SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SGI INTERNATIONAL
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(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[LOGO]
SGI INTERNATIONAL
1200 Prospect Street, Suite 325
La Jolla, California 92037
August 1, 2000
Dear SGI Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend a
Special Meeting of Shareholders on September 18, 2000. The meeting will
begin promptly at 9:30 a.m. local time on the 2nd Floor balcony of the La
Jolla Financial Building, located at 1200 Prospect Street, La Jolla, California.
At this meeting you will be asked to vote on an amendment to our Articles of
Incorporation to increase the number of authorized shares of SGI International
from 75,000,000 to 125,000,000. On July 14, 2000, approximately 66.6 million
shares of common stock were issued and outstanding and approximately 6.0
million shares were reserved for convertible debt conversions, preferred stock
conversions and for warrant and option exercises. Thus, the Company requires
an increase in the authorized common shares which will be used, for a
period of time, to continue to fund operations. The Board has recommended that
only that number of additional shares of Common Stock be Authorized that it
believes may be needed to finance current cash needs and provide flexibility in
future funding and capitalization.
The Company needs shareholder approval in order to increase the number of
authorized common shares. Therefore, your vote is extremely important. Your
Board of Directors recommends this increase in the best interest of the
Corporation and its current shareholders and urges you to vote "FOR" this
amendment. The Board believes, if this amendment is not approved that it would
adversely impact the Company's ability to sustain operations and continue in
business.
The Company intends to use the additional shares, as needed, to implement its
strategic plan, which envisions generating revenues from manufacturing process
derived fuel and coal liquid products from the ENCOAL demonstration plant and
future commercial plants. As an interim measure the Company is attempting to
obtain through the issuance of either long-term debt or a long-term convertible
instrument (convertible into a fixed number of shares) enough cash to pay off
its short-term debt obligations and provide cash available for its working
capital requirements, until cash can be generated from other sources, which may
include manufacturing operations, licensing fees, royalties, proceeds from the
sale of an interest in the technology partnership with Mitsubishi, and service
fees from its participation in the first commercial plant or other sources which
have not yet been identified. Some of the additional shares may also be required
from time to time to generate working capital. However, the Company intends to
use such additional shares for the latter purpose only if other measures are
unavailable and as a last resort.
The official Notice of the Special Meeting, Proxy Statement and Proxy
Card are included with this letter. The approval of the amendment to the
Articles of Incorporation requires the affirmative vote of the majority of the
shares represented and entitled to vote at the Special Meeting. The vote of
every shareholder is important; whether or not you plan to attend the meeting,
please take the time to vote. As explained in the proxy statement, you may
withdraw your proxy at any time before it is actually voted at the meeting. Your
cooperation in promptly signing, dating and mailing your Proxy Card, will be
greatly appreciated. Please note that mailing your completed proxy will not
prevent you from voting in person at the meeting, if you wish to do so.
If you plan to attend the meeting in person, please remember to bring a form of
personal identification with you. Directions are as follows: from Interstate 5
North or 52 West, use the Ardath Road Exit, follow Ardath Road to Torrey Pines,
turn right on Prospect. From Interstate 5 South, exit at La Jolla Village Drive
and turn right (west), turn left onto Torrey Pines Road, turn right on Prospect.
Parking is available under the building, and on surrounding streets.
Should you have any questions pertaining to the Special Meeting or require
special assistance at the meeting please contact Investor Relations at
(858) 551-1090. We look forward to meeting you personally, should you be able
to attend.
Sincerely,
/s/ MICHAEL L. ROSE
MICHAEL L. ROSE
Chairman of the Board
<PAGE>
[LOGO]
SGI INTERNATIONAL
1200 Prospect Street, Suite 325
La Jolla, California 92037
Notice of Special Meeting of Shareholders
To be Held September 18, 2000
YOUR VOTE IS IMPORTANT
NOTICE is hereby given that a Special Meeting of the Shareholders of SGI
International, a Utah Corporation (the "Company"), will be held on September
18, 2000, at 9:30 a.m. local time on the 2nd Floor balcony of the La Jolla
Financial Building, located at 1200 Prospect Street, La Jolla, California, to
consider and vote to:
* AMEND THE ARTICLES OF INCORPORATION. To vote upon the Company's proposed
amendment to the Articles of Incorporation to authorize an additional
50,000,000 shares of Common Stock
Only Shareholders of record at the close of business on July 14, 2000,
will be entitled to receive notice of, and to vote at, the meeting or any
adjournments thereof. The Board asks you to vote in favor of the proposed
amendment to the Articles of Incorporation.
