<PAGE> 1
SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c- 5(d)(2))
[X] Definitive Information Statement
NORTH COAST ENERGY, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rule 14c-5(g)
and 0-11
1) Title of each class of securities to which transaction
applies:__________
2) Aggregate number of securities to which transaction
applies:__________
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): Not applicable.
4) Proposed maximum aggregate value of transaction: Not
applicable.
5) Total fee paid: None; no fee required.
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
NORTH COAST ENERGY, INC.
1993 CASE PARKWAY
TWINSBURG, OHIO 44087-2343
INFORMATION STATEMENT
PURSUANT TO REGULATION 14C PROMULGATED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
This information statement, which is being mailed on or about May 18, 1999
to holders of record on May 12, 1999 of shares of common stock and series A
preferred stock of North Coast Energy, Inc., a Delaware corporation, is being
furnished in connection with the adoption of a certificate of amendment to North
Coast's certificate of incorporation through a written consent of the holders of
a majority of North Coast's outstanding shares of common stock and series A
preferred stock.
On March 17, 1999, the board of directors approved and recommended that
North Coast's certificate of incorporation be amended to effect a 1 for 5
reverse stock split of North Coast's common stock. The amendment will be
approved, not less than twenty days following the mailing of this information
statement to shareholders of record at the close of business on May 12, 1999, by
a written consent to corporate action executed by the holders of more than a
majority of the issued and outstanding shares of common stock and series A
preferred stock. The written consent will be executed by Nuon International bv,
Range Resources Corp. and Messrs. Lombardy, Regan and Siegel, executive officers
of North Coast. Approval by the board of directors and by the holders of a
majority of the issued and outstanding shares of common stock and series A
preferred stock is adequate under Delaware law to effect the amendment. The
amendment will become effective upon the filing of the written consent with
North Coast and the filing of the amendment with the Secretary of State of
Delaware. North Coast anticipates that the filing of the written consent will
occur on or about June 7, 1999.
This information statement is being provided for your informational
purposes only.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
OUTSTANDING STOCK AND VOTING RIGHTS
As of the record date, there were 22,784,070 shares of common stock and
73,816 shares of series A preferred stock issued and outstanding. Each share of
common stock entitles its holder to one vote and each share of series A
preferred stock entitles its holder to 2.3 votes.
<PAGE> 3
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table presents information with respect to the common stock,
owned on April 29, 1999, by: (1) each person known by North Coast to own
beneficially more than 5% of North Coast's outstanding common stock; (2) each
director of North Coast; (3) each of the executive officers of North Coast; and
(4) all directors and executive officers as a group, and the percentage of the
outstanding shares represented by that group.
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------
NATURE AND ADDRESS(1) AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
--------------------- -------------------- --------
<S> <C> <C>
Charles M. Lombardy, Jr.................................... 550,242 Shares(2) 2.42%
Garry Regan................................................ 572,424 Shares 2.51%
Saul Siegel................................................ 434,400 Shares(3)(4) 1.90%
Leo J. M. J. Blomen........................................ 0 Shares *%
Jos J. M. Smits............................................ 0 Shares *%
Nuon International bv...................................... 17,241,381 Shares(5) 60.43%
Ralph L. Bradley........................................... 66,666 Shares(6) *%
C. Rand Michaels........................................... 8,094 Shares *%
John H. Pinkerton.......................................... 8,464 Shares *%
Range Resources Corp....................................... 4,159,874 Shares(7) 18.10%
Dominic A. Visconsi........................................ 185,000 Shares *%
All directors and executive officers as a group (11
persons)................................................. 1,898,793 Shares(8) 8.32%
</TABLE>
- ---------------
* Less than one percent
(1) NUON's address is Utrechtsweg 68, 6812 AH Arnhem, The Netherlands. Range's
address is 125 State Route 43, Hartville, Ohio 44632.
(2) Includes 13,738 shares of common stock owned by a trust for which Mr.
Lombardy is the trustee and as to which he disclaims any beneficial
interest.
(3) Includes 134,000 shares of common stock which Mr. Seigel could acquire upon
the exercise of immediately exercisable stock options or warrants which he
holds.
(4) Does not include 134,000 shares of common stock that Mr. Seigel could
acquire through the exercise of a warrant which may be issued upon the
purchase of common stock by NUON.
(5) Includes 5,747,127 shares of common stock that may be acquired by NUON for
$0.87 per share on or before September 30, 1999.
(6) Includes 66,666 shares of common stock which Mr. Bradley could acquire upon
the exercise of immediately exercisable stock options which he holds. Mr.
Bradley will vest in options representing 33,333 shares of common stock in
April, 2000 which are not reflected in the above table.
(7) Includes 200,000 shares of common stock which may be acquired upon the
exercise of certain warrants to purchase common stock.
(8) Includes 244,191 shares of common stock which may be acquired by all
directors and executive officers as a group upon the exercise of immediately
exercisable stock options or warrants.
