SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
INFORMATION STATEMENT
PURSUANT TO SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934
FAMILY BARGAIN CORPORATION
(Name of Subject Company)
FAMILY BARGAIN CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
23331C105
(CUSIP Number of Class of Securities)
JEFFREY C. GERSTEL
FAMILY BARGAIN CORPORATION
4000 RUFFIN ROAD
SAN DIEGO, CALIFORNIA 92123
(619) 627-1800
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
With copies to:
DAVID W. BERNSTEIN, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
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INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 UNDER THAT ACT
This information statement is being furnished by Family Bargain
Corporation (the "Company") in connection with the election, other than
at a meeting of stockholders, to what will be a majority of the places
on the Company's Board of Directors of persons designated by Three Cities
Research, Inc. ("TCR") as contemplated in connection with a sale by the
Company to three entities advised by TCR of $27 million, and possibly
$32 million, of the Company's Series B Junior Convertible, Exchangeable
Preferred Stock.
At December 6, 1996, there were 4,693,337 shares of Common Stock
of the Company outstanding.
THE TRANSACTIONS
On December 30, 1996, the Board of Directors of the Company
approved the creation of a new Series B Junior Convertible, Exchangeable
Preferred Stock ("Series B Stock"), the sale of 27,000 shares of
Series B Stock to three entities (the "Purchasers") advised by TCR for
$1,000 per share, and the grant to the Purchasers of a 90 day option to
purchase another 5,000 shares of Series B Stock for the same price. At
the same time, the Board of Directors approved the sale of up to 1,500
shares of Series B stock to members of the operating management of the
Company's subsidiaries for $1,000 per share.
Each share of Series B Stock will become convertible 30 days after
there is no outstanding Series A 9 1/2% Cumulative Convertible Preferred
Stock ("Series A Stock"), or after there has been a change of control of
the Company, into common stock at the initial conversion ratio of 526.09
shares of common stock per share of Series B Stock. Therefore, the 27,000
shares of Series B Stock the Purchasers will be acquiring would be
convertible at the initial conversion ratio into 14,204,513 shares of
common stock, which will be approximately 75% of the outstanding common
stock, and 44% of the outstanding common stock if all the Series A Stock
were converted into common stock and outstanding options were exercised.
If the Purchasers acquire the additional 5,000 shares of Series B Stock,
this will increase the common stock they can acquire by converting their
Series B Stock to 16,834,978 shares, equal to approximately 78%
of the outstanding shares, and 48% if all the Series A Stock were
converted and the options were exercised. In addition, as described
below, the Purchasers will be acquiring from Benson Selzer and John Selzer
and affiliated entities 668,780 shares of common stock and 88,725 shares
of Series A Stock, which will be convertible (and which the Purchasers
have said they intend to convert) into 226,288 shares of common stock.
This would enable the Purchasers to increase their total holdings to
17,730,047 shares of common stock (if they exercise their option to
purchase an additional 5,000 shares of Series B Stock), which would be
approximately 82% of the outstanding common stock, and 50% if all the
Series A Stock were converted and the options were exercised.
The Series B Stock will vote together with the common stock on all
matters, with the holders of the Series B Stock having a number of votes
equal to the number of shares of common stock into which their Series B
Stock may be converted. Because of this, when the Series B Stock is
issued and the Purchasers acquire the common stock and Series A Stock
from Benson and John Selzer and affiliated entities, the Purchasers
<PAGE>
will be entitled to cast approximately 79% of the votes with regard to
matters presented to the Company's stockholders, which would be reduced
to 48% if all the Series A Stock (including that which will be owned by
the Purchasers) were converted into common stock and the outstanding
options were exercised. The Purchasers could increase this to 81% of the
votes (which would be reduced to 52% if all the Series A Stock were
converted and all the options were exercised) by exercising their option
to purchase an additional 5,000 shares of Series B Stock.
The Purchasers will obtain the funds with which to purchase the
Series B Stock from their own resources or, in the case of Purchasers
which are partnerships, through capital contributions by partners as
contemplated by their respective partnership agreements.
Any operating management employees who purchase Series B Stock will
borrow the funds for the purchase from the Company under full recourse
loans, which will bear interest at 8% per annum and will require
amortization of principal out of a portion of each year's bonus, with any
balance due in five years.
