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SCHEDULE 13E-4
(Rule 13e-101)
Tender Offer Statement Pursuant to Section 13(e) (1) of the
Securities Exchange Act of 1934 and Rule 13e-4 Thereunder
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Issuer Tender Offer Statement (Pursuant to Section 13(e) (1)
of the Securities Exchange Act of 1934)
(Amendment No. )
RONSON CORPORATION
(Name of Issuer)
RONSON CORPORATION
(Name of Person(s) Filing Statement)
12% Cumulative Convertible Preferred Stock, No Par Value
(Title of Class of Securities)
776338-30-3 (CUSIP Number of
Class of Securities)
Kenneth B. Falk Louis V. Aronson, II
Deutch & Falk, P.C. Ronson Corporation
843 Rahway Avenue P.O. Box 6707
Woodbridge, NJ 07095 Campus Drive
Somerset, NJ 08875
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
November 15, 1996
(Date Exchange Offer First Published,
Sent or Given to Security-Holders)
Calculation of Filing Fee
Transaction Amount of Filing Fee $605.17
Valuation* $3,025,813
<PAGE>
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid:______________________________
Form or Registration No.:____________________________
Filing Party:________________________________________
Date Filed:__________________________________________
<PAGE>
Item 1. Security and Issuer.
(a) The name of the Issuer is Ronson Corporation (the "Company"). The
address of its principal executive office is Campus Drive, P.O. Box 6707,
Somerset, NJ 08875.
(b) The title of the securities which are the subject of this Exchange
Offer is 12% Cumulative Convertible Preferred Stock, No Par Value, face value
$1.75 per share ("Preferred Stock"). There are approximately 837,595 shares of
Preferred Stock outstanding as of the date of this statement. The Issuer is
offering to all of the holders of shares of Preferred Stock the right to
exchange their shares of Preferred Stock for shares of Common Stock ($1.00 par
value) of the Company at the rate of 1.7 shares of Common Stock for each share
of Preferred Stock. To the extent that officers, directors and affiliates of the
Issuer are holders of Preferred Stock, the Exchange Offer is being offered to
them as well. The Issuer has been advised by all officers and directors that all
of them intend to accept the Exchange Offer with respect to all of their shares
of Preferred Stock. The Ronson Corporation Retirement Plan, the Company's
primary pension plan, which holds 91,487 shares of Preferred Stock, is
restricted from accepting the Exchange Offer at this time, due to constraints
imposed by the Employee Retirement Income Security Act. The Company and the Plan
Trustees intend to make an application to the United States Department of Labor
("DOL") to permit the plan to take advantage of the Exchange Offer.
(c) The principal market for trading of the Issuer's Preferred Stock
and Common Stock is the Nasdaq SmallCap Market. Prior to October 2, 1995, the
principal market for trading in Ronson Common Stock and Preferred Stock was the
National Association of Securities Dealers' Electronic Bulletin Board. Market
data for the last two fiscal years are listed below. The data presented reflect
inter-dealer prices without retail markup or markdown and commission and may not
represent actual transactions.
<PAGE>
<TABLE>
<CAPTION>
Common:
1996
---------------------------------------------------------------------
Quarter 1st 2nd 3rd
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
High Bid 4 1/8 2 7/8 2 7/8
Low Bid 2 5/8 2 1/4 2 5/8
<CAPTION>
1995
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 5/16 2 3/8 4 3/4 4 7/8
Low Bid 1 3/4 1 1/4 2
<CAPTION>
1994
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 3/4 1 3/8 1 3/8
Low Bid 1/2 3/8 1/8 5/8
<CAPTION>
Preferred:
1996
---------------------------------------------------------------------
Quarter 1st 2nd 3rd
---------------------------------------------------------------------
High Bid 4 1/8 3 3
Low Bid 2 5/8 2 5/8 2 5/8
<CAPTION>
1995
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 3/4 2 1/4 4 3/4 4 7/8
Low Bid 1 1/8 3/4 1 1/2 2
<CAPTION>
1994
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 1/8 3/4 1 5/8 1 3/4
Low Bid 1/2 7/16 1/4 5/8
</TABLE>
(d) This statement is being filed on behalf of the Issuer.
<PAGE>
Item 2. Source and Amount of Funds or Other Consideration.
(a) No funds will be used in connection with the Exchange Offer since
the offer solely involves the exchange of Common Stock for Preferred Stock. The
Company will incur minor expenses, such as printing, mailing, telephone charges,
etc. in connection with the Exchange Offer.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer
or Affiliate.
The purpose of the Exchange Offer is to reduce or eliminate
substantially the number of shares of Preferred Stock outstanding and thereby
reduce or eliminate the need to pay dividends, both future and accumulated but
unpaid, on Preferred shares prior to the payment of any dividend on Common
shares. The accumulated dividend as of November 15, 1996 is $0.9103 per
Preferred share. The Issuer has not been and does not expect for the foreseeable
future to be in a position to make payment of Preferred dividends or of the
arrearages on Preferred dividends.
Management believes that the reduction or elimination of the Preferred
Stock resulting from the Exchange Offer and its preferential and accrued
dividends gives many advantages and benefits to the holders of the Company's
Common and Preferred Stock. The reasons for this belief include, but are not
limited to, the following:
1) Elimination or reduction of the Preferred Stock will increase the
Company's ability to obtain capital; simplify its financial statement
presentation; and potentially increase the value of its Common shares.
2) Upon completion of the Exchange Offer, the addition in the number of
outstanding Common shares would increase the liquidity of these shares,
potentially resulting in an increase in trading volume and a greater stability
in pricing of the Common shares in the marketplace.
3) The book value per Common share will increase to $0.79 per Common
share compared to $(0.04) per Common share prior to the Exchange Offer, an
increase of $0.83 per Common share.
4) Completion of the Exchange Offer will eliminate or greatly reduce
the existing Preferred dividend arrearage of approximately $762,000 as well as a
major continuing claim on the Company's future cash for Preferred dividends,
currently about $44,000 per quarter, or $176,000 per year.
5) The Preferred shareholders will gain voting rights by exchanging
their Preferred shares for Common shares.
6) The Company's shareholder-related expenses would be reduced with
only one class of stock outstanding.
7) Management is of the opinion that the Exchange Offer would improve
the Company's ability to raise capital by issuing new Common shares, simplify
the Company's accounting presentation and increase the value of Common shares.
<PAGE>
The Company intends to retire all of the Preferred shares which it
acquires in connection with the Exchange Offer, and return them to the status of
authorised but unissued shares. The Company has no present intention to reissue
them, but reserves the right to do so in the future. The Company does not have
any plans or proposals which relate to or which would result in the acquisition
by any person of any additional securities of the Issuer or the disposition of
securities of the Issuer, any extraordinary corporate transaction, any sale or
transfer of a material amount of assets of the Issuer, any change in the present
Board of Directors or management of the Issuer, any material change in the
present dividend rate or policy, except as described above, any material change
in the Company's corporate structure or business, except as described above, any
change in the Issuer's corporate Charter or By-Laws or instruments corresponding
thereto or any other action which may impede the action or control by any person
or the structure of the Issuer's obligation to file reports pursuant to Section
(d) of the Act. The Issuer anticipates that if the Exchange Offer is successful,
the Preferred shares will cease to be listed and will not be quoted on any
inter-dealer quotation system of any registered national securities association.
Item 4. Interest in Securities of the Issuer.
The Issuer is not aware of any transaction in the Preferred shares that
was effected during the past 40 business days by the Issuer or by any executive
officer or director of the Issuer, any person controlling the Issuer or any
executive officer or director of any corporation ultimately in control of the
Issuer.
Item 5. Contracts, Arrangements, Understandings or Relationships
With Respect to the Issuer's Securities.
The Issuer is not aware of any contracts, arrangements, understandings
or relationships relating directly or indirectly to the Exchange Offer, whether
or not legally enforceable, between the Issuer and any person with respect to
any securities of the Issuer.
Item 6. Persons Retained, Employed or to be Compensated.
The Issuer has not employed or retained and does not intend to
compensate any person to make solicitations or recommendations in connection
with the Exchange Offer, except that the Issuer has engaged Morrow & Co., Inc.,
909 Third Avenue, New York, NY 10022 , for a fee estimated to be approximately
$5,000 plus out-of-pocket expenses for the purpose of assisting in distribution
of an Offering Circular with respect to the proposed Exchange Offer and
responding to requests for information regarding procedures for acceptance of
the Exchange Offer.
<PAGE>
Item 7. Financial Information.
Annexed hereto are the following:
1. Audited Financial Statements for the two fiscal years required to be
filed with the Issuer's most recent Annual Report, i.e., as of and for
the fiscal years ended December 31, 1994 and 1995, incorporated herein
by reference.
2. Unaudited Balance Sheets and Comparative Year-to-Date Income Statements
and Statements of Cash Flows and Related Earnings per share amounts
required to be included in the Issuer's quarterly report for the
quarter and nine months ended September 30, 1996 pursuant to the Act,
incorporated herein by reference.
3. The attached table sets forth certain financial information with
respect to the Issuer:
(a) Ratio of earnings to fixed charges for the two most recent
fiscal years and for the interim periods.
(b) Book value per Common share as of the most recent fiscal year
and as of the latest Interim Balance Sheet.
(c) Pro forma data reflecting the effect of the Exchange Offer on
(1) the Issuer's balance sheet as of December 31, 1995 and
September 30, 1996, and
(2) the Issuer's statements of operations, earnings per
share amount and ratio of earnings to fixed charges for the year
ended December 31, 1995 and for the quarter and nine months ended
September 30, 1996.
Item 8. Additional Information.
(a) None
(b) None
(c) None
(d) None
(e) None
<PAGE>
Item 9. Exhibits.
(a) 1. Offering Circular dated November 15, 1996
2. Letter of Transmittal
3. Letter to holders of Common shares
4. Letter to holders of Preferred shares
5. Notice of Guaranteed Delivery
(b) None
(c) None
(d) None
(e) None
(f) None
After due 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.
November 15, 1996
-----------------
(Date)
/s/Louis V. Aronson, II
--------------------
Louis V. Aronson, II.