2
<PAGE> 4
AMENDMENT TO NORTH COAST'S CERTIFICATE OF INCORPORATION TO EFFECT A
1 FOR 5 REVERSE STOCK SPLIT OF NORTH COAST'S COMMON STOCK
The Nasdaq Stock Market has modified its requirements with regard to the
listing of a company's shares on the Nasdaq SmallCap Market. Among other
requirements, the minimum bid price for a security trading on the Nasdaq
SmallCap Market is now $1.00.
On November 5, 1998, Nasdaq advised North Coast that North Coast's common
stock was not in compliance with this new Nasdaq SmallCap Market minimum bid
price requirement. Nasdaq provided North Coast with a ninety-day period, which
expired on February 5, 1999, to regain compliance with this standard for at
minimum of ten consecutive trading days. Although the price of North Coast's
common stock has been $1.00 on several occasions over the last few months, North
Coast's common stock did not exceed $1.00 for the required ten consecutive days.
Nasdaq also provided North Coast with a procedure to stay the delisting of
North Coast's common stock. According to this procedure, North Coast requested a
hearing before Nasdaq's Listing Qualifications Panel. The hearing took place on
Thursday, April 15, 1999. At the hearing, North Coast established that it has a
plan for meeting the minimum bid requirement and also demonstrated its ability
to sustain long-term compliance with all maintenance criteria. As of the date of
this information statement, the Listing Qualifications Panel has not made a
determination regarding the delisting of North Coast's common stock.
North Coast believes that in view of recent market conditions in the
exploration and production sector of the oil and gas industry, and the
performance of many similarly-situated energy stocks, it must take whatever
action may be reasonably calculated to increase and maintain the minimum bid
price of its common stock. Management believes that continuing uncertainty as to
North Coast's stock price and the possibility of delisting are harmful to the
interests of North Coast's stockholders.
Accordingly, the board of directors has adopted a resolution approving a
proposal to amend North Coast's certificate of incorporation to effect a reverse
stock split. In the reverse stock split, each five shares of common stock will
automatically be converted into one share, without any action on the part of the
stockholders. Instead of issuing less than one whole share to holders of a
fraction of a share resulting from the reverse stock split, fractional shares
will be rounded up to the nearest whole share of common stock. Through the
written consent, holders of a majority of North Coast's outstanding shares of
common stock will approve the amendment. These holders include Nuon, Range and
Messrs. Lombardy, Regan and Siegel. The complete text of the amendment is
Exhibit A to this information statement.
Consummation of the reverse stock split will not change the number of
shares of common stock authorized by North Coast's certificate of incorporation
or the par value of each share of common stock. However, the aggregate par value
of the issued common stock will be reduced. The reverse stock split will become
effective as of 5:00 p.m., Cleveland time, on the date the certificate of
amendment to North Coast's certificate of incorporation is filed with the
Secretary of State of the State of Delaware. Stockholders have no right under
Delaware law or under North Coast's certificate of incorporation or by-laws to
dissent to the reverse stock split.
As soon as practical after the effective date, American Stock Transfer will
mail a letter of transmittal to each holder of record of stock certificates
which represent issued common stock outstanding on the effective date. The
letter of transmittal will contain instructions for the surrender of these
certificates to American Stock Transfer in exchange for certificates
representing the number of whole shares of common stock into which the shares of
common stock have been converted by the reverse stock split. No new certificates
will be issued to a stockholder until he or she has surrendered his or her
outstanding certificates, together with the letter of transmittal to American
Stock Transfer. Stockholders will not be required to pay a transfer or other fee
in connection with the exchange of certificates. Stockholders should not submit
any certificates to American Stock Transfer until requested to do so.
North Coast anticipates that the decrease in the number of outstanding
shares of common stock resulting from the reverse stock split will place the
market price of the common stock in a range satisfactory to satisfy the Nasdaq
minimum bid price requirement.
3
<PAGE> 5
If North Coast's securities are eventually delisted, they will likely be
quoted in the "pink sheets" maintained by the National Quotation Bureau, Inc.,
or the Nasdaq Electronic Bulletin Board. As a result, the spread between the
"bid" and the "ask" price of the shares of common stock is likely to be greater
than at present. Thus, stockholders may experience difficulty in engaging in
trades of North Coast's common stock.
The stockholders should note that the effect of the reverse stock split
upon the price of North Coast's common stock cannot be accurately predicted. In
particular, there is no assurance that the price for shares of common stock
immediately after the reverse stock split will be five times the price of shares
of common stock immediately prior to the reverse stock split. Furthermore, there
can be no assurance that the reverse stock split will not adversely impact the
price of the common stock or, alternatively, that any increase in price of the
common stock immediately after the reverse stock split will be sustained for a
prolonged period of time. In addition, the reverse stock split likely will have
the effect of creating odd lots of stock for some stockholders. These odd lots
may be more difficult to sell or have higher brokerage commissions associated
with their sale.
As a result of the reverse stock split, the number of whole shares of
common stock held by stockholders of record as of the close of business on the
effective date will automatically, without any action required by the
stockholders, be equal to the number of shares of common stock held immediately
prior to the close of business on the effective date divided by five, plus a
small number of shares of common stock in place of any fractional shares. The
reverse stock split will not effect a stockholder's percentage ownership
interest in North Coast or proportional voting power, except for minor
differences resulting from rounding.