By Order of the Board of Directors,
/s/ MICHAEL L. ROSE
MICHAEL L. ROSE
Chairman of the Board
La Jolla, California
August 1, 2000
Whether or not you intend to be present at the Special Meeting, please promptly
mark, sign, date and return the accompanying proxy. A return addressed envelope
is enclosed for your convenience.
<PAGE>
SGI INTERNATIONAL
1200 Prospect Street, Suite 325
La Jolla, California 92037
This Proxy Statement and the letter to Shareholders contain forward looking
statements, including estimates and expectations relative to achieving the
Company's business objectives and the amount of capital stock needed for
funding corporate operations. The expectations reflected in such forward-looking
statements are necessarily based upon various assumptions and involve
judgments with respect to future business decisions, accomplishing objectives,
and other uncertainties, that are difficult to predict and are not within the
control of the Company. Accordingly, while the Company believes that these
assumptions are reasonable there can be no assurance that the assumptions will
approximate actual experience or that the expectations or estimates will be
realized. All forward-looking statements contained in this Proxy Statement or
the letter to Shareholders or the Notice that are attributable to the
Company or to its Board are expressly qualified in their entirety by the
foregoing cautionary statements.
Proxy Statement
Solicitation of Proxies
PROXY STATEMENT AND SPECIAL MEETING
The enclosed proxy is solicited by the Board of Directors on behalf of SGI
International, a Utah corporation ("SGI" or the "Company"), for use at the
Special Meeting of the Company's Shareholders to be held on the 2nd Floor
balcony of the La Jolla Financial Building, located at 1200 Prospect Street, La
Jolla, California. on September 18, 2000, at 9:30 a.m. local time, or any
adjournments thereof.
Only Shareholders of record at the close of business on July 14, 2000 (the
"Record Date"), will be entitled to receive notice of, and to vote at, the
meeting. On July 14, 2000, there were issued and outstanding 66,573,809 shares
of Common Stock. The holders of shares of Common Stock issued and outstanding
on the Record Date are entitled to cast one vote per share on all matters voted
on at the Special Meeting. Whether or not you expect to attend the meeting in
person, please return your executed proxy in the enclosed envelope and the
shares represented thereby will be voted in accordance with your wishes. There
are no rights, which will accrue to Shareholders dissenting in any matter known
to the Company to be raised at the meeting.
VOTING BY PROXY
The Proxy Statement and the enclosed form of proxy are being mailed to
Shareholders on or about August 16, 2000. If, after sending in your proxy, you
decide to vote in person or desire to change the voting instructions on your
proxy or revoke your proxy, you may do so by notifying the Secretary of the
Company in writing of such revocation at any time prior to the voting of the
proxy, by submitting a later-dated proxy or by attending the meeting and voting
in person.
IF YOUR SHARES ARE HELD IN "STREET NAME" THROUGH A BROKER, BANK OR OTHER HOLDER
OF RECORD, YOU WILL RECEIVE INSTRUCTIONS FROM THE REGISTERED HOLDER THAT YOU
MUST FOLLOW IN ORDER FOR YOUR SHARES TO BE VOTED FOR YOU BY SUCH RECORD HOLDER.
HOW TO REVOKE YOUR PROXY
You may revoke your proxy at any time before its exercise at the Special Meeting
by: (a) giving written notice of revocation to the Secretary of the Company, (b)
executing and delivering a later-dated proxy, or (c) voting in person at the
Special Meeting. All written notices of revocation or other communications with
respect to revocation of proxies should be addressed as follows: SGI
International 1200 Prospect Suite 325, La Jolla California 92037, Attention:
John R. Taylor, Secretary.
