this Special Meeting, stockholders will be called
upon to authorize the conversion of each outstanding
share of Series A Non-Voting Convertible Preferred
Stock, $0.01 par value per share and to ratify the
appointment of Coopers & Lybrand as independent
auditors for the transition period ending December 31,
1994.
The Notice of Special Meeting and Proxy Statement
follow herein. Please be assured that we consider it
important for your shares to be represented and voted
at the Special Meeting. Please promptly mark, sign
and date the enclosed Proxy and return it in the
enclosed envelope to ensure that your shares will be
represented. If you do attend the Special Meeting,
you may withdraw your Proxy and vote in person, if you
wish.
Sincerely,
/s/ Jorge Lankenau Rocha
-------------------------
Jorge Lankenau Rocha
Chairman of the Board
October 19, 1994
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 South LaSalle Street
Chicago, Illinois 60603
(312) 977-7800
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1994
TO THE STOCKHOLDERS OF RODMAN & RENSHAW CAPITAL GROUP,
INC.:
A Special Meeting of Stockholders (the "Special
Meeting") of Rodman & Renshaw Capital Group, Inc.,
a Delaware corporation (the "Company"), will be held
on November 17, 1994, at 9:00 A.M., Central Standard
Time, at the Stouffer Riviere Hotel, 1 West Wacker
Drive, Chicago, Illinois, for the following purposes:
1. To authorize the conversion of each outstanding
share of the Company's Series A Non-Voting
Convertible Preferred Stock, $.01 par value per
share, into 13,793.103 shares of the Company's
Common Stock, $.09 par value per share.
2. To ratify the appointment of Coopers & Lybrand
as independent auditors for the Company and its
subsidiaries for the transition period from
June 25, 1994, through December 31, 1994.
Holders of record of Common Stock of the Company at
the close of business on October 13 will be entitled
to notice of and will be eligible to vote on all
matters presented at the Special Meeting and any
adjournments thereof.
By order of the Board of Directors,
/s/ James D. Van De Graaff
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James D. Van De Graaff
Secretary
October 19, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE
THAT YOUR SHARES WILL BE REPRESENTED AT SUCH MEETING.
YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU
ATTEND THE MEETING.<PAGE>
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 South LaSalle Street
Chicago, Illinois 60603
(312) 977-7800
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PROXY STATEMENT
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SPECIAL MEETING OF STOCKHOLDERS
November 17, 1994
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This Proxy Statement and the accompanying Notice of
Special Meeting and form of proxy are being furnished
to the stockholders of Rodman & Renshaw Capital Group,
Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the
Board of Directors of the Company for use at the
Special Meeting of Stockholders (the "Special
Meeting") to be held on November 17, 1994, at
9:00 A.M., Central Standard Time, at the Stouffer
Riviere Hotel, 1 West Wacker Drive, Chicago, Illinois,
and any adjournments thereof, for the purposes set
forth in the attached Notice of Special Meeting.
These proxy materials are being mailed on or about
October 19, 1994 to holders of record of the Company's
Common Stock at the close of business on October 13.
A proxy may be revoked by a stockholder prior to its
exercise by written notice to the Secretary of the
Company, by submission to the Secretary of another
proxy bearing a later date or by voting in person at
the Special Meeting. Such notice or later proxy will
not affect a vote on any matter taken prior to the
receipt thereof by the Company. The mere presence at
the Special Meeting of the stockholder appointing the
proxy will not revoke the appointment. If not
revoked, a properly executed and returned proxy will
be voted at the Special Meeting in accordance with the
instructions indicated on the proxy by the
stockholder, or, if no instructions are indicated,
will be voted FOR the proposal to authorize conversion
of each outstanding share of the Company's Series A
Non-Voting Convertible Preferred Stock, $.01 par value
per share (the "Preferred Stock"), into 13,793.103
shares of the Company's Common Stock, $.09 par value
per share (the "Common Stock"), and FOR ratification
of the appointment of Coopers & Lybrand as the
Company's independent auditors for the transition
period ending December 31, 1994.
All expenses incurred in connection with the
solicitation of proxies will be borne by the Company.
