SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
(Name of subject company)
Mimbres Valley Farmers Association, Inc.
(Name of Person Filing Statement)
Common Stock
(Title of Class of Securities)
CUSIP Number of Class of Securities: Not Applicable
Donald B. Monnheimer
Kemp, Smith, Duncan & Hammond, P.C.
500 Marquette NW, Suite 1200
Albuquerque, New Mexico 87102
(505) 247-2315
Fax: (505) 764-5480
(Name, address and telephone number of person authorized to
receive notice and communications on behalf of the person
filing statement)
Item 1. Security and Subject Company
This statement relates to common stock of Mimbres Valley
Farmers Association, Inc., a New Mexico corporation ("Mimbres"),
whose principal executive offices are at 811 South Platinum,
Deming, New Mexico 88030.
Item 2. Tender Offer of the Bidder
This statement relates to a tender offer dated June 3, 1996 by
John Brownfield, John Keck, J.W. Donaldson Jr., Frederick H.
Sherman, Kenny Stevens, Harold Morrow and approximately 54 other
persons. Mr. Brownfield's address is HC 66, Box 28, Deming, New
Mexico 88030; Mr. Keck's address is Alamo Rancho Company, 83-555
Airport Blvd., Thermal, California 92274; Mr. Donaldson's address
is Rt. 2, Box 129, Deming, New Mexico 88030; Mr. Sherman's address
is 210 South Silver, Deming, New Mexico 88030; Mr. Stevens'
address is Rt. 2, Box 1285, East Dona Ana Road, Deming, New Mexico
88030; and Mr. Morrow's address is 1319 Shelly Drive, Deming, New
Mexico 88030.
Item 3. Identity and Background
The person filing this statement is Mimbres Valley Farmers
Association, whose address is 811 South Platinum, Deming, New
Mexico 88030.
There are material actual or potential conflicts of interest
between Mimbres and three of the bidders: John Brownfield, J.W.
Donaldson, Jr., and Harold Morrow. Messrs. Brownfield and
Donaldson are current directors of Mimbres, and may have a conflict
of interest arising from their duty of loyalty to the shareholders
of Mimbres. Mimbres believes, however, that this conflict of
interest may be resolved by Messrs. Brownfield and Donaldson fully
abstaining from any deliberation or vote of the Board pertaining to
the tender offer or the response of Mimbres thereto. For the
eleven years prior to June 4, 1996, when he resigned, Mr. Morrow
was the outside auditor of Mimbres. Mimbres believes that Mr.
Morrow's resignation without notice and under the circumstances may
constitute a conflict of interest with his duty owed to Mimbres in
his role as a professional accountant.
Item 4. The Solicitation and Recommendation
See pages 1 through 3 of the attached Exhibit A (Letter dated
June 17, 1996 from James E. Keeler, Chairman of the Mimbres Board
of Directors, to Mimbres shareholders).
Item 5. Persons Retained, Employed or to Be Compensated
None.
Item 6. Recent Transactions and Intent with Respect to Securities
All of the directors and executive officers of Mimbres hold
shares of Mimbres common stock. As noted in Item 3 above, two of
the directors are also bidders. Mimbres believes that the other
directors and/or executive officers do not intend to tender their
stock to the bidders.
Item 7. Certain Negotiations and Transactions by the Subject
Company
No negotiation is being undertaken or is underway by Mimbres
in response to the tender offer, and there is no transaction, board
resolution, agreement in principle, or signed contract, that
relates to or would result in any of the circumstances listed in
Item 7(a)(1) through (4).
Item 8. Additional Information to be Furnished
None.
Item 9. Material to be Furnished as Exhibits
See Exhibit A (Letter dated June 15, 1996 from James E.
Keeler, Chairman of Mimbres the Mimbres Board of Directors, to
Mimbres shareholders).
Signature. After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
June 15, 1996 James E. Keeler
James E. Keeler, President
[Mimbres Valley Farmers Association, Inc. letterhead]
June 15, 1996
All Mimbres Valley Farmers
Association Shareholders
Re: June 3 Tender Offer
Dear Shareholder:
As you may know, a tender offer dated June 3, 1996 (the
"Tender Offer") has been made for all outstanding stock of Mimbres
Valley Farmers Association, Inc. ("Farmers"). The persons making
the tender offer (the "Bidders") are John Brownfield, John Keck,
J.W. Donaldson, Jr., Frederick H. Sherman, Kenny Stevens, Harold
Morrow, and others. Mr. Brownfield and Mr. Donaldson are current
directors of Farmers, but have voluntarily abstained from any
discussions or votes of the Farmers board of directors (the
"Board") concerning the Tender Offer. To that extent, this letter
is presumed to not reflect their views, but instead reflects the
opinions and determinations of all five of the remainder of the
directors. Mr. Morrow is a principal in Morrow & Company, Farmers'
auditor for the past eleven years, which delivered its resignation
to Farmers on June 4, 1996 without any advance notice.
