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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. 5)*
TREATS INTERNATIONAL ENTERPRISES, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
89464M 20 2
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(CUSIP Number)
Jacques Sayegh, President, Royal Bank Capital Corporation,
200 Bay Street, Royal Bank Plaza, Toronto, Ontario M5J 2J5 (416-974-4497)
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
On or about April 8, 1997
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(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).
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 2 of 11 Pages
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(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Royal Bank of Canada and its wholly-owned subsidiary
Royal Bank Capital Corporation
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDS IS REQUIRED / /
TO PURSUANT TO ITEMS 2(d) OR 2(e)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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NUMBER OF (7) SOLE VOTING POWER
SHARES 19,637,627 (See Notes 1,2,5 and 6)
BENEFICIALLY -----------------------------------------------------------
OWNED BY (8) SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------------------------------
PERSON (9) SOLE DISPOSITIVE POWER
WITH 19,637,627 (See Notes 1,2,5 and 6)
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(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
19,637,627 (See Notes 1,2,5 and 6)
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / /
CERTAIN SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62.4% (See Notes 1,2,5 and 6)
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(14) TYPE OF REPORTING PERSON*
BK (Royal Bank of Canada) CO (Royal Bank Capital Corporation)
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*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.
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 3 of 11 Pages
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This Amendment No. 5 amends the original Schedule 13D previously filed by
Royal Bank of Canada ("RBC") and Royal Bank Capital Corporation ("RBCC"), as
Reporting Person, on June 19, 1995, as amended by Amendment No. 1 thereto
filed on September 28, 1995, as amended by Amendment No. 2 thereto filed on
October 30, 1995, as amended by Amendment No. 3 thereto filed on July 2,
1996, and as amended by Amendment No. 4 thereto filed on August 15, 1996,
relating to Common Stock of Treats International Enterprises, Inc.
Terms used in this Amendment that are defined in the original Schedule 13D or
in Amendment No. 1, Amendment No. 2, Amendment No. 3 or Amendment No. 4
thereto, and not otherwise defined herein, shall have the meanings assigned
to such terms in the original Schedule 13D or in Amendment No. 1, Amendment
No. 2, Amendment No. 3 or Amendment No. 4 thereto.
All share amounts have been adjusted to reflect a 1-for-3 reverse stock split
of the Common Shares of Issurer effective as of June 21, 1993.
Unless indicated otherwise, all dollar ($) amounts are in United States
Dollars (C$ signifies Canadian Dollars).
ITEM 4. PURPOSE OF TRANSACTION
The Common Shares and Series A Preferred Shares of Issuer that are owned by
Reporting Persons are currently being held for sale in an orderly disposition.
RBC is a "foreign banking corporation" under Section 211.23(b) of Title 12 of
the Code of Federal Regulations. By virtue of Section 8(a) of the
International Bank Act of 1978, RBC is subject to the provisions of the Bank
Holding Company Act of 1956 (the "BHCA"), including Section 4 thereof,
because it conducts a banking business in the United States through its
branches and agencies. Under the BHCA, RBC is prohibited from owning,
directly or indirectly, 5% or more of the voting securities of a U.S.
nonbanking company like Issuer unless exemptive authority is available.
Because the voting shares of Issuer were acquired by RBC as the result of a
debt previously contracted, the exemption contained in Section 4(c)(2) of the
BHCA is available to RBC with respect to the Common Shares and Preferred
Shares of Issuer.