The Company will request brokerage firms, nominees,
custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by
such persons and will reimburse such persons for their
reasonable out-of-pocket expenses in forwarding such
materials.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company's authorized capital stock consists of
20,000,000 shares of Common Stock, and 5,000,000
shares of Preferred Stock. As of August 31, 1994,
4,576,837 shares of Common Stock were issued and
outstanding. As of the same date, 150 shares of
Preferred Stock were issued and outstanding.
Holders of record of the Company's Common Stock at the
close of business on October 13 are entitled to notice
of and to vote at the Special Meeting and any
adjournments thereof. Each holder of Common Stock is
entitled to one vote per share for the election of
directors and on all other matters to be voted on by
the Company's stockholders. Inasmuch as each share of
Common Stock is entitled to one vote, the total voting
power of all such outstanding shares of Common Stock
as of August 31, 1994 was therefore 4,576,837 votes.
Holders of Common Stock entitled to exercise more than
50% of the voting rights are able to cast a sufficient
number of votes to control the affairs of the Company
subject to a vote of stockholders. Abaco Casa de
Bolsa, S.A. de C.V., Abaco Grupo Financiero ("Abaco"),
which holds approximately 52% of the outstanding
Common Stock, has advised the Company that it intends
to vote its shares for the conversion of the
Preferred Stock into Common Stock and for the
ratification of the appointment of Coopers & Lybrand.
The presence in person or by proxy at the Special
Meeting of the holders of a majority of the issued and
outstanding shares of Common Stock shall constitute a
quorum.
With respect to the proposal to authorize conversion
of the Preferred Stock, a stockholder may mark the
accompanying form of proxy to (i) vote for approval of
the proposal, (ii) vote against approval of the
proposal or (iii) abstain from voting on the proposal.
Assuming that a quorum is present at the Special
Meeting, the affirmative vote of a majority of the
shares of stock voted on the proposal is required for
approval of the proposal. Proxies marked to abstain
from voting with respect to this proposal will not
affect the outcome.
With respect to the proposal to ratify appointment of
Coopers & Lybrand, a stockholder may mark the
accompanying form of proxy to (i) vote for approval of
the proposal, (ii) vote against approval of the
proposal or (iii) abstain from voting on the proposal.
Assuming that a quorum is present at the Special
Meeting, the affirmative vote of a majority of the
shares of stock represented at the meeting and
entitled to vote on the matter is required for
approval of the proposal. Proxies marked to abstain
from voting with respect to this proposal will have
the legal effect of voting against the proposal.
Proxies submitted by brokers for shares beneficially
owned by other persons may indicate that all or a
portion of the shares represented by such proxies are
not being voted with respect to approval of the
conversion of the Preferred Stock. This is because
the rules of the New York Stock Exchange do not permit
a broker to vote stock held in street name with
respect to such matters in the absence of instructions
from the beneficial owner of the stock. The shares
represented by broker proxies which are not voted with
respect to the conversion of the Preferred Stock will
be treated as abstentions and will not affect the
outcome of such vote.
The following table sets forth information concerning
the beneficial ownership of the Company's Common Stock
by (i) each stockholder owning more than 5% of the
outstanding Common Stock, (ii) each director of the
Company; (iii) each person serving as the Company's
chief executive officer during the last completed
fiscal year, the Company's four most highly
compensated executive officers, other than the chief
executive officer, at the end of the last fiscal year,
and one additional individual who would have been
among the four most highly compensated executive
officers but for the fact that he was not serving as
an executive officer at the end of the fiscal year and
(iv) all current directors and executive officers of
the Company as a group. Messrs. Chigas, Helfand,
Karmin and Mains are no longer employed by the Company
and all unexercised options granted to them by the
Company have been cancelled. The information for all
persons listed on the table is as of August 31, 1994.
Amount and
Nature of
Beneficial Percent
Identity of Holder Ownership (1) of Class (2)
- ------------------ --------------- ------------
Abaco(3) 2,363,003 51.63%
Montes Rocallosos
505 Sur, Residential San Agustin, 66260
Garza Garcia, N.L. Mexico
Marshall S. Geller(4) 29,304 5.01
1875 Century Park East, Suite 1770
Los Angeles, California 90067
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Victor C. Chigas(5) 16,720 *
400 E. Randolph Dr. #3005
Chicago, Illinois 60601
Lawrence R. Helfand 43,451 *
860 N. Lake Shore Drive #7M
Chicago, Illinois 60611
Kurt B. Karmin(5) 35,000 *
924 Fisher Lane
Winnetka, Illinois 60093
Norman E. Mains(5) 35,000 *
1065 Fisher Lane
Winnetka, Illinois 60093
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The business address for each of
the following persons is:
Rodman & Renshaw, Inc.
