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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
PhoneTel Technologies, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
71921H-10-9
(CUSIP Number)
Lawrence G. Goodman, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 19, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746 (12-91)
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SCHEDULE 13D
CUSIP No. 71921H-10-9 Page 2 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GABRIEL CAPITAL, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 975,850
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
975,850
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
975,850
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.4%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
SEC 1746 (12-91)
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SCHEDULE 13D
CUSIP No. 71921H-10-9 Page 3 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ARIEL FUND LIMITED
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
7 SOLE VOTING POWER
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 975,850
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
975,850
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
975,850
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.4%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
SEC 1746 (12-91)
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SCHEDULE 13D
CUSIP No. 71921H-10-9 Page 4 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ARIEL MANAGEMENT CORP.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 975,850
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
975,850
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
975,850
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.4%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
SEC 1746 (12-91)
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SCHEDULE 13D
CUSIP No. 71921H-10-9 Page 5 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
J. EZRA MERKIN
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
7 SOLE VOTING POWER
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,951,700
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
1,951,700
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,951,700
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
SEC 1746 (12-91)
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SCHEDULE 13D
Item 1. Security and Issuer
Securities acquired: Common Stock, $.01 par value ("Common Stock")
Issuer: PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
(216) 241-2555
Item 2. Identity and Background
(a), (b), (c) and (f) This Schedule 13D is being filed jointly by
Gabriel Capital, L.P., a Delaware limited partnership ("Gabriel"), Ariel Fund
Limited, a Cayman Islands corporation ("Ariel Fund"), Ariel Management Corp.
("Ariel"), a Delaware Corporation and the Investment Advisor of Ariel Fund,
and J. Ezra Merkin ("Merkin"). Merkin is the General Partner of Gabriel.
Merkin is also the sole shareholder, sole director and the president of Ariel.
Gabriel, Ariel Fund, Ariel and Merkin are hereinafter sometimes referred to
collectively as the "Reporting Persons." The business address of each of
Gabriel, Ariel and Merkin is 450 Park Avenue, New York, New York 10022 and the
business address of Ariel Fund is c/o Maples & Calder, P.O. Box 309, Grand
Cayman, Cayman Islands, British West Indies.
Gabriel and Ariel Fund are private investment funds. Ariel and Merkin
are private investment managers.
Merkin is a United States citizen.
See Item 5 for information regarding ownership of Common Stock.
(d) and (e). During the past five years, none of the Reporting Persons
has been convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
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Item 3. Source and Amount of Funds
As of September 12, 1995, Gabriel and Ariel Fund made a loan (the "Loan")
in the principal amount of $1,200,000 ($600,000 each) to the Issuer, each
using their own funds. The loan transaction was funded on September 19, 1995.
In connection with the funding of the Loan, each of Gabriel and Ariel Fund
were issued separate warrants (the "Warrants") to purchase 369,300 shares (for
an aggregate of 738,600 shares) of Common Stock.
On August 29, 1995, Gabriel purchased 350,000 shares of Common Stock at
an aggregate cost of $262,500, and Ariel Fund purchased 350,000 shares of
Common Stock at an aggregate cost of $262,500, each using its own funds. In
addition, in connection with the respective purchases of Common Stock, each of
Gabriel and Ariel Fund were issued separate Warrants to purchase 256,550
shares of Common Stock.
All of the forgoing transactions were with the Issuer.
Item 4. Purpose of the Transaction
All of the shares of Common Stock and Warrants were acquired for
investment purposes. Each of the Reporting Persons may acquire or dispose of
securities of the Issuer, including shares of Common Stock, directly or
indirectly, in open-market or privately negotiated transactions, depending
upon the evaluation of the performance and prospects of the Issuer by the
Reporting Persons, and upon other developments and circumstances, including,
but not limited to, general economic and business conditions and stock market
conditions.
Gabriel and Ariel Fund have entered into an agreement with the Issuer
pursuant to which Gabriel and Ariel Fund may nominate one candidate to the
Issuer's Board of Directors in the event Gabriel and Ariel Fund own,
collectively and in the aggregate, at least 700,000 shares of Common Stock.
The Reporting Persons have no present intention of exercising such right. The
Reporting Persons are engaged in discussions with the Issuer concerning the
possible grant of preemptive rights by the Issuer to the Reporting Persons.
In addition, the Reporting Persons are engaged in discussions with the Issuer
concerning other transactions which may result in the acquisition by Gabriel
and Ariel Fund of additional unregistered securities of the Issuer. At present
there is no definitive agreements between such parties in this regard, and
there can be no assurance that any such transactions will take place.
Except for the foregoing, no Reporting Person has any present plans or
proposals which relate to or would result in any of the actions or events
described in paragraphs (a) through (j) of item 4 of Schedule 13D. However,
the Reporting Persons retain their respective rights to modify their plans
with respect to the transactions described in this Item 4, to acquire or
dispose of securities of the Issuer and to formulate plans and
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proposals which could result in the occurrence of any such events subject to
applicable laws and regulations.
