SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential For Use of
the Commission Only (as
Permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
PORTSMOUTH SQUARE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
- -------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PORTSMOUTH SQUARE, INC.
Street Address: 2251 SAN DIEGO AVENUE, SUITE A-151
SAN DIEGO, CALIFORNIA 92110
Mailing Address: P.O. Box 80037
San Diego, CA 92138-0037
Telephone: (619) 298-7201
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 5, 1998
To the Shareholders of
Portsmouth Square, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Portsmouth
Square, Inc. ("Portsmouth" or the "Company") will be held on May 5, 1998 at
2:00 P.M. at the Park Hyatt Hotel located at 2151 Avenue of the Stars, Los
Angeles, California 90067 for the purpose of considering and acting on the
following:
1. The election of five Directors to serve until the next Annual
Meeting or until successors have been duly elected and qualified.
2. To ratify the appointment of Price Waterhouse LLP as independent
accountants for the Company for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the
Meeting, or any adjournment or adjournments thereof.
March 13, 1998 is the record date for determining which Shareholders are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
Your proxy is important to us whether you own a few or many shares. Please
complete, sign, date and promptly return the enclosed proxy in the self
addressed, postage-paid envelope provided. Return the proxy even if you plan
to attend the meeting. You may always revoke your proxy and vote in person.
Dated: April 9, 1998
By Order of the Board of Directors,
/S/ Michael G. Zybala
Michael G. Zybala
Secretary
<PAGE>
PORTSMOUTH SQUARE, INC.
Street Address: 2251 San Diego Avenue, Suite A-151
San Diego, California 92110-2926
Mailing Address: P.O. Box 80037
San Diego, California 92138-0037
Telephone: (619) 298-7201
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
May 5, 1998
The Board of Directors of Portsmouth Square, Inc. (the "Company" or
"Portsmouth") is soliciting proxies in the form enclosed with this statement
in connection with the Annual Meeting of Shareholders to be held May 5, 1998
or at any adjournment or adjournments thereof.
This Proxy Statement and the accompanying Proxy are first being sent to
Shareholders on or about April 13, 1998. Only shareholders of record at the
close of business on March 13, 1998 are entitled to notice of, and to vote at,
the Annual Meeting.
If you give us a proxy, you can revoke it at any time before it is used. To
revoke it, you may file a written notice revoking it with the Secretary of the
Company, execute a proxy with a later date or attend the meeting and vote in
person.
You may vote at the Annual Meeting only shares that you owned of record on
March 13, 1998. There were 734,183 shares of stock outstanding on that date.
A majority, or 367,092 of those shares will constitute a quorum for the
transaction of business at this meeting. Each share is entitled to one vote
on each matter to be presented at the meeting. Unless cumulative voting is
elected as described under "Election of Directors" below, the affirmative vote
of the holders of the majority of the shares of the Company's stock present or
represented at the meeting and entitled to vote is required to elect directors
and ratify or approve the other item being voted on at this time.
In addition to mailing this material to shareholders, the Company has asked
banks and brokers to forward copies to persons for whom they sold stock of the
Company and to request authority for execution of the proxies. The Company
will reimburse the banks and brokers for their reasonable out-of-pocket
expenses in doing so. Officers of the Company may, without being additionally
compensated, solicit proxies by mail, telephone, telegram or personal
contact. All proxy-soliciting expenses will be paid by the Company. The
Company does not expect to employ anyone else to assist in the solicitation of
proxies.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of five directors. We
propose to elect five directors, each to hold office until we have the next
Annual Meeting and until his successor is elected and qualified. The Board of
Directors has nominated John V. Winfield, Jerold R. Babin, Josef A. Grunwald,
John C. Love and William J. Nance. The person named in the enclosed form of
proxy will vote it for the election of the nominees listed below unless you
instruct him otherwise, or a nominee is unwilling to serve. The Board of
Directors has no reason to believe that any nominee will be unavailable.
However, in that event, the proxy may vote for another candidate or candidates
nominated by the Board of Directors.
