File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
MAXCO, INC.
(Name of Issuer)
MAXCO, INC.
(Name of person(s) filing statement)
Common Stock
(Title of class of securities)
577723 10 9
(CUSIP number of class of securities)
Vincent Shunsky
Vice President of Finance
MAXCO, INC.
1118 Centennial Way
Lansing, Michigan 48917
(517) 321-3130
(Name, Address and Telephone Number of person authorized
to receive notices and communications on behalf of the
person(s) filing statement)
May 14, 1997
(Date tender offer first published, sent or given to security holders)
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation Filing Fee
- --------------------------------------------------------------------------------
$3,375,000* $675.00
- --------------------------------------------------------------------------------
*Based on the average of the high and low prices of the Common Stock to be
received in exchange, as of May 23, 1997
( ) Check if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
<PAGE>
Item 1. Security and Issuer.
This filing relates to an Exchange Offer for its own securities of Maxco,
Inc., a Michigan corporation ("Maxco"), whose principal executive office is
located at 1118 Centennial Way, Lansing, Michigan 48917.
The class of equity securities to which this filing relates is Maxco, Inc.
common stock of which 3,517,180 shares were outstanding as of April 22, 1997. Up
to 500,000 shares of the common stock are being sought to be exchanged for
Maxco, Inc. Series Five Preferred Stock at the rate of one share of preferred
stock for each 15 shares of common stock tendered and accepted. The common
shares may be tendered by any officer, director or affiliate of Maxco and will
be accepted for exchange in the same manner and according to the same terms as
any other shareholder. Reference is made to the information set forth on page 8
under the caption "The Exchange Offer" and page 19 under the caption "Tenders by
Maxco Officers, Directors or Affiliates" in the Exchange Offer attached hereto
and incorporated herein by reference.
Maxco, Inc. Common Stock is traded in the over-the-counter market and is
listed by Nasdaq with its National Market Issues. Reference is made to the
information set forth on page 9 under the caption "Common Stock" in the Exchange
Offer attached hereto, and on page 8 under the caption "Market for Registrant's
Common Equity and Related Shareholder Matters" in Maxco, Inc.'s Annual Report on
Form 10-K for the year ended March 31, 1996, attached as Exhibit A to the
Exchange Offer attached hereto, for certain market price information, which is
incorporated herein by reference.
Item 2. Source and Amount of Funds or Other Consideration.
Consideration for the exchange will be 33,333 shares of previously
authorized but unissued Maxco, Inc. Series Five Preferred Stock. Reference is
made to page 6 under the caption "Description of the Preferred Shares" and to
page 8 under the caption "The Exchange Offer" in the Exchange Offer attached
hereto and incorporated herein by reference.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
Reference is made to the information set forth on page 9 under the caption
"Purpose of the Transaction" and on page 14 under the caption "Effect of the
Exchange Offer on the Market for Common Stock; Exchange Act Registration" in the
Exchange Offer attached hereto and incorporated herein by reference. Pursuant to
Michigan corporate law, the common stock acquired by Maxco in the Exchange Offer
will become authorized but unissued stock. Neither Maxco nor its affiliates has
any plans or proposals relative to Maxco, any of its subsidiaries or the common
stock or preferred shares not set forth in the above referenced materials.
Except for changes in dividend policy and capitalization related to issuance of
the Series Five Preferred Shares, there are no plans or proposals which would
result in any material change in the present dividend rate or policy, or
indebtedness or capitalization of Maxco, Inc.
Item 4. Interest in Securities of the Issuer.
Maxco has not effected any transaction in its securities during the past 40
business days nor, to its knowledge, has any such transaction been effected by
any officer, director of affiliate of Maxco or its subsidiaries, as disclosed at
page 20 under the caption "Transactions in Common Stock" in the Exchange Offer
attached hereto and incorporated herein by reference.
<PAGE>
Item 5. Contracts, Arrangements, Understandings or Relationships with Respect to
the Issuer's Securities.
Reference is made to the information set forth on page 20 under the
caption "Certain Contracts and Arrangements with Respect to Maxco Securities" in
the Exchange Offer attached hereto and incorporated herein by reference. Neither
Maxco, its subsidiaries nor any of their respective directors, executive
officers or controlling persons have any contracts, arrangements, understandings
or relationships not set forth in the above referenced materials.
Item 6. Persons Retained, Employed or to be Compensated.
No individual or entity has been retained by Maxco for advisory or
solicitation services in connection with the Exchange Offer.
Item 7. Financial Information.
Reference is made to pages 19 - 34 in the Maxco, Inc. Annual Report on Form
10-K for the year ended March 31, 1996, attached as Exhibit A to the Exchange
Offer and to page 5 under the caption "Selected Financial Data," and pages 16
and 17 under the caption "Effect of the Exchange Offer on the Market for Common
Stock; Exchange Act Registration" of the Exchange Offer attached hereto and
incorporated herein by reference.
Item 8. Additional Information.
Reference is made to page 4 under the caption "Investment Considerations",
page 8 under the caption "The Exchange Offer," page 14 under the caption "Effect
of the Exchange Offer on the Market for Common Stock; Exchange Act
Registration," and page 19 under the caption "Regulatory Approvals" of the
Exchange Offer attached hereto and incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
Exhibit 1. Form of Exchange Offer
Exhibit A. Maxco, Inc. Annual Report on Form 10-K for the year
ended March 31, 1996 is hereby incorporated by reference.
Exhibit B. Maxco, Inc. Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996 is hereby incorporated by
reference.
Exhibit 2. Form of Letter of Transmittal
Exhibit 3. Form of Notice of Withdrawal
Exhibit 4. Form of Cover Letter of Maxco, Inc. to its Shareholders
Exhibit 5. Form of Proposed Follow-up Letters of Maxco, Inc. to its
Shareholders
Exhibit 6. Form of Broker Client Letter
<PAGE>
SIGNATURE
After due 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.
MAXCO, INC.
By: /s/ Vincent Shunsky
-----------------------------------
Vincent Shunsky, Vice President-Finance
Dated: May 28, 1997
OFFER TO EXCHANGE
MAXCO, INC.
Offer to holders of record of Maxco, Inc. Common Stock as of April 22,
1997, to exchange 33,333 shares of Series Five Preferred Stock for up to 500,000
shares of outstanding Maxco, Inc. Common Stock.
Series Five Preferred Stock will be nonvoting stock. It will provide
quarterly cumulative dividends at the annual rate of 10%, subject to the
restrictions of Michigan corporate law and the discretion of the Maxco Board of
Directors. It will be callable at the option of the Company after three years at
105% of face value, with the call price declining at the rate of one percent per
year to a minimum price after eight years to a price equal to face value. Series
Five Preferred Stock will have rights on liquidation superior to those of Maxco
Inc. Common Stock and equal to other outstanding preferred stock. See
"Description of the Preferred Shares."
Based on the face value per Preferred Share of $120.00 and the exchange
ratio of 15 to 1, the effective exchange price per common share is $8.00. Based
on the closing price of the Company's Common Stock for the ten trading days up
to and including May 23, 1997, the exchange price provides a premium of 17% to
tendering Shareholders. However, holders of the Preferred Shares will be limited
in their ability to sell such shares as the Preferred Shares will not be
registered securities and will not be freely tradable.
Shareholders who exchange their Maxco Common Stock for Series Five
Preferred hereby should be aware that there is no trading market for such Series
Five Preferred Shares and that there is no ability for such a trading market to
develop. Shareholders should review and carefully consider the discussion under
"Investment Considerations."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS ANY SUCH COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE OFFER TO EXCHANGE AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
EASTERN DAYLIGHT TIME, ON JUNE 25, 1997, UNLESS THE OFFER TO EXCHANGE IS
EXTENDED OR TERMINATED AS DESCRIBED HEREIN.
May 28, 1997
1
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Exchange Offer
or in the accompanying documents.
The Company
Maxco, Inc. is a holding company with corporate headquarters located at
1118 Centennial Way, Lansing, Michigan 48917. Its telephone number is (517)
321-3130. A diversified wholesale distributor/converter and manufacturer,
Maxco's products and services are used by highway and general construction, heat
treating and flexible packaging industries. Maxco presently employs
approximately 620 persons at its various locations in Michigan, Wisconsin, Ohio
and Indiana. Maxco is involved in distribution, packaging products, metal heat
treating services and real estate. In addition to its operating units, Maxco has
an equity position in a real estate development limited liability company and
three technology related companies, Medar, Inc., AXSON, S.A. and Strategic
Interactive, Inc. For a more complete description of the Company, see the Maxco,
Inc. Annual Report on Form 10-K for the year ended March 31, 1996, attached
hereto as Exhibit A. For developments subsequent to March 31, 1996, see the
Maxco, Inc. Form 10-Q for the quarter ended December 31, 1996, attached hereto
as Exhibit B.