President and Chief Executive Officer
(Name and Title)
<PAGE>
ANNEXED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
ACTUAL PRO FORMA
------ ---------
<S> <C> <C>
Fiscal year ended December 31,
1995 2.11 to 1 2.77 to 1
1994 2.06 to 1
Nine months ended September 30,
1996 1.01 to 1 1.24 to 1
1995 2.89 to 1
BOOK VALUE PER COMMON SHARE
As of December 31, 1995 $(0.26) $0.64
As of September 30, 1996 $(0.04) $0.79
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF DECEMBER 31, 1995
Dollars in thousands
ASSETS AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT ASSETS:
Cash ........................................................................... $ 64 $ 64
Accounts receivable, less allowances for doubtful accounts of $86 .............. 1,940 1,940
Inventories:
Finished goods ......................................................... 5,501 5,501
Work in process ........................................................ 177 177
Raw materials .......................................................... 700 700
------- -------
6,378 6,378
Other current assets ........................................................... 783 783
Current assets of discontinued operations ...................................... 187 187
------- -------
TOTAL CURRENT ASSETS ................................................... 9,352 9,352
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land ........................................................................... 19 19
Buildings and improvements ..................................................... 3,477 3,477
Machinery and equipment ........................................................ 2,995 2,995
Construction in progress ....................................................... 45 45
------- -------
6,536 6,536
Less accumulated depreciation and amortization ................................. 4,370 4,370
------- -------
2,166 2,166
INTANGIBLE PENSION ASSETS ...................................................... 419 419
OTHER ASSETS ................................................................... 764 764
OTHER ASSETS OF DISCONTINUED OPERATIONS ........................................ 702 702
------- -------
$13,403 $13,403
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF DECEMBER 31, 1995
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt .......................................................................... $4,472 $4,472
Current portion of long-term debt ........................................................ 211 211
Current portion of lease obligations ..................................................... 40 40
Current portion of pension obligations ................................................... 280 280
Accounts payable ......................................................................... 1,428 1,428
Accrued expenses ......................................................................... 1,750 1,750
Current liabilities of discontinued operations ........................................... 993 993
------ ------
TOTAL CURRENT LIABILITIES ........................................................ 9,174 9,174
LONG-TERM DEBT ........................................................................... 1,728 1,728
LONG-TERM LEASE OBLIGATIONS .............................................................. 37 37
PENSION OBLIGATIONS ...................................................................... 287 287
OTHER LONG-TERM LIABILITIES .............................................................. 78 78
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS ......................................... 65 65
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $.01 stated value, outstanding
As Reported, 847,308 and Pro Forma, none ................................................. 8 --
<CAPTION>
Common Stock, par value $1 AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C> <C> <C>
Authorized shares................................. 11,848,106 11,848,106
Reserved shares................................... 917,374 70,066
Issued (including treasury)....................... 1,820,893 3,261,317 1,821 3,261
<CAPTION>
<S> <C> <C>
Additional paid-in capital................................................................ 30,308 28,876
Accumulated deficit....................................................................... (27,081) (27,081)
Unrecognized net loss on pension plans.................................................... (1,403) (1,403)
Cumulative foreign currency translation adjustment........................................ (26) (26)
------ ------
3,627 3,627
Less cost of treasury shares, 62,087 Common shares........................................ 1,593 1,593
------ ------
TOTAL STOCKHOLDERS' EQUITY........................................................ 2,034 2,034
------ ------
$13,403 $13,403
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31,1995
Dollars in thousands (except per share data)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
NET SALES .............................................. $ 26,953 $ 26,953
-------- --------
Cost and expenses:
Cost of sales .................................. 18,416 18,416
Selling, shipping and advertising .............. 3,340 3,340
General and administrative ..................... 3,141 3,141
Depreciation and amortization .................. 344 344
-------- --------
25,241 25,241
-------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INTEREST AND OTHER ITEMS ................ 1,712 1,712
Other expense:
Interest expense ............................... 541 541
Other - net .................................... 168 168
-------- --------
709 709
-------- --------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES ................. 1,003 1,003
Income tax benefits - net .............................. 497 497
-------- --------
EARNINGS FROM CONTINUING OPERATIONS .................... 1,500 1,500
Loss from discontinued operations (net of applicable
deferred income tax benefit of $110) ........... (860) (860)
-------- --------
NET EARNINGS ........................................... $ 640 $ 640
======== ========
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31,1995
Dollars in thousands (except per share data)
(continued)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE:
Assuming no dilution:
Earnings from continuing operations ............ $ 0.77 $ 0.47
Loss from discontinued operations .............. (0.50) (0.27)
-------- --------
Net earnings ................................... $ 0.27 $ 0.20
======== ========
Assuming full dilution:
Earnings from continuing operations ............ $ 0.58 N/A
Loss from discontinued operations .............. (0.33) N/A
-------- --------
Net earnings ................................... $ 0.25 N/A
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF SEPTEMBER 30, 1996
Dollars in thousands
ASSETS
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT ASSETS:
Cash ............................................................. $ 57 $ 57
Accounts receivable, less allowances for doubtful accounts of $103 1,899 1,899
Inventories:
Finished goods ........................................... 6,078 6,078
Work in process .......................................... 93 93
Raw materials ............................................ 776 776
------- -------
6,947 6,947
Other current assets ............................................. 1,182 1,182
------- -------
TOTAL CURRENT ASSETS ..................................... 10,085 10,085
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land ............................................................. 19 19
Buildings and improvements ....................................... 3,605 3,605
Machinery and equipment .......................................... 3,357 3,357
Construction in progress ......................................... 55 55
------- -------
7,036 7,036
Less accumulated depreciation and amortization ................... 4,564 4,564
------- -------
2,472 2,472
INTANGIBLE PENSION ASSETS ........................................ 375 375
OTHER ASSETS ..................................................... 795 795
OTHER ASSETS OF DISCONTINUED OPERATIONS .......................... 702 702
------- -------
$14,429 $14,429
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF SEPTEMBER 30, 1996
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt .............................................................................. $ 4,733 $ 4,733
Current portion of long-term debt and leases ................................................. 573 573
Accounts payable ............................................................................. 1,920 1,920
Accrued expenses ............................................................................. 2,008 2,008
Current liabilities of discontinued operations ............................................... 738 738
------- -------
TOTAL CURRENT LIABILITIES ............................................................ 9,972 9,972
LONG-TERM DEBT ............................................................................... 1,301 1,301
PENSION OBLIGATIONS .......................................................................... 249 249
OTHER LONG-TERM LIABILITIES .................................................................. 345 345
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $.01 stated value, outstanding
As Reported, 837,595 and Pro Forma, none ............................................. 8 --
Common Stock, par value $1
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C> <C> <C>
Authorized shares ...................................... 11,848,106 11,848,106
Reserved shares ........................................ 944,195 106,600
Issued (including treasury) ............................ 1,863,939 3,287,851 1,864 3,288
<CAPTION>
Additional paid-in capital ................................................................... 30,345 28,929
Accumulated deficit .......................................................................... (26,721) (26,721)
Unrecognized net loss on pension plans ....................................................... (1,309) (1,309)
Cumulative foreign currency translation adjustment ........................................... (31) (31)
------- -------
4,156 4,156
Less cost of treasury shares, 62,105 Common shares ........................................... 1,594 1,594
------- -------
TOTAL STOCKHOLDERS' EQUITY ........................................................... 2,562 2,562
------- -------
$14,429 $14,429
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Dollars in thousands (except per share data)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
NET SALES .......................................... $18,182 $18,182
------- -------
Cost and expenses:
Cost of sales .............................. 11,560 11,560
Selling, shipping and advertising .......... 2,617 2,617
General and administrative ................. 2,487 2,487
Depreciation and amortization .............. 275 275
------- -------
16,939 16,939
------- -------
EARNINGS BEFORE INTEREST AND OTHER ITEMS ........... 1,243 1,243
------- -------
Other expense:
Interest expense ........................... 581 581
Non-recurring charge ....................... 434 434
Other-net .................................. 89 89
------- -------
1,104 1,104
------- -------
EARNINGS BEFORE INCOME TAXES ....................... 139 139
Income tax benefits - net .......................... 221 221
------- -------
NET EARNINGS ....................................... $ 360 $ 360
======= =======
EARNINGS PER COMMON SHARE:
Assuming no dilution ....................... $ 0.13 $ 0.11
======= =======
Assuming full dilution ..................... $ 0.13 N/A
======= =======
</TABLE>
<PAGE>
RONSON CORPORATION
OFFER TO EXCHANGE
Common Stock
for
12% Cumulative Convertible Preferred Stock at a ratio
of 1.7 shares of Common Stock for each share of Preferred Stock
THE EXCHANGE OFFER AND THE WITHDRAWAL RIGHTS WILL EXPIRE AT 5:OO P.M., NEW YORK
CITY TIME, ON DECEMBER 16, 1996, UNLESS EXTENDED.
Ronson Corporation (the "Company") hereby offers, upon the terms and
subject to the conditions set forth in this Offering Circular (the "Circular")
and in the accompanying Letter of Transmittal (the "Letter of Transmittal",
which together with this Circular, constitute the "Exchange Offer"), to exchange
up to 1,423,912 aggregate shares of its Common Stock for all of the 837,595
issued and outstanding shares of its 12% Cumulative Convertible Preferred Stock,
no par value (the "Preferred Stock").
For each share of Preferred Stock so exchanged, the Company will issue
1.7 shares of Common Stock. Fractional shares or scrip will not be issued.
Payment for fractional shares will be based on the price of the Common shares as
of the date of first acceptance of shares tendered. No payment will be made on
account of any outstanding dividend arrearage on Preferred shares exchanged.
Thus, as part of the exchange, each accepting Preferred shareholder will
relinquish, in addition to shares of Preferred Stock, the right to receive all
accumulated and unpaid dividends, which amounts to about $0.9103 per share as of
the date of this Circular. The precise amount of dividends being relinquished
will depend on the date of first acceptance by the Company of shares of
Preferred Stock tendered in the Exchange Offer.