The California Corporations Code, as applicable to the Company, provides that
a shareholder may cumulate votes if a shareholder gives notice, prior to the
voting, of an intention to cumulate votes. If such a notice is given, every
shareholder may cumulate votes. Cumulating votes means that you can take the
total number of votes you have for all directors and distribute them among one
or more nominees as you see fit. For example, assume you have 100 shares. We
have five directors so you have a total of 5 x 100 = 500 votes. You could
give all 500 votes to one person or 250 votes to each of two nominees, or 100
votes to each of five nominees. You can use this power only under the
circumstances described herein. If cumulative voting is elected, the enclosed
form of proxy gives the proxy discretion to cumulate votes so that he can
elect the maximum possible number of the nominees identified below.
Any shareholder executing the enclosed form of proxy may withhold authority to
vote for any one or more nominees by so indicating in the manner described in
the form of proxy. However, the number of votes authorized by the form of
proxy will not be affected and the named proxies could probably offset any
such action by using cumulative voting if they thought it necessary. Under
the California Corporations Code any shareholder or any person who claims to
have been denied the right to vote may apply to a state superior court for a
determination of the validity of any election or appointment of any director.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company. There is no relationship by
blood, marriage or adoption among the Directors and Officers. All Directors ser
ve one-year terms with their terms expiring at the Annual Meeting. All
Officers of the Company are elected or appointed by the Board of Directors and
hold office until the Annual Meeting or until replaced at the discretion of
the Board.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Present Owned on Percent
Position Director March 13, of
Name Age With the Company Since 1998 Class (1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John V. Winfield (2) 51 Chairman of the Board, 1996 0(4) 0.00
President and Chief
Executive Officer
Jerold R. Babin (3) 65 Director 1996 48,345 6.58
John C. Love 57 Director 1998 0(4) 0.00
Josef A. Grunwald 49 Director 1996 0 0.00
William J. Nance 54 Director, 1996 0(4) 0.00
L. Scott Shields 46 Treasurer and N/A 0 0.00
Chief Financial
Officer
Michael G. Zybala 45 Vice President, N/A 0 0.00
Secretary and
General Counsel
Santa Fe Financial 480,957 65.51
Corporation (5)
All of the above as a group(6) 529,302 72.09
- ------------------------------
</TABLE>
(1) Based on 734,183 common shares issued and outstanding.
(2) John V. Winfield is the sole beneficial owner of 24,700 shares
of Portsmouth's majority owner Santa Fe Financial Corporation ("Santa Fe").
The InterGroup Corporation is the beneficial owner of 275,148 common
shares and 31,800 preferred shares of Santa Fe. As the President and
Chairman of the Board of InterGroup, Mr. Winfield has voting and
dispositive power over a total of 331,648 shares of Santa Fe which
represents 49.5% of the voting power of Santa Fe.
(3) Jerold R. Babin claims sole voting power over the 48,345 shares identified
herein, of which he has sole dispositive power over 9,667 shares held in
his retirement account. He claims shared dispositive power with his wife
over 38,478 shares which they hold as trustees of a family trust.
(4) Santa Fe Financial Corporation is the record and beneficial owner
of 480,957 of the common shares of Portsmouth. As directors of Santa Fe,
Messrs. Winfield, Nance and Love have the power to direct the vote of the
shares of Portsmouth owned by Santa Fe.
(5) As a group, the directors of Portsmouth owned a total of 331,648 shares of
Santa Fe's common and preferred stock as of March 13, 1998,
which represents 49.5% of Santa Fe.
<PAGE>
BUSINESS EXPERIENCE:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as
follows:
John V. Winfield - Mr. Winfield was first elected to the Board in May of 1996
and currently serves as the Company's Chairman of the Board, President and
Chief Executive Officer. Mr. Winfield is also Chairman of the Board,
President and Chief Executive Officer of Portsmouth's parent company Santa Fe
Financial Corporation, having held those positions since April 1996. Mr.