120 S. LaSalle Street
Chicago, Illinois 60603
Alexander C. Anderson(6) 0 --
Paul C. Blackman 2,575 *
Eduardo Camarena Legaspi(6) 0 --
Charles W. Daggs, III 0 --
Jorge Antonio Garcia Garza(6) 0 --
Francis L. Kirby 0 __
Scott H. Lang 50,860 1.11%
Jorge Lankenau Rocha(6) 0 --
Thomas E. Meade 0 --
Mauricio Morales Sada(6) 0 --
Richard Pigott 500 *
David S. Ruder 10,000 *
Joseph P. Shanahan(6) 0 --
David H. Shulman 7,800 *
Frederick G. Uhlmann 35,563 *
All current directors and executive
officers as a group (18 persons)
(3)(6) 107,298 2.33%
__________________
* Less than 1%
(1) Includes 19,125 shares of Common Stock subject to
stock options vested under the Company's Incentive
Stock Option Plan adopted in 1983, as amended and
restated in 1988, and as amended in 1991, and
exercisable within 60 days after August 31, 1994, as
follows: Mr. Blackman, 2,575; Mr. Lang, 11,900;
Mr. Shulman, 2,800; Mr. Uhlmann, 1,450. For each of
the following persons, the number of shares of Common
Stock shown as owned in the table includes shares, as
follows, subject to a contract with Abaco dated as of
January 10, 1994, under which Abaco will acquire such
shares in January, 1995, at a purchase price of $10.50
per share plus interest at 4% per annum:
Mr. Chigas, 16,720 shares; Mr. Helfand, 32,100 shares;
Mr. Karmin, 35,000 shares; Mr. Lang, 21,000 shares;
Mr. Mains, 35,000 shares; and Mr. Uhlmann, 27,000
shares.
(2) Pursuant to the requirements of Rule 13d-3(d)(1)
promulgated under the Securities Exchange Act of 1934,
percentage ownership is calculated as if the shares
subject to immediately exercisable stock options
(including options which become exercisable within 60
days) held by the persons identified in the above
table had been issued to them and were outstanding, as
of August 31, 1994, or within 60 days thereafter.
(3) Parent, defined below, also is deemed the
beneficial owner of Abaco's Common Stock. Abaco has
the right, under the Acquisition Agreement, defined
below, to acquire Common Stock from the Company under
certain circumstances. See "Change of Control." The
figure in the table does not include 2,068,965 shares
of Common Stock that Abaco will receive if the
conversion of the Preferred Stock is approved. See
"Proposal 1 - Authorization of Conversion of Preferred
Stock." Upon such conversion, Abaco would own
4,431,968 shares, or approximately 67% of the Common
Stock then outstanding. Abaco also has the right to
acquire Common Stock from the Company if the Company
issues stock and the result is that Abaco beneficially
owns less than 51% of the total voting power of the
Company's stock. Abaco also has agreed to purchase a
total of 180,060 shares of Common Stock from certain
persons, including those listed in the last sentence
of Note 1, above, in January, 1995.
(4) Based upon a Schedule 13D received from
Mr. Geller.
(5) Based upon the records of the Company's transfer
agent.
(6) Not included are 2,363,003 shares held by Abaco,
of which the referenced person is a director and/or
officer.
CHANGE OF CONTROL
Pursuant to the Acquisition Agreement dated as of
November 17, 1993, (the "Acquisition Agreement") among
the Company, Abaco, and Abaco's parent, Abaco Grupo
Financiero, S.A. de C.V., a Mexican corporation that
owns 99.99% of Abaco ("Parent"), Abaco acquired by
purchase in a tender offer consummated on December 22,
1993, at a price of $10.50 per share, net to the
sellers in cash, 2,363,003 shares of the Company's
Common Stock, as a result of which Abaco is the owner,
at August 31, 1994, of 51.63% of the Company's
outstanding Common Stock, and controls the Company.