The Exchange Offer is intended to provide an economic incentive to the
Preferred shareholders to exchange their Preferred shares for Common shares. In
the absence of the Exchange Offer, upon conversion of a Preferred share, a
Preferred shareholder would receive one share of Common Stock. If the Company
redeemed shares of Preferred Stock, a Preferred shareholder would receive a cash
redemption price of $2.25, plus all unpaid dividend arrearages on the Preferred
shares (totaling $3.1603 as of the date of this Circular). The Company believes
the Exchange Offer will enable the holders of Preferred shares to obtain, for
each Preferred share, a value exceeding the market price of the Preferred shares
prior to the announcement of the Exchange Offer, and exceeding the per share
cash redemption price plus all unpaid dividend arrearages.
The Exchange Offer is conditioned on the receipt of tenders of a
minimum of 550,000 Preferred shares out of the total of 837,595 Preferred shares
outstanding. Of the total outstanding Preferred shares, a total of 219,070 are
owned by Directors and officers of the Company, each of whom has stated that
they will tender their shares in accordance with the Exchange Offer. The Ronson
Corporation Retirement Plan, the Company's primary pension plan, which holds
91,487 shares of Preferred Stock, is restricted from accepting the Exchange
Offer at this time, due to constraints imposed by the Employee Retirement Income
Security Act. The Company intends to make an application to the United States
Department of Labor ("DOL") to permit the plan to participate in the Exchange
Offer. The Company retains the right to accept all Preferred shares tendered if
the minimum number of shares is not reached. See "The Exchange Offer - Terms of
the Exchange Offer" p.22. The Exchange Offer is also subject to certain
additional conditions. See "The Exchange Offer - Conditions of the Exchange
Offer" p.31.
<PAGE>
Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all shares of Preferred Stock validly tendered prior to
5:00 p.m., New York City time, on December 16, 1996 or, if the Exchange Offer is
extended by the Company, the latest time and date to which it is extended.
Tenders are irrevocable, except that shares of Preferred Stock tendered and not
accepted for exchange may be withdrawn at any time after 40 business days from
the date of this Circular. The Company reserves the right to waive the minimum
share condition and accept all shares tendered. A holder of shares of Preferred
Stock who desires to tender such shares and whose certificates for such shares
are not immediately available, or who cannot comply in a timely manner with the
procedure for book-entry transfer, may tender such shares of the Preferred Stock
by following the procedures for guaranteed delivery set forth in "The Exchange
Offer - Guaranteed Delivery Procedures" p.27. For a description of the other
terms of the Exchange Offer, see "The Exchange Offer" p.22.
See "Comparison of Common Stock and Preferred Stock - Description of
Preferred Stock" p.34, "Risk Factors" p.12, "Special Factors" p.35 and "The
Exchange Offer - Certain Federal Income Tax Consequences" p.33 for a description
of the principal terms of and certain significant considerations relating to the
Exchange Offer and the Preferred Stock.
FOR FEDERAL INCOME TAX PURPOSES, A PORTION OF THE CONSIDERATION RECEIVED
IN THE EXCHANGE MAY BE TAXABLE, AS A DIVIDEND, TO THE EXTENT DESCRIBED IN DETAIL
IN "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" p.33.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD EXCHANGE ANY OR ALL OF SUCH
SHAREHOLDER'S SHARES OF THE PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER. THE
COMPANY'S DIRECTORS AND OFFICERS HAVE STATED THEIR INTENTION TO TENDER THEIR
SHARES SUBJECT TO THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER. SHAREHOLDERS
MUST MAKE THEIR OWN DECISIONS WHETHER TO EXCHANGE THEIR SHARES OF THE PREFERRED
STOCK.
The date of this Circular is November 15, 1996.
The shares of the Preferred Stock and Common Stock are listed on the
Nasdaq SmallCap Market. On November 12, 1996, three trading days prior to the
commencement of the Exchange Offer, the reported price of the shares of the
Preferred Stock as reported on the Nasdaq SmallCap Market was $2.00 per share.
Holders of shares of the Preferred Stock are urged to obtain current market
quotations.
Morrow & Co., Inc. (the "Information Agent") is acting as Information
Agent in connection with the Exchange Offer. Questions and requests for
assistance may be directed to the Information Agent, as set forth on the back
cover of this Circular. Requests for copies of this Circular, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent.
No person has been authorized to make any recommendation on behalf of
the Company as to whether shareholders should tender or refrain from tendering
the shares of the Preferred Stock pursuant to the Exchange Offer, other than
those contained in this Circular or in the Letter of Transmittal. If given or
made, such information or representation may not be relied upon as having been
authorized by the Company.
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<PAGE>
The Company is not aware of any jurisdiction in which the making of the
Exchange Offer is not in compliance with applicable law. If the Company becomes
aware of any jurisdiction in which the making of the Exchange Offer would not be
in compliance with applicable law, the Company will make a good faith effort to
comply with such law. If, after a good faith effort, the Company cannot comply
with any such law, the Exchange Offer will not be made to (nor will tenders be
accepted from or on behalf of) holders residing in such jurisdictions. In any
jurisdiction where the securities, blue sky or other laws require the Exchange
Offer to be made by a licensed broker or dealer, the Exchange Offer will be
deemed to be made on behalf of the Company by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Neither the delivery of this Circular nor any exchange made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any time subsequent to the date hereof or that
there has been no change in the information set forth herein or in the affairs
of the Company since the date hereof.
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<PAGE>
TABLE OF CONTENTS
Page
----
Available Information 5
Incorporation of Certain Documents by Reference 5
Offering Circular Summary 6
Description of Business 9
Risk Factors 12
Financial Information 14
The Exchange Offer 22
Comparison of Common Stock and Preferred Stock 34
Special Factors 35
Market and Trading Information 37
Transactions and Arrangements Concerning
the Shares of the Preferred Stock 38
Exchange Agent and Information Agent 39
Appendix A. Ronson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 A-1
Appendix B. Ronson's Quarterly Report on Form 10-Q for the
quarter and nine months ended September 30, 1996 B-1
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<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission") an Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule
13E-4", which term shall encompass all amendments, exhibits, annexes and
schedules thereto), under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder, which
includes certain additional information relating to the Exchange Offer. This
Circular does not contain all the information set forth in the Schedule 13E-4,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission, and to which reference is hereby made. Statements made in
this Circular as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
THIS OFFERING CIRCULAR HAS BEEN PREPARED SOLELY FOR, AND SHOULD BE USED
ONLY IN CONNECTION WITH, THE EXCHANGE OFFER DESCRIBED HEREIN IN RELIANCE UPON
THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(THE "SECURITIES ACT") AFFORDED BY SECTION 3(A)(9) THEREOF. THE COMPANY,
THEREFORE, WILL NOT PAY ANY COMMISSION OR OTHER REMUNERATION TO ANY BROKER,
DEALER, SALESMAN OR OTHER PERSON FOR SOLICITING THE EXCHANGE OF ANY
SHAREHOLDER'S SHARES OF PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER. THE
COMPANY HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY BROKER, SALESMAN OR OTHER
PERSON TO SOLICIT TENDERS OF PREFERRED SHARES.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995 (the "1995 Form 10-K"), and its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (the "Form 10-Q"), filed by the Company with
the Commission pursuant to the Exchange Act, are attached to this Circular as
Appendices A and B, respectively, and are incorporated herein by this reference.
Any documents filed by the Company pursuant to Sections 13(a) and (c)
and 14 of the Exchange Act after the date of this Circular and prior to the
Expiration Time shall be deemed to be incorporated by reference into this
Circular and to be made a part hereof. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference shall be deemed
to be modified or superseded for purposes of this Circular to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement.
The Company undertakes to provide, without charge, to each person to
whom this Circular is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents, other than the documents that are
attached as Appendices to this Circular, that have been incorporated in this
Circular by reference (but excluding the exhibits to any such incorporated
documents). Any such requests should be directed to Morrow & Co., Inc.,
telephone 1-800-566-9058.
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<PAGE>
OFFERING CIRCULAR SUMMARY
The following summary does not purport to be complete and is qualified
in its entirety by the detailed information appearing elsewhere in this Circular
or by documents incorporated by reference into the Circular. Capitalized terms
used herein have the respective meanings ascribed to them elsewhere in this
Circular.
SUMMARY OF THE EXCHANGE OFFER
The Company
The Company was incorporated in 1928 and is engaged principally in the
businesses of manufacturing and selling consumer products and in aviation
operations and services. The consumer products business, Ronson Consumer
Products Corporation in Woodbridge, New Jersey, and Ronson Corporation of
Canada, Ltd., in Mississauga, Ontario, Canada, includes lighters, lighter fluid,
flints and other products which are distributed by Ronson throughout the United
States, Canada and Mexico. The Company's aviation services business, Ronson
Aviation, Inc., provides general aviation services out of Trenton-Mercer
Airport, Trenton, New Jersey.
Terms of the Exchange Offer
The Preferred shareholders are being offered the opportunity to exchange each of
their shares of Preferred Stock for 1.7 shares of Common Stock in the Exchange
Offer. In the absence of the Exchange Offer, upon conversion of a share of
Preferred Stock, a Preferred shareholder currently would receive one share of
Common Stock. See "The Exchange Offer - Terms of the Exchange Offer" p.22.
Purpose and Effect of the Exchange Offer
The Exchange Offer will enable holders of Preferred Stock to obtain value (based
on the Nasdaq SmallCap Market close on November 12, 1996) exceeding both the
market price of the Preferred Stock prior to the announcement of the Exchange
Offer and the amount of the per share cash redemption value plus unpaid dividend
arrearages ($3.1603) as of November 15, 1996 on the Preferred Stock. They will
also receive more shares of Common Stock than they would have received if they
converted their shares of Preferred Stock into Common Stock. See "The Exchange
Offer - Purpose and Effect of the Exchange Offer" p.22. The Exchange Ratio was
determined by the Board of Directors in order to provide an economic incentive
to the Preferred shareholders to exchange their shares of Preferred Stock for
shares of Common Stock. The Board also considered, among other things, the
relative trading ranges of the Common Stock and the Preferred Stock preceding
the date of determination. The Company believes the Exchange Offer will enhance
the Company's financial position and ability to capitalize on opportunities for
continued growth.