The Exchange Offer
Shares of Maxco, Inc. Series Five Preferred Stock (the "Preferred Shares"),
are being offered to the Company's common shareholders of record as of April 22,
1997 in exchange for up to 500,000 shares of Maxco's outstanding Common Stock
(the "Common Stock"). The Company will issue one share of the Preferred Shares
for each fifteen shares of Common Stock tendered. No fractional Preferred Shares
will be issued. Shareholders will instead be paid for such unissued fractional
Preferred Shares at the rate of $120.00 per share. In the event more than
500,000 shares of outstanding Common Stock are tendered, the exchange will be
made, as nearly as possible, pro rata, based on the number of shares tendered by
each shareholder during the period the Exchange Offer remains open. In making
such prorations, the Company intends to use increments of fifteen shares of
Common Stock to avoid, as much as possible, the creation of fractional Preferred
Share interests. In addition, Common Stock tendered by holders of less than
ninety shares who have tendered all of the shares of Common Stock held by them
will be accepted prior to any proration. It is anticipated that the Exchange
Offer will remain open until 5:00 p.m., Eastern Daylight Time, on June 25, 1997
unless further extended by the Company. See "The Exchange Offer" for a further
discussion.
Purpose of the Exchange Offer
Maxco has never paid dividends on its Common Stock. In the foreseeable
future with the planned growth of its businesses, the Company does not expect
the situation to change. However, the Company recognizes that the investment
objectives of some of its Shareholders may now be focused more on current income
than long term appreciation.
2
<PAGE>
The Exchange Offer is being made to address this need. See "Purpose of the
Transaction" for a more complete discussion.
Dissenters' Rights of Appraisal
This Exchange Offer does not give rise to any dissenters' rights of
appraisal under Michigan corporate law.
The Preferred Shares
Preferred Shares will be nonvoting and will provide quarterly dividends at
an annual interest rate of 10%. Dividends will be payable only out of current or
retained earnings and will be further subject to the requirements of Michigan
Corporate law and the discretion of the Maxco board of directors. Dividends will
be cumulative.
The Preferred Shares will be callable, at the option of the Company, at
105% of face value after 36 months from the date of issuance. The call price
will decline 1% each 12 month period thereafter that the shares remain
outstanding, but will not decline below face value.
The Preferred Shares will have liquidation rights equal to holders of Maxco
Inc. Series Three and Four Preferred Shares and superior to those of Common
Stock holders. See "Description of the Preferred Shares" for a more detailed
description.
3
<PAGE>
INVESTMENT CONSIDERATIONS
There are a number of considerations, including those enumerated below,
pertinent to a decision to retain the Common stock or to accept the Exchange
Offer for an investment in the Preferred Shares. Before tendering any Common
Stock pursuant to the Exchange Offer, a Shareholder should carefully consider
the following, together with all of the other information set forth in this
Prospectus, in light of such Shareholder's particular financial circumstances
and investment objectives.
Lack of Trading Market. Shareholders can expect that there will not be a
trading market for the Preferred Shares and that the Shareholder may find it
difficult to sell the Preferred Shares if they desire to do so. The Preferred
Shares have not been registered with the United States Securities and Exchange
Commission and will not be registered on any exchange or with the National
Association of Securities Dealers.
Static Nature of Price for Preferred Shares. It is unlikely that the market
value of the Preferred Shares will fluctuate significantly from the $120 face
value. Preferred Shareholders will, thus, not experience any appreciation in the
value of their stock. Depending on market conditions and the performance of the
Company, however, the price of the Common Stock could increase in the future and
the Common Stock might trade at prices greater than the relative value of the
Preferred Shares. In addition, the aggregate net realizable value of the
individual business units or assets of the Company may exceed the market value
of the Company's Common Stock. There are currently no plans to dispose of any of
the Company's business units or assets outside the ordinary course of business.
Potential Negative Consequences of Redemption. Holders of the Preferred
Shares will not be able to cause their shares to be redeemed, or to prevent such
redemption. The decision as to when, or if, to redeem the Preferred Shares is at
the sole option of the Company. In the event the Company elects to redeem the
Preferred Shares at the end of three years, Shareholders will have had a
relatively short time in which dividends were received. Depending on prevailing
interest rates at the time of redemption, Shareholders may not be able to
achieve an equivalent yield from another investment. In addition, depending on
the Shareholder's basis in the shares, a redemption may give rise to taxable
gain in a year which the Shareholder would otherwise not choose to take such
gain.
4
<PAGE>
The following table sets forth certain information
regarding the Company for the periods ended March 31
and December 31, 1996 and 1995
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended Twelve Months Ended
December 31, March 31,
1996 1995 1996 1995
-----------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Total assets $ 54,708 $ 69,031 $ 68,544 $ 60,672
Long-term obligations (net of current 5,628 23,934 26,815 15,369
maturities)
Net sales and other income 54,172 49,106 59,330 55,850
Income (loss) from continuing operations 22,879 (1,404) (2,599) 2,084
Income (loss) from discontinued businesses (594) 405 (94) 2,034
Equity share of affiliates earnings (losses) (459) (2,340) (2,275) 664
Net income (loss) 22,285 (999) (2,693) 4,118
Per common share (primary):
Income (loss) from continuing operations 5.66 (0.35) (0.64) 0.42
Income (loss) from discontinued businesses (0.15) 0.09 (0.02) 0.46
Net income (loss) 5.51 (0.26) (0.66) 0.88
Per common share (fully diluted):
Income (loss) from continuing operations 5.37 (a) (a) 0.42
Income (loss) from discontinued businesses (0.14) (a) (a) 0.44
Net income (loss) 5.23 (a) (a) 0.86
Ratio of earnings to fixed charges and 31.38 (b) (c) 2.87
preferred stock dividends
</TABLE>
(a) Antidilutive for the period presented
(b) Ratio is less than 1 to 1 representing a coverage deficiency of $2,314,000
(c) Ratio is less than 1 to 1 representing a coverage deficiency of $4,035,000
5
<PAGE>
DESCRIPTION OF THE PREFERRED SHARES
Holders of Preferred Shares will be not be entitled to vote. The Preferred
Shares will provide a dividend at the rate of 10% per annum. Dividends will be
payable solely out of current or accumulated earnings, and will be further
subject to the requirements of Michigan corporation law that dividends may not
be paid if the effect would cause the corporation to be unable to pay its debts
as they become due in the usual course of business. It is anticipated that the
dividends will be paid on a quarterly basis. However, if the board of directors
of the Company determines that it would not be prudent in any quarter to pay
such dividends, the dividend will accumulate and be payable in the next quarter
in which dividends are paid. The terms of the loan agreement between the Company
and its major lender currently limit the annual dividends payable by the
Company. The Company is seeking a modification of its loan agreement in order to
pay the dividends payable on the Preferred Shares in any fiscal year.
The Preferred Shares will not be callable by the Company for three years.
Thirty-Six months after the date of issuance, the Preferred Shares will become
subject to being called at the sole option of the Company. Payment upon such
call after thirty-six months will be at the rate of One Hundred Five Percent
(105%) of the face value of One Hundred Twenty and 00/100 ($120.00) Dollars for
each Preferred Share. The call price will decline at the rate of One Percent
(1%) per year during the time which the Preferred Shares remain outstanding. In
no event, however, will the call price decline below the face value of One
Hundred Twenty and 00/100 ($120.00) Dollars per share of Preferred Stock. The
following table sets forth the call prices per Preferred Share:
Year 4 105% $126.00
Year 5 104% $124.80
Year 6 103% $123.60
Year 7 102% $122.40
Year 8 101% $121.20
Thereafter 100% $120.00
In addition to the Preferred Shares and the Common Stock, the Company has
outstanding 15,931 shares of Series Three Preferred Shares which were issued in
February 1992 and 46,414 shares of Series Four Preferred Shares which were
issued in January 1997. Series Three Preferred is a 10% cumulative preferred
with a face value of $60.00. It is voting stock at the rate of 20 votes per
share and is redeemable at the option of the Company. Series Four Preferred is a
10% cumulative preferred with a face value of $51.50. It is nonvoting stock and
is redeemable at the option of the Company. Dividends have been paid on the
Series Three and Series Four Preferred Shares each quarter since issuance.
Series One Preferred Shares, of which 4,000 shares were issued, and Series
Two Preferred Shares, of which 18,000 shares were issued, have been fully
redeemed and are no longer outstanding.
6
<PAGE>
In the event of liquidation of the Company, the Preferred Shares will have
a preferred position to shares of Common Stock and will have a position equal to
Series Three and Series Four Preferred Shares for payment of its face value plus
any accumulated dividend.
The following table sets forth a comparison of the terms of the Preferred
Shares to the terms of the Common Stock.