The aggregate cost to Abaco of its acquisition of the
Company's Common Stock (including fees and expenses
related thereto) was approximately $26 million and was
financed through the use of internally available funds
and capital contributions from Parent. The Company
entered into agreements with employees of the Company
(other than executive officers) pursuant to the
Acquisition Agreement under which such employees
agreed to the cancellation of employee stock options
on an aggregate of 445,240 shares and were paid by the
Company $2,026,607 in the aggregate (i.e., for each
cancelled option, the difference between $10.50 per
share and the per share option exercise price.)
Pursuant to the Acquisition Agreement, the Company's
Board of Directors (i) amended the Company's by-laws
to (A) provide for not less than eleven and not more
than 21 directors, (B) eliminate the staggered board
provisions, (C) provide that directors must be
Independent Directors (as defined below), Parent
Directors (as defined below), or employees of the
Company or its affiliates and (D) provide that the
term of any director who ceases to qualify as provided
in clause (C) will terminate, and (ii) reconstituted
the Company's Board to consist of eleven Parent
Directors, two Independent Directors and eight Company
Directors (as defined below). Since the consummation
of the tender offer, the Company's Board has
terminated the employment of four of the Company
Directors, who then became ineligible to serve as
Directors, and accepted resignations from two Company
Directors, six Parent Directors, and two Independent
Directors. It has appointed three new Company
Directors, two new Parent Directors and two new
Independent Directors.
An "Independent Director" means any person designated
by Parent who (i) is in fact independent and qualifies
as an independent director in accordance with the New
York Stock Exchange Rules, (ii) is not connected with
Parent or the Company or any of their respective
affiliates as an officer, employee, trustee, partner,
director (other than of the Company) or person
performing similar functions and (iii) has not been
employed by the Company or any of its subsidiaries
during the preceding year. "Parent Directors" means
such persons as are designated by Parent. "Company
Directors" currently means the following persons, each
of whom is a director of the Company: Messrs.
Blackman, Kirby, Lang and Uhlmann; provided that in
the event that any of such directors resigns or
otherwise ceases to be a director for any reason,
then, until December 21, 1996, the other Company
Directors will have the right, by majority vote, to
designate a replacement for such director except in
situations involving reduction of the number of
directors, which during such period will in no event
reduce the number of Company Directors below three.
The other Company Directors designated Messrs.
Blackman, Kirby and Uhlmann pursuant to this
provision. There is currently one vacancy among the
directorships held by the Company Directors. The
Acquisition Agreement provides that until December 21,
1996, (i) the Board will consist of not less than
eleven directors and that the number of Parent
Directors will be equal to one more than the total
number of other Directors, who will consist solely of
two Independent Directors and the Company Directors,
and (ii) the Board's audit committee and compensation
committee shall consist solely of Independent
Directors. The Acquisition Agreement also provides
that until December 21, 1995, the Company will not,
without the approval of a majority of the Company
Directors and Independent Directors, voting together,
engage in any going private transaction, as defined in
Rule 13e-3 under the Securities Exchange Act of 1934
(the "Exchange Act") or take any action to cause the
Common Stock to cease to be registered under the
Exchange Act or delisted from the New York Stock
Exchange.
Under the Acquisition Agreement, if the Company issues
stock and the result of the issuance is that Parent
beneficially owns less than 51% of the Total Voting
Power, as defined below, Parent has the right, for 30
days after notice of such issuance, to acquire from
the Company a number of shares of stock of the class
issued so as to result in Parent beneficially owning
51% of the Total Voting Power. The price of such
shares purchased by Parent is the price at which such
shares had been issued by the Company, except in the
case of shares issued upon exercise of employee stock
options, in which case the price is the fair market
value of the Common Stock on the date that Parent
gives notice of its election to buy. "Total Voting
Power" means the aggregate voting power (in an
election of directors) of all of the Voting Stock.
"Voting Stock" generally means stock having the power
to vote in the election of directors of the Company;
currently, the Common Stock is the only Voting Stock.