The principal effects of acceptance of the Exchange Offer, among other things,
are that the tendering Preferred shareholders:
(a) will currently receive 1.7 shares of Common Stock upon exchange of a share
of Preferred Stock as compared to, upon conversion, one share of Common Stock,
subject to future adjustments for certain other events, but
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<PAGE>
(b) will relinquish all of the existing rights and preferences of the Preferred
Stock exchanged in the Exchange Offer, including but not limited to, (i) the
right to cumulative dividends, if and when paid, at the rate of $0.21 per
Preferred share per annum, (ii) the right, upon conversion, to receive for each
Preferred share converted, one share of Common Stock, subject to future
adjustments for certain other events, and (iii) a liquidation preference of
$1.75 per Preferred share (plus accumulated and unpaid dividends thereon). See
"Comparison of Common Stock and Preferred Stock--Description of Preferred Stock"
p.34.
Acceptance Not Mandatory
Preferred shareholders are free to exchange or not exchange their shares of
Preferred Stock for shares of Common Stock in the Exchange Offer and may tender
all of their Preferred Stock by properly completing and delivering a Letter of
Transmittal, together with their Preferred shares, to the Exchange Agent. No
vote of the Preferred shareholders is required in connection with the Exchange
Offer.
Intention of Directors and Officers
The Company's Directors and officers have stated their intention to tender their
shares of Preferred Stock subject to the terms and conditions of the Exchange
Offer. The Ronson Corporation Retirement Plan, the Company's primary pension
plan, which holds 91,487 shares of Preferred Stock is restricted from accepting
the Exchange Offer at this time, due to constraints imposed by the Employee
Retirement Income Security Act. The Company intends to make an application to
the United States Department of Labor ("DOL") to permit the plan to participate
in the Exchange Offer. Shareholders must make their own decisions whether to
exchange their shares of the Preferred Stock.
Possible Negative Consequences of Not Tendering
(a) There can be no assurance that the Company will reinstate the dividends or
pay any dividend arrearages on any remaining Preferred Stock after completion of
the Exchange Offer. See "The Summary - Acceptance Not Mandatory" p.7 and "The
Exchange Offer - Procedure for Tendering" p.25.
(b) The exchange of shares of the Preferred Stock pursuant to the Exchange Offer
will reduce the number of shares of the Preferred Stock that might otherwise
trade publicly and the number of holders of such shares, and depending on the
number of shares exchanged, could adversely affect the liquidity and market
value of remaining shares held by the public. See "Risk Factors - Listing and
Trading of Common Stock and Preferred Stock" p.13.
(c) Due to the number of shares of Preferred Stock exchanged pursuant to the
Exchange Offer, the Preferred Stock may no longer meet the requirements of the
NASD for continued listing and may no longer continue to be registered under the
Exchange Act. As a result, the market for the Preferred Stock could be adversely
affected. See "Risk Factors - Listing and Trading of Common Stock and Preferred
Stock" p.13.
(d) Any shares of Preferred Stock remaining outstanding after the Exchange Offer
has expired will continue to be redeemable at the option of the Company. See
"Description of Preferred Stock Redemption Rights" p.34.
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<PAGE>
Procedure for Exchanging Preferred Stock
For a Preferred shareholder to exchange his or her shares of Preferred Stock for
shares of Common Stock pursuant to the Exchange Offer, the shares hereby being
exchanged, together with a properly completed and duly executed Letter of
Transmittal, any required signature guarantees, and any other documents required
by the Letter of Transmittal, must be received on or prior to the Expiration
Time by the Exchange Agent at one of the addresses set forth on the back cover
of this Circular. No alternative, conditional, contingent or partial tenders
will be accepted. See "The Exchange Offer - Procedure for Tendering" p.25.
Withdrawal Rights
Tenders are irrevocable, except that any Preferred Stock tendered pursuant to
the Exchange Offer and not accepted for exchange by the Company, may be
withdrawn at anytime after 12:00 Midnight, New York City time, on January 15,
1997 (such date and time being the expiration of 40 business days from the
commencement of the Exchange Offer). See "The Exchange Offer - Expiration;
Extension; Termination; Amendment; Withdrawal Rights and Conditions" p.23; and
"The Exchange Offer - Withdrawal Rights" p.29.
Conditions of the Exchange Offer
The completion of the Exchange Offer is subject to certain conditions, including
that at least 550,000 of the Preferred shares be validly tendered and not
withdrawn prior to the Expiration Time. The Company retains the right to accept
all Preferred shares tendered if the minimum number of shares is not reached.
See "The Exchange Offer - Conditions of the Exchange Offer" p.31 and "The
Exchange Offer - Expiration; Extension; Termination; Amendment; Withdrawal
Rights and Conditions" p.23.
Expiration Time; Extension of the Exchange Offer
The Exchange Offer will expire at 5:00 p.m., New York City time, on December 16,
1996, unless extended by the Company (the "Expiration Time"), and is subject to
prior termination, extension and amendment by the Company. See "The Exchange
Offer - Expiration; Extension; Termination; Amendment; Withdrawal Rights and
Conditions" p.23.
Certain Federal Income Tax Consequences
For Federal income tax purposes, a portion of the consideration received in the
exchange may be taxable, as a dividend, to the extent described in detail in
"The Exchange Offer - Certain Federal Income Tax Consequences" p.33. For a
summary of certain Federal income tax consequences of the Exchange Offer, see
"The Exchange Offer - Certain Federal Income Tax Consequences" p.33.
Market Price of Common Stock and Preferred Stock
The Common Stock and Preferred Stock are listed on the Nasdaq SmallCap Market.
On November 12, 1996, three trading days prior to the announcement of the
Exchange Offer, the closing sale prices per share of the Common Stock and
Preferred Stock were $2.00 and $2.00, respectively. PREFERRED SHAREHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK AND THE
PREFERRED STOCK. SEE "MARKET AND TRADING INFORMATION" p.37.
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<PAGE>
No Brokerage or Other Fees
Tendering holders will not be obligated to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal with respect to special
issuance instructions, transfer taxes with respect to the exchange of shares of
Preferred Stock pursuant to the Exchange Offer. Tendering holders whose shares
are held by a broker, dealer, bank or trust company may, however, be charged a
fee for services rendered in connection with the Exchange Offer.
DESCRIPTION OF BUSINESS
The Company
The Company was incorporated in 1928, and is engaged principally in the
following businesses:
1. Consumer Products; and
2. Aviation-Fixed Wing Operations and Services and Helicopter Services.
Consumer Products
The Company's consumer packaged products, which are distributed in the
United States by the Company's wholly owned subsidiary, Ronson Consumer Products
Corporation ("RCPC"), include "Ronsonol" lighter fluid, "Multi-Fill" butane
injectors, flints, wicks for lighters, a multi-use penetrant spray lubricant
product under the trademark "Multi-Lube", a spot remover under the product
trademark "Kleenol", and a surface protectant under the trademark "GlossTek". In
addition, the Company's consumer packaged products are marketed in Canada
through Ronson Corporation of Canada, Ltd. ("Ronson-Canada"), a wholly owned
subsidiary of the Company. RCPC and Ronson-Canada together comprise Ronson
Consumer Products. The Company also distributes its consumer products in Mexico.
The consumer products are distributed through distributors, food
brokers, automotive and hardware representatives and mass merchandisers, drug
chains and convenience stores in the United States and Canada. Ronson Consumer
Products is a principal supplier of packaged flints and lighter fuels in the
United States, Canada and Mexico. These subsidiaries' consumer products face
substantial competition from other nationally distributed products and from
numerous local and private label packaged products. Since Ronson Consumer
Products produces products in accordance with its sales forecasts, which are
frequently reviewed and revised, inventory accumulation has not been a
significant factor, and this segment does not have a significant order backlog.
The sources and availability of raw materials for this segment's packaged
products are not significant factors.
Ronson Consumer Products also distributes three lighter products - the
RONII refillable butane lighter, the Ronson liquid fuel windproof lighter, and
the Ronson "Varaflame Ignitor", used for lighting fireplaces, barbecues, camping
stoves and candles. The lighter products are marketed in the United States,
Canada and Mexico, except that the windproof lighter is marketed only in the
United States.
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<PAGE>
On January 1, 1995, Ronson Consumer Products introduced a new lighter
product, the RONII refillable butane lighter, in both the United States and
Canada. The RONII is a pocket lighter that meets the new child resistant
requirements issued by the Consumer Product Safety Commission. The RONII is
manufactured for the Company in Spain and is sold through the Company's
distribution channels. The RONII is priced competitively but has strong
competition from several brands of disposable lighters and unbranded imports
from China and other Far Eastern countries.
The windproof lighter and Varaflame Ignitor are manufactured in Korea in
accordance with the design specifications of the Company. The Company has the
exclusive right to market these products in the United States, Canada and
Mexico, and does so through its distribution channels. The windproof lighter
faces strong competition and uses Ronson flints, wicks and Ronsonol lighter
fuel. The Varaflame Ignitor is refillable with Ronson butane refills and is less
expensive than most other refillable ignitors. The Varaflame Ignitor encounters
strong competition from imported disposable ignitors.
Aviation - Fixed Wing Operations And Services and Helicopter Services
Ronson Aviation, Inc. ("Ronson Aviation"), a wholly owned subsidiary of
the Company, headquartered at Trenton-Mercer Airport, Trenton, New Jersey,
provides a wide range of general aviation services to the general public and to
government agencies. Services include air charter, air cargo, cargo handling,
avionics, management aviation services, flight training, new and used aircraft
sales, aircraft repairs, aircraft fueling, storage and office rental. This
subsidiary's facility is located on 18 acres, exclusive of four acres on which
Ronson Aviation has a first right of refusal, and includes a 52,000 square foot
hangar/office complex, two aircraft storage units ("T" hangars), and a 48,500
gallon fuel storage complex. In its passenger and cargo services, Ronson
Aviation operates a total of 13 aircraft, including five twin-engine airplanes
in charter operations and eight single-engine airplanes in the flight school and
rental fleet. Ronson Aviation is an FAA approved repair station for major and
minor airframe and engine repairs and an avionics repair station for repairs and
installations. Ronson Aviation is an authorized Beech Aircraft and Parts Sales
and Service Center; a dealer for the Grob trainer aircraft manufactured in
Germany; a customer service facility for Bell Helicopter Textron; and is an
authorized service center for Allison, Pratt & Whitney and Garrett engines.
