SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Cortech, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Asset Value Fund Limited Partnership
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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|X| No fee required
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
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(032796DTI)
<PAGE>
ASSET VALUE FUND LIMITED PARTNERSHIP
376 Main Street
P.O. Box 74
Bedminster, NJ 07921
(908) 234-1881
January 29, 1998
Dear Fellow Cortech Stockholder:
As you probably already know, in the fall of 1997 Asset Value Fund Limited
Partnership ("Asset Value") purchased approximately 15% of the outstanding
common stock of Cortech, Inc., making it by far Cortech's largest stockholder.
In connection with its purchase, Asset Value stated that it believed Cortech's
stock was undervalued; that Asset Value could assist Cortech's management in
realizing full value; and that Asset Value intended to request representation on
the Cortech board. Indeed even Mr. Lynn, Cortech's CEO, concedes that Asset
Value's chief executive officer, Paul Koether, is a "shrewd, sophisticated and
successful investor." But when Asset Value tried to share this investment savvy
with Cortech, Mr. Lynn and Cortech's board of directors were simply too busy to
meet Paul Koether. How this board was busying itself became eminently clear on
December 15, 1997, when Cortech announced management's proposal to merge with
Biostar, Inc., a company located in Boulder, Colorado.
A review of the limited information available about Biostar, a private
company, revealed that it and Cortech shared one common trait (aside from their
geographic proximity): they both had built substantial losses in attempting to
develop commercial applications from esoteric biotechnology. The principal
synergy from the merger appears to be that Cortech's cash previously used to pay
for Cortech's losses would now be available to pay for Biostar's losses as well.
From Asset Value's perspective, the merger would result in the biotech version
of Penn-Central.1
Asset Value has already expressed to Cortech's management, Asset Value's
opposition to this merger. Cortech has responded with silence, even though we
believe stockholder approval of this merger is unlikely given Asset Value's
opposition.2 Moreover, we have spoken to other large stockholders who, we
believe, will also oppose this transaction, making approval of the merger, in
our view, statistically improbable. Why then would Mr. Lynn, a self described
"fiduciary," countenance the expenditure of corporate funds in furtherance of
this ill-fated transaction?
- --------
1 In 1970, the New York Central Railroad, which was losing money, merged
with the Pennsylvania Railroad, which was also losing money. The successor to
the merger was called Penn-Central, which lost even more money than the separate
constituent companies lost prior to the merger. The result was a bankruptcy of
historic and infamous proportions.
2 In the third quarter of 1997, among other management perquisites, the
Cortech Board granted themselves options to acquire shares of Cortech stock at
the then current low market values. The grant, however, was subject to
stockholder approval. After Asset Value made its investment in Cortech and
complained, the options were canceled. Mr. Lynn said that the options were
canceled spontaneously. We believe that the cancellation was a direct result of
Asset Value's resistance and the Board's conclusion that the stockholder
approval was unlikely given Asset Value's opposition.
<PAGE>
SELF INTEREST!
Mr. Lynn could benefit from the approval of this merger irrespective of any
benefits to the stockholders.3 Using his golden parachute, Mr. Lynn could have a
soft landing, even if Cortech stockholders crash and burn from the losses
sustained by yet another failed biotech dream.
We urge the Cortech Board to reassess the viability of this proposed merger
in light of what we believe is the considerable opposition to this transaction
among major stockholders of Cortech. We believe that after an objective
evaluation of the facts, the Cortech board will share our opinion that this
merger is dead on arrival and that frittering away more equity in pursuit of an
unpopular merger would be a waste of assets. In our view, cash is now Cortech's
principal asset. To us, it makes sense to develop a consensus about Cortech's
future before management further erodes cash.
We are not soliciting your proxy at this time, nor would we accept it even
if you offered it. Cortech has not even commenced its required solicitation of
proxies to approve this significant transaction. Why then are we writing? To
apprise our fellow stockholders that substantial amounts of their money are
being wasted in what we consider to be an unrealistic effort to secure approval
for this merger. Cortech's equity has hemorrhaged in management's failed attempt
to exploit Cortech's technology and, consequently, stockholders have suffered an
enormous deterioration in their investment. Now, adding insult to injury,
Cortech offers a merger which has generated a market reaction ranging from
disinterest to disdain. Its time for stockholders to stand up and declare that
"we aren't going to take it anymore." Maybe if we shout loud enough it will be
heard in Denver, Colorado and this management will do the right thing: go back
to the drawing board and find a transaction that paints a better picture than
Biostar.
Sincerely,
Asset Value Fund Limited Partnership
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3 Mr. Lynn owns only 3,433 shares of Cortech stock with a current value of
approximately $2,200. Two other directors own no shares of Cortech stock and
another owns 5,000 shares of Cortech stock. Only one director owns over 2%
(2.21%) of the outstanding shares of Cortech stock, bringing total management
ownership to less than 2.5%. Of course this excludes directors' options to
purchase 721,974 Cortech shares, representing more than one and one-half times
the number of Cortech shares owned by the directors.
<PAGE>
ADDITIONAL INFORMATION ABOUT ASSET VALUE FUND
LIMITED PARTNERSHIP
Asset Value Fund Limited Partnership ("Asset Value") is engaged in
investing in securities. The sole general partner of Asset Value is Asset Value
Management, Inc. ("Asset Value Management"). Asset Value Management is a
wholly-owned subsidiary of Kent Financial Services, Inc. ("Kent"), whose
principal business is the operation of T.R. Winston & Company, Inc. ("TRW"), its
wholly-owned subsidiary. TRW is a securities broker-dealer registered with the
National Association of Securities Dealers, Inc. Asset Value, Asset Value
Management, Kent and TRW maintain offices at 376 Main Street, Bedminster, New
Jersey 07921. As of January 29, 1998 Asset Value holds 2,770,000 shares of
common stock of Cortech, Inc. ("Cortech") or approximately 14.95% of the total
Cortech shares outstanding.