Item 5. Interest in Securities of the Issuer
(a) and (b) Gabriel is the beneficial and record owner of 350,000 shares
of Common Stock and Warrants to purchase 625,850 shares of Common Stock, for a
total beneficial ownership of 975,850 shares of Common Stock, or 7.4% of the
outstanding shares of Common Stock.
Ariel Fund is the beneficial and record owner of 350,000 shares of Common
Stock and Warrants to purchase 625,850 shares of Common Stock, for a total
beneficial ownership of 975,850 shares of Common Stock, or 7.4% of the
outstanding shares of Common Stock.
Ariel, as Investment Advisor to Ariel Fund, has the power to vote and to
direct the voting of and the power to dispose and direct the disposition of
the 975,850 shares of Common Stock (assuming exercise of the Warrants) owned
by Ariel Fund. Accordingly, Ariel may be deemed to be the beneficial owner of
such 975,850 shares of Common Stock, or 7.4% of the outstanding shares of
Common Stock.
As the General Partner of Gabriel, Merkin has the power to vote and to
direct the voting of and the power to dispose and direct the disposition of
the 975,850 shares of Common Stock (assuming exercise of the Warrants) owned
by Gabriel. In addition, as the president of Ariel, Merkin may be deemed to
have power to vote and to direct the voting of and the power to dispose and
direct the disposition of the 975,850 shares of Common Stock (assuming
exercise of the Warrants) owned by Ariel Fund. Accordingly, Merkin may be
deemed to be the beneficial owner of 1,951,700 shares of Common Stock, or
14.8% of the outstanding shares of Common Stock.
The number of shares beneficially owned by each of the Reporting Persons
and the percentage of outstanding shares represented thereby, have been
computed in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended. The ownership of the Reporting Persons is based on
11,261,043 outstanding shares of Common Stock of the Issuer on August 29,
1995, which information was supplied by the Issuer to the Reporting Persons,
and does not take into account the shares of Common Stock and Warrants issued
to the Reporting Persons.
The Warrants are exercisable for a period of ten years from issuance at
an exercise price of $.95 per share of Common Stock. The Warrants and the
Common Stock issuable in respect of the Warrants are, or will be,
unregistered.
(c) On September 19, 1995, each of Gabriel and Ariel Fund were issued
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separate Warrants to purchase 369,300 shares of Common Stock. See Item 3.
(d) Not Applicable
(e) Not Applicable
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
See Item 4.
Item 7. Material to be Filed as Exhibits
Exhibit B. Voting Agreement
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Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GABRIEL CAPITAL, L.P.
By: /s/ J. Ezra Merkin
Name: J. Ezra Merkin
Title: General Partner
ARIEL FUND LIMITED
By: MEESPIERSON MANAGMENT (CAYMAN)
LIMITED
By: /s/ Roger Hanson, C. Anthony Mellin
Name:Roger Hanson, C. Anthony Mellin
Title: Director, Director
ARIEL MANAGEMENT CORP.
By: /s/ J. Ezra Merkin
Name: J. Ezra Merkin
Title: President
/s/ J. Ezra Merkin
J. EZRA MERKIN
Dated: September 22, 1995
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Exhibit B
GABRIEL CAPITAL, L.P.
ARIEL FUND LIMITED
450 Park Avenue
New York, New York 10022
September 12, 1995
Phonetel Technologies, Inc.
650 Statler Officer Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
Gentlemen:
This is to confirm our understanding that, commencing at such time as
Gabriel Capital, L.P. ("Gabriel"), Ariel Fund Limited ("Ariel") and their
respective affiliates own in the aggregate at least 700,000 of the issued and
outstanding shares of common stock, $.01 par value ("Common Stock"), of Phonetel
Technologies, Inc. (the "Company"), Gabriel and Ariel will have the right upon
written notice to the Company, to designate a candidate to the Company's board
of directors (the "Board").
A candidate designated by Gabriel and Ariel may be removed as a director
only by the written consent of Gabriel or Ariel. In the event any candidate
designated by Gabriel or Ariel dies, resigns, is removed or otherwise ceases
to serve as a member of the Board, Gabriel and Ariel shall have the right to
designate a successor.
The Company agrees to take such prompt action as shall be necessary to
cause the election to the Board of the candidate designated by Gabriel and
Ariel including, but not limited to, arranging for the resignation of such
other director necessary to allow for such election.
In the event that Gabriel, Ariel and their respective affiliates should
own in the aggregate less than 700,000 of the issued and outstanding Common
Stock, Gabriel and Ariel
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shall cause its candidate to resign from the Board.
If the foregoing is acceptable, please have a duly authorized officer of
the Company sign a copy of this letter in the space indicated below and return
it to the undersigned, whereupon it will become a binding agreement between us
as of the date first above written.
Very truly yours,
GABRIEL CAPITAL, L.P.
By: /s/Elliot H. Herskowitz
ARIEL FUND LIMITED
By: /s/Elliot H. Herskowitz
Accepted and Agreed to:
PHONETEL TECHNOLOGIES, INC.
By: /s /Daniel J. Moos
Senior Vice President
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