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. 1)
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.
- --------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Rodman & Renshaw Capital Group, Inc.
- --------------------------------------------------------------
(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:
--------------------------------------------------------
(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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[X] 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.
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(1) Amount Previously Paid: $125
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(2) Form, Schedule or Registration Statement No.:
Schedule 14A
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(3) Filing Party: Rodman & Renshaw Capital Group, Inc.
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(4) Date Filed: October 4, 1994
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<PAGE>
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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 SERIES A
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) Date
------------------------- -------------------
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
________ __, 1995
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
O undersigned, with full 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 of Rodman & Renshaw Capital Group,
X Inc., Chicago, Illinois, on _______, ________ __, 1995 at
9:00 A.M., or at any adjournment thereof, upon the matters
set forth on the reverse side and described in the
Y accompanying Proxy 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)
<PAGE>
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 ________ __, 1995, 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 of the 150 outstanding shares
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,
Jorge Lankenau Rocha
Chairman of the Board
December __, 1994
<PAGE>
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 South LaSalle Street
Chicago, Illinois 60603
(312) 977-7800
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ________ __, 1995
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 ________ __, 1995, 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 of the 150 outstanding
shares 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 December __ 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,
James D. Van De Graaff
Secretary
December __, 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>
PAGE 1
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 South LaSalle Street
Chicago, Illinois 60603
(312) 977-7800
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Proxy Statement
- ------------------
- ------------------------------------
Special Meeting of Stockholders
________ __, 1995
- ------------------------------------
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 ________ __, 1995, 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 December __,
1994 to holders of record of the Company's Common Stock at the
close of business on December __.
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 of the 150
outstanding shares of the Company's Series A Non-Voting
Convertible Preferred Stock, $.01 par value per share (the
"Series A 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 October 31, 1994, 4,576,837 shares of
Common Stock were issued and outstanding. As of the same date,
the 150 shares of Series A Preferred Stock were the only shares
of preferred stock issued and outstanding.
Holders of record of the Company's Common Stock at the
close of business on December __ 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<PAGE>
PAGE 2
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 October 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 Series A
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
Series A 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 Series A 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 Series A 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 October 13, 1994.
<PAGE>
PAGE 3
Amount and
Nature of
Beneficial Percent
Identity of Holder Ownership (1) of Class (2)
- ------------------ ------------- ------------
Abaco(3) . . . . . . . . . 4,431,968 66.69%
Montes Rocallosos
505 Sur, Residential San Agustin, 66260
Garza Garcia, N.L. Mexico
Marshall S. Geller(4) . . . 229,304 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 . . . . 3,451 *
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
<PAGE>
PAGE 4
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 *
Keith F. Pinsoneault . . . . . 0 --
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 (19 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
October 13, 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 October 13, 1994, or
within 60 days thereafter.
(3) The figure in the table includes 2,068,965 shares of Common
Stock that Abaco will receive if the conversion of the
Series A Preferred Stock is approved. See "Proposal 1 -
Authorization of Conversion of Series A Preferred Stock."
Abaco also has the right under the Acquisition Agreement,
defined below under "Change of Control," 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 196,620 shares of Common
Stock from certain persons, including those listed in the
last sentence of Note 1, above, in January, 1995. Of those
persons, Messrs. Lang and Uhlmann are currently directors
and executive officers of the Company. Abaco entered into
such agreements in accordance with the terms of the
Acquisition Agreement, which gave each holder of stock
options who was a director and/or executive officer of the
Company at the time of the tender offer and who exercised
options by a certain date the right to elect to enter into
a mutually binding contract with Abaco for the sale of
shares acquired upon such exercise at a future date at the
tender offer price. Parent, defined below, also is deemed
the beneficial owner of Abaco's Common Stock.
<PAGE>
PAGE 5
(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 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 October 31, 1994, of 51.63% of the Company's outstanding
Common Stock, and controls the Company. The tender offer price
of $10.50 per share resulted from negotiations between Abaco and
then-management of the Company. The high and low sales prices
for the Common Stock on the NYSE Composite Tape for the quarter
ended September 24, 1993 were $9.50 and $5.50, respectively. On
November 16, 1993, the last full trading day prior to the
announcement of the tender offer, the closing sale price per
share of Common Stock reported on the NYSE Composite Tape was
$8.75. 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). The Company was not required to
and did not obtain stockholder approval of such amendments to
its by-laws. 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 three Company
Directors, six Parent Directors, and two Independent Directors.
It has appointed four new Company Directors, two new Parent
Directors and two new Independent Directors.
<PAGE>
PAGE 6
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, Pinsoneault 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, Pinsoneault 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.
The Company has no present intention to engage in any going
private transaction.
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<PAGE>
PAGE 7
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.
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PROPOSAL 1
AUTHORIZATION OF CONVERSION OF SERIES A 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. The plans focused on (i) the completion of the
restructuring of the Company's institutional fixed income
department; (ii) the expansion of the Company's investment
banking business, both in the United States and in Mexico, and
the development of institutional equity research and sales
efforts and retail brokerage capacity to strengthen the
Company's distribution capabilities supporting its
underwritings; (iii) the development of measures necessary to
achieve a higher degree of profitability from the Company's
futures business; and 4) the development of a plan to expand the
Company's asset management business. Management also determined
that the Company was in urgent need of additional capital to
conduct its current business. It concluded that the Company
would require a capital infusion of $25 million both to meet its
current needs 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.