Parent and Abaco have agreed in the Acquisition
Agreement that, from December 21, 1993 through
December 21, 1994, Parent will cause the Company to,
and the Company will, continue to provide to employees
of the Company benefits under employee benefit plans
which, in the aggregate, are not less favorable than
those provided by the Company to such employees as of
the date of the Acquisition Agreement. Parent has
further agreed that Parent will, and will cause the
Company to, (i) honor without modification all terms
of all employee severance plans, employment agreements
and severance agreements adopted by the Board of
Directors prior to the date of the Acquisition
Agreement or otherwise permitted by the Acquisition
Agreement; (ii) honor without modification until
December 31, 1994 all terms of employee compensation
arrangements including, without limitation, broker
payout grids and customer commission schedules for the
Company's employees unless such arrangements are
modified with the approval of a majority of the
Company Directors. In addition, the Acquisition
Agreement provides that it is understood and agreed by
Parent, Abaco and the Company that management of the
Company may recommend to the Board of Directors
reasonable and prudent additional compensation of
specified employees for purposes of incentivization
and retention.
Abaco agreed in the Acquisition Agreement that, at all
times after December 21, 1993, it will cause the
Company and its subsidiaries to indemnify each person
who is now, or has been at any time prior to the date
of the Acquisition Agreement, an employee, agent,
director or officer of the Company or of any of the
Company's subsidiaries, together with each such
person's heirs, representatives, successors and
assigns (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), to the same
extent and in the same manner as is now provided in
the respective charters or by-laws of the Company and
such subsidiaries or otherwise in effect on the date
of the Acquisition Agreement, with respect to any
claim, liability, loss, damage, cost or expense,
whenever asserted or claimed ("Indemnified
Liability"), based in whole or in part on, or arising
in whole or in part out of, any matter existing or
occurring at or prior to December 21, 1993. In
addition, Abaco has agreed that it will cause the
Company to maintain in effect at least through
December 21, 1998, the current policies of directors'
and officers' liability insurance maintained by the
Company and the Company's subsidiaries on the date of
the Acquisition Agreement (provided that Abaco may
substitute therefor policies having at least the same
coverage and containing terms and conditions which are
not less advantageous to the persons currently covered
by such policies) with respect to matters existing or
occurring at or prior to December 21, 1993, provided,
that in no event will the Company be required to
expend in any year in excess of 200% of the per annum
rates paid by the Company and its subsidiaries for
such insurance on the date of the Acquisition
Agreement. If, because of the aforementioned ceiling
on premiums, the Company provides policies (at any
time during the five-year period ending December 21,
1998) affording less coverage than is provided under
the Company's existing policies, the Company is
obligated to indemnify the Indemnified Parties for the
balance of such insurance coverage as though it were
the insurer.
PROPOSAL 1
AUTHORIZATION OF CONVERSION OF PREFERRED STOCK
Subsequent to the Change of Control, the Company
substantially replaced its senior management team. On
April 11, 1994, the Company appointed Charles W.
Daggs, III as its President and Chief Executive
Officer. Following Mr. Daggs' appointment, the
Company conducted a review of each of its core
businesses and developed overall Company and
departmental business plans, as discussed in the
Company's Annual Report to Stockholders for the fiscal
year ended June 24, 1994 (the "Annual Report")
enclosed herewith. Management also determined that
the Company was in urgent need of additional capital
both to conduct its current business and to implement
the new business plans. In light of the Company's
financial condition, Abaco appeared to be the
most viable source of this additional capital.
Abaco indicated its willingness to provide the Company
with an aggregate of $25 million in additional
capital, which amount was requested by Mr. Daggs in a
meeting with Abaco management. On June 24, 1994,
Confia, S.A., Institucion de Banca Multiple, Abaco
Grupo Financiero ("Confia, S.A."), a commercial
banking subsidiary of Parent, entered into an
agreement with the Company pursuant to which Confia,
S.A. agreed to provide the Company with $10 million of
capital in the form of a loan. Abaco agreed to
provide the remaining $15 million in capital in the
form of an investment in additional shares of the
Common Stock.