Agreements relating to the sale of the Series B Stock to the
Purchasers were signed on December 31, 1996. At the same time (a) the
Purchasers agreed to purchase from Benson A. Selzer and John A. Selzer and
entities they own all the shares of the Company's stock owned by them
(consisting of 668,780 shares of common stock and 88,725 shares of Series
A Convertible Preferred Stock) for $2.99 million and (b) the
Company entered into an agreement with Benson A. Selzer, John A. Selzer
and Joseph Eiger under which, after the Purchasers purchase the
shares from Benson Selzer and John Selzer, the two Selzers and Mr. Eiger
will resign from all their positions as directors and officers of the
Company and the Company will make payments to them and forgive
indebtedness from them totalling $8,968,000 to terminate their
employment contracts and their rights under bonus and retirement
benefit plans, for their agreement not to compete with the Company
for three years, and for their agreement to be available to consult
with the Company about occurrences while they were engaged in the
management of the Company. In addition, the Company will permit them to
continue to use the Company's New York City office for two years and
will pay the cost of the New York City office up to a total of $830,000.
At the Board of Directors meeting held on December 30, 1996,
Edwin C. Nevis and Francis Warburton resigned from the Company's
Board of Directors, effective when the Purchasers complete the purchase
of Series B Stock from the Company. At the same meeting, the Board of
Directors elected J. William Uhrig, H. Whitney Wagner and Thomas G. Weld,
each of whom is a Managing Director of TCR, to become directors of
the Company at the later of (i) the time when the Purchasers complete
the purchase of shares of Series B Stock from the Company (which is
expected to occur on January 9 or 10, 1997) and (ii) ten days after
the day on which this information statement is mailed to the
stockholders of the Company and is filed with the Securities and Exchange
Commission. At that time, the Board of Directors will consist of Messrs.
Uhrig, Wagner and Weld and William Mowbray (who will become President and
chief executive officer of Company) and John J. Borer III.
PAGE
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INFORMATION CONCERNING OFFICERS, DIRECTORS AND PERSONS ELECTED TO BECOME
DIRECTORS
Set forth below is the name, age, business address, present
principal occupation and five year employment history of each of the
persons newly elected to become a director of the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND FIVE YEAR
__________________________________
NAME AND ADDRESS AGE EMPLOYMENT HISTORY
________________ ___ __________________
<S> <C> <C>
J. William Uhrig 34 Mr. Uhrig is a Managing Director of TCR, a firm
Three Cities Research, Inc. engaged in the investment and management of
135 East 57th Street private capital. Mr. Uhrig joined Three Cities
New York, New York 10022 in 1984. Prior to December 1991, Mr. Uhrig was
the Managing Director of TCR Europe Ltd. Mr.
Uhrig serves on the board of directors of MLX
Corp., a holding company. Mr. Uhrig received
his Masters of Business Administration from the
University of Chicago in 1984, and graduated
from Purdue University in 1982.
H. Whitney Wagner 41 Mr. Wagner has served as a Managing Director of
Three Cities Research, Inc. TCR since 1989. He joined TCR in 1983 and was
135 East 57th Street elected a Vice President in 1986. Mr. Wagner
New York, New York 10022 serves on the boards of directors of MLX Corp.
and Garden Ridge Corporation, a specialty
retailing company.
Thomas G. Weld 34 Mr. Weld has served as a Managing Director of
Three Cities Research, Inc. TCR since 1993. From 1988 until 1993, Mr. Weld
135 East 57th Street was an associate with McKinsey and Company, a
New York, New York 10022 management research firm.
</TABLE>
The following table provides information as of December 31, 1996 with
respect to each of the Company's present directors and executive officers:
<TABLE>
<CAPTION>
Served as Officer or Director's Term
Director of Expires{(1)}
NAME AGE POSITION Company Since
____ ___ ________ ____________________ _______________
<S> <C> <C> <C> <C>
Benson A. Selzer{(2)} 75 Chairman and Director 1992 1997
<PAGE>
John A. Selzer{(2)} 41 Chief Executive 1992 1997
Officer, President,
Assistant Secretary
and Director
Joseph Eiger{(2)} 65 Vice Chairman, 1992 1997
Executive Vice
President, Secretary
and Director
William W. Mowbray 57 Chief Operating 1994 1997
Officer of General
Textiles and Director
Jeffrey C. Gerstel 32 Executive Vice 1992
President, Finance{(3)}
John J. Borer III 39 Director 1994 1997
Edwin C. Nevis{(2)} 70 Director 1994 1997
Francis G. Warburton{(2)} 67 Director 1992 1997
<FN>
{(1)}Because the Company did not hold annual meetings in 1995 or 1996, all
directors would be subject to election at the 1997 annual meeting.