Except as described in the Memorandum of Understanding among RBCC, Paul
Gibson and Issuer referred to under Item 6 below ("MOU"), Reporting Persons
currently do not have any plans or proposals which relate to or would result
in:
(a) The acquisition by any person of additional securities of Issuer
or the disposition of securities of Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of Issuer or
any of its subsidiaries;
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 4 of 11 Pages
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(d) Any change in the present board of directors or management of
Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the
board of directors of Issuer;
(e) Any material change in the present capitalization or dividend
policy of Issuer;
(f) Any other material change in Issuer's business or corporate
structure;
(g) Changes in Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of
control of Issuer by any person;
(h) Causing a class of securities of Issuer to be delisted from a
national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Act; or
(j) Any action similar to any of those enumerated above;
PROVIDED, HOWEVER, that (i) Reporting Persons reserve and do not hereby
release or relinquish any rights that Reporting Persons may have by law,
pursuant to the charter and bylaws of Issuer, pursuant to any contract, or
otherwise, including, but not limited to, any rights as a creditor of Issuer
and its subsidiaries, any rights to elect directors of Issuer and its
subsidiaries, any rights to convert Series A Preferred Shares into Common
Shares of Issuer, any rights to receive Common Shares in payment of dividends
on Series A Preferred Shares, or any rights to vote Series A Preferred Shares
or Common Shares; (ii) if the "Gibson Interests" are acquired as described in
the MOU, one or more of the actions described in subparagraphs (a) through
(j) are likely to occur, but Reporting Persons currently do not know what
such actions would be or how such actions would take place (See Notes 1,2,3
and 4); and (iii) if neither the "Gibson Interests" nor the "RBCC Interests"
are acquired as described in the MOU, one or more of the actions described in
subparagraphs (a) through (j) may occur, but Reporting Persons currently do
not know what such actions would be or how such actions would take place (See
Notes 1,2,3 and 4).
The MOU is filed with this Schedule 13D as an Exhibit and by reference
incorporated in this Item 4.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) The aggregate number of Common Shares of Issuer beneficially owned by
Reporting Persons is 19,637,627 Common Shares, which includes (i) 5,875,001
Common Shares currently owned by RBC, (ii) 1,332,759 Common Shares currently
owned by RBCC, (iii) an estimated 9,016,375 Common Shares which RBC has the
right to acquire upon conversion of 5,409,825 Series A Preferred Shares of
Issuer assuming a conversion price of $.30 per share, and (iv) an estimated
3,413,492 Common Shares that RBC has the right to acquire if it should elect
to have accrued dividends of $409,125 on 5,409,825 Series A Preferred Shares
for the period from July 1, 1994 through March 31, 1997 paid in Common
Shares. (See Notes 1,2 and 5)
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 5 of 11 Pages
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The 19,637,627 Common Shares beneficially owned by Reporting Persons
represent approximately 62.4% of the outstanding Common Shares of Issuer
(based upon the number of Common Shares shown to be outstanding as of March 31,
1997 in Issuer's Form 10-Q for the Quarter ended March 31, 1997. (See
Notes 1,2,5 and 6)
(b) Reporting Persons have sole power to vote or to direct the vote and sole
power to dispose or direct the disposition of all of the Common Shares
beneficially owned by Reporting Persons as described in (a) above. (See
Notes 3 and 4)
(c) Except as described under Item 6 below, there have been no transactions
in Common Shares by either Reporting Person since August 15, 1996, which is
the date on which Amendment No. 4 to this Schedule 13D was filed.
(d) Except for the directors of Issuer (who, through their statutory powers
as directors, have the right to determine if and when dividends are declared
and paid), no person (other than a Reporting Person) is known by Reporting
Persons to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Common Shares
beneficially owned by Reporting Persons as described in (a) above. (See
Note 3).
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The following contracts, arrangements, understandings and relationships
currently exist among Reporting Persons with respect to securities of Issuer:
(a) Power of Attorney dated April 4, 1991 from RBC to RBCC
(b) Agreement effective as June 15, 1995 between RBC and RBCC
that this Schedule 13D (including all amendments) are filed
on behalf of each of them.