<TABLE>
<CAPTION>
Series Five Preferred Common Stock
<S> <C> <C>
Voting Rights None One per Share
Dividend 10% on Face Value of None Anticipated
$120.00
Conversion Rights None Not Applicable
Redemption at Option of None None
Shareholder
Call at Option of Company None for 3 years, at 105% of None
face value in 4th year,
declining 1% per year to face
value in 9th year and
thereafter,
plus any accumulated
dividends.
Liquidation Rights Following payment of Following payment of
creditors, but prior to any creditors and Preferred
payments to holders of Shareholders, holders of
Common Stock, will receive Common Stock will share
face value of shares plus equally in the assets of
accumulated dividends. the Company on a per share
Thereafter will not be entitled basis.
to share in the assets of the
Company.
Preemption Rights None None
</TABLE>
7
<PAGE>
THE EXCHANGE OFFER
The Preferred Shares are being offered to the holders of record of the
Company's Common Stock as of April 22, 1997 in exchange for up to 500,000 shares
of such Common Stock. Maxco will issue one share of the Preferred Shares in
exchange for every fifteen shares of Maxco, Inc. Common Stock tendered to, and
accepted by, the Company. No fractional Preferred Shares will be issued. In the
event the amount of Common Stock tendered by a shareholder is not evenly
divisible by fifteen, the shareholder will be paid for the unissued fractional
Preferred Share at the rate of $120.00 per share. Up to Five Hundred Thousand
(500,000) shares of Common Stock will be accepted in exchange for the Preferred
Shares. In the event Common Stock in excess of 500,000 shares are tendered,
acceptance will be pro rata for all shareholders tendering Common Stock in
accordance with the number of shares tendered during the time the Exchange Offer
is open. Pursuant to rules of the Commission, the Company is permitted to accept
up to 2% additional tendered Common Stock without amending the Exchange Offer.
In the event proration is required, the Company intends to use increments of
fifteen shares of Common Stock to avoid, as much as possible, the creation of
fractional Preferred Share interests. In addition, Common Stock tendered by
holders of less than ninety shares who have tendered all of the shares of Common
Stock held by them will be accepted prior to any proration. Further, in the
event that the shares tendered appear likely to cause the number of record
shareholders to approach 300, the Company will reduce the number of shares to be
accepted for exchange or will withdraw the Exchange Offer. Subject to the above,
in the event less than 500,000 shares of Common Stock are properly tendered, all
shares of Common Stock tendered will be accepted for exchange.
Based on the face value per Preferred Share of $120.00 and the exchange
ratio of 15 for 1, the effective exchange price per common share is $8.00. Based
on the closing price of the Common Stock for the ten trading days up to and
including May 23, 1997, the exchange price provides a premium of 17% to
tendering Shareholders. However, there is no assurance that a holder of the
Preferred Shares will be able to sell such shares, or that the Preferred Shares
will trade at their face value.
The Exchange Offer will expire at 5:00 p.m., Eastern Daylight Time, on June
25, 1997, unless extended or earlier terminated (the "Exchange Expiration
Date"). The Company reserves the right to extend the Exchange Offer for such
periods as it may determine, in its sole discretion, from time to time. If the
Company extends the Exchange Offer, it will do so by giving oral or written
notice to the Exchange Agent no later than 9 a.m., Eastern Daylight Time, on the
business day following any previously announced Exchange Expiration Date.
Any extension, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by notice thereof, such notice in the case
of any extension to be issued no later than 9:00 a.m., Eastern Daylight Time, on
the business day following the previously scheduled Exchange Expiration Date.
For purposes of the Exchange Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday, and consists of the time period from 12:01
a.m. through 12:00 midnight, Eastern Daylight Time.
8
<PAGE>
The Company does not expect to change the terms of the Exchange Offer or
increase the exchange rate of the Preferred Shares offered in the Exchange
Offer. However, if the consideration offered in the Exchange Offer is increased,
all tendering holders of Maxco, Inc. Common Stock accepted for exchange in such
Exchange Offer, including those accepted before the announcement of any such
increase, will receive the same consideration regardless of when they tender. If
the exchange rate is increased, the consideration is otherwise changed or the
number of shares to be accepted for exchange is increased or decreased, the
Exchange Offer will remain open at least 10 business days from the date the
Company first gives notice to the Exchange Agent of such increase.
The Common Stock
As of March 31, 1997, the Company had 3,517,180 shares of its Common Stock
outstanding, which were held by approximately 1,500 record and beneficial
holders. Maxco's Common Stock is traded on the Nasdaq Stock Market national list
under the symbol MAXC.
The range of high and low sales prices for the last two years as reported
by Nasdaq were:
YEAR QUARTER ENDED HIGH LOW
- ---- ------------- ---- ---
1995 March 31 10- 3/4 8
June 30 9 7-1/4
September 30 10 7-7/8
December 31 9-1/8 7
1996 March 31 10 6-3/4
June 30 10-1/8 8
September 30 9-3/4 8-1/8
December 31 8-5/8 7-3/8
1997 March 31 7-3/4 6-1/4
No shareholder vote is required for this transaction and you are not being
asked to give a proxy.
Purpose of the Transaction
Maxco has never paid dividends on its common stock. Although the Company
will not be prohibited from paying dividends on the contemplated Preferred
Shares, it is prohibited from paying dividends on its Common Stock by the terms
of the loan agreement between the Company and its primary lender. In the
foreseeable future, the Company does not expect the situation to change.
The Company also recognizes that the investment objectives of some of its
Shareholders may now be focused more on current income than long term
appreciation. At annual meetings of the
9
<PAGE>
Shareholders and in other contacts, Shareholders have frequently raised the
question as to when they can expect dividends to be paid. In addition, some long
term shareholders are now reaching an age at which current income is more
important to them than it was at the time their investment was made. Company
management initiated discussion of the proposed exchange to address this need
and, as a result, this offer is being made to Shareholders.
Anticipated Federal Income Tax Consequences
The Company intends for the exchange to qualify as a "recapitalization"
pursuant to Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended. If the transaction should qualify as such a recapitalization, shares of
Preferred Shares received by Shareholders in exchange for Common Stock tendered
pursuant to this Exchange Offer will have a "carry-over basis" which will be the
same as the basis of the Common Stock tendered. (The basis of a shareholder's
Common Stock will usually be equal to the price paid upon the purchase of such
shares by such shareholder.) The basis of the Preferred Shares will determine
the gain or loss to be recognized by the Shareholder at the time of a later
transfer of such Preferred Shares by the Shareholder, whether or not upon call
by the Company.
If the Internal Revenue Service should determine that the value of the
Preferred Shares is greater that the value of the Common Stock tendered by a
Shareholder, that Shareholder will have taxable gain equal to the deemed
difference in value. Although the face value of the Preferred Shares is 18.5%
greater than the closing price of the Common Stock on May 23, 1997, other
factors may be considered in establishing the actual value of the Preferred
Shares. These factors include but are not limited to the value of the Common
Stock on the actual Exchange Date, the potential lack of a trading market for
the Preferred Shares and the possibility of greater appreciation in the price of
the Common Stock in comparison to the Preferred Shares. (See "Investment
Considerations.") The Company has established the face value of the Preferred
Shares at $120 in an attempt to equalize the value of the Preferred Shares to
the Common Stock. However, there can be no guaranty that the IRS will agree that
the value of the Preferred Shares is equal to that of the Common Stock at the
time of the exchange.
In the event the IRS determines that the fair market value of the Preferred
Shares exceeds that of the Common Stock surrendered, it is likely that the
excess received in the exchange will be taxable as part of a capital exchange.
Conversely, in the event the value of the Common Stock is deemed to be greater
than that of the Preferred Shares, the shareholder could be entitled to
recognize a loss on the exchange.
In addition, in the event Shareholders receive cash payments from the
Company in lieu of unissued fractional Preferred Shares, it is likely that such
payments will constitute income which will be taxable as a redemption of such
fractional shares.
Shareholders are urged to consult their own tax advisors to determine the
effect of this transaction based on their particular circumstances.
10
<PAGE>
Procedure for Tendering Maxco Common Stock.
The tender by a record holder, and acceptance by the Company, of Common
Stock in accordance with the procedures set forth below will constitute an
agreement between such holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Except as set forth below, to effect a valid tender pursuant to the
Exchange Offer, a record holder must transmit certificates for its Maxco Common
Stock, together with the Letter of Transmittal (or copies thereof) properly
completed and duly executed as of the date of tendering, and all other documents
required by such Letter of Transmittal, to the Exchange Agent at its address set
forth herein prior to the Exchange Expiration Date. (See "The Exchange Agent")
HOLDERS SHOULD NOT SEND COMMON STOCK OR LETTERS OF TRANSMITTAL OR ANY OTHER
REQUIRED DOCUMENTS TO THE COMPANY. TO VALIDLY TENDER COMMON STOCK THE HOLDERS
MUST SEND THE COMMON STOCK TOGETHER WITH THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT ONLY. THE METHOD OF DELIVERY OF THE
COMMON STOCK, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER OF THE COMMON STOCK.