The terms of all the directors other than Messrs. Benson Selzer,
Mowbray and Borer were scheduled to expire in 1995 or 1996.
{(2)}Messrs. Benson and John Selzer, Eiger, Nevis and Warburton have all
resigned, effective after the Purchasers acquire Series B Preferred
Stock from the Company.
{(3)}Mr. Gerstel will become the Chief Financial Officer when the
Purchasers acquire Series B Preferred Stock from the Company.
</FN>
</TABLE>
The Company has a classified Board of Directors, under which its
members are divided into three classes. The term of office of each
Director in a particular class expires at the third annual meeting of
stockholders following the meeting at which the Director was elected.
The terms of Mr. Mowbray and Mr. Borer both terminate at the 1997 annual
meeting. Messrs. Uhrig and Weld were elected to serve until the 1998
annual meeting and Mr. Weld was elected to serve until the 1999 annual
meeting.
The Board of Directors held a total of three meetings during
1996. Each member of the Board of Directors attended at least 75 percent
of the meetings.
The Board of Directors has three committees, an Executive Committee,
an Audit Committee and a Compensation Committee. The Executive Committee
acts between Board meetings on all corporate matters and nominates
candidates for membership on the Audit and Compensation Committees.
Certain actions by the Executive Committee require prior approval of the
Audit Committee or the Compensation Committee as described below. The
members of the Executive Committee are Benson A. Selzer (Chairman),
Joseph Eiger and John A. Selzer.
PAGE
<PAGE>
The Compensation Committee reviews and approves compensation
arrangements for top management and employee compensation programs and
administers the Company's stock option plans. The Company's Board of
Directors determines the compensation of the Company's executive officers
based on recommendations from the Compensation Committee. The compensation
of both Messrs. Selzer and Mr. Eiger is determined pursuant to their
respective employment agreements, each of which was approved by the
Compensation Committee and the Company's Board of Directors. The
Compensation Committee consists of Joseph Eiger and John J. Borer III.
The Audit Committee reviews and evaluates the results and scope of the
audit and other services provided by the Company's independent accountants,
as well as the Company's accounting principles and system of internal
accounting controls. The Company's By-Laws provide that affiliated
transactions and acquisitions by Family Bargain of businesses not within
specified SIC Codes (primarily, the codes covering wholesale apparel trade,
retail stores, and apparel stores) must be unanimously approved by the
Audit Committee; provided that (i) if at any time there are fewer than
two independent directors designated or approved by the representative of
the underwriters of the Company's 1994 Series A Stock offering on the
Audit Committee, those transactions will require the unanimous consent
of all independent directors on the Board of Directors and (ii) if at any
time there are no shares of Series A Stock outstanding, acquisitions of
businesses not within the specified SIC Codes will require approval by
only a majority of the Audit Committee. The members of the Audit
Committee are Francis G. Warburton and John J. Borer.
During fiscal 1996, there were two meetings of the Executive
Committee, one meeting of the Audit Committee, and one meeting of
the Compensation Committee of the Board of Directors.
COMPENSATION OF NEW DIRECTORS
None of Messrs. Uhrig, Wagner and Weld has ever received any
compensation from the Company.
SECURITY OWNERSHIP
The following table describes the persons known to the Company to
have been the beneficial owners of 5% or more of the Company's common
stock at December 31, 1996 (treating the Purchasers as not yet being the
beneficial owners of the Series B Stock they have agreed to purchase
or the common stock into which it may be converted):
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<TABLE>
<CAPTION>
Name and Address Amount and
of Beneficial Naure of Percent of
Owner Beneficial Ownership{(1)} Class
_________________ ____________________ _____
<S> <C> <C>
Dutford Limited 301,640 6.3%
Tropic Isle Building
Wickham's Bay
Roadtown
Tortola
British Virgin Islands
Benson A. Selzer 506,057{(2)} 10.4%
315 E. 62nd Street
New York, NY 10021
<FN>
{(1)}Unless otherwise indicated, all stockholders have sole voting rights
and sole power to dispose of their shares.