However, the New York Stock Exchange, Inc. (the
"Exchange"), which lists the Company's outstanding
Common Stock, has a policy requiring stockholder
approval of such an issuance. Management of the
Company believed that the process of calling a special
stockholders' meeting to approve the issuance of the
Common Stock and preparing and circulating proxy
materials would have unacceptably delayed the infusion
of capital. Therefore, the Company, with the approval
of the Exchange, entered into a Stock Purchase
Agreement with Abaco as of June 24, 1994 (the "Stock
Purchase Agreement"), under which the Company issued
150 shares of the Preferred Stock to Abaco in a
private placement. Abaco purchased the Preferred
Stock at a price of $100,000 per share (the
"Subscription Price") for an aggregate purchase price
of $15,000,000. The Board of Directors of the Company
unanimously approved the terms and conditions of the
Stock Purchase Agreement upon recommendation of the
Audit Committee.
Under the terms of the Stock Purchase Agreement, each
outstanding share of the Preferred Stock will be
converted automatically into fully paid and
nonconvertible shares of Common Stock upon the
approval of such conversion by the stockholders of the
Company pursuant to the Exchange requirements. The
Preferred Stock is otherwise not convertible. Each
share of Preferred Stock shall be converted into a
number of shares of Common Stock equal to the
Subscription Price divided by the conversion price.
The Company and Abaco agreed in a letter agreement
executed simultaneously with the Stock Purchase
Agreement that the conversion price would be fixed by
the Board of Directors of the Company following
receipt of an analysis of the fair market value of the
Common Stock to be prepared by a "big six" public
accounting firm (the "Valuation Report") and upon
recommendation of the Audit Committee. The Valuation
Report concluded that the fair market value of the
Common Stock to be issued to Abaco in the conversion
was $7.25 per share as of June 24, 1994. This
conversion price would result in the receipt by Abaco
of 13,793.103 shares of Common Stock for every share
of Preferred Stock upon conversion of the Preferred
Stock, assuming stockholder approval of the
conversion. The Company's Audit Committee, comprised
of the Company's two Independent Directors, reviewed
the Valuation Report and unanimously recommended a
conversion price of $7.25 to the full Board of
Directors. The Board of Directors unanimously
approved the conversion price of $7.25 upon the Audit
Committee's recommendation. On June 24, 1994, the
date Abaco purchased the Preferred Stock, the closing
price for the Common Stock was $5.25 and the book
value per share of Common Stock, prior to the
purchase, was $3.41.
EFFECT OF CONVERSION
Assuming stockholder approval of the conversion
features of the Preferred Stock, which approval Abaco
can control through its ownership of the majority of
the voting stock of the Company, Abaco will receive a
total of 2,068,965 shares of Common Stock upon the
automatic conversion of the Preferred Stock. Such
newly issued shares will constitute approximately 31%
of the total number of shares of Common Stock then
outstanding. Abaco currently owns 2,363,003, or
51.63%, of the issued and outstanding shares of Common
Stock. When combined with the Common Stock that Abaco
would receive upon conversion of the Preferred Stock,
Abaco would beneficially own approximately 67% of the
Common Stock outstanding following the conversion.
Because additional shares of Common Stock will be
outstanding following the conversion, the conversion
will have a dilutive effect on the earnings per share
of the Common Stock currently outstanding. See the
Annual Report, Item 8. Selected Financial Data. At
June 24, 1994 prior to the sale of the Preferred
Stock, the Company's book value per share of Common
Stock was $3.41. After the sale, the book value per
share of Common Stock at June 24, 1994 was $6.68.
Assuming the conversion had taken place at June 24,
1994, the book value per share as of that date would
have been $4.60.
While the conversion will also have a dilutive effect
upon the voting power of such Common Stock, it is not
likely to affect the outcome of any stockholder vote
because Abaco already holds a majority of the
outstanding Common Stock of the Company.
DETERMINATIONS BY THE BOARD OF DIRECTORS
In approving the Stock Purchase Agreement, the Audit
Committee and the Board of Directors considered
management's view that the Company urgently needed
additional capital, and that in light of the Company's
then financial condition, alternate sources of capital
would be both severely limited and, if available at
all, extremely expensive and time consuming to obtain.
The Board, with assistance from management, reviewed
potential alternatives, but concluded that it was
unlikely that any source of capital other than Abaco
would be willing and able to provide the required
financing on terms as favorable to the Company and
within the required time period. In approving the
conversion price, the Audit Committee and the Board
relied to a great extent on the Valuation Report.
