UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission file number: 1-9143
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RODMAN & RENSHAW CAPITAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-3111956
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
233 S. Wacker Drive, Suite 4500, Chicago, IL 60606
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312)526-2000
--------------
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(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. YES No X *
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* - Registrant's Form 10-K for 1996 was filed on April 16, 1997, one day
later than the extended due date.
Shares of common stock outstanding at May 1, 1997: 6,645,802
par value $.09 per share.
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Financial Condition
as of March 31, 1997 (unaudited) and December 31, 1996.
Condensed Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 1997 and
March 31, 1996.
Condensed Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1997 and
March 31, 1996.
Notes to Condensed Consolidated Financial Statements
(unaudited) - March 31, 1997.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
<TABLE>
MARCH 31,
1997 DECEMBER 31,
(unaudited) 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 128 $ 2,243
Securities purchased under agreements
to resell 4,501 5,301
Cash and short-term investments required to
be segregated under federal regulations - 7,467
Receivables:
Customers - 25
Brokers, dealers, and clearing
organizations 816 1,610
Securities owned - at market 6,940 8,279
Memberships in securities and commodities
exchanges at cost(market value 03/31/97 -
$246; 12/31/96 - $246) 122 122
Furniture, fixtures and leasehold improvements,
at cost, less accumulated depreciation and
amortization (03/31/97 - $5,843; 12/31/96 -
$5,484) 7,112 7,431
Prepaid expenses and other assets 9,337 11,305
__________ ___________
$ 28,956 $ 43,783
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term note payable to affiliate $ 26,500 $ 23,500
Payables:
Customers - 8,290
Brokers, dealers, and clearing
organizations - 1,294
Securities sold but not yet purchased,
at market 975 782
Accrued commissions 1,575 1,995
Accounts payable and accrued expenses 11,785 15,770
_________ ___________
40,835 51,631<PAGE>
Stockholders' equity:
Convertible non-voting preferred stock,
$.01 par value, 5,000,000 shares authorized;
175 shares issued at 03/31/97 and
at 12/31/96 - -
Common stock, $.09 par value: 20,000,000
shares authorized; 6,645,802 issued at
03/31/97 and 12/31/96 598 598
Additional paid-in capital 48,249 48,249
Accumulated deficit (60,726) (56,695)
__________ ___________
(11,879) (7,848)
__________ ___________
$ 28,956 $ 43,783
========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share data)
<TABLE>
THREE MONTHS ENDED
MARCH 31,
1997 1996
<S> <C> <C>
REVENUES:
Commissions $ 4,435 $ 5,239
Principal 5,127 6,662
Interest 281 640
Fee income 1,563 1,817
Other 175 614
_________ ________
TOTAL REVENUES 11,581 14,972
EXPENSES:
Employee compensation
and benefits 9,016 12,815
Commissions, floor brokerage
and clearance 1,117 1,112
Interest 917 1,500
Communications 1,151 1,482
Occupancy and equipment 1,547 1,411
Professional fees 674 443
Other operating expense 1,190 1,460
_________ ________
TOTAL EXPENSES 15,612 20,223
NET LOSS $ (4,031) $ (5,251)
========= ========
Earnings per share data:
NET LOSS PER COMMON SHARE $ (0.61) $ (0.79)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 6,646 6,646
</TABLE>
See Notes to Condensed Consolidated Financial Statements
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
<TABLE>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,031) $ (5,251)
Adjustments to reconcile net loss to
net cash flows provided by (used in)
operating activities:
Depreciation and amortization 357 245
Net changes in operating assets
and liabilities:
Cash and short-term investments
required to be segregated under
federal regulations 7,467 (1,275)
Receivables from and payables
to customers, brokers, dealers
and clearing organizations (8,764) 30,839
Securities owned 1,339 11,574
Prepaid expenses and other assets 683 (2,459)
Securities sold but not yet purchased 193 (631)
Accrued commissions (420) 189
Accounts payable and accrued expenses (3,986) (7,847)
NET CASH FLOWS PROVIDED BY (USED IN) ___________ __________
OPERATING ACTIVITIES (7,162) 25,384
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase)/Sale of furniture, fixtures and