Under the terms of the Tender Offer, the Bidders are offering
$50.00 per share. The period during which shares may be tendered
to the Bidders expires on July 1, 1996. In other words, the tender
period provided in the Tender Offer is twenty business days, which
is the minimum period that a tender offer must be held open under
applicable federal law (Rule 14e-1(a) of the Securities and
Exchange Commission (the "SEC")).
Federal law (SEC Rule 14e-2) also requires that a company that
is subject to a tender offer publish, send or give to its
shareholders, no later than ten business days from the date of the
tender offer, a statement that the company "(1) recommends
acceptance or rejection of the bidder's tender offer, (2) expresses
no opinion and is remaining neutral toward the bidder's tender
offer, or (3) is unable to take a position with respect to the
bidder's tender offer". In addition, the board of directors of
Farmers (the "Board") has also been advised by its attorneys that
it has a duty under state law to evaluate the Tender Offer
objectively, and, after making all reasonable inquiry, to
communicate its recommendations, if any, to the shareholders.
In light of all information available to the Board at this
time, the Board recommends rejection of the Tender Offer.
The Board has, on the advice of its legal counsel, retained an
independent accounting firm to do a formal appraisal of the worth
of Farmers (and, by extension, the worth of the Farmers stock).
The firm that has been retained is Rogoff, Diamond & Walker LLP,
certified public accountants, of Albuquerque ("Rogoff"). Rogoff
has told the Board that a proper appraisal may require over 30 days
to complete, because of its lack of previous knowledge about
Farmers and the diversity of retail businesses in which Farmers is
engaged. Nevertheless, Rogoff has done a very preliminary review,
and based on that preliminary review has offered the following
comments that the Board believes to be material.
Initially, Rogoff notes that "[a]ssuming that [Farmers] assets
could be disposed of at least at net book value", the net proceeds
would be "approximately $200 per share". On the other hand, Rogoff
also states that "[t]ypically, on-going businesses are valued based
on earnings or cash flows rather than net book value". Rogoff's
preliminary range of estimated value using an earnings based method
is $116 to $188 per share. Rogoff's preliminary conclusion,
therefore, is that "the tender offer of $50 per share is far below
what the shareholders could expect to realize if the company is
either liquidated or continued to operate." Based on this
information, the Board believes that the tender price may be
significantly lower than the actual value of the company.
Nevertheless, Rogoff emphasizes that its conclusions are
limited by the information it has at hand and by the very short
time it has had to review such information. Rogoff notes that the
appraisal will require a thorough investigation of Farmers, and
that its preliminary conclusions may be significantly adjusted
after it has obtained and has carefully analyzed all necessary
information, including, among other things, the factors cited in
the Tender Offer as limiting Farmers' future return (for example,
the opening of "Peppers" as a new competitor).
In view of all the circumstances, including the unexpected
resignation of Morrow & Company, the Board believes that the
interests of Farmers shareholders would be best served by an
extension of the tender period sufficient to allow completion of
the appraisal and the communication of the appraisal's conclusions
to the shareholders, plus several additional days to allow the
shareholders time to decide whether or not to tender their shares
to the bidder in light of the information provided by the
appraisal. The Board has sent a request to the Bidders to
voluntarily agree to such an extension. If the Bidders will not
agree to the extension, it is the Board's intention to seek a court
order requiring an extension, in addition to other injunctive
relief. If the Board is successful in obtaining such an extension,
either voluntarily or through a court order, the Board will send
notice of the new tender period to the shareholders no later than
June 24, 1996. If the Board fails to obtain an extension of the
tender period, it will send notice of such failure to the
shareholders, together with any relevant additional information on
the value of Farmers that the Board has at that time, also not
later than June 24, 1996.
In the Tender Offer, the Bidders cite several proposed reforms
that they feel should be adopted in order to improve the financial
health of Farmers and advance the interests of the shareholders.
The Board believes that the proposed reforms, as well as the long-
standing Farmers philosophy of not seeking to maximize profits, are
entirely appropriate subjects for shareholder discussion and
decision. To the best of the Board's knowledge, however, none of
the Bidders have ever sought to place these proposals before the
shareholders for their consideration, and none of the Bidders have
every formally presented proposals for such reforms to the Board
for the consideration of the directors. The Board is completely
willing to consider any reforms that may be necessary or desirable
for the continued success of Farmers, but believes that those
reforms should only be implemented after full and open discussion
by all interested shareholders.
The Tender Offer raises questions about the financial
soundness of Farmers. The Board believes that Farmers is
financially sound, and that in any event any such questions will be
best answered by the appraisal being prepared by Rogoff. The Board
notes that at the most recent meeting of the Board with Mr. Morrow
prior to his resignation, Mr. Morrow did not indicate any material
concern about the financial soundness of Farmers. In addition,
Rogoff's preliminary review has not revealed any items of immediate
concern to that firm.
Very truly yours,
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
By: James E. Keeler
James E. Keeler
Chairman of the Board of Directors