Winfield is Chairman of the Board, President and Chief Executive Officer of
The InterGroup Corporation, a public company, and has held those positions
since 1987. InterGroup is Santa Fe's largest shareholder. Mr. Winfield is
also a Director of Healthy Planet Products, Inc. a public company.
Jerold R. Babin - Mr. Babin was appointed as a Director of the Company on
February 1996. Mr. Babin has been a retail securities broker for the past 37
years. From 1989 to present, he has worked for Prudential Securities, where
he currently holds the title of First Vice-President.
John C. Love - Mr. Love was appointed a Director of the Company on March 5,
1998 to fill the vacancy caused by the resignation of Janice Braly-Nelsen as
Director on March 2, 1998. Mr. Love is an international hospitality and
tourism consultant based in Orinda, California. He was formerly a partner in
the national CPA and consulting firm of Pannel Kerr and Forster. Mr. Love has
extensive experience in hotel development, acquisition and development. He is
chairman emeritus of Golden Gate University in San Francisco.
Josef A. Grunwald - Mr. Grunwald was elected as a Director of the Company in
May 1996. Mr Grunwald is an industrial, commercial and residential real estate
developer. He serves as Chairman of PDG N.V. (Belgium), a hotel management
company, and President of I.B.E. Services S.A. (Belgium), an international
trading company. Mr. Grunwald is also a Director of The InterGroup
Corporation, a public company, having held that position since 1987.
William J. Nance - Mr. Nance was first elected to the Board in May 1996. Mr.
Nance is also a Director of Santa Fe. He is the President and CEO of Century
Plaza Printers, Inc., a company he founded in 1979. He has also served as a
consultant in the acquisition and disposition of multi-family and commercial
real estate. Mr. Nance is a Certified Public Accountant and, from 1970 to
1976, was employed by Kenneth Leventhol & Company where he was a Senior
Accountant specializing in the area of REITS and restructuring of real estate
companies, mergers and acquisitions, and all phases of real estate development
and financing. Mr. Nance is a Director and the Treasurer of The InterGroup
Corporation, a public company, and has held such positions since 1984.
L. Scott Shields - Mr. Shields is the Treasurer and Chief Financial Officer of
the Company having held those positions since January 1994. He also serves as
Treasurer and Chief Financial Officer of Santa Fe Financial Corporation,
having been appointed to those positions in May 1994. Mr. Shields is a
Certified Public Accountant with 14 years experience with Ernst & Young LLP
and was the partner in charge of tax planning and preparation for Santa Fe and
Portsmouth from 1985 to 1991. Since 1991, he has been actively engaged in
developing his own tax and accounting practice.
Michael G. Zybala - Mr. Zybala was appointed as Vice President and Secretary
of the Company on February 20, 1998. He is also Vice President, Secretary and
General Counsel of Santa Fe. Mr. Zybala has served as the Company's General
Counsel since 1995 and has represented the Company as its corporate counsel
since 1978.
<PAGE>
BOARD MEETINGS
For the fiscal year ended December 31, 1997, the Board of Directors held eight
meetings, with no incumbent director attending (whether in person,
telephonically or by written consent) fewer than 75 percent of the meetings
held during the period for which he has been a director.
STANDING COMMITTEES
As a small business issuer, the Board of Directors has not established any
standing audit, nominating or compensation committees.
EXECUTIVE COMPENSATION
As a small business issuer, Portsmouth has no compensation committee.
Executive officer compensation is set by disinterested members of the Board of
Directors. Set forth below is a summary compensation table concerning
compensation of the chief executive officer ("CEO"), and any qualifying
executive officer, for the last three completed fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Other Annual (1)
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ----------------
<S> <C> <C> <C> <C>
John V. Winfield (2) 1997 $20,417 $ 0 $6,000
Chairman, President and 1996 $ 0 $ 0 $4,500
Chief Executive Officer
R. N. Gould (3) 1996 $ 8,000 $ 0 $3,000
Chairman, President and 1995 $24,000 $ 0 $6,000
Chief Executive Officer
- -----------------------
</TABLE>
(1) Amounts shown reflect regular Directors fees.