leasehold improvements (38) 59
Securities purchased under agreements to resell 800 2,204
Sale of exchange memberships 1,285 -
NET CASH FLOWS PROVIDED BY (USED IN) ___________ __________
INVESTING ACTIVITIES 2,047 2,263
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in short-term
borrowings from banks - (30,672)
Proceeds from short-term note payable
to affiliate 3,000 -
Proceeds from issuance of convertible
non-voting preferred stock - 5,000
NET CASH FLOWS PROVIDED BY (USED IN) ___________ __________
FINANCING ACTIVITIES 3,000 (25,672)
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (2,115) 1,975
Cash and cash equivalents at beginning
of period 2,243 9,001
___________ ___________
Cash and cash equivalents at end of period $ 128 $ 10,976
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
- - ------------------------------
The unaudited condensed consolidated financial statements of Rodman & Renshaw
Capital Group, Inc. and subsidiaries (collectively, the "Company") have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management of the
Company, all adjustments considered necessary for a fair presentation of the
financial condition and results of operations of the Company for the periods
presented have been included. Although the Company has stock options
outstanding, such stock options do not have a dilutive effect on earnings per
share; accordingly, the primary and fully diluted loss per share calculations
are not different. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Report on
Form 10-K for the year ended December 31, 1996.
NOTE B - ASSETS SEGREGATED UNDER FEDERAL AND OTHER REGULATIONS
- - --------------------------------------------------------------
The Company was holding in safekeeping $0.0 million and $1.0 million of
securities owned by customers as of March 31, 1997, and December 31, 1996,
respectively. In accordance with applicable regulations, these securities are
not included in the Condensed Consolidated Statement of Financial Condition.
NOTE C - NET CAPITAL REQUIREMENT AND DIVIDEND RESTRICTIONS
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The Company's primary subsidiary, Rodman & Renshaw, Inc.("Rodman"), a
registered broker-dealer and futures commission merchant, is subject to the
minimum net capital rules of the Securities and Exchange Commission (the
"SEC"), Commodity Futures Trading Commission (the "CFTC"), and the capital
rules of the New York Stock Exchange, Inc. (the "NYSE"), of which Rodman is a
member. Rodman has elected to use the alternative net capital method permitted
by SEC rules. At December 31, 1995, these rules required that Rodman maintain
minimum net capital, as defined in such rules, equal to the greater of 2% of
aggregate debits arising from customer securities transactions or $1,000,000,
or 4% of the funds required to be segregated for customers pursuant to the
Commodity Exchange Act. In January 1996, Rodman changed its business operation
from a clearing securities broker to a non-clearing securities broker whereby
Rodman's customer accounts are introduced and cleared by a contracted clearing
broker on a fully disclosed basis. As a result of this conversion, Rodman is
required to maintain minimum net capital, as defined in such rules, equal to
the greater of $250,000 or 4% of the funds required to be segregated for
commodities customers. At March 31, 1997, and December 31, 1996, Rodman had net
capital, as defined, of $2.1 million and $2.5 million, respectively, or $1.8
million and $2.2 million, respectively, in excess of the minimum net capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The results of operations should be read in conjunction with the Company's
condensed consolidated statements of income. Like other securities brokerage
and investment banking firms, the Company conducts its businesses in highly
volatile markets. Consequently, the Company's results of operations are
affected by many factors, including general market conditions, the liquidity
of secondary markets, the level and volatility of interest rates, currency and
security valuations, competitive conditions and the size, number and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, revenues and net earnings can vary significantly from quarter to
quarter. In addition, results of operations for any particular interim period
may not be indicative of results to be expected for the year ending December
31, 1997.