{(2)}Includes 163,917 shares of Common Stock issuable upon the exercise of
options. Does not include common stock issuable on conversion of 23,225
shares of Series A Stock owned by Mr. Selzer. Benson A. Selzer is the
father of John A. Selzer. Each of them disclaims any beneficial
ownership interest in the other's holdings.
</FN>
</TABLE>
The following table identifies the persons who are expected to be the
beneficial owners of 5% or more of any class of the Company's outstanding
stock after the Purchasers complete their acquisition of $27,000,000
of Series B Stock:
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
Title of Class Of Beneficial Owner Beneficial Ownership Class
______________ ___________________ ____________________ __________
<S> <C> <C> <C>
Series B Stock{(1)} Three Cities Fund II L.P. 6,540 shrs.{(3)} 29.7% {(3)(4)}
Common Stock {(4)}
Series A Stock {(4)}
Series B Stock{(1)} Three Cities Offshore II C.V. 11,060 shrs.{(3)} 50.3%{(3)(4)}
Common Stock {(4)}
Series A Stock {(4)}
Series B Stock{(1)} Terfin International, Ltd. 4,040 shrs.{(3)} 18.4%{(3)(4)}
Common Stock {(4)}
Series A Stock {(4)}
<FN>
{(1)}When there is no longer any outstanding Series A Stock, or if there is
a change of control of the Company, the Series B Stock will become
convertible into common stock at the rate of 526.09 shares of common
stock per share of Series B Stock. However, because the Series B
Preferred Stock is not expected to become convertible within the next
60 days, the holders of the Series B Stock are not deemed to be the
beneficial owners of the common stock into which the Series B Stock
will become convertible.
{(2)}The address of each of the three beneficial owners is c/o Three Cities
Research Inc., 135 East 57th Street, New York NY 10022.
<PAGE>
{(3)}An additional 5,000 shares of Series B Stock will be allocated among
the Purchasers in a manner which has not yet been determined.
{(4)}The Purchasers, in total, will be acquiring 668,780 shares of common
stock, constituting 14.2% of the outstanding common stock, and 88,725
shares of Series A Stock, constituting 2.4% of the outstanding Series
A Stock. How these shares will be allocated among the three
Purchasers has not yet been determined.
</FN>
</TABLE>
The following table sets forth the beneficial ownership at December 31,
1996 of the Company's common stock by (i) each director, individually, and
(ii) all directors and officers of the Company, as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Owmership Class
___________________ ____________________ _____
<S> <C> <C>
Benson A. Selzer 506,057{(1)(2)} 10.4%
Joseph Eiger 163,917{(2)} 3.4%
John A. Selzer 75,833{(2)} 1.6%
William W. Mowbray 115,000{(2)} 2.4%
John J. Borer, III 20,000{(2)} -
Edwin C. Nevis 20,000{(2)} -
Francis G. Warburton 22,500{(1)(2)} -
All directors and executive
officers as a group (8 persons) 974,557{(1)(2)(3)} 18.3%
<FN>
{(1)}Does not include common stock issuable on conversion of 23,225 shares
of Series A Stock owned by Benson A. Selzer. Mr Selzer has agreed to
sell the common stock and the Series A Stock which he owns to the
Purchasers. Benson A. Selzer is the father of John A. Selzer. Each
of them disclaims any interest in the other's holdings.
{(2)}Includes shares issuable on exercise of options as follows:
Benson A. Selzer, 163,917; Joseph Eiger, 163,917; John A. Selzer
75,833; William W. Mowbray, 100,000; John J. Borer, 20,000; Edwin C.
Nevis, 20,000; Francis G. Warburton, 22,500; all directors and
executive officers as a group 617,417. All the directors except
Mr. Mowbray and Mr. Borer have agreed to accept payments from the
Company to relinquish their options.
{(3)}Does not include common stock issuable on conversion of 30,500
shares of Series A Stock owned by John A. Selzer. Mr. Selzer has
agreed to sell the Series A Stock which he owns to the Purchasers.
</FN>
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3, 4 and 5 received by the Company
during its most recent fiscal year, the Company is not aware that any
director, officer, or beneficial owner of more than 10% of the Company's
common stock, failed to file on a timely basis reports required by Section
16(a) of the Securities Exchange Act of 1934 during that fiscal year.
January 8, 1997