(2) Mr. Winfield became the Company's Chairman, President and Chief Executive
Officer in May 1996. Prior to that time, Mr. Winfield received no
compensation from the Company.
(3) Mr. Gould resigned from the Company in May 1996.
Portsmouth has no stock option plan or stock appreciation rights for its
executive officers. The Company has no pension or long-term incentive plans.
There are no employment contracts between Portsmouth and any executive
officer, nor are there any termination-of-employment or change-in-control
arrangements.
DIRECTOR COMPENSATION
The bylaws of Portsmouth permit directors to be paid a fixed sum for
attendance at each meeting of the Board or a stated salary as director. Each
director is paid a fee of $1,500 per quarter for a total annual compensation
of $6,000. This policy has been in effect since July 1, 1985.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of March 13, 1998, Santa Fe owned 65.5% of the common stock of Portsmouth,
and InterGroup and John V. Winfield, in the aggregate, owned approximately
49.5% of the voting stock of Santa Fe. During the year ended December 31,
1997, the Company paid consulting fees to an officer of InterGroup in the
amount of $88,200. The Company also made payments to Santa Fe and InterGroup
in the amounts of $73,629 and $75,272, respectively, as its share of certain
general and administrative expenses that were allocated based on management's
estimate of the pro rata utilization of resources.
There are no other relationships or related transactions between the Company
and any of its officers, directors, five-percent security holders or their
families which require disclosure.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors, executive officers and each beneficial owner of more than ten
percent of the Common Stock of the Company are required by Section 16(a) of
the Securities Exchange Act of 1934 to file reports periodically disclosing
their transactions in the Company's securities. Based on a review of such
reports, no reporting person failed to file required reports on a timely basis
during fiscal year 1997.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP,
certified public accountants, as the Company's independent accountants for the
current fiscal year and recommends to shareholders that they vote for the
ratification of this selection. On January 26, 1998, Price Waterhouse LLP was
engaged by the Company to serve as its new independent accountants commencing
with the audit for the year ended December 31, 1997. The Company's prior
independent accountants were Ernst & Young LLP. A representative of Price
Waterhouse LLP is expected to be present at the Annual Meeting to make a
statement, if desired, and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF THE AUDITORS.
CHANGES IN CERTIFYING ACCOUNTANTS
Previous independent accountants
(i) On January 26, 1998, Ernst & Young LLP indicated that it declined
to stand for re-election as the independent accountants for Santa Fe.
(ii) The reports of Ernst & Young LLP on the consolidated financial
statements for the past two fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.
(iii) The Company's Board of Directors participated in and approved the
decision to change independent accountants.
(iv) In connection with its audits for the two most recent fiscal years
and through January 26, 1998, there have been no disagreements with Ernst &
Young LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if
not resolved to the satisfaction of Ernst & Young LLP would have caused them
<PAGE>
to make reference thereto in their report on the financial statements for such
years.
(v) During the two most recent fiscal years and through January 26,
1998, there have been no reportable events (as defined in Regulation S-K Item
304(a)(1)(v)).
(vi) Ernst & Young LLP furnished the Company with a letter addressed to
the SEC stating that it agreed with the above statements. A copy of such
letter, dated January 28, 1998 was filed as Exhibit 16 to the Company's Form
8-K dated January 26, 1998.
New independent accountants
(i) The Company engaged Price Waterhouse LLP as its new independent
accountants as of January 26, 1998. During the two most recent fiscal years
and through January 26, 1998, the Company has not consulted with Price
Waterhouse LLP regarding either (i) the application of accounting principles
to a specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Company's financial statements, and
either a written report was provided to the Company or oral advice was
provided that Price Waterhouse LLP concluded was an important factor
considered by the Company in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was either the
subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or
a reportable event, as that term is defined in Item 304 (a)(1)(v) of
Regulation S-K.
PRINCIPAL HOLDERS OF EQUITY SECURITIES
The following table shows, as of March 13, 1998, the Common Stock owned by
every person owning of record (other than securities depositories), or known
by the Company to own beneficially, more than 5% of the outstanding shares.