Revenues for the quarter ended March 31, 1997 totaled $11.6 million, a 22.7%
decrease from $15.0 million for the previous year's comparative quarter,
reflecting a transition in product lines, the weak performance of the
securities markets, in general, in the first quarter of 1997 and capital
constraints. For the most recent quarter, the Company recorded a net loss of
$4.0 million, or $0.61 cents per common share. This was an improvement by 24.5%
over the same period in 1996, reflecting in large part lower expenses due to
the Company's cost reduction program, which focused primarily on downsizing the
Company's Futures and Institutional Fixed Income businesses.
REVENUES
Revenues for the quarter ended March 31, 1997 were $11.6 million, or $3.4
million lower than the same period last year. This was due in large part to
changes in the business mix. Downsizing of the Futures and Fixed Income
businesses accounted for most of the revenue decline in the 1997 first quarter
versus the same quarter in the prior year. The Company's core business lines
(Retail, Institutional Equity, and Investment Banking) were 10.1% below 1996
levels, reflecting general weakness during the first quarter of 1997 in the
securities markets and a net reduction in producers.
Commission revenue is derived from the execution of customer orders to buy and
sell securities. Commission revenue decreased 15.4% to $4.4 million for the
quarter ended March 31, 1997 from $5.2 million in the corresponding 1996
period, mainly reflecting lower Retail sales.
Revenue from principal transactions includes mark-ups and realized and
unrealized gains and losses on securities held for resale. Principal
transaction revenue decreased $1.6 million to $5.1 million for the quarter
ended March 31, 1997, from $6.7 million in the corresponding 1996 quarter. This
decline was primarily due to the extensive downsizing of the Fixed Income
business, both in New York and Chicago. Also contributing to the weaker 1997
performance level was lower revenue from the Institutional Equity business
line, which reflected a combination of market conditions and the departures of
certain New York based sales personnel. Partly offsetting the decline were
gains in the corporate securities portfolio.
Interest income for the first quarter of 1997 also declined, versus the first
quarter of 1996, by $0.4 million as the Company continued to reduce its
securities inventory positions.
Fee income, which reflects mainly the activities of Rodman's Investment Banking
department, decreased 14.0% for the quarter ended March 31, 1997 as compared
to the same 1996 quarter. In the 1997 quarter, the Company completed one public
offering versus three in the same 1996 period. Also contributing to the revenue
decline were lower Investment Banking advisory fees in the 1997 quarter.
EXPENSES
Expenses for the quarter ended March 31, 1997 decreased $4.6 million to $15.6
million, or 22.8%, as compared with the same period last year. Employee
compensation, which represented 82.6% of the expense reduction, decreased by
$3.8 million for the quarter ended March 31, 1997 versus the same period last
year. Total corporate headcount at March 31, 1997 was 29.4% lower than at March
31, 1996. This change is mainly attributable to the expense reduction program
which primarily reflects the downsizing of the Futures and Fixed Income
business lines, as well as reductions in administrative costs.
Communications and other operating expenses also declined in the 1997 first
quarter as compared to the same period last year, mainly related to savings
from downsizing. Interest expense decreased $0.6 million, or 38.9% versus the
same period last year, due to the decrease in security inventory positions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are substantially comprised of cash and cash equivalents,
receivables and securities inventory, all of which are highly liquid. The
principal sources of financing are stockholders' equity, customer payables and
other payables.
As a registered broker-dealer and futures commission merchant, Rodman is
required by the SEC and CFTC to maintain specific amounts of net capital to
meet its customers' obligations. As of March 31, 1997, Rodman's net capital,
as defined, exceeds the minimum net capital requirements.
On June 22, 1994, the Company borrowed $10 million from Confia, S.A.,
Institucion de Banca Multiple, Abaco Grupo Financiero ("Confia, S.A."),an
affiliated company of the Company's majority stockholder, Abaco Casa de Bolsa,
S.A. de C.V., Abaco Grupo Financiero ("Abaco"). During 1995, the Company
obtained additional loans from Confia, S.A. in an aggregate amount of $16.5
million. The Company needed the additional loans in order to continue to
conduct its business because losses were eroding its net capital. The loans
were consolidated and renewed on June 3, 1996, for a six month term ending
December 3, 1996, at an annual interest rate of 12%, which was further renewed
in December 1996 to June 3, 1997 at an annual interest rate of 12%. On November
14, 1996, $1.5 million of the loan was repaid. Based upon the letter of support
discussed below, management believes that it is the intention of Confia, S.A.
to renew the loan when it becomes due or convert all or a portion of the loan
to equity pursuant to the Note Conversion Agreement discussed below, subject
to receipt of necessary approvals from Mexican governmental authorities. A
renewal may be on different terms than the then existing loan, depending upon
market conditions and Confia, S.A.'s internal lending policies at the time of
renewal.