The following contracts, arrangements, understandings and relationships
currently exist among Reporting Persons and other persons with respect to
securities of Issuer:
(a) Letter dated September 26, 1994 from Barrie Laver, Vice President
of RBCC, to Paul Gibson, President and Chief Executive Officer
of Issuer, accepted and agreed to on behalf of Issuer and
Triadon, with attached Term Sheet dated September 20, 1994 (the
"1994 Letter Agreement")
(b) Certificate of Designation of Preferred Shares of Issuer filed
with Secretary of State of Delaware on September 26, 1994 (the
"Certificate of Designation")
(c) Memorandum of Understanding (undated but signed on or about
April 8, 1997) among RBCC, Paul Gibson and Issuer (the "MOU")
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 6 of 11 Pages
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The 1994 Letter Agreement, the Certificate of Designation and the MOU are
filed with this Schedule 13D as Exhibits and by reference are incorporated in
this Item 6.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following written agreements, contracts, arrangements, understandings,
plans and proposals are filed as Exhibits to this Schedule 13D:
(a) Letter dated September 26, 1994 from Barrie Laver, Vice
President of RBCC, to Paul Gibson, President and Chief Executive
Officer of Issuer, accepted and agreed to on behalf of Issuer
and Triadon with attached Term Sheet dated September 20, 1994*
(b) Certificate of Designation of Preferred Shares of Issuer filed
with Secretary of State of Delaware on September 26, 1994*
(c) Agreement effective as of June 15, 1995 between RBC and RBCC
that this Schedule 13D (including all amendments) are filed
on behalf of each of them**
(d) Memorandum of Understanding (undated but signed on or about
April 8, 1997) among RBCC, Paul Gibson and Issuer
_________________________
* Filed on June 19, 1995 with the original Schedule 13D.
** Filed on September 28, 1995 with Amendment No. 1 to this Schedule 13D.
NOTES:
1. Pursuant to the Certificate of Designation establishing the
designation, preferences and rights for the Series A Preferred Shares of
Issuer, the Series A Preferred Shares are currently convertible, at the
option of the holder, in whole or in part, into Common Shares of Issuer at a
price equal to the lower of (i) the weighted average trading price for Common
Shares of Issuer for the previous 30 trading days using the average exchange
rate for the period or (ii) $0.30 per share. Since the weighted average
trading price for Common Shares of Issuer for the previous 30 trading days
continuously changes, a conversion price of $0.30 per share has been assumed
in calculating the number of Common Shares of the Issuer issuable upon
conversion of the Series A Preferred Shares for the purposes of this Schedule
13D. At a conversion price of $0.30 per share, the 5,409,825 Series A
Preferred Shares would convert into a total of 9,016,375 Common Shares.
Recently, the trading price for Common Shares has been substantially below
$0.30 per share, e.g., during the period from January 1, 1997 through May 15,
1997, the trading price for Common Shares (as reported in Bloomberg's
Composite Close/Price table) has ranged from a high of $0.115 per share and
to a low of $0.03125 per share. At a conversion price of $0.115 per share,
the 5,409,825 Series A Preferred Shares would convert into a total of
23,520,978 Common Shares, and, at a conversion price of $0.03125 per share,
the 5,409,825 Series A Preferred Shares would convert into a total of
86,557,200 Common Shares. (See Notes 5 and 6).
<PAGE> SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 7 of 11 Pages
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2. Pursuant to the Certificate of Designation establishing the designation,
preferences and rights for Series A Preferred Shares of Issuer, the Series A
Preferred Shares carry a cumulative 5.5% cash dividend payable quarterly in
arrears (Dividends accrue at the rate of $37,191 per quarter). At the option
of the holder of Series A Preferred Shares, a dividend may be paid in the
form of Common Shares of Issuer, with the number of Common Shares to be
issued being based upon the weighted average trading price for Common Shares
of Issuer for the previous 30 trading days (from the dividend date) and using
the average exchange rate for the period. It is agreed that the first
dividend will be payable in cash. Currently, the accrued dividends for which
the holder of the Series A Preferred Stock may elect to receive payment in
Common Shares (which are the accrued dividends for the period from July 1,
1994 through March 31, 1997) total $409,125, and the number of Common Shares
that the holder of the Series A Preferred Stock may elect to receive in
payment of such dividends is estimated to be 3,413,492 Common Shares. (See
Notes 5 and 6).