Any voting securities beneficially owned by directors and director nominees
are also disclosed under Proposal 1 - Election of Directors herein.
<TABLE>
<CAPTION>
Name Shares of Common Stock Percent of Class (1)
---- ---------------------- --------------------
<S> <C> <C>
Santa Fe Financial Corporation 480,957(2) 65.51
2251 San Diego Avenue
Suite A-151
San Diego, CA 92110-2926
Jerold R. Babin 48,345(3) 6.58
4 Embarcadero Center
Suite 2400
San Francisco, CA 94111-4131
- -------------------------------
</TABLE>
(1) Based on 734,183 shares issued and outstanding.
(2) Santa Fe is the record and beneficial owner of 480,957 shares.
The President and Chairman of the Board of Santa Fe votes these shares.
(3) Jerold R. Babin claims sole voting power over the 48,345 shares identified
herein, of which he has sole dispositive power over 9,667 held in his
retirement account. He claims shared dispositive power with his wife over
the 38,478 shares which they hold as trustees of a family trust.
<PAGE>
As of March 13, 1998, there were 734,183 shares of the Company's Common Stock
issued and outstanding, which were held by approximately 336 shareholders of
record.
OTHER BUSINESS
We do not know of any other business to be presented to the meeting. However,
if any other matters are properly raised, the person named in the accompanying
proxy intends to vote in accordance with his judgment on such matters.
SHAREHOLDER PROPOSALS
If you want a proposal for the next Annual Meeting of Shareholders, which is
scheduled for May 4, 1999, to be included in the Company's Proxy Statement for
that meeting, it must be received by the Company at its principal office
mailing address, P.O. Box 80037, San Diego, California 92138-0037, prior to
December 1, 1998. You must also comply with all legal requirements for the
inclusion of such proposals.
FORM 10-KSB and ANNUAL REPORT
A copy of the Company's Form 10-KSB for the Year Ended December 31, 1997 will
be furnished free of charge, upon request, to any shareholder. A copy of the
Company's Annual Report is being sent to the shareholders with this Proxy
Statement. The Annual Report is not to be considered part of this soliciting
material.
By Order of the Board of Directors
PORTSMOUTH SQUARE, INC.
Michael G. Zybala
Secretary
Dated: San Diego, California
April 9, 1998
<PAGE>
PROXY PROXY
PORTSMOUTH SQUARE, INC.
P.O. BOX 80037 * SAN DIEGO, CA 92138-0037
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John V. Winfield and Michael G. Zybala as
Proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of common stock of common stock of Portsmouth Square, Inc. held of record by
the undersigned on March 13, 1998, at the Annual Meeting of Shareholders to
be held on May 5, 1998 or any adjournment thereof.
1. ELECTION OF DIRECTORS:
JOHN V. WINFIELD, JEROLD R. BABIN, JOSEF A. GRUNWALD, JOHN C. LOVE
WILLIAM J. NANCE,
CHECK ONE
[ ] IN FAVOR of all [ ] WITHHOLD authority for
nominees listed above all nominees listed above
(except as marked to the
contrary below)
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED)
--------------------------------------
NOTE: YOU ARE DEEMED TO VOTE FOR THE ELECTION OF ANY NOMINEE FOR WHOM YOU
FAIL TO WITHHOLD SUCH AUTHORITY
2. To ratify the appointment of Price Waterhouse LLP as the independent
accountants for the Company for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for the election of some or all of the persons named in the accompanying
Proxy Statement who were nominated by the Board of Directors of Portsmouth
Square, Inc. and in favor of Proposal 2. In the election of directors, should
cumulative voting be in effect, as explained in the Proxy Statement, said
proxies shall have the discretion and authority to distribute the votes
represented by this proxy in such proportions as they shall see fit among the
nominees named in the Proxy Statement.
Please sign exactly as your name or names appear. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give your full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _______________, 1998
____________________________
Signature
____________________________
Signature if held jointly
Please mark, sign, date and
return the proxy card promptly
using the enclosed envelope