EXCEPT AS OTHERWISE PROVIDED HEREIN, SUCH DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT HOLDERS OF THE COMMON STOCK USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
If Common Stock is delivered to the Exchange Agent by or on behalf of any
holder in denominations in excess of the amount tendered in the accompanying
Letter of Transmittal, the Exchange Agent will split the applicable tendered
certificate into two certificates representing Common Stock in an aggregate
principal amount (or amount of shares) equal to the amount so delivered. The
Exchange Agent will then return to the tendering holder, unless otherwise
requested by such holder under "Special Delivery Instructions" in the Letter of
Transmittal, as promptly as practicable following the expiration, withdrawal or
termination of the Exchange Offer, a new certificate representing the portion of
such delivered Common Stock not tendered.
Tendering holders of Common Stock will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the Common Stock pursuant to the
Exchange Offer.
11
<PAGE>
With respect to the Exchange Offer, by executing a Letter of Transmittal as
set forth above, and subject to and effective upon acceptance for exchange or
exchange of the Common Stock tendered therewith, a tendering holder irrevocably
sells, assigns and transfers to or upon the order of the Company all right,
title and interest in and to all Common Stock tendered thereby, and irrevocably
constitutes and appoints the Exchange Agent the true and lawful agent of such
holder with respect to such Common Stock, with full power of substitution to (i)
deliver certificates for such Common Stock to the Company and deliver all
accompanying evidences of transfer and authenticity to or upon the order of the
Company upon receipt by the Exchange Agent, as the holder's agent, of the
Preferred Shares for such exchange and (ii) present such Common Stock for
transfer on the books of the company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Common Stock, all in
accordance with the terms of the Exchange Offer. Prior to any acceptance for
exchange, however, a Shareholder which has tendered Common Stock will retain all
voting rights and other beneficial rights of ownership with regard to such
tendered shares of Common Stock.
Acceptance for Exchange; Exchange for Common Stock
The acceptance for exchange of Common Stock validly tendered and not
properly withdrawn will be made as promptly as practicable after the Exchange
Expiration Date. Subject to rules promulgated pursuant to the Exchange Act,
however, the Company expressly reserves the right to delay acceptance of any
Common Stock or terminate the Exchange Offer and not accept for exchange any
Common Stock not previously accepted in order to comply, in whole or in part,
with any applicable law. For purposes of the Exchange Offer, the Company will be
deemed to have accepted for exchange validly tendered and not properly withdrawn
Common Stock if, as and when the Company gives oral or written notice thereof to
the Exchange Agent. Subject to the terms and conditions of the Exchange Offer,
delivery of Preferred Shares for Common Stock accepted pursuant to the Exchange
Offer will be made by the Exchange Agent as soon as practicable after receipt of
such notice, subject to delays, if any, resulting from proration. The Exchange
Agent will act as agent for the tendering holders of Common Stock for the
purposes of receiving Preferred Shares from the Company and transmitting the
Preferred Shares to the tendering holders.
If, for any reason whatsoever, acceptance for exchange or exchange of any
Common Stock tendered pursuant to the Exchange Offer is delayed, or the Company
is unable to accept for exchange or exchange the Common Stock pursuant to the
Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may nevertheless, on behalf of the Company and
subject to rules promulgated pursuant to the Exchange Act, retain tendered
Common Stock and such Common Stock may not be withdrawn except to the extent
that the tendering holder of such Common Stock is entitled to withdrawal rights
as described below.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of a Letter of Transmittal, or copy thereof,
waive any right to receive notice of acceptance of the Common Stock for
exchange.
12
<PAGE>
The Company reserves the right, in its sole discretion, to delay the
consummation of the Exchange Offer in order to comply, in whole or in part, with
any applicable law.
If any tendered Common Stock is not exchanged pursuant to the Exchange
Offer for any reason, or if Common Stock is submitted for a greater principal
amount than is tendered, such Common Stock will be returned, without expense to
the tendering holder, in either case as promptly as practicable following the
acceptance for exchange of Common Stock pursuant to the Exchange Offer or the
termination of the Exchange Offer.
All questions as to the form of documents and the validity, eligibility
(including time of receipt), acceptance for exchange and withdrawal of tendered
Common Stock will be determined by the Company, in its sole discretion, the
determination of which shall be final and binding. The Company reserves the
absolute right to reject any and all tenders of Common Stock pursuant to the
Exchange Offer determined by it not to be in proper form or otherwise not to
have been validly tendered, or acceptance for exchange or exchange for which, in
the opinion of the Company or its counsel, may be unlawful. The Company also
reserves the right to waive any conditions of the Exchange Offer or any defects
or irregularities in the tender of any Common Stock. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding. Unless
waived, any defects or irregularities in connection with tenders must be cured
within such time as the Company shall determine. None of the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of any defects or irregularities in such tenders nor shall any of them incur any
liability for failure to give such notification. Tenders of such Common Stock
will not be deemed to have been made until such irregularities have been cured
or waived. Any Common Stock received by the Exchange Agent that is not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Exchange Expiration Date.
Withdrawal Rights
Common Stock tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Exchange Expiration Date and, unless previously accepted
for exchange by the Company pursuant to the Exchange Offer, Common Stock
tendered may also be withdrawn at any time after midnight, Eastern Daylight
Time, on July 23, 1997.
If the Company extends the Exchange Offer, is delayed in its acceptance for
exchange of any Common Stock or is unable to accept for exchange Common Stock
pursuant to the Exchange Offer for any reason, then, without prejudice to the
Company's rights hereunder, but subject to the rights of holders to withdraw
tendered Common Stock prior to the time of acceptance by the Company as
described herein, the Exchange Agent may, on behalf of the Company, retain
tendered Common Stock until acceptance for exchange.
13
<PAGE>
For a withdrawal of tender to be effective, a written or facsimile
transmission of the Notice of Withdrawal must be timely received by the Exchange
Agent at its address specified herein before the Exchange Expiration Date or, if
applicable, after midnight Eastern Daylight Time, on July 23, 1997. Any such
notice of withdrawal must (i) specify the name of the holder who tendered the
Common Stock to be withdrawn, (ii) identify the certificate number or numbers
shown on the particular certificates evidencing such Common Stock and the
aggregate principal amount represented by such Common Stock and (iii) be signed
by the holder of such Common Stock in the same manner as the original signature
on the Letter of Transmittal by which such Common Stock was tendered (including
any required signature guarantees) or be accompanied by documents of transfer as
would be satisfactory to the Company to register the transfer of such Common
Stock into the name of the person withdrawing the tender of Common Stock. If the
Common Stock to be withdrawn has been delivered or otherwise identified to the
Exchange Agent, a signed Notice of Withdrawal is effective immediately upon
written or facsimile transmission even if physical release is not yet effected.
Withdrawals may not be rescinded. Any tendered Common Stock that is subsequently
withdrawn from the Exchange Offer will thereafter be deemed not validly tendered
for purposes of the Exchange Offer. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, which determination shall be final and binding on all parties.
Any Common Stock withdrawn from the Exchange Offer will be deemed not to
have been validly tendered for purposes of the Exchange Offer if such withdrawal
is prior to the Exchange Expiration Date or, as to Common Stock which has not
been accepted for exchange or exchanged by the Company, after July 23, 1997,
and, unless the Common Stock so withdrawn is validly re-tendered in compliance
with the terms of the Exchange Offer, no exchange will be made, pursuant to the
Exchange Offer with respect to such Common Stock. Any Common Stock so withdrawn
will be returned to the record holder thereof without cost to such record holder
as soon as practicable after withdrawal. Properly withdrawn Common Stock may be
re-tendered by following one of the procedures described above at any time prior
to the Exchange Expiration Date.
Effect of Exchange Offer on the Market for Common Stock; Exchange Act
Registration
Common Stock is publicly traded in the over-the-counter market as a Nasdaq
National Market Security under the symbol MAXC. As of March 31, 1997, there were
outstanding 3,517,180 shares of Common Stock which were held by approximately
1500 record and beneficial holders. Following a successful completion of this
Exchange Offer, the number of outstanding shares of Common Stock will be reduced
by approximately 14%. This reduction in outstanding Common Stock could adversely
affect the liquidity and market value of the remaining shares held by the
public.
If the number of holders of Common Stock were to fall below 400, which is
not anticipated, the Common Stock would no longer be eligible for designation as
a "National Market Security." Further, if the number of holders were to fall
below 300, Nasdaq might cease to provide quotations, although quotations might
still be available from other sources.