3. The Power of Attorney dated April 4, 1991 that is referred to in Item 6
and filed as an Exhibit under Item 7 constitutes and appoints certain
officers of RBCC to be attorneys for RBC with the power and authority to
execute and deliver contracts, deeds, documents and undertakings on behalf of
RBC relating to RBC's investments in Issuer and Triadon.
4. Pursuant to the Certificate of Designation establishing the designation,
preferences and rights for the Series A Preferred Shares of Issuer, the
Series A Preferred Shares are currently entitled to one vote per share. A
majority of the holders of Series A Preferred Shares has the right to
designate two persons to the board of directors of Issuer. The Series A
Preferred Shares also have such other voting rights as are granted pursuant
to the Delaware General Corporation Law.
5. Under the provisions of Issuer's certificate of incorporation, Issuer is
currently authorized to issue a total of 33,333,333 Common Shares. In its
Quarterly Report on Form 10Q for the quarter ended March 31, 1997, Issuer
reported that 19,024,598 Common Shares were outstanding as of March 31, 1997.
This would leave a maximum of 14,308,735 Common Shares available for
issuance. The number of Common Shares available for issuance may not be
sufficient to satisfy Issuer's obligations in respect of the currently
outstanding Series A Preferred Shares. (See Notes 1,2 and 6).
6. Issuer is treating 2,067,344 Common Shares previously issued to
Tricapital as being canceled and returned to treasury. If the 2,067,344
Common Shares previously issued to Tricapital are treated as being
outstanding, the Common Shares outstanding as of March 31, 1997 would be
21,091,942 Common Shares (not 19,024,598 Common Shares as reported in
Issuer's Quarterly Report on Form 10Q for the Quarter ended March 31, 1997),
a maximum of 12,241,391 Common Shares would be available for issuance, and
the 19,637,627 Common Shares beneficially owned by Reporting Persons would
represent approximately 58.6% of the outstanding Common Shares of Issuer;
however, in order for Reporting Persons to beneficially own 19,637,627 Common
Shares, Issuer would be required to issue a total of 33,521,809 Common Shares
if the 2,067,344 Common Shares previously issued to Tricapital are treated as
being outstanding, which is 188,476 Common Shares in excess of the 33,333,333
Common Shares that Issuer is currently authorized to issue under the
provisions of Issuer's certificate of
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 8 of 11 Pages
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incorporation. (See Notes 1,2 and 5).
SIGNATURE
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.
Date: June 5, 1997
ROYAL BANK OF CANADA
/s/ J. Fukakusa
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Signature
Janice R. Fukakusa
Senior Vice President
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Name/Title
ROYAL BANK CAPITAL CORPORATION
/s/ Jacques Sayegh
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Signature
Jacques Sayegh
President
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Name/Title
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 9 of 11 Pages
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EXHIBIT 7(d)
TREAT INTERNATIONAL ENTERPRISES, INC.
MEMORANDUM OF UNDERSTANDING
RBCC, PAUL GIBSON AND TIEI
The parties to the agreement are RBCC and Paul Gibson, as shareholder
representing his family's shareholder interest and in his personal capacity
(the "Gibson interests") in TIEI, and TIEI ("the company"). This agreement is
intended to document the agreement between the parties wherein either RBCC
will provide funding to the company which would allow the company to
repurchase the Gibson interests, or an investor group will provide funding to
the company that would allow the company to repurchase the investment
position of RBC and RBCC, collectively (the "RBCC interests"). At the present
time the various interest are understood to include and be limited to:
GIBSON INTERESTS
i. 6,200,000 (ACTUAL NUMBER TO BE PROVIDED) common shares of TIEI;
ii. Severance in the amount of approximately $400,000 (ACTUAL AMOUNT TO BE
CONFIRMED);
iii. Senior loan - participation in the term loan held by 3193853 Canada Inc.