Ronson Aviation is subject to extensive competition in its air charter
activities, but Ronson Aviation is the only provider of aviation services to the
private, corporate and commercial flying public at Trenton-Mercer Airport in
Trenton, New Jersey.
Recent Developments
Prior to October 2, 1995, the Company's Common and Preferred shares were
quoted by the National Association of Securities Dealers, Inc. ("NASD") through
its Electronic Bulletin Board. On October 2, 1995, the Company's Common shares
were listed on the Nasdaq SmallCap Market, and on December 1, 1995, the
Company's Preferred shares were listed on the Nasdaq SmallCap Market. The
Company's Common shares are quoted under the symbol RONC and the Preferred
shares under the symbol RONCP.
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<PAGE>
In December 1989, the Company adopted a plan to discontinue the
operations of Ronson Metals Corporation ("Ronson Metals"), Newark, New Jersey,
one of the Company's wholly owned subsidiaries. Ronson Metals had sizable losses
in several years prior to 1987 with reduced losses continuing in 1987 through
1989. In 1990, operations ceased at Ronson Metals, and Ronson Metals began
complying with the New Jersey Industrial Site Recovery Act ("ISRA"), formerly
the New Jersey Environmental Clean-up Responsibility Act ("ECRA"), and all other
applicable laws. As part of the plan to sell the properties of the Ronson Metals
discontinued operations, Ronson Metals has also been involved in termination of
its United States Nuclear Regulatory Commission ("NRC") license. Compliance with
ISRA and NRC requirements has continued through 1995 and into 1996. Although the
Company believes that it has accrued for all future costs, the full extent of
the costs and time required is not determinable until additional testing and
remediation, if any, has been completed and accepted by the New Jersey
Department of Environmental Protection and the NRC.
In October 1993, the Company sold its hydraulic units business in
Charlotte, North Carolina, to Kaiser Aerospace and Electronics Corporation
("Kaiser"). The sale of the assets and business of Ronson Hydraulic Units
Corporation ("Ronson Hydraulics"), Charlotte, North Carolina, was for
approximately $11,300,000, including the assumption by Kaiser of certain
liabilities. The sale resulted in a net gain to the Company of $3,916,000. The
Company utilized a portion of the proceeds to repay its long-term debt to its
former principal lender, Foothill Capital Corporation, of approximately
$5,000,000 in total. In January 1995, the Company obtained financing of
$2,225,000 from Summit Bank, formerly known as United Jersey Bank, consisting of
a $2,000,000 line of credit and a $225,000 term loan. In December 1995, Summit
Bank granted the Company a mortgage loan in the amount of $1,300,000.
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<PAGE>
RISK FACTORS
In addition to other information in this Circular, the following risk
factors should be considered carefully in evaluating the Company and its
business before making any decision to exchange shares of Preferred Stock for
shares of Common Stock.
Loss of Rights and Privileges of Preferred Shareholders Who Exchange
Their Shares in the Exchange Offer. As described below, a Preferred shareholder
who exchanges all or a portion of his or her Preferred Stock for Common Stock
will no longer own the Preferred Stock exchanged and, consequently, will no
longer be entitled to any of the rights and privileges of the Preferred Stock,
including but not limited to, the fixed cumulative dividends payable thereon,
and the liquidation preference therefor, as follows:
Loss of Cumulative Quarterly Dividend. Dividends on the Preferred
Stock are payable at the rate of $0.21 per share per annum, quarterly,
on the fifteenth day of January, April, July and October of each year,
when, as and if declared by the Board of Directors. Dividends not paid
accumulate daily and all accumulated dividends must be paid before any
dividends are declared or paid on the Common Stock. By exchanging
Preferred Stock as provided herein, the Preferred shareholders are
waiving their rights to receive any accumulated and unpaid dividends on
the Preferred Stock ($0.9103 per Preferred share as of November 15,
1996). The Board of Directors has not declared a dividend on Preferred
shares since April 15, 1994, and since that date dividends on the
Preferred shares have accumulated. There can be no assurance that the
Company will reinstate the dividends or pay any dividend arrearages on
any remaining Preferred Stock after completion of the Exchange Offer.
Loss of Liquidation Preference. Upon liquidation, dissolution or
winding up of the Company, holders of Preferred Stock are entitled to
receive liquidation distributions equivalent to $1.75 per share (plus
accumulated and unpaid dividends) before any distribution to holders of
the Common Stock or any capital stock ranking junior to the Preferred
Stock. See "Comparison of Common Stock and Preferred Stock-Description
of Preferred Stock" p.34. By exchanging their Preferred Stock for Common
Stock as provided herein, the Preferred shareholders will relinquish
their right to such liquidation preference.
Right of Redemption. The Company has the right to redeem outstanding
shares of Preferred Stock, on thirty days notice, at a price of $2.25 per share
plus accrued dividends ($3.1603 per share as of November 15, 1996). Shares not
exchanged pursuant to the Exchange Offer will continue to be subject to such
right of redemption.
No Dividends on Common Stock. The Company has not paid any dividends on
its Common Stock since 1975, and does not expect to pay any dividends on its
Common Stock in the foreseeable future. See "The Exchange Offer - Dividends on
Common Shares" p.23.
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<PAGE>
Certain Legal Matters; Regulatory and Foreign Approvals; No Appraisal
Rights. The Company is not aware of any license or regulatory permit that
appears to be material to its business that might be adversely affected by its
exchange of shares of the Preferred Stock for Common Stock as contemplated in
the Exchange Offer or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the Company's exchange of shares of the
Preferred Stock pursuant to the Exchange Offer. Should any such approval or
other action be required, the Company currently contemplates that it will seek
such approval or other action. The Company cannot predict whether it may
determine that it should delay the acceptance of shares of the Preferred Stock
tendered pursuant to the Exchange Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained, or would be obtained without substantial conditions, or that
the failure to obtain any such approval or other action might not result in
adverse consequences to the Company's business. The Company intends to make all
required filings under the Exchange Act.
There is no shareholder vote required in connection with the Exchange
Offer.
No appraisal rights are available to holders of shares of the Preferred
Stock in connection with the Exchange Offer.
Certain Federal Income Tax Consequences. For Federal income tax
purposes, a portion of the consideration received in the exchange may be
taxable, as a dividend, to the extent described in detail in "The Exchange
Offer-Certain Federal Income Tax Consequences" p.33.
Listing and Trading of Common Stock and Preferred Stock. The exchange of
shares of the Preferred Stock pursuant to the Exchange Offer will reduce the
number of shares of the Preferred Stock that might otherwise trade publicly and
the number of holders of such shares, and depending on the number of shares
exchanged, could adversely affect the liquidity and market value of remaining
shares held by the public.
Due to the reduced number of shares of the Preferred Stock exchanged
pursuant to the Exchange Offer, the Preferred Stock may no longer meet the
requirements of the NASD for continued listing. If, as a result of the exchange
of shares of the Preferred Stock pursuant to the Exchange Offer or otherwise,
the shares of the Preferred Stock no longer meet the requirements of the NASD
for continued listing and the listing of the shares of the Preferred Stock is
discontinued, the market for the Preferred Stock could be adversely affected.
The Preferred Stock is currently registered under the Exchange Act.
Registration of the Preferred Stock may be terminated upon application of the
Company to the Commission pursuant to Section 12(g)(4) of the Exchange Act if
the shares of the Preferred Stock are neither held by 300 or more holders of
record nor listed on a national securities exchange. Termination of registration
of the Preferred Stock under the Exchange Act would substantially reduce the
information required to be furnished by the Company to the holders of shares of
Preferred Stock (although the Company would, among other things, remain subject
to the reporting obligations under the Exchange Act as a result of its other
outstanding securities) and would make certain provisions of the Exchange Act,
such as the requirements of Rule 13e-3 thereunder with respect to "going
private" transactions, no longer applicable in respect of the Preferred Stock.
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<PAGE>
FINANCIAL INFORMATION
Annexed hereto are the following:
Appendix A. Ronson's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
Appendix B. Ronson's Quarterly Report on Form 10-Q for the quarter and
nine months ended September 30, 1996.
The following table sets forth certain financial information with
respect to the Company:
(a) Ratio of earnings to fixed charges for the two most recent
fiscal years and for the interim periods.
(b) Book value per Common share as of the most recent fiscal year
and as of the latest interim balance sheet.
(c) Pro forma data reflecting the effect of the tender offer on:
(1) the Company's balance sheets as of December 31, 1995 and
September 30, 1996, and
(2) the Company's statements of operations, earnings per share
amount and ratio of earnings to fixed charges for the year ended
December 31, 1995 and for the quarter and nine months ended
September 30, 1996.