14
<PAGE>
Maxco Common Stock presently meets the requirements of the Federal Reserve
Board of Governors for a margin security, which has, among others, the effect of
allowing brokers to extend margin credit on the collateral of such shares. If
the Common Stock were to become ineligible for designation as a National Market
Security, or if certain other requirements should no longer be satisfied, the
shares might no longer meet the margin requirements.
The Common Stock is currently registered under the Exchange Act. The
registration may be terminated if there are fewer than 300 record holders of
Common Stock, which is not anticipated. Termination of registration of the
Common Stock under the Exchange Act would substantially reduce the information
required to be furnished by Maxco to its security holders and to the Commission
and would make certain provisions of the 1934 Act, such as the short-swing
profit recovery provision of section 16(b) and the requirement of furnishing a
proxy statement in connection with stockholders' meetings pursuant to Section
14(a), no longer applicable to Maxco. Furthermore, "affiliates" of Maxco and
persons holding "restricted securities" of Maxco may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the Act.
In order to cause the Common Stock to cease to be quoted by Nasdaq or to be
eligible for termination of its registration under the Exchange Act, the number
of record shareholders would have to fall below 300. Although the Company cannot
accurately predict what the number of record shareholders will be subsequent to
the Exchange Offer, its analysis indicates that the number will remain
substantially above 300. However, in the event that the shares tendered appear
likely to cause the number of record shareholders to approach 300, the Company
will reduce the number of shares to be accepted for exchange or will withdraw
the Exchange Offer.
Shareholders should also be aware that a successful completion of the
Exchange Offer will have an effect on the book value of the remaining
outstanding shares of Common Stock. The following table sets forth the
shareholders' equity and book value of the Company at March 31, 1996 and
December 31, 1996, and as adjusted to give effect to the exchange by the Company
of 33,333 shares of Preferred Shares offered hereby net of the estimated costs
of such exchange.
15
<PAGE>
March 31, December 31, As
1996 1996 Adjusted (1)(2)
-----------------------------------------
(in thousands except per share data)
Series Two 12% cumulative $ 900 $ 900 $ --
redeemable, convertible preferred
stock, 18,000 shares issued
Series Three 10% cumulative 754 746 746
redeemable preferred stock,
15,931 shares issued (16,050 at
March 31)
Series Four 10% Cumulative, -- -- 2,390
redeemable Preferred Stock,
46,414 shares issued
Series Five 10% cumulative, -- -- 4,000
redeemable preferred stock,
33,333 shares issued
Common stock, $1 par value, 4,227 3,683 3,043
10,000,000 shares authorized,
3,682,780 shares issued, 3,182,760
as adjusted (4,227,442 at March 31)
Additional paid-in capital 686 -- --
Net unrealized gain on marketable -- 39 39
securities
Retained earnings 12,759 30,370 24,873
Common stockholder equity 17,672 34,092 28,905
Book value per common share 4.18 9.26 9.50
(1) Based on exchange price of $8.00 a share for common stock Net of estimated
costs of exchange offer of $65,000
(2) Includes effect of January 1997 exchange of Series Four Preferred for
Series Two Preferred Stock.
16
<PAGE>
The following table summarizes net income applicable to common shareholders
and net income per common share for the nine months ended December 31, 1996, and
the year ended March 31, 1996 giving effect to payment of $400,000 in dividends
on the Series Five Preferred Shares ($300,000 for nine months), and the
pro-forma effect based on the maximum exchange of common shares as contemplated
herein as if such exchange occurred at the beginning of the period.
PRO FORMA
Nine Months Ended Twelve Months Ended
December 31, 1996 March 31, 1996
-------------------------------------
(in thousands except per share data)
Net Income (Loss) $ 22,285 $ (2,693)
Preferred Stock Dividend (453) (604)
Net Income (Loss ) Applicable
To Common Stock-
Primary 21,832 (3,297)
Net Income (Loss) Applicable
To Common Stock-
Fully Diluted 21,913 (3,189)
Net Income (Loss) Per Share
Of Common Stock:
Primary 6.21 (.85)
Fully Diluted 5.84 (a)
(a) Antidilutive for the period presented
Certain Conditions of the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange or, subject to any applicable rules
and regulations of the SEC, exchange any Common Stock tendered pursuant to the
Exchange Offer, and may terminate or amend the Exchange Offer and may postpone
the acceptance for payment of and payment for Common Stock, if at any time on or
after May 28, 1997, and prior to the acceptance for exchange of Common Stock,
any of the following conditions exist:
17
<PAGE>
(a) there shall be instituted, threatened or pending any action or
proceeding before any court or governmental, administrative or
regulatory authority, agency or tribunal, domestic or foreign, or any
non-governmental regulatory agency that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in the remainder of this paragraph (a) make illegal, materially delay
or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Exchange Offer, the
acceptance for exchange or exchange of some or all of the Common Stock
by the Company or cause the incurrence of material damages by the
Company in connection with the Exchange Offer.
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
entered, enforced, promulgated, amended, issued or deemed applicable
to (i) the Company or any subsidiary or affiliate of the Company or
(ii) the Exchange Offer by any legislative body, court, government or
governmental, administrative or regulatory authority, agency or
tribunal, domestic or foreign, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in (a)
above or in paragraph (c) below.
(c) there shall have occurred any change, condition, event or development
(including, without limitation, the institution of litigation) in the
business, properties, assets, liabilities, financial condition or
results of operations of the Company or any of its subsidiaries that
is, or is reasonably likely to be, materially adverse to the Company
and its subsidiaries taken as a whole.
(d) there have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii)
from the date of the Exchange Offer, a decline of at least 15% in
either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 index, (iii) any suspension of, or limitation on, the
market for United States currency, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (v) any limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority,
agency or tribunal, domestic or foreign, on the extension of credit by
banks or other lending institutions in the United States, (vi) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the united
States or (vii) in the case of any of the foregoing existing on May
28, 1997, a material acceleration or worsening thereof
18
<PAGE>
which, in the good faith judgment of the Company in any such case, and
regardless of the circumstances (including any action or inaction by the Company
or any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for exchange or exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in the good faith judgment of the Company. The failure by the
Company at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right. The waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances. Each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
Regulatory Approvals
Except as disclosed in this document, the Company is not aware of any
approval or other action by any domestic (federal or state) or foreign
governmental, administrative or regulatory agency that would be required prior
to an acquisition of Common Stock by the Company. Should any such approval or
other action be required, it is the Company's present intention to seek such
approval or action.
Tenders by Maxco Officers, Directors or Affiliates
Officers, Directors or Affiliates of Maxco, Inc. who are also holders of
Common Stock will receive the Exchange Offer and will be eligible to tender
shares of Common stock held by them on the same basis as any other shareholder.
Although Officers, Directors or Affiliates of Maxco may choose to tender shares
of Common Stock held by them, the Company is not presently aware of any such
intention other than as follows.
Max A. Coon, the president of the Company has indicated that he expects to
tender the 48,250 shares of Common Stock presently held by him in a wholly owned
corporation.
19
<PAGE>
Exchange Agent
Boston Equiserve (617/575-3400) will act as Exchange Agent for the Exchange
Offer. All correspondence in connection with the Exchange Offer and the Letter
of Transmittal should be addressed to the Exchange Agent as follows:
By Mail: By Overnight Courier: By Hand:
Boston EquiServe Boston EquiServe Bank of Boston
Corporate Reorganization 150 Royall Street Boston EquiServe LP
Post Office Box 1889 Mail Stop 45-02-53 Corporate Reorganization
Boston, MA 02205 Canton, MA 02021 55 Broadway, Third Floor
New York, NY 10006
In addition, Corporate Investor Communications, Inc. ("CIC"), 111 Commerce
Road, Carlstadt, NJ 07072, (800/346-7885) will act as "Information Agent" to
assist those brokers and dealers who tender Common Stock on behalf of
shareholders who have held their shares of Common Stock in broker accounts.
The Company will pay the Exchange Agent and the Information Agent
reasonable and customary compensation for services in connection with the
Exchange Offer. In addition, the Company will reimburse the Exchange Agent and
the Information Agent for their out-of-pocket expenses, and will indemnify them
against certain liabilities and expenses in connection with their services,
including liabilities under the federal securities laws.
Certain Contracts or Arrangements with Respect to Maxco Securities
Stock Option Plan
Under the terms of Maxco's Incentive Stock Option Plan, options for the
purchase of up to 500,000 shares of Common Stock may be granted to key employees
of Maxco and its subsidiaries for an option price equal to the fair market value
of the Common Stock on the date of such option grant. As of March 31, 1997,
options on 202,500 shares of stock were outstanding at option prices ranging
from $1.38 to $8.00 per share.
Transactions in Common Stock
To the knowledge of the Company, there have been no transactions in Common
Stock by the Company or any of its officers, directors of affiliates within the
40 business days preceding May 28, 1997.