They also considered that the effective price that
Abaco would be paying for the Common Stock, i.e.,
$7.25 per share, included a substantial premium over
the then market price and book value of the Common
Stock, even though Abaco already held control of the
Company and had paid such a premium to acquire control
in its tender offer. On June 24, 1994, the closing
price of the Common Stock was $5.25 and the book value
per share of Common Stock, prior to the issuance of
the Preferred Stock, was $3.41.
DESCRIPTION OF PREFERRED STOCK
In addition to the conversion feature described above,
the Preferred Stock has the following terms which will
remain in effect if the stockholders do not approve
the conversion feature and the Preferred Stock
therefore remains outstanding:
DIVIDENDS
Each share of Preferred Stock is entitled to receive,
out of funds legally available for the purpose, cash
dividends equal to a percentage of the Subscription
Price. The percentage is determined daily and is
equal to the then most recent "Prime Rate," as
published in The Wall Street Journal as the base rate
on corporate U.S. dollar loans posted by at least 75%
of the nation's 30 largest banks (or any other
publicly published comparable rate as determined by
the Company's Board of Directors) plus 2% per annum.
The rate changes as and when such "Prime Rate" changes
and is determined on the basis of a 365 day year and
the actual days elapsed in a dividend period.
Dividends are cumulative from October 1, 1994, and are
payable in arrears, when and as declared by the Board
of Directors, on March 31, June 30, September 30 and
December 31 of each year commencing December 31, 1994.
So long as shares of the Preferred Stock are
outstanding, the Company cannot declare or pay any
dividend on any junior stock or make any distribution
thereon or redemption thereof unless all dividends to
which holders of the Preferred Stock are entitled for
all previous dividend periods have been paid or have
been declared and a sum of money sufficient to pay
them has been set apart.
If Proposal 1 is approved, all shares of the Preferred
Stock will be converted automatically into shares of
Common Stock as described above prior to the first
scheduled dividend record date. Thus, if Proposal 1
is approved, the Company will pay no dividends on the
Preferred Stock. Even if Proposal 1 is not approved,
management anticipates that the Company will pay no
dividends on the Preferred Stock until the financial
condition and operations of the Company improve.
VOTING RIGHTS
Without the consent of the holders of at least a
majority of the shares of Preferred Stock then
outstanding, the Company cannot:
1) increase the authorized amount of Preferred
Stock;
2) create any other class of parity stock or senior
stock or increase the authorized amount of any such
other class;
3) amend, alter or repeal any provision of the
Company's Certificate of Incorporation or the
certificate of designations setting forth the terms of
the Preferred Stock so as to adversely affect the
rights, preferences or privileges of the Preferred
Stock;
4) consolidate with or merge into any other person
unless the Company is the surviving entity in the
merger and the merger does not adversely affect the
rights, preferences and privileges of the Preferred
Stock; or
5) sell substantially all of its assets or business
to any other person.
Other than the foregoing rights, the holders of the
Preferred Stock have no voting rights.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary
liquidation, dissolution or other winding up of the
affairs of the Company, the holders of Preferred Stock
would be entitled to receive the sum of $100,000 per
share plus any accrued and unpaid dividends thereon to
the date of liquidation, subject to any prior
preferences and other rights of any stock senior in
preference upon liquidation and before any
distribution or payment would be made on the Common
Stock or any other class of stock junior in preference
upon liquidation.
* * *
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE PROPOSED CONVERSION OF THE
PREFERRED STOCK.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche were the independent auditors for
the Company for the fiscal year ended June 24, 1994.
Following the Change of Control, the Board of
Directors of the Company determined that it would be
cost effective for the Company and Parent to change
the Company's fiscal year to coincide with that of
Parent and Abaco and to engage one independent
certified accountant to audit the financial statements
of Parent, Abaco and the Company. Coopers & Lybrand
is the independent auditor for Parent and Abaco. As
a result, on recommendation of the Audit Committee,
the Board of Directors of the Company resolved to:
(1) change the Company's fiscal year end to
December 31, with a transition period from June 25,
1994, the day following the last day of the Company's
prior full fiscal year, through December 31, 1994; and
(2) replace Deloitte & Touche with Coopers & Lybrand
as the Company's independent auditors, effective
October __, 1994, for the transition period ending
December 31, 1994.