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
ACTUAL PRO FORMA
------ ---------
<S> <C> <C>
Fiscal year ended December 31,
1995 2.11 to 1 2.77 to 1
1994 2.06 to 1
Nine months ended September 30,
1996 1.01 to 1 1.24 to 1
1995 2.89 to 1
BOOK VALUE PER COMMON SHARE
As of December 31, 1995 $(0.26) $0.64
As of September 30, 1996 $(0.04) $0.79
</TABLE>
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<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF DECEMBER 31, 1995
Dollars in thousands
ASSETS AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT ASSETS:
Cash ........................................................................... $ 64 $ 64
Accounts receivable, less allowances for doubtful accounts of $86 .............. 1,940 1,940
Inventories:
Finished goods ......................................................... 5,501 5,501
Work in process ........................................................ 177 177
Raw materials .......................................................... 700 700
------- -------
6,378 6,378
Other current assets ........................................................... 783 783
Current assets of discontinued operations ...................................... 187 187
------- -------
TOTAL CURRENT ASSETS ................................................... 9,352 9,352
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land ........................................................................... 19 19
Buildings and improvements ..................................................... 3,477 3,477
Machinery and equipment ........................................................ 2,995 2,995
Construction in progress ....................................................... 45 45
------- -------
6,536 6,536
Less accumulated depreciation and amortization ................................. 4,370 4,370
------- -------
2,166 2,166
INTANGIBLE PENSION ASSETS ...................................................... 419 419
OTHER ASSETS ................................................................... 764 764
OTHER ASSETS OF DISCONTINUED OPERATIONS ........................................ 702 702
------- -------
$13,403 $13,403
======= =======
</TABLE>
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<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF DECEMBER 31, 1995
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt .......................................................................... $4,472 $4,472
Current portion of long-term debt ........................................................ 211 211
Current portion of lease obligations ..................................................... 40 40
Current portion of pension obligations ................................................... 280 280
Accounts payable ......................................................................... 1,428 1,428
Accrued expenses ......................................................................... 1,750 1,750
Current liabilities of discontinued operations ........................................... 993 993
------ ------
TOTAL CURRENT LIABILITIES ........................................................ 9,174 9,174
LONG-TERM DEBT ........................................................................... 1,728 1,728
LONG-TERM LEASE OBLIGATIONS .............................................................. 37 37
PENSION OBLIGATIONS ...................................................................... 287 287
OTHER LONG-TERM LIABILITIES .............................................................. 78 78
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS ......................................... 65 65
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $.01 stated value, outstanding
As Reported, 847,308 and Pro Forma, none ................................................. 8 --
<CAPTION>
Common Stock, par value $1 AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C> <C> <C>
Authorized shares................................. 11,848,106 11,848,106
Reserved shares................................... 917,374 70,066
Issued (including treasury)....................... 1,820,893 3,261,317 1,821 3,261
<CAPTION>
<S> <C> <C>
Additional paid-in capital................................................................ 30,308 28,876
Accumulated deficit....................................................................... (27,081) (27,081)
Unrecognized net loss on pension plans.................................................... (1,403) (1,403)
Cumulative foreign currency translation adjustment........................................ (26) (26)
------ ------
3,627 3,627
Less cost of treasury shares, 62,087 Common shares........................................ 1,593 1,593
------ ------
TOTAL STOCKHOLDERS' EQUITY........................................................ 2,034 2,034
------ ------
$13,403 $13,403
======= =======
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31,1995
Dollars in thousands (except per share data)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
NET SALES .............................................. $ 26,953 $ 26,953
-------- --------
Cost and expenses:
Cost of sales .................................. 18,416 18,416
Selling, shipping and advertising .............. 3,340 3,340
General and administrative ..................... 3,141 3,141
Depreciation and amortization .................. 344 344
-------- --------
25,241 25,241
-------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INTEREST AND OTHER ITEMS ................ 1,712 1,712
Other expense:
Interest expense ............................... 541 541
Other - net .................................... 168 168
-------- --------
709 709
-------- --------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES ................. 1,003 1,003
Income tax benefits - net .............................. 497 497
-------- --------
EARNINGS FROM CONTINUING OPERATIONS .................... 1,500 1,500
Loss from discontinued operations (net of applicable
deferred income tax benefit of $110) ........... (860) (860)
-------- --------
NET EARNINGS ........................................... $ 640 $ 640
======== ========
(continued)
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31,1995
Dollars in thousands (except per share data)
(continued)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE:
Assuming no dilution:
Earnings from continuing operations ............ $ 0.77 $ 0.47
Loss from discontinued operations .............. (0.50) (0.27)
-------- --------
Net earnings ................................... $ 0.27 $ 0.20
======== ========
Assuming full dilution:
Earnings from continuing operations ............ $ 0.58 N/A
Loss from discontinued operations .............. (0.33) N/A
-------- --------
Net earnings ................................... $ 0.25 N/A
======== ========
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF SEPTEMBER 30, 1996
Dollars in thousands
ASSETS
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT ASSETS:
Cash ............................................................. $ 57 $ 57
Accounts receivable, less allowances for doubtful accounts of $103 1,899 1,899
Inventories:
Finished goods ........................................... 6,078 6,078
Work in process .......................................... 93 93
Raw materials ............................................ 776 776
------- -------
6,947 6,947
Other current assets ............................................. 1,182 1,182
------- -------
TOTAL CURRENT ASSETS ..................................... 10,085 10,085
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land ............................................................. 19 19
Buildings and improvements ....................................... 3,605 3,605
Machinery and equipment .......................................... 3,357 3,357
Construction in progress ......................................... 55 55
------- -------
7,036 7,036
Less accumulated depreciation and amortization ................... 4,564 4,564
------- -------
2,472 2,472
INTANGIBLE PENSION ASSETS ........................................ 375 375
OTHER ASSETS ..................................................... 795 795
OTHER ASSETS OF DISCONTINUED OPERATIONS .......................... 702 702
------- -------
$14,429 $14,429
======= =======
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEETS
AS OF SEPTEMBER 30, 1996
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt .............................................................................. $ 4,733 $ 4,733
Current portion of long-term debt and leases ................................................. 573 573
Accounts payable ............................................................................. 1,920 1,920
Accrued expenses ............................................................................. 2,008 2,008
Current liabilities of discontinued operations ............................................... 738 738
------- -------
TOTAL CURRENT LIABILITIES ............................................................ 9,972 9,972
LONG-TERM DEBT ............................................................................... 1,301 1,301
PENSION OBLIGATIONS .......................................................................... 249 249
OTHER LONG-TERM LIABILITIES .................................................................. 345 345
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $.01 stated value, outstanding
As Reported, 837,595 and Pro Forma, none ............................................. 8 --
Common Stock, par value $1
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C> <C> <C>
Authorized shares ...................................... 11,848,106 11,848,106
Reserved shares ........................................ 944,195 106,600
Issued (including treasury) ............................ 1,863,939 3,287,851 1,864 3,288
<CAPTION>
Additional paid-in capital ................................................................... 30,345 28,929
Accumulated deficit .......................................................................... (26,721) (26,721)
Unrecognized net loss on pension plans ....................................................... (1,309) (1,309)
Cumulative foreign currency translation adjustment ........................................... (31) (31)
------- -------
4,156 4,156
Less cost of treasury shares, 62,105 Common shares ........................................... 1,594 1,594
------- -------
TOTAL STOCKHOLDERS' EQUITY ........................................................... 2,562 2,562
------- -------
$14,429 $14,429
======= =======
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Dollars in thousands (except per share data)
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
NET SALES .......................................... $18,182 $18,182
------- -------
Cost and expenses:
Cost of sales .............................. 11,560 11,560
Selling, shipping and advertising .......... 2,617 2,617
General and administrative ................. 2,487 2,487
Depreciation and amortization .............. 275 275
------- -------
16,939 16,939
------- -------
EARNINGS BEFORE INTEREST AND OTHER ITEMS ........... 1,243 1,243
------- -------
Other expense:
Interest expense ........................... 581 581
Non-recurring charge ....................... 434 434
Other-net .................................. 89 89
------- -------
1,104 1,104
------- -------
EARNINGS BEFORE INCOME TAXES ....................... 139 139
Income tax benefits - net .......................... 221 221
------- -------
NET EARNINGS ....................................... $ 360 $ 360
======= =======
EARNINGS PER COMMON SHARE:
Assuming no dilution ....................... $ 0.13 $ 0.11
======= =======
Assuming full dilution ..................... $ 0.13 N/A
======= =======
</TABLE>
-21-
<PAGE>
THE EXCHANGE OFFER
Terms of the Exchange Offer
Upon the terms and subject to the conditions of the Exchange Offer, the
Company is offering to exchange up to 1,423,912 shares of Common Stock for up to
837,595 shares of Preferred Stock, which constitute all outstanding shares of
Preferred Stock as of the date of this Circular. Exchanges will be made on the
basis of 1.7 shares of Common Stock for each share of Preferred Stock validly
tendered and accepted for exchange.
Tendering holders will not be obligated to pay brokerage commissions or
fees to the Exchange Agent, the Information Agent or the Company or, subject to
the instructions in the Letter of Transmittal with respect to special issuance
instructions, transfer taxes with respect to the exchange of shares of the
Preferred Stock pursuant to the Exchange Offer, other than any charges that
individual brokerage firms or banks charge their clients for other services
rendered in connection with tendering their shares.
Pursuant to the terms and subject to the conditions of the Exchange
Offer, the Company will accept for exchange all shares of the Preferred Stock
validly tendered and not properly withdrawn prior to the Expiration Time.
The Exchange Offer is subject to the condition that a minimum of 550,000
shares of the Preferred Stock shall have been tendered and not withdrawn prior
to the Expiration Time (the "Minimum Condition"). The Company retains the right
to accept all Preferred shares tendered if the Minimum Condition is not reached.
The Exchange Offer is also subject to certain additional conditions. See "The
Exchange Offer - Conditions of the Exchange Offer" p.31.
The Company will not issue fractional shares of Common Stock upon
exchange of the Preferred shares. In lieu of issuing fractional shares, the
Company will pay for such fraction in cash, based on the closing price of the
Common Stock on the date Preferred shares are first accepted for exchange under
the Exchange Offer. No payment will be made on account of accrued dividends on
the Preferred shares.
Purpose and Effect of the Exchange Offer
The purpose of the Exchange Offer is to eliminate or substantially
reduce the number of shares of Preferred Stock outstanding and thereby reduce or
eliminate the need to pay both future and accumulated but unpaid dividends on
Preferred Stock prior to the payment of any dividend on Common Stock. The
accumulated dividend as of November 15, 1996 is $0.9103 per Preferred share.
Dividends continue to accumulate on a daily basis. The Company has not been and
does not expect for the foreseeable future to be in a position to make payment
of Preferred dividends or of the arrearages on Preferred dividends.
Description of Common Stock Offered
Voting Rights - The holders of shares of the Company's Common Stock are
entitled to one vote per share on the election of Directors and all other
questions on which shareholders are generally entitled to vote. They do not have
cumulative voting rights, or preemptive or subscription rights, and shares of
Common Stock are not redeemable, assessable or convertible.
-22-
<PAGE>
Dividends on Common Shares - Holders of shares of Common Stock are
entitled to receive dividends as and when declared by the Board of Directors of
the Company out of funds legally available therefor, except that the holders of
shares of Preferred Stock are entitled to receive cumulative dividends,
including Preferred dividends in arrears, as and when declared at the annual
rate of $0.21 per share before any dividend may be declared on Common Stock.