During the past ten years, none of Asset Value, Asset Value Management,
Kent, TRW, or the Directors and Executive Officers of Kent has been convicted in
a criminal proceeding.
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS
OF KENT FINANCIAL SERVICES, INC.
Percent of Direct or
Indirect Ownership
Name and Address Position and Office of Voting Securities of
of Beneficial Owner Currently Held Kent Financial Services, Inc.
- ------------------- ------------------- ------------------------------
<S> <C> <C>
Paul O. Koether Chairman, Director 44.90%
211 Pennbrook Road and President
Far Hills, NJ 07931
John W. Galuchie, Jr. Vice President and
376 Main Street Treasurer 2.32%
Bedminster, NJ 07921
Mark Koscinski Vice President *
376 Main Street
Bedminster, NJ 07921
M. Michael Witte Director 1.15%
1120 Granville Avenue
Suite 102
Los Angeles, CA 90049
Casey K. Tjang Director *
56 Hall Drive
Clark, NJ 07066
Mathew E. Hoffman Director *
62 Rosehill Avenue
New Rochelle, NY 10804
- -----------------------------------------
*Less than 1 percent.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PURCHASES AND SALES OF CORTECH SHARES BY ASSET VALUE<F1>
Dates purchased Number of shares purchased Price per share<F2> Total
- --------------- -------------------------- ---------------- --------
<S> <C> <C> <C>
07/25/97 20,000 $.61375 $ 12,275.00
07/31/97 6,700 .625 4,321.50
08/06/97 9,100 .6875 6,256.25
08/07/97 2,600 .6875 1,787.50
08/08/97 3,100 .6875 2,131.25
08/12/97 458,500 .6875 315,218.75
08/15/97 5,100 .6875 3,506.25
08/18/97 5,200 .6689 3,478.28
08/19/97 3,200 .65625 2,100.00
08/20/97 9,000 .65625 5,906.25
08/21/97 8,500 .6875 5,843.75
08/27/97 146,800 .6875 103,861.00
09/08/97 22,000 .6875 15,125.00
09/11/97 20,000 .703125 14,062.50
09/15/97 26,000 .703125 18,281.25
09/16/97 7,700 .703125 5,414.06
09/17/97 4,000 .703125 2,812.50
09/24/97 31,425 .703125 22,095.70
09/30/97 89,600 .703125 63,000.00
10/01/97 56,000 .703125 39,375.00
10/02/97 1,475 .703125 1,037.11
10/06/97 25,000 .6875 17,187.50
10/07/97 2,000 .6875 1,375.00
10/07/97 6,500 .71875 4,671.88
10/07/97 336,000 .703125 236,250.00
10/08/97 1,556,757 .65 1,011,892.05
10/08/97 5,000 .75 3,750.00
10/08/97 20,000 .71875 14,375.00
10/09/97 2,000 .71875 1,437.50
10/09/97 5,000 .765625 3,828.13
10/09/97 18,500 .75 13,875.00
10/10/97 4,500 .78125 3,515.63
10/14/97 1,000 .78125 781.25
10/14/97 6,000 .8125 4,875.00
10/28/97 15,000 .6875 10,312.50
10/30/97 13,000 .6875 8,937.50
10/30/97 12,000 .65625 7,875.00
11/03/97 3,700 .6875 2,543.75
11/04/97 4,900 .65625 3,215.63
11/05/97 12,000 .6875 8,250.00
11/05/97 2,500 .65625 1,640.63
11/07/97 11,300 .65625 7,415.63
11/10/97 58,343 .65625 38,287.59
11/11/97 10,500 .65625 6,890.63
(table continued on next page)
<PAGE>
(table continued from previous page)
Dates purchased Number of shares purchased Price per share<F2> Total
- --------------- -------------------------- ---------------- --------
11/14/97 4,000 .65625 2,625.00
11/14/97 8,500 .6875 5,843.75
11/17/97 9,700 .65625 6,365.63
11/18/97 11,300 .65625 7,415.63
11/24/97 5,000 .640625 3,203.13
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3,106,000 $2,086,524.84
--------- -------------
</TABLE>
<TABLE>
<CAPTION>
Dates sold Number of shares sold Price per share<F2> Total
- ---------- ------------------------- --------------- --------
<S> <C> <C> <C>
08/13/97 3,000 $.6875 $ 2,062.43
08/29/97 3,000 .71875 2,156.17
09/17/97 2,000 .71875 1,437.45
09/30/97 3,000 .71875 2,156.17
10/07/97 325,000 .65 211,242.95
--------- -------------
336,000 219,055.17<F3>
--------- -------------
2,770,000 $1,857,284.59
========= =============
<FN>
<F1> Excludes the purchase for an aggregate amount of $11,251.52 on October
8, 1997 of warrants to purchase 562,576 shares of Cortech stock, which
were contributed back to the capital of Cortech on October 18, 1997.
No shares were purchased with or are being held with borrowed funds.
<F2> Price excludes brokerage commissions, if any.
<F3> Reflects loss on sale of $10,185.08.
</FN>
</TABLE>