QUORUM AND VOTES REQUIRED FOR APPROVAL
The required quorum for the transaction of business at the Special Meeting is a
majority of the shares of common stock issued and outstanding on the Record
Date. Abstentions will be treated as shares that are present and entitled to a
vote for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of any matter submitted for a vote of the
Shareholders. If a broker indicates on the proxy that the broker does not have
SGI INTERNATIONAL
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discretionary authority to vote on a particular matter as to certain shares,
those shares will be counted for general quorum purposes, but will not be
considered as present and entitled to vote with respect to that matter. The
affirmative vote of the majority of the shares represented and entitled to vote
at the Special Meeting is necessary to amend the Articles of Incorporation.
MATTERS RAISED AT THE SPECIAL MEETING
Under the Company's Bylaws, no business other than that specified in the notice
of Special Meeting shall be transacted at any such Special Meeting. Therefore,
only those matters presented in this Proxy Statement under "Actions to be Taken
Under Proxy" may be acted upon at the Special Meeting.
PROXY SOLICITATION
The Company will pay all costs of solicitation of proxies including preparation,
assembly, printing and mailing of this proxy statement, the proxy and any
additional information furnished to Shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners. Original solicitation of proxies by mail may be
supplemented by telephone, telegram, telefax or personal solicitation by
directors, officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees for
such services. The Board of Directors encourages you to vote promptly. Voting
promptly may save the Company the expense of a second mailing.
Action to be Taken Under Proxy
Shares will be voted as instructed in the accompanying proxy on each matter
submitted to the vote of Shareholders. If any duly executed proxy is returned
without voting instructions, the persons named as proxies thereon intend to vote
all shares represented by such proxy as follows:
[] FOR the proposed amendment to the Articles of Incorporation to authorize an
additional 50,000,000 shares of Common Stock
PROPOSAL - AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED COMMON SHARES
General
The present capital structure of the Company provides for 75,000,000
shares of common stock, no par value, and 20,000,000 shares of preferred stock.
The Company's Board of Directors believes the current capital structure is
inadequate for the present and future needs of the Company. Therefore, the Board
of Directors has unanimously approved an Amendment of the Company's Articles of
Incorporation to amend Article IV thereof to increase the number of shares of
authorized common stock from 75,000,000 to 125,000,000. The text of the form of
the Amendment to the Articles of Incorporation, as the same would read if such
proposal is adopted at the Special Meeting, is set forth in Appendix A. The
Board of Directors urges you to vote for the adoption of the Amendment. In the
event that the Amendment is approved, the Company will thereafter amend the
Certificate of Incorporation.
On July 14, 2000, 66,573,809 shares of common stock and 60,518 shares
of preferred stock were outstanding, and approximately 6.0 million shares of
common stock were reserved for warrant exercises, option exercises, convertible
debt conversions and preferred stock conversions.
The Amendment, if approved, may in the future if additional shares are issued
affect any given shareholder's proportionate equity interest in the Company,
but will not affect the relative rights, preferences, privileges or priorities
of any stockholder.
SGI INTERNATIONAL
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Purpose and Effect of Authorizing Additional Common Stock
The Board of Directors believes it is necessary to have additional
common stock available for general corporate purposes. Such purposes include
financing, acquisitions, technology licensing programs, stock dividends or
distributions, replacement of approximately 3.8 million shares previously
escrowed, for the benefit of the Company, for cancellation by certain officers
and one former director on the condition they be replaced if additional shares
are subsequently authorized, and for existing and future designation of other
convertible securities, options or warrants. Authorization of an additional
50,000,000 shares of common stock will give the Board of Directors the express
authority, without further action of the Shareholders, to issue such shares of
common stock from time to time as the Board of Directors deems necessary, unless
such action were specifically required by applicable law or rules of any stock
exchange on which the Company's securities may then be listed.