<PAGE>
PAGE 8
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 Series A Preferred Stock to Abaco in a private
placement. Abaco purchased the Series A 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 of
the 150 outstanding shares of the Series A Preferred Stock will
be converted automatically into fully paid and nonassessable
shares of Common Stock upon the approval of such conversion by
the stockholders of the Company pursuant to the Exchange
requirements. The Series A Preferred Stock is otherwise not
convertible. Each share of Series A 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, which was prepared by
KPMG Peat Marwick LLP and is attached to this Proxy Statement as
Exhibit A, 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 upon conversion of the Series A
Preferred Stock of 13,793.103 shares of Common Stock for each of
its 150 shares of Series A Preferred Stock, for a total of
2,068,965 shares of Common Stock. Abaco would also receive a
cash payment based on the market value of the Common Stock for
four-tenths of a share of Common Stock to which it would be
entitled in 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 Series A 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.
<PAGE>
PAGE 9
Effect of Conversion
Assuming stockholder approval of the conversion features of
the Series A 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 Series A
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 Series A 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. At June 24, 1994 prior to the sale of
the Series A 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. Assuming the
conversion had taken place at the beginning of the fiscal year,
the loss per share would have decreased by $1.17 to $2.52 per
common share.
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. The
Board, with assistance from management, reviewed potential
alternatives, including a public offering or private placement
of additional Common Stock or a loan from an existing lender or
other third party lender. In light of the Company's then
financial condition, however, the Board determined that the
Company would be unable to raise sufficient funds through an
offering or placement of Common Stock and that even if such an
offering or placement were successful, the Company would be
unable to complete it within the required time period. Based on
management's discussions with the Company's existing lenders,
the Board also concluded that it was unlikely that any lender,
other than Abaco, would be willing and able to provide the
required financing on terms as favorable to the Company.
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 Series A Preferred Stock,
was $3.41, therefore Abaco would be paying a premium of
approximately $2.00 per share over the market price on such date
and a premium of $4.09 per share over the book value. In the
tender offer, Abaco paid a premium of $1.75 per share over the
closing sale price of the Common Stock on the NYSE Composite
Tape on the last full trading day prior to the announcement of
the tender offer.
<PAGE>
PAGE 10
Description of Series A Preferred Stock
In addition to the conversion feature described above, the
Series A Preferred Stock has the following terms which will
remain in effect if the stockholders do not approve the
conversion feature and the Series A Preferred Stock therefore
remains outstanding:
Dividends
Each share of Series A 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. However, Abaco waived the
dividend payable on December 31, 1994.
So long as shares of the Series A 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 Series A
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 Series A
Preferred Stock will be converted automatically into shares of
Common Stock as described above prior to the second scheduled
dividend record date. Therefore, because Abaco waived the
dividend payable on December 31, 1994, if Proposal 1 is
approved, the Company will pay no dividends on the Series A
Preferred Stock. Even if Proposal 1 is not approved, management
anticipates that the Company will pay no dividends on the Series
A 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 Series A Preferred Stock then
outstanding, the Company cannot:
1) increase the authorized amount of Series A
Preferred Stock;
2) create any other class of parity stock or senior
stock or increase the authorized amount of any such
other class;
<PAGE>
PAGE 11
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 Series A Preferred Stock so as to adversely
affect the rights, preferences or privileges of the
Series A 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 Series A
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 Series A
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 Series A 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 Series A 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 6,
1994, for the transition period ending December 31, 1994.
The Board of Directors desires to obtain stockholder
ratification 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.
<PAGE>
PAGE 12
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 of accounting 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 6, 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.
<PAGE>
PAGE 13
* * * *
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 any nomination not made in
compliance with the foregoing procedure.
- ----------------
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-K for the
fiscal year ended June 24, 1994 accompanies this Proxy
Statement. The following sections of such Form 10-K 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.
<PAGE>
PAGE 14
The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994 also accompanies this Proxy Statement
and is incorporated herein by reference.
By order of the Board of Directors,
James D. Van De Graaff
Secretary
Rodman & Renshaw Capital Group, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
December __, 1994
KPMG PEAT MARWICK LETTERHEAD EXHIBIT A
August 23, 1994
PRIVATE and CONFIDENTIAL
Mr. Thomas Meade
Richard Pigott, Esq.
Board of Directors
Rodman & Renshaw Capital Group, Inc.
120 South LaSalle Street
Chicago, IL 60603-3402
Dear Board Members:
Pursuant to your request, we have analyzed the fair market value
of a block of the common stock of Rodman & Renshaw Capital
Group, Inc. ("Rodman & Renshaw" or "the Company") as of June 24,
1994. The block of Rodman & Renshaw common stock to be issued
upon conversion of a new class of stock was analyzed as follows:
(1) The common stock was valued based on the assumption
that the purchaser currently owns 51% of the total
common stock.