The Company entered into a Note Conversion Agreement with Confia, S.A. dated
September 29, 1995 and amended November 10, 1995, pursuant to which Confia,
S.A. has the right to convert all or a portion of the Company's outstanding
indebtedness into common stock. The number of shares of common stock to be
issued upon a conversion would be determined by dividing the amount of
indebtedness to be converted by the book value per share of common stock as of
the end of the Company's most recent fiscal quarter (provided, however, that
if such book value per share were equal to or less than $0.09, which is the par
value per share of the common stock, the denominator would be $0.09).
Indebtedness is convertible only if the conversion receives stockholder
approval or if the conversion is made in connection with a rights offering to
all stockholders at the same effective per share price for a number of shares
proportional to the number to be issued upon the conversion. Confia, S.A. may
transfer the conversion right to Abaco or another corporation within its group
of affiliated companies.
In addition, in December 1995, the Company issued to Abaco 50 shares of
non-voting preferred stock at a price per share of $100,000, which shares are
convertible into common stock. In a conversion, the $5 million preferred stock
purchase price would be divided by the book value per share of common stock as
of the end of the most recent month to determine the number of shares of common
stock to be issued (provided, however, that if such book value per share were
equal to or less than $0.09, which is the par value per share of the common
stock, the denominator would be $0.09). The preferred stock is convertible
only in connection with a rights offering to all stockholders at the same
effective per share price of a number of shares proportional to the number to
be issued upon conversion at a price per share equal to such book value per
share or par value, as the case may be. Accordingly, in the event of such a
rights offering, each stockholder would have the opportunity to purchase a
sufficient number of shares at the offering price to maintain his or her
percentage ownership of the Company.
On February 9, 1996, the Company received a letter from Abaco Grupo Financiero,
S.A. de C.V. ("Parent"), whereby Parent agreed to continue to unconditionally
support the Company and Rodman for the next year, up to and including March 31,
1997. The support referred to in the February 9, 1996 letter may include, with
previous receipt of requisite approvals from Mexican governmental authorities,
infusions of capital, conversion of short-term debt to long-term debt or
conversion of short or long-term debt to equity, if required, to continue to
sustain Rodman's operations and allow it to maintain the required net capital
pursuant to the SEC's Uniform Net Capital Rule 15c3-1. In February 1997 the
Company received a new support letter from Abaco covering the period up to and
including March 31, 1999. Such letter states that it is the intention of Parent
and Abaco to continue to unconditionally support the Company and Rodman for
losses incurred in the ordinary course of business during such period and that
such support may include, with prior receipt of requisite approvals from
Mexican governmental authorities, infusions of capital, conversion of short
term debt to long term debt or conversion of short or long term debt to equity.
The Company is dependent on the Parent to cover operating cash requirements.
Parent agreed to provide the Company with a total of $9.5 million in equity
capital in March and April, 1996. On March 29, 1996, Parent provided $5
million of that total through the purchase by Abaco of 50 additional shares of
non-voting preferred stock at a price per share of $100,000. On April 30,
1996, Abaco provided the remaining $4.5 million through the purchase of 45
additional shares of non-voting preferred stock at a price per share of
$100,000. The terms of such shares are substantially identical to those of the
preferred stock issued in December, 1995, as discussed above.
The balance sheet as of September 30, 1996 reflected the issuance to Abaco of
an additional 30 shares of non-voting preferred stock at a price per share of
$100,000 for a total of $3 million pursuant to an understanding reached with
Abaco during the third quarter. The terms of such shares also are
substantially identical to those issued in December 1995 except that conversion
may only be made if the conversion receives stockholder approval or if the
conversion is made in connection with a rights offering to all stockholders.
