UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)*
(AMENDMENT NO.1)
Dynex Capital, Inc.
-----------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.01 par value per share
-----------------------------------------------------------------------------
(Title of Class of Securities)
26817Q506
-----------------------------------------------------------------------------
(CUSIP Number)
with a copy to:
Stephen Fraidin
Michael R. Kelly Fried, Frank, Harris, Shriver & Jacobson
550 West C Street One New York Plaza
San Diego, CA 92101 New York, NY 10004-1980
(619) 687-5000 (212) 859-4000
-----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 12, 2000
-----------------------------------------------------------------------------
(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(e), 13d-1(f) or 13d-1(g), check
the following box [ ].
Note: Schedules filed in paper format shall include a signed original
and five copies of the Schedule, including all exhibits. See Rule 13d-7(b)
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, as amended ("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).
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CALIFORNIA INVESTMENT FUND, LLC 33-0688954
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL R. KELLY
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RICHARD KELLY
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
<PAGE>
This amendment amends and supplements the Schedule 13D, dated March
29, 2000, and filed on April 4, 2000, with the Securities and Exchange
Commission (the "Schedule 13D"). Except as amended by this amendment, there
has been no change in the information previously reported on the Schedule
13D.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
On September 12, 2000, California Investment Fund, LLC (the
"Fund") submitted a letter to Dynex Capital, Inc. ("Dynex") detailing its
proposal to acquire all of the outstanding shares of common stock (the
"Common Stock") and Series A, B and C Redeemable Preferred Stock of Dynex
(together, the "Preferred Stock") for an aggregate of $90 million in cash
(the "Proposal Letter"). The Proposal Letter contemplates that the Fund
would be prepared to offer $2.4631 per share in cash for all of the
outstanding shares of Dynex common stock, $10.8788 per share for all
outstanding shares of Series A Preferred Stock, $11.4946 per share for all
outstanding shares of Series B Preferred Stock, and $13.9064 per share for
all outstanding shares of Series C Preferred Stock. The Proposal Letter
also indicates that the Fund is flexible with respect to the allocation of
the total purchase price. As part of the transaction, all outstanding stock
options of Dynex would be cancelled without consideration. A copy of the
Proposal Letter is attached hereto as Exhibit A and is specifically
incorporated herein by reference, and the description herein of the
Proposal Letter is qualified in its entirety by reference to the Proposal
Letter.
The Fund is prepared to take steps necessary to complete the
proposed transaction, including, without limitation, the negotiation,
execution and consummation of a definitive acquisition agreement. There can
be no assurance, however, that such a transaction will be consummated; or,
if it is consummated, that such a transaction will be consummated on the
terms and conditions set forth in the Proposal Letter. Consummation of the
proposed transaction would be subject to a number of conditions, including
satisfaction of any regulatory requirements, receipt of all required
consents including all consents required to deliver 100% of the
fully-diluted equity of Dynex to the Fund at Closing, and receipt by the
Fund of necessary financing. Upon execution of a definitive acquisition
agreement, the Fund is prepared to deposit into escrow 572,178 shares of
Common Stock and to forfeit those shares to Dynex if the transaction fails
to close as a result of the failure of the Fund to obtain the necessary
financing.
On September 13, 2000, the Fund issued a press release
announcing that it had submitted the Proposal Letter. A copy of the press
release is attached hereto as Exhibit B and is specifically incorporated
herein by reference, and the description herein of such press release is
qualified in its entirety by reference to such press release.
The offer set forth in the Proposal Letter is a result of recent
discussions between the Fund and Dynex concerning a potential business
combination. On April 6, 2000, the Fund entered into a confidentiality and
limited standstill agreement with PaineWebber Incorporated pursuant to
which it agreed, among other things, to (i) except as required by law, keep
confidential information disclosed to the Fund regarding Dynex and (ii) not
to purchase any of the securities of Dynex without the prior written
consent of Dynex's board of directors for a period of 24 months following
termination of discussions between the Fund and Dynex (the "April 6
Agreement"). A copy of the April 6 Agreement is attached hereto as Exhibit
C and is specifically incorporated herein by reference, and the description
herein of such agreement is qualified in its entirety by reference to such
agreement.
On April 21, 2000, the Fund submitted a letter to Dynex outlining
the principal terms it was prepared to offer in connection with a potential
business combination (the "April 21 Letter.") The April 21 Letter was
thereafter superceded by a letter from the Fund to Dynex dated April 26,
2000 (the "April 26 Letter"). The Fund received a letter from PaineWebber
Incorporated dated May 22, 2000 outlining the items to be addressed by
parties interested in submitting a merger or acquisition proposal in
connection with Dynex and certain procedures to be followed in connection
therewith (the "May 22 Letter"). The April 26 Letter was thereafter
superseded by a letter from the Fund to Dynex dated June 1, 2000 (the "June
1 Letter"). On July 6, 2000, the Fund received from Dynex two letters
outlining the potential terms upon which the Board of Directors of Dynex
would consider a potential business combination transaction (the "July 6
Letters"). On July 12, 2000, the Fund responded to Dynex's July 6 Letter in
two separate letters and proposed revised terms in connection with a
potential transaction (the "July 12 Letters"). The Fund thereafter
submitted two letters to Dynex dated July 24, 2000, in which it increased
the consideration it would potentially pay to Dynex's stockholders in a
potential business combination transaction (the "July 24 Letters").
