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 does not know the
intentions of the other directors and/or executive officers with
respect to their shareholdings. [But if the Board votes to
recommend a rejection, presumably the directors so voting will at
least not tender their stock.]
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 17, 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 14, 1996 James E. Keeler
James E. Keeler, President
[Mimbres Valley Farmers Association, Inc. letterhead]
June 26, 1996
All Mimbres Valley Farmers
Association Shareholders
Re: June 3 Tender Offer
Dear Shareholder:
On June 15, 1996 the majority of the board of directors (the
"Board") of Mimbres Valley Farmers Association, Inc. ("Farmers")
sent you a letter about the Board's recommendation concerning the
tender offer dated June 3, 1996 (the "Tender Offer") for Farmers
stock. The purpose of this letter is to inform you of certain
developments that have occurred since June 15.
The June 15 letter noted that it was the Board's intention to
obtain an extension of the tender period in order to allow an
accounting firm retained by Farmers time to complete a formal
valuation of the company. Attempts by Farmers to obtain a
voluntary extension of the tender period from the principal
individuals making the Tender Offer (John Brownfield, John Keck,
J.W. Donaldson, Jr., Frederick H. Sherman, Kenny Stevens and Harold
Morrow; hereafter the "Bidders") were initially unsuccessful.
Accordingly, Farmers filed a complaint against the Bidders, and a
motion for injunctive relief, in federal court in Albuquerque last
Thursday afternoon, June 20. The motion included a request for,
among other things, the issuance of a temporary restraining order
("TRO").
In its complaint, and as the basis for its motion for
injunctive relief, Farmers asserted that the Tender Offer violated
Section 14(e) of the federal Securities Exchange Act of 1934.
Specifically, Farmers claimed that Mr. Morrow's statement as a
certified public accountant that the tender price of $50.00 per
share is "fair", and a statement in the Tender Offer concerning the
nature of the Board's fiduciary responsibilities, violate the
prohibition in Section 14(e) against making an "untrue statement of
a material fact ... in connection with [a] tender offer". In
addition, Farmers claimed that Mr. Morrow's resignation on June 4,
1996 was improperly delayed for the specific purpose of putting
Farmers at the greatest possible disadvantage in responding to the
Tender Offer, and that this action violated the Section 14(e)
prohibition against "fraudulent, deceptive and manipulative acts or
practices ... in connection with [a] tender offer".
A hearing was held on the TRO portion of Farmers' motion on
Friday afternoon, June 21, at the conclusion of which the court
(Judge Edwin Mechem) issued the TRO that Farmers sought. The TRO
prohibits the Bidders and any of their agents (and specifically
including Mimbres Valley Abstract and Title Company, the depositary
for the Tender Offer) "from accepting delivery of any shares of
[Farmers] stock tendered in response to [the Tender Offer], or from
purchasing any stock that may have been tendered prior to this
temporary restraining order." Temporary restraining orders
typically cannot last more than ten days; thus, the TRO provides
for a hearing on a preliminary injunction to be held on July 1,
1996, at which time the TRO would expire.
Yesterday afternoon Farmers entered into an agreement with the
Bidders under which the Bidders will extend the expiration date of
the Tender Offer to September 16, 1996, and will amend the Tender
Offer to state that "Morrow is not Farmers' outside accountant, and
... the representations about the fairness of the tender price in
the Tender Offer do not reflect his judgment as a certified public
accountant." In return, Farmers will provide the Bidders a copy of
the valuation report and certain other financial information as it
becomes available.
As a result of this agreement, the Board intends to request
the court to dissolve the TRO and cancel the hearing set for July
1. The Board has not made a decision of whether to take additional
legal action against the Bidders, but notes that if it does so it
may have other federal and state claims available.
The June 15 letter noted that Rogoff, Diamond & Walker LLP
("Rogoff"), the accounting firm retained by Farmers to do the
valuation report, had, on the basis of a preliminary review,
indicated that a disposition of Farmers assets at net book value
(assuming that such assets could be sold at net book value) would
yield approximately $200 per share. On the basis of additional
investigations and review of certain additional financial records,
Rogoff now estimates that, taking into account certain assumptions,
"the stockholders equity on a market value basis", determined by
adjusted net book value, is probably in the order of "approximately
$312 per share". Rogoff is careful to note that this figure is
still preliminary, and that it is subject to adjustment up or down
depending on further investigation. Rogoff also cautions, as it
did in its previous communication to Farmers, that "adjusted book
value is only one of several methods of determining the value of
[Farmers]." Nevertheless, this new estimate only reinforces the
belief of the Board that the tender price of $50.00 per share is
significantly lower than the actual value of the company.
Accordingly, the Board continues to recommend rejection of the
Tender Offer.
The Board intends to communicate the results of the valuation
to the shareholders as soon as practicable after Rogoff delivers
its report, which is now expected to be in the third week of July.
In addition, the full report will also be made available at
Farmers' office for examination by any shareholder.
The following information is required to be included in this
letter by Securities and Exchange Commission ("SEC") Rule 14d-9:
a. The principal executive offices of Farmers are at 811 South
Platinum, Deming, New Mexico 88030.
b. The address of John Brownfield is HC 66, Box 28, Deming, NM
88030; the address of John Keck is Alamo Ranch Company, 83-555
Airport Boulevard, Thermal, CA 92274; the address of J.W.
Donaldson, Jr. is Rt. 2, Box 129, Deming, NM 88030; the
address of Frederick H. Sherman is Sherman & Sherman, P.C.,
210 South Silver, Deming, NM 88030; the address of Kenny
Stevens is Rt. 2, Box 1285, Deming, NM 88030; and the address
of Harold Morrow is Morrow & Company, 800 West Florida,
Deming, NM 88030. Although the Tender Offer lists
approximately 60 bidders in all, it indicates that the bidders
other than the six individuals named above are included solely
for the purpose of providing legal ownership for all the
shares that may be purchased, in view of a requirement of the
Farmers articles and bylaws that restricts legal ownership of
Farmers shares to a maximum of 240 per person. The Tender
Offer indicates that the six individuals named above will be
the beneficial owners of all acquired stock, and will exercise
all power pertaining to such stock.
c. With respect to Item 3(b) of SEC Schedule 14D-9, there are
material actual or potential conflicts of interest between
Farmers and three of the bidders: John Brownfield, J.W.
Donaldson, Jr., and Harold Morrow. Messrs. Brownfield and
Donaldson are current directors of Farmers, and may have a
conflict of interest arising from their duty of loyalty to the
shareholders of Farmers. Farmers 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
Farmers thereto. To date, Messrs. Brownfield and Donaldson
have so abstained. For the eleven years prior to June 4,
1996, when he resigned, Mr. Morrow was the outside auditor of
Farmers. Farmers believes that Mr. Morrow's resignation
without notice and under the circumstances, and also certain
statements attributable to Mr. Morrow in the Tender Offer,
constitute conflicts of interest with his duty owed to Farmers
in his role as a certified public accountant.
Very truly yours,
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
By: James E. Keeler
James E. Keeler
Chairman of the Board of Directors