In reaching its decision to submit the proposal to Amend its Articles
to the Shareholders, the Board of Directors balanced the dilution, which could
result if all of the additional Common Stock were issued with the positive
contribution, which will be provided from the additional capital, which the
Company anticipates becoming available for use from any future issuance of the
additional equity. The Board concluded that the Amendment increasing the
authorized number of shares of Common Stock is important to the Company since
it may allow the Company to finance ongoing activities, which are critical
to its ability to continue operations, including but not limited to possible
plans to sell the ENCOAL plant, and begin development of commercial LFC plants,
which the Board anticipates may provide the basis for revenues and additional
funding. The Board of Directors believe that the Amendment to the Articles of
Incorporation may also enhance the Company's flexibility in its future financing
and capitalization needs.
However, there can be no assurance that the Amendment increasing the
number of authorized share of Common Stock will increase the Company' ability to
finance ongoing activities or that it will not adversely impact the market price
of the Common Stock or that the Amendment may not have other unforeseen effects.
The respective voting rights and other rights that accompany the Common
Stock and any designated series of the Preferred Stock will not be altered by
the increase in Capital Stock and the no par value of the Common Stock will
remain the same. After giving effect to the Amendment the authorized but
unissued shares available to the Company would be approximately 58.4 million.
The proposed increase in the authorized number of shares of common stock could
have a number of effects on the Company's Shareholders depending upon the exact
nature and circumstances of any subsequent issuances of authorized but unissued
shares. The increase could have an anti-takeover effect, in that additional
shares could be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover of the
Company more difficult. This could limit the opportunity for the Company's
Shareholders to realize a higher price for their shares if such a takeover were
prevented. For example, additional shares could be issued by the Company so as
to dilute the stock ownership or voting rights of persons seeking to obtain
control of the Company.
There are no current discussions or plans to accumulate the Company's stock or
to obtain control of the Company by means of a merger, tender offer or
solicitation. This proposal is being made in order to obtain sufficient
additional authorized common shares to implement the Company's business plans.
Further, the Amendment is not part of any plan by management to recommend a
series of similar amendments
SGI INTERNATIONAL
3
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to the Board of Directors and the stockholders. Finally, the Board does not
currently contemplate recommending the adoption of any other amendments to the
Articles of Incorporation, which could be construed to affect the ability of
third parties to take over or change control of the Company.
The holders of shares of SGI's currently outstanding common stock do
not have preemptive rights to subscribe for any of SGI's securities, and
additional authorized shares will not have preemptive rights. This means that
current Shareholders do not have prior right to purchase any new issue of Common
Stock of the Company in order to maintain their proportionate ownership
interest. In addition, the issuance of additional shares by the Company could
have an effect on the voting power and potential realizable value of a
shareholder's investment. In the absence of a proportionate increase in the
Company's future earnings, if any, and book value, an increase in the aggregate
number of outstanding shares of the Company caused by the issuance of the
additional shares would dilute the earnings per share and book value per share
of all outstanding shares of the Company's stock. If such factors were reflected
in the price per share of common stock the potential realizable value of a
shareholder's investment could be adversely affected.
Interests of Certain Persons in Increasing the Number of
Authorized Shares of Common Stock
Certain officers and one former director (collectively, the officers) have
escrowed for cancellation, for the benefit of the Company, approximately 3.8
million shares underlying existing warrants and options. Pursuant to the
agreements between the parties, these officers are precluded from exercising
these warrants and options until such time as additional Common Stock is made
available, either as a result of an increase in the authorized number of
common shares or through a reduction in the number of shares currently reserved.
In the event that additional common shares are not made available then the
parties have agreed to cancel all or part of the effected warrants and options.
Other than this arrangement, the Company is not currently aware of any other
arrangements which, as a result of the Amendment would benefit an officer,
director or associate of such persons.
Recommendation of the Board of Directors
The Company is seeking the affirmative vote of the holders of a
majority of the shares voting at the Special Meeting either in person or by
proxy for approval of the Amendment to the Company's Articles of Incorporation
authorizing 50,000,000 additional shares of Common Stock. The Board of Directors
believes that the amendment to the Articles of Incorporation is in the best
interest of the Company and its Shareholders and recommends a vote "FOR" this
proposal. The Board believes, if this amendment is not approved, that it would
adversly impact the Company's ability to sustain operations and continue in
business.