Election of Directors and New Jersey Statutes - The Company's Directors
are elected by a majority of the votes cast in three classes, the terms of which
expire in sequential years. Each class of Directors is elected for a three-year
term, and Directors may be removed from office only for cause and with the
affirmative vote of at least 80% of the voting power of all of the shares of the
Company's shareholders entitled to vote for the election of Directors. Under New
Jersey law, which is applicable to the Company, any action of the shareholders
other than the election of Directors may be authorized by a majority of the
votes cast at a duly called meeting of stockholders at which a quorum consisting
of the holders of shares entitled to cast a majority of votes at the meeting are
present, except for the following: (a) because the Company was incorporated
under a predecessor statute to the current New Jersey business law, the approval
of two-thirds of the votes cast is required to authorize any plan of merger or
consolidation, any amendment to the Company's Certificate of Incorporation, any
sale of all or substantially all of the assets of the Company or any plan of
dissolution; (b) the Company's Certificate of Incorporation imposes the
additional requirement that certain business combinations be approved by the
affirmative vote of the holders of at least 90% of the voting power of the
outstanding Common shares of the Company entitled to vote in the election of
Directors; and (c) the New Jersey Shareholders Protection Act N.J.S.A. 14A:10A1
et. seq. ("NJSPA") applied to business combinations of the Company. The NJSPA
imposes certain pricing and procedural requirements on business combinations and
could have the effect of delaying, deferring or preventing a change of control
of the Company.
Liquidation - Upon liquidation or other winding up of the Company,
holders of shares of Common Stock are entitled to receive, pro rata, after the
prior rights of creditors and Preferred shareholders have been satisfied, all of
the remaining assets of the Company legally available for distribution.
Expiration; Extension; Termination; Amendment; Withdrawal Rights and Conditions
The Exchange Offer will expire at 5:00 p.m., New York City time, on
December 16, 1996 unless the Company, in its sole discretion, extends the period
during which the Exchange Offer is open, in which event the Exchange Offer will
expire at the latest time and date as so extended by the Company. Tenders of
shares of the Preferred Stock pursuant to the Exchange Offer are irrevocable,
except that shares of the Preferred Stock tendered pursuant to the Exchange
Offer and not theretofore accepted for exchange pursuant to the Exchange Offer,
may be withdrawn at any time after 40 business days from the date of this
Circular. See "The Exchange Offer - Withdrawal Rights" p.29.
The Exchange Offer is subject to certain conditions, including the
Minimum Condition. See "The Exchange Offer-Conditions of the Exchange Offer"
p.31.
-23-
<PAGE>
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to the
Exchange Agent and making a public announcement thereof. There can be no
assurance that the Company will exercise its right to extend the Exchange Offer.
During any extension of the Exchange Offer, all shares of the Preferred Stock
previously tendered pursuant thereto and not exchanged or withdrawn will remain
subject to the Exchange Offer and may be accepted for exchange by the Company at
the expiration of the Exchange Offer subject to the right of a tendering holder
to withdraw its shares of the Preferred Stock. See "The Exchange Offer -
Withdrawal Rights" p.29.
The Company also expressly reserves the right, subject to applicable
law, (i) to delay acceptance for exchange of any shares of the Preferred Stock
or terminate the Exchange Offer and not accept for exchange any shares of the
Preferred Stock and promptly return all such shares to the tendering holders
thereof in the event that the Minimum Condition or any of the conditions
specified in "The Exchange Offer - Conditions of the Exchange Offer" p.31 are
not satisfied or waived by the Company or to comply in whole or in part with
applicable law, by giving oral or written notice of such delay or termination to
the Exchange Agent, (ii) to waive any condition to the Exchange Offer and accept
all shares of the Preferred Stock previously tendered pursuant thereto, (iii) to
extend the Expiration Time and retain all shares of the Preferred Stock tendered
pursuant thereto until the expiration of the Exchange Offer as extended, (iv) to
amend the Exchange Offer in any respect or (v) to modify the form or amount of
the consideration to be paid pursuant to the Exchange Offer. If the Exchange
Offer is so amended, the term "Exchange Offer" shall mean the Exchange Offer as
so amended. The reservation by the Company of the right to delay acceptance for
exchange of shares of the Preferred Stock is subject to the provisions of Rule
13e-4 and Rule 14e-1(c) under the Exchange Act, which require that the Company
pay the consideration offered or return the shares of the Preferred Stock
deposited by or on behalf of holders thereof promptly after the termination or
withdrawal of the Exchange Offer.
Any extension, delay, termination or amendment of the Exchange Offer
will be followed as promptly as practicable by a public announcement thereof.
Without limiting the manner in which the Company may choose to make a public
announcement of any extension, delay, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service, except in the case of an announcement of an extension of
the Exchange Offer, in which case the Company shall have no obligation to
publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 12:00 Noon, New York
City time, on the next business day after the previously scheduled Expiration
Time of the Exchange Offer.
-24-
<PAGE>
If the Company shall decide, in its sole discretion, to decrease the
number of shares of the Preferred Stock being sought in the Exchange Offer or to
increase or decrease the consideration offered to holders of shares of the
Preferred Stock to be paid in the Exchange Offer and if, at the time that notice
of such increase or decrease is first published, sent or given to holders of
shares of the Preferred Stock in the manner specified above, the Exchange Offer
is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from and including the date that such notice is
first so published, sent or given, the Exchange Offer will be extended until the
expiration of such period of ten business days. As used in this paragraph,
"business day" has the meaning set forth in Rule 14d-1 (and applicable to
Regulation 14E) under the Exchange Act.
If the Company makes a material change in the terms of the Exchange
Offer or the information concerning the Exchange Offer, or waives any condition
of the Exchange Offer that results in material change to the circumstances of
the Exchange Offer, the Company will disseminate additional Exchange Offer
materials to the extent required under the Exchange Act, and will extend the
Exchange Offer to the extent required in order to permit holders of the shares
of the Preferred Stock adequate time to consider such materials. The minimum
period during which the Exchange Offer must remain open following material
changes in the terms of the Exchange Offer or information concerning the
Exchange Offer, other than a change in price or percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information.
Procedure for Tendering
The acceptance by a holder of shares of the Preferred Stock of the
Exchange Offer pursuant to one of the procedures set forth below will constitute
an agreement between the holder of such shares and the Company in accordance
with the terms and subject to the conditions set forth in this Circular and in
the Letter of Transmittal.
No partial tenders will be accepted. For shares of the Preferred Stock
to be validly tendered pursuant to the Exchange Offer, the Letter of
Transmittal, properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as hereinafter defined) in connection with a
book-entry transfer of shares of the Preferred Stock, and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth on the back cover page of this Circular prior to the Expiration Time. In
addition, either (i) the certificates representing tendered shares of the
Preferred Stock must be received by the Exchange Agent or such shares of the
Preferred Stock must be tendered pursuant to the procedure for book-entry
transfers described below and a confirmation of receipt of such tendered shares
of the Preferred Stock must be received by the Exchange Agent, in each case
prior to the Expiration Time, or (ii) the tendering holder must comply with the
guaranteed delivery procedures described below.
The method of delivery of shares of the Preferred Stock, the Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the holder tendering such shares and, except as otherwise
provided herein, the delivery will be deemed made only when actually received by
the Exchange Agent. If sent by mail, it is recommended that the holder use
properly insured registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the Expiration Time to permit
delivery to the Exchange Agent on or before the Expiration Time.
-25-
<PAGE>
If a holder desires to tender shares of the Preferred Stock pursuant to
the Exchange Offer but is unable to locate the certificates representing such
shares to be tendered, such holder should write to or telephone the Exchange
Agent, Registrar and Transfer Company, telephone number 1-800-368-5948, about
procedures for obtaining a replacement certificate for shares of the Preferred
Stock and arranging for indemnification.
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING SHARES OF
PREFERRED STOCK SHOULD BE SENT TO THE COMPANY OR THE INFORMATION AGENT. SUCH
DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
Any beneficial owner whose shares of the Preferred Stock are registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender such shares should contact such registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf.
Book-Entry Transfer. The Company understands that the Exchange Agent
will make a request promptly after the date of this Circular to establish
accounts with respect to the shares of the Preferred Stock at The Depository
Trust Company ("DTC") for the purpose of facilitating the Exchange Offer.
Subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of shares of the
Preferred Stock by causing DTC to transfer such shares into the Exchange Agent's
account in accordance with DTC's procedures for such transfer. Although delivery
of shares of the Preferred Stock may be effected through book-entry transfer
into the Exchange Agent's account at DTC pursuant to DTC's Automated Tender
Offer Program ("ATOP") procedures, a Letter of Transmittal, properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and other required documents, must in
each case be received by the Exchange Agent at one of its addresses set forth on
the back cover page of this Circular prior to the Expiration Time, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. DELIVERY OF DOCUMENTS TO DTC IN
ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the shares of the Preferred Stock which are the
subject of such book-entry confirmation, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against such participant.
Signature Guarantees. All signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution, unless the shares of the Preferred Stock
which are the subject of such Letter of Transmittal are tendered or executed,
respectively, (i) by a registered holder (which term, for the purposes described
above, shall include any participant in DTC whose name appears on a security
position listing as the owner of shares of the Preferred Stock) of such shares
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the
account of an Eligible Institution. If shares of the Preferred Stock are
registered in the name of a person other than the signer of a Letter of
-26-
<PAGE>
Transmittal, then the certificate for the shares of the Preferred Stock must be
endorsed by the registered holder, or be accompanied by a stock power in form
satisfactory to the Company, duly executed by the registered holder with such
signatures guaranteed by an Eligible Institution. If signatures on a Letter of
Transmittal are required to be guaranteed, such guarantees must be by a member
firm or a registered national securities exchange, a member of the NASD or by a
commercial bank, trust company or savings and loan association having an office
in the United States that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Program (each of the
foregoing being referred to as an "Eligible Institution").
Miscellaneous. Issuance of shares of Common Stock in exchange for shares
of the Preferred Stock will be made only against deposit of the tendered shares
of the Preferred Stock.