20
<PAGE>
ADDITIONAL INFORMATION
Maxco, Inc. ("Maxco" or the "Company") is subject to the informational
requirements of the Securities and Exchange Act of 1934 (the "Exchange Act") and
in accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, NW,
Washington, D.C. 20549, and at its regional offices in New York (7 World Trade
Center, Suite 1300, New York, New York 10048) and Chicago (Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511). Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, NW, Washington, D.C. 20549 at prescribed rates.
The Company has filed with the Commission a statement on Schedule 13E-4
pursuant to Rule 13e-4 under the Exchange Act furnishing certain information
with respect to the Exchange Offer. Within ten days after the termination of the
Exchange Offer, the Company will be required to file an amendment to such
statement setting forth the results of the Exchange Offer. Such Schedules, and
any amendments thereto, should be available for inspection and copying as set
forth above.
Additional information concerning the Company and its subsidiaries is
contained in the Maxco Annual Report on 10-K filed with the Commission for the
year ended March 31, 1996 and the Quarterly Report on Form 10-Q filed for the
quarter ended December 31, 1996, which accompany this Exchange Offer. Exhibits
filed with the Form 10-Q have not been included, but may be obtained as set
forth above. The Company expects to file its Annual Report on Form 10-K on
approximately June 5, 1997. Copies of such report may be obtained without charge
from the Company upon written request, or may be obtained from the Commission as
set forth above.
No salesman or any other person has been authorized to give any information
or to make any representations other than those contained in this Exchange Offer
in connection with the offer made by this Exchange Offer and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company. Neither the delivery of this Exchange Offer nor any
transaction made hereunder shall under any circumstances create an implication
that there has been no change in the affairs of the Company since the date
hereof. This Exchange Offer does not constitute an offer or solicitation by
anyone in any state in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such an offer or solicitation.
21
<PAGE>
TABLE OF CONTENTS
SUMMARY ................................................................... 2
INVESTMENT CONSIDERATIONS ................................................. 4
SELECTED FINANCIAL DATA ................................................... 5
DESCRIPTION OF THE PREFERRED SHARES ....................................... 6
THE EXCHANGE OFFER ........................................................ 8
The Common Stock ................................................. 9
Purpose of the Transaction ....................................... 9
Anticipated Federal Income Tax Consequences ...................... 10
Procedure for Tendering Maxco Common Stock ....................... 11
Acceptance for Exchange; Exchange for Common Stock ............... 12
Withdrawal Rights ................................................ 13
Effect of Exchange Offer on the Market for Common
Stock; Exchange Act Registration .............................. 14
Certain Conditions of the Exchange Offer ......................... 17
Regulatory Approvals ............................................. 19
Tenders by Maxco Officers, Directors or Affiliates ............... 19
Exchange Agent ................................................... 20
Certain Contracts or Arrangements with
Respect to Maxco Securities ................................... 20
ADDITIONAL INFORMATION .................................................... 21
EXHIBITS
A. Maxco Annual Report on Form 10-K for the year ended March 31, 1996.
B. Maxco Quarterly Report on Form 10-Q for the quarter ended December 31,
1996.
22
LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK OF
MAXCO, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CERTIFICATES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Address(es) of Registered Holder(s) Certificates tendered for exchange
(please fill in, if blank) (attach additional list if necessary)
- ------------------------------------------------------------------------------------------------------------------------------------
Number of shares
Certificate represented by
Number(s) Certificate(s)
--------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
To: Boston EquiServe (617-575-3400)
By Mail: By Overnight Courier: By Hand:
Boston EquiServe Boston EquiServe Bank of Boston
Corporate Reorganization 150 Royall Street Boston EquiServe LP
Post Office Box 1889 Mail Stop 45-02-53 Corporate Reorganization
Boston, MA 02205 Canton, MA 02021 55 Broadway, Third Floor
New York, NY 10006
DO NOT SEND STOCK CERTIFICATES TO MAXCO, INC.
For information call: (617) 575-3400
Letter of Transmittal and Stock Certificates need to be
received by 5:00 p.m., June 25, 1997
Delivery of this instrument to an address other than as set forth above
does not constitute a valid delivery.
Ladies/Gentlemen:
Enclosed are one or more certificates, representing shares of common stock
("Common Stock") of Maxco, Inc. (the "Company").
The undersigned, the registered holder of record as of April 22, 1997 of
the stock certificate(s) referred to above, or the assignee of such registered
holder, hereby surrenders such certificate(s) representing Common Stock of the
Company pursuant to the offer by the Company to exchange one share of Series
Five Preferred Stock ("Preferred Stock") for fifteen shares of Common Stock upon
the terms set forth in the Exchange Offer dated May 28, 1997, receipt of which
is hereby acknowledged, for the purpose of receiving from the Company (a) one
share of Preferred Stock for each fifteen shares of Common Stock tendered with
this letter, and (b) if and to the extent the aggregate number of Common Stock
tendered by the undersigned is not evenly divisible by fifteen, cash in lieu of
a fractional share of Preferred Stock based on the face value of the Preferred
Stock of $120.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ALL PERSONS MUST SIGN HERE, AND, IF REQUIRED, HAVE SIGNATURES GUARANTEED
See Instructions 3(b) and 5 concerning the need for a signature guarantee on this Letter of Transmittal, and Instruction 3(a) and
(d) concerning the need for a signature guarantee on unit certificates.
<S> <C>
- ------------------------------------------------------ Signature(s) Guaranteed:
- ------------------------------------------------------ -------------------------------------------------------------------
(Firm--Please Print or Type)
- ------------------------------------------------------
Signature(s) of Owners -------------------------------------------------------------------
(Authorized Signature)
- ------------------------------------------------------
-------------------------------------------------------------------
Date: ----------------------------------------------- (Name--Please Print or Type)
</TABLE>
This Letter of Transmittal must be signed by the registered holder(s), exactly
as the name(s) appear(s) on the stock certificate(s), by the person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith, or by the authorized representative(s) of such person(s).
If signed by an attorney, executor, administrator, guardian, trustee, officer of
a corporation or other person acting in a fiduciary or representative capacity,
set forth the full title and submit evidence of such person's authority to act
(Instruction 6).
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
BOX A: |_|
- --------------------------------------------------------------------------------
ROUTINE EXCHANGE WITH CASH IN LIEU OF A FRACTIONAL SHARE
Check this box only if the certificate(s) listed in Box entitled "Description of
Certificates Tendered" at the beginning of this Letter of Transmittal represents
an aggregate number of Shares of Common Stock that is not evenly divisible by
fifteen, and consequently the holder thereof will receive a check in an amount
based on the $120 face value of a share of Preferred Stock.
TAXPAYER IDENTIFICATION NUMBER
Substitute Form W-9
- --------------------------------------------------------------------------------
Part I--Please provide your Part II -- (Disregard if TIN
Taxpayer Identification Number given in Part I)
("TIN") in the space provided
below and certify by signing |_| -- Awaiting TIN
below.
|_| -- Exempted from backup
- --------------------------------- holding
(Social Security Number or
Employer Identification Number
- --------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that the information
provided in this Box is true, complete and correct.
Signature: __________________________________ Date: ________________________
NOTE: Failure to provide the requested information regarding your TIN may result
in backup withholding of 31% of any cash payment due you [Instruction 2(b)].
Unless otherwise indicated under Special Issuance and Payment Instruction
(BOX B), please issue the certificate representing share(s) of Preferred Stock
and the check for payment in lieu of a fractional share of Preferred Stock to
which the undersigned is entitled in the name(s) listed above. Unless otherwise
indicated under Special Delivery Instruction (BOX C), forward such certificate
and the check to the address of record of the registered holder(s).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX B: |_|
SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS
This box should be completed only if the certificate(s) representing shares of
Preferred Stock and the check in lieu of the issuance of a fractional share of
Preferred Stock are to be in the name(s) of someone other than the registered
holder(s), or if the name listed above is to be corrected. In such cases, the
certificate(s) representing shares of Preferred Stock must be properly assigned
and signatures guaranteed. (Instruction 3).
Name(s) ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
(Zip Code)
Social Security Number or Employer Identification Number:
________________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX C: |_|
SPECIAL DELIVERY INSTRUCTIONS
This box should be completed only if the certificate(s) representing shares of
Preferred Stock and the check in lieu of the issuance of a fractional share of
Preferred Stock are to be issued to the registered holder(s), but sent to an
address other than that listed above. (Instruction 4).
Name(s) ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
(Zip Code)
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BOX D: |_|
LOST CERTIFICATES
If you have lost your certificate(s) representing shares of Common Stock,
please check Box D. If you have lost your certificate(s) the Company will
require such further information and assurances concerning lost certificates and
such affidavits of loss, indemnity bonds and guarantees as it may deem
advisable.