- of $120,000 (ACTUAL AMOUNT TO BE CONFIRMED);
iv. Shareholder advances in the amount of $80,000 (ACTUAL AMOUNT TO BE
CONFIRMED).
RBCC INTERESTS
i. 7,207,760 common shares;
ii. 5,409,825 Series A preferred shares with a face value of $3,732,779 and
cumulative, but undeclared dividends in the approximate amount of
$500,000 (5.5% cumulative dividend) as at December 31, 1996;
iii. a subordinated debenture with a principal face value of $1,129,562, with
accrued interest of approximately $78,000 at December 31, 1996, accruing
at a rate of 8% per month.
DEAL PROPOSALS
Each of RBCC and Gibson have agreed upon a price, and basic terms, for which
they would be prepared to either: (i) buy out the Gibson interests or the
RBCC interests respectively; or, (ii) sell the RBCC interests or Gibson
interests respectively. The respective prices, and basic terms, are as follow:
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SCHEDULE 13D
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CUSIP No. 89464M 20 2 Page 10 of 11 Pages
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GIBSON PRICE AND TERMS
The total price for the Gibson interests is $2,600,000 (subject to adjustment
up or down re independent confirmation of amounts as noted above). The price
is to be satisfied by: (i) a payment, by certified cheque, in the amount of
$1,500,000 at closing; and, (ii) the take back of a debenture in the amount
of $1,100,000 (subject to adjustment up or down for reasons noted above),
such debenture which would rank ahead of the existing RBCC debenture. The
debenture would have a 3 year term with interest payable monthly in arrears
calculated at a rate of RBC Prime.
RBCC PRICE AND TERMS
The total price for the RBCC interests is $3,800,000. The price is to be
satisfied by a payment, by certified cheque, in the amount of $3,800,000 at
closing.
SUMMARY TERMS AND CONDITIONS OF THE BUY/SELL PROCESS
1. The Buy/Sell agreement will be in force for 90 days from the date of
signing.
2. At the time of signing each of RBCC and Gibson will deposit the RBCC
interests and the Gibson interests respectively into escrow with a
mutually acceptable legal counsel. All appropriate transfer documents
will be executed and deposited with the escrow agent at the same time.
3. During the 90 day period the company will make itself and management
available for due diligence. It is anticipated that due diligence
examinations may be carried out by any investor groups working with Gibson
or by RBCC or any parties working with RBCC. 48 hours notice, as well as
a summary due diligence list, must be provided to the company prior to
any on-site visits.
4. All contracts between TIEI and RBCC or Gibson and their respective
affiliates will be fully disclosed to any investor.
5. The company will also take steps to ensure that professional advisors
(lawyers, auditors) may be contacted for due diligence purposes.
6. Each of Gibson, TIEI, and RBCC will pay their own legal counsel. Gibson
and TIEI may not use the same legal counsel/firm. The selling party will
pay the costs of Orenstein & Partners re the mediation process.
Orenstein will be asked to provide an estimate of this cost.
7. The first part to deliver an offer and certified cheque pursuant to the
Gibson Price and Terms or RBCC Price and Terms to the escrow agent will
have the right and obligation to acquire the other party's position. Any
cheque should be made out to the TIEI and be held by the escrow agent
pending finalization of documentation and regulatory approvals, if any.
8. The parties agree that at all times they will cooperate to conclude an
agreement and closing as quickly as possible.
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SCHEDULE 13D
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CUSIP No. 89464M 202 Page 11 of 11 Pages
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9. Upon the closing of either transaction, the parties will provide mutual
releases.
ACCEPTED AND AGREED TO:
By: Treats International Enterprises, Inc. Royal Bank Capital Corporation
/s/ Paul Gibson /s/ Jacques Sayegh
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Paul Gibson Jacques Sayegh
President and C.E.O. President
By: Paul Gibson
/s/ Paul Gibson
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