The cash consideration was received for such shares from Abaco on November 14,
1996. At December 31, 1996, the book value per share of the Company's common
stock was negative, meaning that any conversion of the Company's preferred
stock held by Abaco would be at $0.09 per share. Full conversion of the
Company's preferred stock held by Abaco at such price, assuming only Abaco's
exercise of its conversion rights, would entail the issuance of approximately
198 million shares of common stock. In the event that the Company's
outstanding indebtedness to Confia also were converted at such price, such
conversion would entail the issuance of an additional 295 million shares of
common stock.
At March 31, 1997, the Company had subordinated loans outstanding to Rodman,
its broker-dealer subsidiary, in an aggregate amount of $21.5 million. The
loans are funded by the Company's borrowings from Confia, S.A. discussed above.
To the extent that such subordinated borrowings are required for Rodman's
continued compliance with minimum net capital requirements, they may not be
repaid. In the event that the borrowing between the Company and Confia, S.A.
is not renewed or converted, Rodman would be required to curtail its business
activities substantially in order to reduce its minimum net capital
requirements, and then it would seek regulatory approval to repay its
subordinated debt to the Company.
The Uniform Net Capital Rule also provides that the total outstanding principal
amounts of a broker-dealer's indebtedness under certain subordination
agreements, the proceeds of which are includible in its net capital, may not
exceed (for a period in excess of 90 days) 70% of the sum of the total
outstanding principal amounts of all subordinated indebtedness included in net
capital plus stockholder's equity (the "debt/equity ratio"). At December 31,
1995, Rodman's debt/equity ratio was 78%. In January 1996, the Company and
Rodman converted $5 million from short-term to long-term subordinated debt,
which is treated as equity for purposes of the Uniform Net Capital Rule,
thereby reducing the debt/equity ratio to 60%. At December 31, 1996, Rodman's
debt/equity ratio was 75%. In mid-February 1997, Rodman repaid $5 million of
its revolving subordinated indebtedness to the Company and the Company
correspondingly made a $5 million contribution to Rodman's capital. Also in
February 1997, Rodman received an additional capital contribution of $0.3
million from the Company and borrowed an additional $2.5 million under the
revolving subordinated credit facility with the Company. At the end of February
1997, Rodman's net capital was $1.8 million and its debt-equity ratio was 58%.
In March 1997, the Company borrowed $0.5 million from Confia, which in turn was
loaned to Rodman by the Company under the revolving subordinated credit
facility with the Company. As of March 31, 1997, the debt/equity ratio was 61%.
In April 1997, the Company borrowed an additional $2.5 million from Confia.
$1.5 million of this in turn was loaned by the Company to Rodman under the
revolving subordinated credit facility with the Company. As a result of the
borrowings in the second quarter of 1997, the debt-equity ratio at April 30,
1997 was just below 70%.
In the quarter ended March 31, 1997, the Company used cash and cash equivalents
of $7.2 million from operating activities primarily related to the payments of
accounts payable. In the quarter ended March 31, 1996, the Company's operations
provided $25.4 million of cash, primarily related to the decrease in
receivables from and payables to customers, brokers, dealers and clearing
organizations.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
On April 4, 1997, an action entitled Feivel Gottlieb and Kenneth Steiner,
Plaintiffs v. Rodman & Renshaw Capital Group, Inc., Ernesto Arechavala,
Alexander C. Anderson, Peter Boneparth, Eduardo Camarena Legaspi, William C.