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INSTRUCTIONS
To complete this Letter of Transmittal properly, all persons must provide
in the Box on the first page the certificate numbers and the number of shares of
Common Stock being tendered with the Letter of Transmittal and sign the Letter
of Transmittal. In addition, Boxes A through D on the second page of the Letter
of Transmittal are provided for stockholders to exchange their certificates
representing shares of Common Stock. The following paragraphs briefly outline
the use of those Boxes.
Box A: To be completed if you are exchanging the shares of Common Stock
and will be receiving directly shares of Preferred Stock and a
check in lieu of a fractional share of Preferred Stock, if any.
Box B: To be completed only if you are transferring your shares of
Common Stock (and check, if any) to someone else at this time or
correcting or changing name to appear on your new certificate.
Box C: To be completed only if you want your certificate representing
shares of Preferred Stock (and check, if any) sent to an address
other than than listed in the Box on the front page of the Letter
of Transmittal.
Box D: To be completed only if you have lost your certificate(s).
Leave blank any of the Boxes that do not apply to you. Also, if you do not
complete Box B, you need not have your signature guaranteed on this Letter of
Transmittal and you need not endorse your surrendered certificate(s). The
Instructions set forth below further explain how to complete this Letter of
Transmittal and form a part of the terms and conditions of this Letter of
Transmittal.
1. DELIVERY OF LETTER OF TRANSMITTAL
This Letter of Transmittal should be completed and signed by the record
holder or holders of the certificate(s) representing shares of Common Stock of
Maxco, Inc. (the "Company") listed on the first page of this Letter of
Transmittal (unless the listed certificate(s) have been transferred or assigned,
in which case this Letter of Transmittal should be signed by the transferee or
assignee). This Letter of Transmittal, together with the certificate(s) listed
on this form, should be sent by mail or delivered by hand to the locations noted
above. The certificate(s) (or a stock power) should be properly endorsed, and
the signatures thereon, and on this Letter of Transmittal, guaranteed if you are
completing Box B. For your convenience, a return envelope is enclosed.
The method of delivery of all documents is at the option and risk of the
stockholder. It is suggested that if you mail these documents, such mail should
be registered, return receipt requested, and properly insured.
2. CASH IN LIEU OF FRACTIONAL PREFERRED STOCK
(a) Settlement of Fractional Preferred Stock. Stockholders who surrender an
aggregate number of shares of Common Stock that is not evenly divisible by
fifteen will receive cash in lieu of a fractional share of Preferred Stock based
on the $120 face value of a share of Preferred Stock.
(b) Substitute Form W-9. Under Federal income tax law, a person who
receives cash in lieu of the issuance of a fractional share of Preferred Stock
must provide Boston EquiServe (the "Exchange Agent") with his or her correct
taxpayer identification number ("TIN") and certify that such TIN is correct
under penalties of perjury. Failure to furnish the correct TIN may subject the
security holder to a penalty imposed by the Internal Revenue Service, and any
payment to such security holder may be subject to backup withholding of 31%.
The TIN that must be provided in Box A is that of the registered holder of
the certificate(s) or the last transferee appearing on the transfers attached to
or endorsed on the certificate(s). The TIN for an individual is his or her
social security number.
The Box in Part 2 of the Substitute Form W-9 may be checked if the person
surrendering the certificate(s) has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future. Exempt persons (including
among others, all corporations) are not subject to backup withholding and should
indicate their exempt status in Part 2 of the Substitute Form W-9.
3. ISSUANCE OF NEW CERTIFICATE AND CHECK IN DIFFERENT NAMES
If the certificate for shares of Preferred Stock and the check for payment
in lieu of a fractional share of Preferred Stock, if any, are to be issued in
the same name as that of the record holder inscribed on the surrendered
certificate(s), the surrendered certificate(s) need not be endorsed. If the
certificate(s) for shares of Preferred Stock and the check for payment in lieu
of a fractional share of Preferred Stock are to issued in a name other than that
of the record holder of the listed certificate(s) exactly as it appears thereon,
please be guided by the following:
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(a) Endorsement and Guarantee. The certificate(s) need not be endorsed or
accompanied by stock powers, and signatures need not be guaranteed, UNLESS any
certificate is to be registered or a check is to be issued in the name of a
person other than the person in whose name the certificate(s) is registered. In
such event, (i) if the person surrendering the certificate(s) is not the
registered holder thereof, the certificate(s) must be properly endorsed or
accompanied by properly executed stock powers, the signature(s) on which have
been guaranteed by a financial institution that is a member of the Stock
Transfer Association approved medallion program such as STAMP, SEMP or MSP, (ii)
if the person surrendering such certificate(s) is the registered holder thereon,
the signature of such registered holder must be guaranteed as set forth in
preceding clause (i); and (iii) the person surrendering such certificate(s) must
remit to the Exchange Agent the amount of any transfer or other taxes payable by
reason of the delivery to a person other than the registered holder(s) of such
certificate(s) surrendered or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(b) Transferee's Signature. This Letter of Transmittal must be signed by
the person to whom the transfer or assignment is made, by his or her agent, and
should not be signed by the person transferring or assigning the units. The
signature of such transferee, assignee or agent must be guaranteed in accordance
with Instruction 3(a).
(c) Transfer Taxes. In the event that any transfer or other taxes become
payable by reason of the issuance of any certificate or check, if applicable, in
a name other than that of the record holder of the surrendered certificate(s),
the transferee or assignee must pay such tax to the Company or must establish to
the satisfaction of the Company that such tax has been paid; otherwise, the
Company will withhold issuance of the certificate and check, if applicable, to
such transferee or assignee.
(d) Correction of, Change in, Name. For a name correction, or for a change
in name that does not involve a change in ownership, proceed as follows. For a
correction in name, the listed certificate(s) should be endorsed, for example,
"James E. Brown, incorrectly inscribed as J.E. Brown," with the signature
guaranteed as described in Instruction 3(a). For a change in name by marriage,
the surrendered certificate(s) should be endorsed, for example, "Mary Doe, now
by marriage Mrs. Mary Jones," with the signature guaranteed as described in
Instruction 3(a).
4. SPECIAL DELIVERY INSTRUCTIONS
Unless instructions to the contrary are given in Box B, the certificate for
shares of Preferred Stock and a check in lieu of a fractional share of Preferred
Stock to be distributed upon exchange of the shares of Common Stock surrendered
with this Letter of Transmittal will be mailed either to the address shown in
the Box headed "Description of Certificates Tendered" (if this Letter of
Transmittal is signed by the person whose name appears in such Box) or to the
address shown in Box B (if Box B is completed in accordance with Instruction 3).
5. SIGNATURES
This Letter of Transmittal must be signed by (or on behalf of) the record
holder(s) of the surrendered certificate(s) unless the surrendered
certificate(s) has been transferred or assigned. In the case of joint tenants,
both should sign. If different certificate(s) surrendered with this Letter of
Transmittal are registered in different forms of the name of any person signing
this Letter of Transmittal (e.g. John Doe, J. Doe, J.A. Doe), it will be
necessary for such person either to sign this Letter of Transmittal in each way
in which the certificate(s) are registered or to sign as many Letters of
Transmittal as there are different forms of registration. If any surrendered
certificate has been transferred or assigned, please follow Instruction 3.
6. SUPPORTING EVIDENCE
In case any Letter of Transmittal, certificate endorsement or stock power
is executed by an agent, attorney, administrator, executor, guardian, trustee,
officer of a corporation on behalf of the corporation, or other person in a
fiduciary or representative capacity, the full title of such person should be
given and documentary evidence of appointment and authority to act in such
capacity (including court orders and corporate resolutions where necessary)
should also be submitted. Such documentary evidence of authority must be in a
form satisfactory to the Company.
7. MISCELLANEOUS
The Company is not under any duty to give notification of defects in any
Letter of Transmittal and shall not incur any liability for failure to give such
notification. The Company has the absolute right to reject any and all Letters
of Transmittal not in proper form or to waive any irregularities in any Letter
of Transmittal.
8. ADDITIONAL COPIES
Additional copies of this Letter of Transmittal may be obtained from Boston
EquiServe.