Finally, on August 8, 2000, the Fund submitted a letter to Dynex in which
it responded to the rejection by Dynex of the terms outlined in the Fund's
July 24 Letters by terminating discussions between the Fund and Dynex
regarding a potential business combination and requested the written
consent of Dynex's Board of Directors to allow the Fund to purchase any of
the securities of Dynex (the "August 8 Letter"). As of the date of the
Proposal Letter, the Fund has not received a response to its August 8
Letter and has not acquired any securities of Dynex in addition to those
disclosed on the Schedule 13D.
Copies of the April 6 Agreement, the April 21 Letter, the April
26 Letter, the May 22 Letter, the June 1 Letter, the July 6 Letters, the
July 12 Letters, the July 24 Letters and the August 8 Letter are attached
hereto as Exhibits C-N, respectively, and are each specifically
incorporated herein by reference, and the descriptions herein of such
letters are qualified in their entirety by reference to such letters.
Depending on the response of the Board of Directors of Dynex to
the Proposal Letter, the Fund reserves the right to formulate other plans
and/or make other proposals, and take such actions with respect to its
investment in Dynex, including any or all of the actions set forth in
paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions
as it may determine. The Fund also reserves the right to amend or withdraw
the proposal at any time.
Except as stated in this response to Item 4 and in furtherance of
the proposed business combination, the Fund has no current plans or
proposals with respect to Dynex or its securities of the types enumerated
in paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
--------------------------------------------------------
As described in Item 4 above, the Fund has entered into the April
6 Agreement with respect to further acquisitions of securities of Dynex. A
copy of the April 6 Agreement is attached hereto as Exhibit C and is
incorporated herein by reference, and the description herein of such
agreement is qualified in its entirety by reference to such agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
DOCUMENT
--------
Exhibit A -- Letter from the Fund to Dynex, dated September 12, 2000
Exhibit B -- Press Release of Dynex, dated September 13, 2000
Exhibit C -- Letter Agreement between PaineWebber Incorporated and
the Fund, dated April 6, 2000
Exhibit D -- Letter from the Fund to Dynex, dated April 21, 2000
Exhibit E -- Letter from the Fund to Dynex, dated April 26, 2000
Exhibit F -- Letter from PaineWebber Incorporated to the Fund,
dated May 22, 2000
Exhibit G -- Letter from the Fund to Dynex dated June 1, 2000
Exhibit H -- Letter from Dynex to the Fund, dated July 6, 2000
Exhibit I -- Letter from Dynex to the Fund, dated July 6, 2000
Exhibit J -- Letter from the Fund to Dynex, dated July 12, 2000
Exhibit K -- Letter from the Fund to Dynex, dated July 12, 2000
Exhibit L -- Letter from the Fund to Dynex, dated July 24, 2000
Exhibit M -- Letter from the Fund to Dynex, dated July 24, 2000
Exhibit N -- Letter from the Fund to Dynex, dated August 8, 2000
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is
true, complete and correct.
Date: September 12, 2000 California Investment Fund, LLC,
a California limited liability company
By: /s/ Michael R. Kelly
----------------------------------
Michael R. Kelly
Its: Managing Member
Date: September 12, 2000 Michael R. Kelly
By: /s/ Michael R. Kelly
----------------------------------
Michael R. Kelly, as an Individual
Date: September 12, 2000 Richard Kelly
By: /s/ Richard Kelly
----------------------------------
Richard Kelly, as an Individual
<PAGE>
EXHIBIT INDEX
DOCUMENT
--------
Exhibit A -- Letter from the Fund to Dynex, dated September 12, 2000
Exhibit B -- Press Release of Dynex, dated September 13, 2000
Exhibit C -- Letter Agreement between PaineWebber Incorporated and
the Fund, dated April 6, 2000
Exhibit D -- Letter from the Fund to Dynex, dated April 21, 2000
Exhibit E -- Letter from the Fund to Dynex, dated April 26, 2000
Exhibit F -- Letter from PaineWebber Incorporated to the Fund,
dated May 22, 2000
Exhibit G -- Letter from the Fund to Dynex dated June 1, 2000
Exhibit H -- Letter from Dynex to the Fund, dated July 6, 2000
Exhibit I -- Letter from Dynex to the Fund, dated July 6, 2000
Exhibit J -- Letter from the Fund to Dynex, dated July 12, 2000
Exhibit K -- Letter from the Fund to Dynex, dated July 12, 2000
Exhibit L -- Letter from the Fund to Dynex, dated July 24, 2000
Exhibit M -- Letter from the Fund to Dynex, dated July 24, 2000
Exhibit N -- Letter from the Fund to Dynex, dated August 8, 2000