(2) Upon the completion of the assumed transaction, the
purchaser's initial ownership of 51% will increase
and the other shareholders' ownership interest will
be diluted.
(3) The aggregate proceeds to be invested in Rodman &
Renshaw's common stock by the 51% shareholder,
provided for above, is $15 million.
For purposes of this engagement, the term fair market value was
defined as the following:
The price at which an asset would change hands between a
willing buyer and a willing seller, neither being under
compulsion to act and both being knowledgeable of the
relevant facts and circumstances.
The purpose of this analysis is to assist the Board of Directors
in determining the current fair market value of the subject
common stock. It is our understanding that the Board of
Directors of Rodman & Renshaw will use our analysis in part to
evaluate the convertible preferred stock to be sold to Abaco
Casa de Bolsa, S.A. de C.V. Our study is subject to the
assumptions and limiting conditions detailed in this letter and
the attached Statement of Limiting Conditions.
The Company and the Board of Directors have agreed that this
letter is for the Board of Director's internal use only and will
not be distributed to the Company's shareholders or any other
third party. Neither our letter, nor its contents, nor any of
our work product is to be referred to our quoted, in whole or in
part, in any registration statement, prospectus, public filing,
loan agreement or other agreement or document, nor can it be
used for any purpose other than as expressly stated in this
letter or our engagement letter of June 13, 1994, without our
prior written approval, which shall not be unreasonably
withheld. Notwithstanding the foregoing, the Company may
provide, and communicate regarding, this opinion letter to the
Securities and Exchange Commission without such approval.
Taking into account all that was developed through our analysis,
it is our opinion that the fair market value of the subject
block of Rodman & Renshaw's common stock, as defined above,
would have been $7.25 per share as of June 24, 1994.
This analysis was performed under the direction of Anthony C.
Paddock, a principal in KPMG Peat Marwick LLP. KPMG Peat
Marwick LLP has no present or contemplated future interest in
the Company, or any other interest which might prevent us from
performing an unbiased valuation. The assumptions and limiting
conditions that apply to our opinion are contained in this
letter or the attached Statement of Limiting Conditions attached
to this letter.
We thank you for the opportunity to assist you on this project.
Very truly yours,
/s/ KPMG Peat Marwick LLP
<PAGE>
STATEMENT OF LIMITING CONDITIONS
The attached letter report is subject to the following
conditions, limitations and assumptions:
- This analysis assumes the Company will continue to
operate as a going concern and is based on past and
present results of operations and the existing
financial condition at the valuation date, June 24,
1994.
- Information, estimates and opinions used in this
analysis were obtained from sources considered
reliable. However, we assume no liability for such
sources. KPMG Peat Marwick LLP did not conduct an
audit of the information used in this analysis
which was provided by the Company's management and
Board of Directors or public sources.
- No independent verification has been made of
historical information provided by the Company or
its representatives. We have assumed that all such
information reflects good faith efforts to describe
the status and prospects of the Company from an
operational and financial point of view.
- We have not audited, reviewed or compiled, pursuant
to the applicable professional standards of the
American Institute of Certified Public Accountants,
any of the information or analyses provided to KPMG
Peat Marwick LLP by the Company and its
representatives. Had we performed an audit, review
or compilation, or had we attempted to perform any
verification procedures, matters may have come to
our attention that we would have been considered in
our analysis, and those matters may have been
material.
- Events and conditions affecting the Company, stock
market and business environment subsequent to the
valuation date, if considered, could materially
alter our findings. We have no responsibility to
update this letter or revise the analysis because
of events and circumstances occurring after the
valuation date.
- Our letter report and conclusion is intended solely
for the purpose and recipients stated in our June
13, 1994 engagement letter for this project. The
Company and the Board of Directors have agreed that
this letter is for the board of Director's internal
use only and will not be distributed to the
Company's shareholders or any other third party.
Neither our letter, nor its contents, nor any of
our work product is to be referred to or quoted, in
whole or in part, in any registration statement,
prospectus, public filing, loan agreement or other
agreement or document, nor can it be used for any
purpose other than as expressly stated in this
letter or our engagement letter of June 13, 1994,
without our prior written approval.
- The Company has agreed to indemnify KPMG Peat
Marwick and hold harmless KPMG Peat Marwick from
and against any and all liabilities, damages,
costs, and expenses (including attorneys' fees)
which may be incurred by KPMG Peat Marwick as a
result of any action(s) brought against KPMG Peat
Marwick in connection with our letter report except
arising from KPMG Peat Marwick's willful misconduct
or negligence.
- We are not required to give testimony in court, or
be in attendance during any hearings or
depositions, with reference to the Company being
analyzed, unless previous arrangements have been
made.
- The appraisal of a business enterprise is a matter
of informed judgment. Although we believe the
information and judgments used are reasonable basis
for the preparation of this letter, the ultimate
determination of amounts at which an equity
interest changes hands must rest with the parties
to such a transfer on their own individual
evaluation of factors involved.