NOTICE OF WITHDRAWAL
Withdrawing previously tendered shares of Maxco, Inc. Common Stock
tendered pursuant to the Maxco, Inc. Exchange Offer dated May 28, 1997
To: Boston EquiServe _ (617-575-3400)
By Mail: By Overnignt Courier: By Hand:
Boston EquiServe Boston EquiServe Bank of Boston
Corporate Reorganization 150 Royall Street Boston EquiServe, LP
Post Office Box 1889 Mail Stop 45-02-53 Corporate Reorganization
Boston, MA 02205 Canton, MA 02021 515 Broadway, 3rd floor
New York, NY 10006
Ladies and Gentlemen:
The undersigned hereby WITHDRAWS the following described shares of Maxco
Common stock which were previously tendered for exchange pursuant to the
Exchange Offer of Maxco, Inc. dated May 28, 1997:
PLEASE PRINT OR TYPE CLEARLY
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COMMON STOCK
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Name of Certificate No. of Shares No. of Shares
Registered Owner Number(s) Previously Tendered Withdrawn
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WITHDRAWING SHAREHOLDER(S) SIGN HERE:
Sign exactly as your name appears on your certificate(s))
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(Signature) (Date)
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(Signature (Area Code and Telephone Number)
Please Print or Type Clearly:
Name:
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Signature Guaranty
Address: (See Instruction 2(a))
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Instructions:
1. Fill in the information describing the Maxco Common Stock to be
withdrawn in the Notice of Withdrawal.
2. Sign and date the Notice of Withdrawal
(a) Signatures must exactly correspond to the name(s) on the
certificate and the previously sent Letter of Transmittal
(including any required signature guaranty).
3. Notices of Withdrawal must be received by the Exchange Agent before the
Exchange Expiration Date or if the Common Stock is not yet exchanged by the
Company, after July 23, 1997.
May 28, 1997
Dear Shareholder:
The Board of Directors (the "Board") of Maxco, Inc. (the "Company") has approved
an Exchange Offer which will allow all common shareholders of record of the
Company, as of April 22, 1997, to participate in a unique investment
opportunity. Specifically, the Board of Directors has authorized the issuance of
one (1) share of Ten Percent (10%) Preferred Stock for every fifteen (15) shares
of Maxco Common tendered in this Exchange Offer. The Preferred Stock would have
a One Hundred Twenty Dollar ($120.00) face value. If the Preferred Shares trade
at the face value, this provides the tendering investor a premium of 17% over
the average closing price of the Common Stock for the ten trading days up to and
including May 23, 1997 which was $6.84 per share. However, there is no assurance
that the Preferred Shares will trade at their face value. In addition, because
the Preferred Shares are not being registered with the US Securities and
Exchange Commission, they will not be freely tradable and there is little
likelihood that a trading market in the Preferred Shares will develop.
Based on the aforementioned parameters, this new issue of Preferred Stock would
carry an effective dividend yield of 11.7% which represents a healthy premium in
today's low interest rate environment. These dividends would be payable out of
earnings. While there may be occasions when earnings are not sufficient to pay
dividends, such dividends otherwise payable will accumulate to the benefit of
the preferred shareholder.
The Board of Directors of Maxco, Inc. has authorized this transaction for a
number of reasons. Historically the Company has maintained the policy of
reinvesting earnings for the future, and therefore, not paying a dividend on its
Common Stock. In recent times, however, the Board has felt that there were
various constituencies which would be better served through dividend income.
Therefore, the Board has endeavored to provide an instrument which would enable
the Maxco shareholder to increase dividend income by exchanging their Common
Stock into Preferred Stock.
This Exchange Offer allows you as an individual shareholder to determine the
level of dividend income versus capital gains which you desire, subject to the
number of shares of Common Stock tendered in the Exchange Offer. In other words,
the Exchange Offer provides a means to turn all or a portion of your Maxco
Common Stock into a high yielding Preferred Stock while minimizing capital gains
tax and eliminating brokerage commission, which could collectively amount to a
significant amount. The final number of shares of Common Stock which will be
accepted from each individual will be dependant upon the total number of shares
of Common Stock tendered in the offering.
If, after careful review of the enclosed materials, you should determine that an
investment in a high yielding, dividend paying, Preferred Stock is in your best
interest, please fill out and sign the enclosed Letter of Transmittal signifying
the number of shares of Common Stock which you wish to exchange in this offer.
Sincerely,
MAXCO, INC.
Max A. Coon
Chairman & Chief Executive Officer
(Maxco Letterhead)
(Letter #2)
June 11, 1997
Dear Shareholder,
Recently you received a package of information regarding a unique, high yielding
investment opportunity. In order to participate in this offer, your immediate
attention is required.
Specifically, Maxco, Inc. has filed an exchange offer with the SEC, which will
allow you as a shareholder of Maxco, Inc. common stock to exchange all or a
portion of your common stock into a preferred stock which carries a 10%
dividend. For every 15 shares of common stock tendered in the exchange offer you
will receive one share of Preferred Stock with a $120.00 face value. Based on
this exchange ratio, the per share exchange price is $8.00, which based on a
closing price of, 6 3/4, on May 23, 1997 represents a premium of 18.5%.
If you wish to avail yourself of this opportunity and you still have the
offering documents, please fill them out and return them as soon as possible. If
you have any questions or did not receive a copy of the documentation, please
call Boston EquiServe at 617/575-3400 so that we may be able to expedite the
process.
Sincerely,
MAXCO, INC.
Max A. Coon
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IMPORTANT
---------
PLEASE SEND IN YOUR MAXCO, INC. EXCHNAGE OFFER
DOCUMENTS ... TODAY!
You are urged to review the Exchange Offer documentation and information which
was mailed to you approximately three weeks ago. If you wish to participate in
the Exchange Offer your immediate attention is needed. If you have any questions
or desire receiving additional copies of the Stock Exchange Offer documentation,
please call Boston EquiServe at 617/575-3400.
THE LETTER OF TRANSMITTAL AND YOUR TENDERED MAXCO COMMONS STOCK MUST BE RECEIVED
BY THE EXCHANGE AGENT NO LATER THAN 5 P.M. ON JUNE 25, 1997.
(Maxco Letterhead)
(Letter #3)
May 1997
Dear Shareholder,
Your immediate attention is required!
If you wish to exchange your Maxco, Inc. Common Stock into a high yielding
Preferred Stock you must act now!
The Board of Directors of Maxco, Inc. has recently approved an exchange offer
that will allow you to exchange 15 shares of Maxco, Inc. Common Stock for one
$120 State Value Preferred Stock that will carry a 10% dividend yield. Based on
this exchange ratio of 15 for 1, the implied price of $8.00 per share represents
a premium of (insert percent) percent over the closing price of Maxco, Inc.'s
common Stock on (insert date), thus providing an effective yield of (insert
percentage). Please review the offering documents for the specifics of the
transaction. This Exchange Offer is rapidly coming to a close, and if you fail
to respond promptly you may miss the opportunity to participate in a unique
investment opportunity.
If you have any questions or are desirous of receiving additional copies of the
Exchange Offer documents, please call (insert name and number) immediately so
that we can ensure your participation in the offer.
Sincerely,
MAXCO, INC.
Max A. Coon
Offer to Exchange
Shares of Series Five Preferred Stock
for up to 500,000 Shares of Common Stock
of
Maxco, Inc.
At the Rate of
1 Share of Preferred Stock for
15 Shares of Common Stock Tendered
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 28,
1997 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by Maxco, Inc., a Michigan corporation
(the "Company") to exchange one share of newly issued Series Five Preferred
Stock (the "Preferred Shares") for fifteen shares of its outstanding Common
Stock (the "Common Stock"). We are the holder of record of Common Stock held in
your account. A tender of the Common Stock can be made only by us as the holder
of record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Common Stock held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Common Stock held by us for your account, upon the terms and subject to the
conditions set forth in the Exchange Offer and the Letter of Transmittal.
Your attention is invited to the following:
1. The Preferred Shares have a face value of $120. It is nonvoting stock,
will pay a quarterly cumulative dividend at the annual rate of 10%,
and will be callable at the option of the Company after 3 years at a
call price of 105% of face value, with the call price declining 1% per
year, but not below face value.
2. The rate of exchange will be one share of the Preferred Shares for
fifteen shares of Common Stock tendered. Fractional shares of the
Preferred Shares will not be issued, but Shareholders will be paid for
such unissued fractional Preferred Shares at the rate of $120 per
share.
3. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Daylight Time, on Wednesday, June 25, 1997, unless the Offer is
extended.
1
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If you wish to have us tender any or all of your Common Shares, please so
instruct us by completing, executing and returning to us the instruction form on
the last page of this notice. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Common Shares, all such Common Shares
will be tendered unless otherwise specified on the instructions. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf by the expiration of the Offer.
2
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Instructions Regarding
Offer to Exchange
Shares of Series Five Preferred Stock
for up to 500,000 Shares of Common Stock
of
Maxco, Inc.
The undersigned acknowledges receipt of your letter and the enclosed Offer
to Exchange dated May 28, 1997, and the related Letter of Transmittal, in
connection with the offer by Maxco, Inc. to exchange Shares of Series Five
Preferred Stock for up to 500,000 shares of its Common Stock.
This will instruct you to tender the number of Common Shares indicated
below held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Offer to Exchange and the related Letter of
Transmittal.
Number of Shares to be Tendered: SIGN HERE
___________________ Common Shares 1
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Signature(s)
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Please print name(s) and
address(es) here
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1 Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