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of July 14, 2000, (i) by each person
who is known by the Company to own beneficially more than 5% of the Company's
common stock, (ii) by each of the Company's directors, (iii) by the four most
highly compensated executive officers other than the Chief Executive Officer
("named executive officers"), and (iv) by all named
executive officers and directors as a group.
<TABLE>
AMOUNT PERCENT
NAME BENEFICIALLY OWNED(1,5) OF CLASS
================================================================================
<S> <C> <C>
Richard B. Bein 5,500 *
Edward D. Doherty - *
George E. Donlou 224,573(2) *
Ernest P. Esztergar 552,458(3) *
John W. Hart 87,622(4) *
William A. Kerr 543,613(4) *
James W. Mahler 246,046(4) *
Ben W. Reppond 2,336,365 3.51
Michael L. Rose 302,857(4) *
Joseph A. Savoca 690,000(4) 1.03
Jeffrey L. Smith 890,460(4) 1.34
John R. Taylor 449,311(4) *
Officers and Directors as a group (12 persons) 6,328,805 9.19
================================================================================
</TABLE>
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to warrants and
convertible preferred stock currently exercisable or convertible, or exercisable
or convertible within 60 days, are deemed outstanding for computing the
percentage of the person holding such securities but are not deemed outstanding
for computing the percentage of any other person or for any other purpose.
Except as indicated by footnote, and subject to community property laws where
applicable, the persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by them.
The amounts calculated above include the common shares underlying the warrants
and options that Messrs. Donlou, Esztergar, Hart, Mahler, Rose, Savoca and
Taylor, among other officers, have agreed to escrow for cancellation, for the
benefit of the Company. See Section "Interest of Certain Persons in Increasing
the Number of Authorized Shares of Common Stock," for additional information.
(2) Represents common shares under warrants or options.
(3) Includes 50,000 common shares issuable upon conversion of 200 convertible
preferred shares and 355,000 common shares under warrant and options.
(4) Includes outstanding and exercisable warrants and options to purchase the
number of common shares of SGI International Common Stock as follows: Mr. Hart
57,622; Mr. Kerr 105,000; Mr. Mahler 131,433; Mr. Rose 190,244, Mr. Taylor
416,811; Mr. Savoca 640,000, Dr. Smith 125,324.
(5) There are no arrangements known to the Company, including the pledge by any
person of securities of SGI, the operation of which may at a subsequent date,
result in a change of control of SGI.
OTHER BUSINESS
The Company knows of no other business to be brought before the Special
Meeting other than as set forth above.
By Order of the Board of Directors,
/s/ MICHAEL L. ROSE
MICHAEL L. ROSE
Chairman of the Board
SGI INTERNATIONAL
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Proxy
SGI INTERNATIONAL
a Utah Corporation
SPECIAL MEETING OF SHAREHOLDERS
September 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Michael L. Rose
and John R. Taylor as proxies, each with the power to appoint his or her
substitute, and hereby authorized them to represent and vote, as designated
below, all of the shares of Common Stock of SGI International, held of record
by the undersigned on July 14, 2000, at the Special Meeting of Shareholders to
be held on September 18, 2000, or any adjournment thereof.
1. Proposal to Amend the Articles of Incorporation.
_____________ FOR __________AGAINST _______ ABSTAIN
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made this Proxy will be voted
for the Proposal.
Dated: ________________________
_______________________________
_______________________________
2nd Signature if held Jointly
_______________________________
Number of Shares
Please sign exactly as your name appears on your stock certificate. When shares
are held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If the
shares are owned by a corporation, sign in the full corporate name by the
President or other authorized officer. If the shares are owned by a partnership,
sign in the name of the Partnership name by an authorized person. Please mark,
sign, date and return the Proxy promptly using the enclosed enveloped.