North Coast is currently subject to certain obligations to issue shares of
common stock through the exercise of outstanding warrants and options and with
respect to convertible preferred stock. Under the terms of various agreements
relating to these securities, the number of shares of common stock issuable
pursuant to these securities and the per share exercise price, will
automatically be adjusted for the reverse stock split. Thus, for every five
shares of common stock before the reverse stock split, the holders of these
securities will, upon exercise of the security, receive one share of common
stock after the reverse stock split for the same aggregate amount of
consideration paid, with fractional shares resulting from the reverse stock
split rounded up to the nearest whole share of common stock.
The following discussion of the material federal income tax consequences of
the reverse stock split is based on the Internal Revenue Code of 1986, as
amended, the applicable Treasury regulations, judicial authority and current
administrative rulings and practices all as in effect on the date of this
information statement. North Coast has not sought and will not seek an opinion
of counsel or a ruling from the Internal Revenue Service regarding the federal
income tax consequences of the reverse stock split. This discussion is for your
general information purposes only and you are urged to consult your tax advisor
to determine the particular consequences to you.
North Coast should not recognize any material gain or loss from the reverse
stock split, and no material gain or loss should be recognized by a stockholder.
The aggregate tax basis of the shares of common stock held by a stockholder
following the reverse stock split will equal the stockholder's aggregate basis
in the common stock immediately prior to the reverse stock split and generally
will be allocated among the shares of common stock held following the reverse
stock split on a pro rata basis.
North Coast believes that because the reverse stock split is not part of a
plan to increase periodically a stockholder's proportionate interest in North
Coast's assets or earnings and profits, stockholders will not recognize any gain
or loss in the exchange.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas A. Hill, Secretary
4
<PAGE> 6
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NORTH COAST ENERGY, INC.
PURSUANT TO SECTION 242 OF THE
DELAWARE GENERAL CORPORATION LAW
The undersigned, Garry Regan, being the President, and Vicki L. Matjasic,
being the Assistant Secretary, of North Coast Energy, Inc., a Delaware
corporation (the "Corporation"), hereby certify as follows:
1. The name of the Corporation is North Coast Energy, Inc.
2. The Board of Directors of the Corporation, by action taken at a
meeting on March 17, 1999, adopted a resolution proposing and declaring
advisable the amendment to Article IV of the Certificate of Incorporation
of the Corporation described below.
3. This Certificate of Amendment of the Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors of the
Corporation.
4. By written action of more than a majority of the stockholders of
the Corporation entitled to vote effective on June 7, 1999, taken in
accordance with Sections 228 and 242 of the Delaware General Corporation
Law, the necessary number of shares as required by statute were voted in
favor of the adoption of the amendment.
5. The amendment of the Certificate of Incorporation as hereinafter
set forth has been duly adopted in accordance with Section 242 of the
Delaware General Corporation Law.
6. The Certificate of Incorporation of the Corporation is hereby
amended by deleting in its entirety the current first full, introductory
paragraph of Article IV and replacing it with the following:
"The total authorized capital stock of the Corporation shall be
Sixty-Two Million (62,000,000) shares of which number Sixty Million
(60,000,000) shall be shares of Common Stock, $.01 par value (the
"Common Stock"), and Two Million (2,000,000) shall be shares of
Preferred Stock, $.01 par value. The total authorized capital stock of
the Corporation shall not be changed by the transaction described
below.
At the time this Certificate of Amendment becomes effective, and
without any further action on the part of the Corporation or its
stockholders, each five shares of common stock, par value $.01 per
share, then issued and outstanding, shall be changed and reclassified
into one fully paid and nonassessable share of common stock, par value
$.01. The capital account of the Corporation shall not be increased or
decreased by such change and reclassification. To reflect the said
change and reclassification, each certificate representing shares of
common stock, par value $.01 per share, theretofore issued and
outstanding, shall represent one-fifth the number of shares of common
stock, par value $.01 per share, issued and outstanding after such
change and reclassification; and the holder of record of each such
certificate shall be entitled to receive a new certificate
representing a number of shares of common stock, par value $.01, of
the kind authorized by this amendment, equal to one-fifth the number
of shares represented by said certificate for theretofore issued and
outstanding shares, so that upon this amendment becoming effective
each holder of record of five shares of the common stock with a par
value of $.01 will have, or be entitled to, a certificate representing
one share of common stock with par value $.01 of the kind authorized
by this amendment."
A-1
<PAGE> 7
IN WITNESS WHEREOF, the undersigned, being the duly elected and acting
President and Assistant Secretary, respectively, have hereunto subscribed their
names to this Certificate of Amendment and affirm that the facts stated herein
are true under penalties of perjury, this 7th day of June, 1999.
------------------------------------
Garry Regan, President
- ----------------------------------
Vicki L. Matjasic
Assistant Secretary
A-2