The Board of Directors desires to obtain approval from
the stockholders of the Board's action in appointing
Coopers & Lybrand as independent auditors for the
Company and its subsidiaries for the transition period
ending December 31, 1994.
Deloitte & Touche's report on the Company's financial
statements for the fiscal years ending June 24, 1994
and June 25, 1993 contained no adverse opinion or
disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting
principles.
During the two fiscal years ended June 24, 1994 and
June 25, 1993, and during the interim period from June
24, 1994, through the dismissal of Deloitte & Touche,
the Company had no disagreements with Deloitte &
Touche on any matter of accounting principles or
practices, financial statement disclosure or auditing
scope or procedure.
During the two fiscal years ended June 24, 1994 and
June 25, 1993, and during the interim period from June
24, 1994, through its dismissal, Deloitte & Touche did
not advise the Company:
(a) that the internal controls necessary for the
Company to develop reliable financial statements do
not exist;
(b) that information had come to such firm's
attention that led it to no longer be able to rely on
management's representations, or that made it
unwilling to be associated with the financial
statements prepared by management;
(c) of the need to expand significantly the scope of
its audit, or that information had come to its
attention during such period that, if further
investigated, may have:
(i) materially impacted the fairness or
reliability of either a previously issued audit report
or the underlying financial statements, or the
financial statements to be issued for the transition
period ending December 31, 1994; or
(ii) caused it to be unwilling to rely on
management's representations or be associated with the
Company's financial statements;
(d) that information had come to its attention that
it had concluded materially impacted the fairness or
reliability of either a previously issued audit report
or the underlying financial statements, or the
financial statements to be issued covering the
transition period ending December 31, 1994.
During the two fiscal years ended June 24, 1994 and
June 25, 1993, and during the interim period from
June 25, 1994, through the dismissal of Deloitte & Touche,
neither the Company nor anyone on the Company's behalf
consulted Coopers & Lybrand regarding either the
application ofaccounting principles to a specified
transaction or the type of audit opinion that might be
rendered on the Company's financial statements.
The Company filed with its Current Report on Form 8-K
dated October __, 1994, a letter from Deloitte &
Touche prepared in accordance with Item 304(a) of
Regulation S-K of the Securities and Exchange
Commission.
Representatives of Deloitte & Touche and Coopers &
Lybrand are expected to be present at the Special
Meeting, and they will be available to respond to
appropriate questions. These representatives will be
given the opportunity to make a statement if they so
desire.
* * * *
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
BY THE COMPANY'S STOCKHOLDERS FOR RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND AS INDEPENDENT
AUDITORS.
STOCKHOLDER PROPOSALS
As discussed under Proposal 2, the Board of Directors
of the Company has determined as a cost saving measure
to change the Company's fiscal year to a calendar
year. Therefore, it anticipates that it will hold its
next Annual Meeting of Stockholders in June, 1995.
Any stockholder who wishes to submit a proposal for
inclusion in the proxy material to be distributed by
the Company in connection with its annual meeting in
1995 must do so no later than December 26, 1994.
The By-Laws of the Company require that a stockholder
intending to nominate any person for election as a
Director of the Company must deliver written notice
thereof to the Secretary of the Company not less than
90 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders.
The notice must set forth certain information
concerning such stockholder and his nominee(s),
including their names and addresses, a representation
that the stockholder is entitled to vote at such
meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons
specified in the notice, a description of all
arrangements or understandings between the stockholder
and each nominee, such other information as would be
required to be included in a proxy statement
soliciting proxies for the election of the nominees of
such stockholder and the consent of each nominee to
serve as a director of the Company if so elected. The
chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with
the foregoing procedure.
INCORPORATION BY REFERENCE
The Annual Report to Stockholders for the fiscal year
ended June 24, 1994 accompanies this Proxy Statement.
The following sections of the Annual Report are
incorporated into this Proxy Statement by reference:
1. Consolidated Financial Statements of Rodman &
Renshaw Capital Group, Inc. and Subsidiaries for the
fiscal years ended June 24, 1994 and June 25, 1993.
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
By order of the Board of Directors,
/s/ James D. Van De Graaff
---------------------------------
James D. Van De Graaff
Secretary
Rodman & Renshaw Capital Group, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
October 19, 1994
