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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:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c- 5(d)(2))
[ ] 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:
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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 __________ shares of common
stock and _____ 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.
SECURITY OWNERSHIP OF
PRINCIPAL HOLDERS AND MANAGEMENT
The following table presents information with respect to the
common stock, owned on April 12, 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.
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<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------
Nature and Address (1) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
----------------------------- -------------------- --------
<S> <C> <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 by ............. 17,241,381 Shares (5) 60.43%
Ralph L. Bradley .................. 33,333 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) 1,865,460 Shares (8) 8.18%
</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 33,333 shares of common stock which Mr. Bradley could acquire
upon the exercise of immediately exercisable stock options or warrants
which he holds. Mr. Bradley will vest in options representing 33,333
shares of common stock in each of April, 1999 and 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 210,858 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.
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.
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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 is scheduled for Thursday, April 15, 1999. At the hearing, North Coast
will be expected to establish that it has a plan for meeting the minimum bid
requirement and also demonstrate its ability to sustain long-term compliance
with all maintenance criteria. If North Coast cannot convince the Listing
Qualifications Panel to stay the delisting of North Coast's common stock, there
are two more levels of appellate review available beyond the Listing
Qualifications Panel which North Coast can approach with its presentation.
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
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satisfactory to satisfy the Nasdaq minimum bid price requirement. However, the
effective date of the reverse stock split will not occur until after the hearing
before the Listing Qualifications Panel. North Coast cannot guarantee that the
Listing Qualifications Panel will accept the merits of North Coast's proposal
and North Coast cannot guarantee that delisting will not occur after the
scheduled hearing or at some later date even though the reverse stock split has
become effective.
If North Coast's securities are 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.
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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
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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.
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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."
2
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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
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