Dennis, Jorge Lankenau Rocha, Edwin J. McGuinn, Jr., Rodrigo Padilla, Federico
Richardson Lamas, Joseph P. Shanahan, Abaco Casa de Bolsa, S.A. de C.V., Abaco
Grupo Financiero, R&R Capital Holdings, Inc. and R&R Capital Acquisition Corp.
was commenced in the Court of Chancery of the State of Delaware in and for New
Castle County. The action is a purported class action brought on behalf of all
holders of the common stock other than the defendants and persons affiliated
with the defendants. The action relates to the proposed series of transactions
(the "Transactions") announced by Abaco on February 4, 1997. The plaintiffs
allege that the Transactions and the price to be paid for the shares of common
stock are unfair and entail breach of fiduciary duties owed to the plaintiffs
and the purported class. Plaintiffs seek to preliminarily and permanently
enjoin the Transactions and to obtain a monetary recovery for any damages
sustained. Defendants, including the Company, have retained counsel and believe
they have good and meritorious defenses, which they intend to vigorously
assert. In light of the early stage of this action, the Company cannot assess
at this time whether it will have any material adverse effect on the Company.
On July 8, 1996 Michael Delaney, then an employee of Rodman, initiated
an NASD arbitration proceeding by means of a Statement of Claim alleging breach
of certain terms and conditions of his employment agreement with Rodman,
especially with respect to certain override provisions as to institutional
equity sales commissions. The Statement of Claim alleges damages in excess of
$2 million arising from such breach. On September 6, 1996 Rodman filed its
Answer to Mr. Delaney's Statement of Claim denying Mr. Delaney's claim and
asserting various defenses. On October 11, 1996, Mr. Delaney amended his
Statement of Claim, primarily to include claims relating to the termination of
his employment with Rodman on July 29, 1996. The Amended Statement of Claim
alleges damages in excess of $2 million and requests punitive damages. On
November 12, 1996 Rodman submitted its Answer to the Amended Statement of Claim
again denying Mr. Delaney's claims and asserting various defenses. Rodman has
been contesting this action vigorously. The arbitration hearing was held on
May 12-13, 1997. During the hearing, Mr. Delaney requested $2.8 million in
compensatory damages plus punitive damages. As of the date of this report,
Rodman awaits the decision of the NASD arbitration panel.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
As a result of the proposed Transactions announced by Abaco on February
4, 1997, which Transactions currently remain pending subject to certain
regulatory authorizations, and the impact thereof on the need for and
functioning of a large board of directors, certain directors of the Company
have resigned in recent weeks. In addition, certain directors of the Company
who also were officers have resigned to take positions with other firms.
Specifically, on April 15, 1997, Thomas E. Meade and Richard Pigott resigned
from the Company's Board of Directors and all committees relating thereto. In
addition, on April 24, 1997, David S. Ruder also resigned as a director of the
Company and from all committees relating thereto. On April 30, 1997, William
C. Dennis resigned from his positions with the Company as a director, Executive
Vice President and Chief Financial Officer to take a similar position with a
larger firm; Joan J. Tannen was elected Chief Financial Officer as of May 2,
1997 to fill the vacancy resulting from Mr. Dennis' departure. On May 1, 1997,
Peter Boneparth resigned as a director and Executive Vice President and from
all of his positions with Rodman, including Senior Managing Director and a
director, to become President of a clothing manufacturer. On May 1, 1997,
Francis L. Kirby, Federico Richardson Lamas and Joseph P. Shanahan resigned as
directors of the Company and on May 13, 1997, Rodrigo Padilla resigned as a
director of the Company and its subsidiaries. However, Mr. Shanahan remains as
the Company's President and Chief Executive Officer and Mr. Kirby remains as
an Executive Vice President of the Company. The present directors of the
Company are Alexander C. Anderson, Ernesto Arechavala, Eduardo Camarena
Legaspi, Jorge Antonio Garcia Garza and Jorge Lankenau Rocha.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - The following exhibits are included
herein or are incorporated by reference
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the
quarter ended March 31, 1997.
SIGNATURES
-----------
Pursuant to the requirement of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RODMAN & RENSHAW CAPITAL GROUP, INC.
(Registrant)
Date: May 15, 1997 By: /s/ Joan J. Tannen
---------------------------------
Joan J. Tannen
Chief Financial Officer
Date: May 15, 1997 By: /s/ Joseph P. Shanahan
----------------------------------
Joseph P. Shanahan
President and Chief Executive
Officer
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0
0
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