All questions as to the form of all documents and the validity
(including the time of receipt), eligibility, acceptance and withdrawal of
tendered shares of the Preferred Stock will be determined by the Company, in its
sole discretion, which determination shall be final and binding. The Company
expressly reserves the absolute right to reject any and all tenders not in
proper form and to determine whether the acceptance of or exchange by it for
such tenders would be unlawful. The Company also reserves the absolute right,
subject to applicable law, to waive or amend any of the conditions of the
Exchange Offer or to waive any defect or irregularity in the tender of any
particular shares of the Preferred Stock. Neither the Company, the Exchange
Agent, the Information Agent, nor any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. No tender of shares of the
Preferred Stock will be deemed to have been validly made until all defects and
irregularities with respect to such shares have been cured or waived. Any shares
of the Preferred Stock received by the Exchange Agent that are not properly
tendered and as to which irregularities have not been cured or waived will be
returned by the Exchange Agent to the appropriate tendering holder as soon as
practicable. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding on all parties.
Guaranteed Delivery Procedures
If a holder desires to tender shares of the Preferred Stock and the
holder's certificates are not immediately available or time will not permit the
holder's certificates for Preferred Stock, Letter of Transmittal or other
required documents to reach the Exchange Agent prior to the Expiration Time, or
the procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
(a) the tender is made by or through an Eligible Institution; and
(b) prior to the expiration of the Exchange Offer, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by mail or hand delivery) substantially in the
form provided by the Company which contains a signature guaranteed by an
Eligible Institution in the form set forth in such Notice of Guaranteed Delivery
(unless such tender is for the account of an Eligible Institution) which sets
-27-
<PAGE>
forth the name and address of the holder of the shares of the Preferred Stock
and the number of shares of the Preferred Stock tendered, states that the tender
is being made thereby and guarantees that within three trading days after the
date of the Notice of Guaranteed Delivery, the Letter of Transmittal, properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of shares of the
Preferred Stock, and any other documents required by the Letter of Transmittal,
together with the shares of the Preferred Stock will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) all tendered shares of the Preferred Stock (or a confirmation of
book-entry transfer of such shares into the Exchange Agent's account at DTC) as
well as the Letter of Transmittal, properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer of shares of the Preferred Stock, and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three trading days after the Expiration Time.
A Notice of Guaranteed Delivery may be delivered by hand or mailed to
the Exchange Agent and must include a signature guarantee by an Eligible
Institution in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, in all cases shares of
Common Stock will only be issued in exchange for shares of the Preferred Stock
accepted for exchange pursuant to the Exchange Offer after timely receipt by the
Exchange Agent of certificates for such shares (or a confirmation of book-entry
transfer of such shares into the Exchange Agent's account at DTC as described
above), the Letter of Transmittal, properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents.
Letter of Transmittal
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Exchange Offer:
The party tendering shares of the Preferred Stock for exchange (the
"Transferor") exchanges, assigns and transfers such shares of the Preferred
Stock to the Company and irrevocably constitutes and appoints the Exchange Agent
as the Transferor's agent and attorney-in-fact to cause the shares of the
Preferred Stock to be assigned, transferred and exchanged. The Transferor
represents and warrants that it has the full power and authority to tender,
exchange, assign and transfer the shares of the Preferred Stock and to acquire
the Common Stock issuable upon the exchange of such tendered shares of the
Preferred Stock in accordance with the terms of the Exchange Offer, and that,
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the shares of the Preferred Stock free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The Transferor also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Company to be necessary or
desirable to complete the exchange, assignment and transfer of shares of the
Preferred Stock or transfer ownership of such shares of the Preferred Stock on
the account books maintained by DTC. All authority conferred by the Transferor
will survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
-28-
<PAGE>
Withdrawal Rights
Tenders of shares of the Preferred Stock pursuant to the Exchange Offer
are irrevocable, except that shares of the Preferred Stock tendered pursuant to
the Exchange Offer and not theretofore accepted for exchange pursuant to the
Exchange Offer, may be withdrawn at any time after 40 business days from the
date of this Circular.
To be effective, a written notice of withdrawal delivered by mail or
hand delivery must be timely received by the Exchange Agent at one of the
addresses set forth in the Letter of Transmittal. The method of notification is
at the risk and election of the holder. Any such notice of withdrawal must
specify (i) the holder named in the Letter of Transmittal as having tendered
shares of the Preferred Stock to be withdrawn, (ii) if the shares of the
Preferred Stock are held in certificated form, the certificate numbers of the
shares of the Preferred Stock to be withdrawn, (iii) that such holder is
withdrawing its election to have such shares of the Preferred Stock exchanged,
and (iv) the name of the registered holder of such shares of the Preferred
Stock, and such notice of withdrawal must be signed by the holder in the same
manner as the original signature on the Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the shares of the Preferred Stock being withdrawn.
The Exchange Agent will return the properly withdrawn shares of the
Preferred Stock promptly following receipt of notice of withdrawal. If shares of
the Preferred Stock have been tendered pursuant to the procedure for book-entry
transfer, any notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawn shares of the Preferred Stock
and otherwise comply with DTC's procedures. All questions as to the validity of
a notice of withdrawal, including the time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Withdrawal of tenders of shares of the Preferred Stock may not be rescinded and
any shares of the Preferred Stock withdrawn will not thereafter be deemed to be
validly tendered for the purposes of the Exchange Offer. Properly withdrawn
shares of the Preferred Stock, however, may be retendered by following the
procedures therefor described elsewhere herein at any time prior to the
Expiration Time. See "The Exchange Offer-Procedure for Tendering" p.25.
Acceptance of Preferred Stock; Issuance of Common Stock
The acceptance for exchange of shares of the Preferred Stock validly
tendered and not properly withdrawn will be made as promptly as practicable
after the Expiration Time. The Company expressly reserves the right to terminate
the Exchange Offer and not accept for exchange any of the shares of the
Preferred Stock if the Minimum Condition or any of the conditions set forth
under "The Exchange Offer - Conditions of the Exchange Offer" p.31, shall not
have been satisfied or waived by the Company or to comply, in whole or in part,
with any applicable law. In addition, subject to the rules promulgated pursuant
to the Exchange Act, the Company expressly reserves the right to delay
acceptance of any of the shares of the Preferred Stock for exchange, to comply,
in whole or in part, with any applicable law. For purposes of the Exchange
Offer, the Company will be deemed to have accepted for exchange validly tendered
and not properly withdrawn shares of the Preferred Stock if, as and when the
-29-
<PAGE>
Company gives oral or written notice thereof to the Exchange Agent. Subject to
the terms and conditions of the Exchange Offer, issuance of shares of Common
Stock for shares of the Preferred Stock accepted pursuant to the Exchange Offer
will be made by the Exchange Agent promptly after acceptance thereof. The
Exchange Agent will act as agent for the tendering holders of shares of the
Preferred Stock for the purposes of receiving shares of Common Stock from the
Company. Tendered shares of the Preferred Stock not accepted for exchange by the
Company, if any, will be returned without expense to the tendering holder of
such shares of the Preferred Stock (or, in the case of shares of the Preferred
Stock tendered by book-entry transfer into the Exchange Agent's account at DTC,
such shares will be credited to an account maintained at DTC) as promptly as
practicable following the Expiration Time.
If the Company extends the Exchange Offer, or for any reason whatsoever,
acceptance for exchange or issuance of shares of Common Stock in exchange for
any shares of the Preferred Stock tendered pursuant to the Exchange Offer is
delayed, or the Company is unable to accept for exchange or exchange shares of
the Preferred Stock tendered pursuant to the Exchange Offer, then, without
prejudice to the Company's rights set forth herein, the Exchange Agent may
nevertheless, on behalf of the Company and subject to rules promulgated pursuant
to the Exchange Act, retain tendered shares of the Preferred Stock and such
shares may not be withdrawn except to the extent that the tendering holder of
such shares of the Preferred Stock is entitled to withdrawal rights as described
above.
No alternative, conditional, contingent or partial tenders will be
accepted. All tendering holders, by execution of a Letter of Transmittal, waive
any right to receive notice of acceptance of their shares of the Preferred Stock
for exchange.
Untendered Shares of the Preferred Stock
Holders of shares of the Preferred Stock whose shares are not tendered
and accepted in the Exchange Offer will continue to hold such shares and will be
entitled to all of the rights and preferences, and will be subject to all of the
limitations, applicable thereto. Due to the number of shares of the Preferred
Stock exchanged pursuant to the Exchange Offer, the Preferred Stock may no
longer meet the requirements of the NASD for continued listing and may no longer
continue to be registered under the Exchange Act. If, as a result of the
exchange of shares of the Preferred Stock pursuant to the Exchange Offer or
otherwise, the shares of the Preferred Stock no longer meet the requirements of
the NASD for continued listing and the listing of the shares of the Preferred
Stock is discontinued, or if the shares no longer are registered under the
Exchange Act, the market for the Preferred Stock could be adversely affected.
See "Special Factors-Certain Effects of the Exchange Offer; Plans of the Company
after the Exchange Offer" p.35.
Accrued Dividends
Holders of shares of the Preferred Stock which are accepted for exchange
under the Exchange Offer will relinquish their right to receive payment of
accumulated dividends.
Dividends on shares of the Preferred Stock not exchanged in the Exchange
Offer will continue to accrue and be payable when, as and if declared in
accordance with the terms of the shares of the Preferred Stock.
-30-
<PAGE>
Conditions of the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange or, subject to any applicable rules
and regulations of the Commission, including Rule 13e-4 and Rule 14e-1(c)
(relating to the Company's obligation to exchange and issue shares of Common
Stock for or return tendered shares of the Preferred Stock promptly after
termination of the Exchange Offer), exchange and issue shares of Common Stock
for any shares of the Preferred Stock tendered, and may postpone the acceptance
for exchange of or, subject to the restriction set forth above, postpone the
exchange and issuance of, shares of Common Stock for shares of the Preferred
Stock tendered and to be exchanged and may terminate or amend the Exchange Offer
if, at any time prior to the time of acceptance for exchange of or exchange and
issuance of shares of Common Stock for, any such shares of the Preferred Stock
(whether or not any other shares of the Preferred Stock have theretofore been
accepted for exchange or shares of Common Stock have been issued in respect
thereof pursuant to the Exchange Offer), any of the following events shall
occur:
(a) any change (or any condition, event or development involving
a prospective change) shall have occurred or been threatened in the
business, properties, assets, liabilities, capitalization, stockholders'
equity, financial condition, operations, results of operations or
prospects of the Company or any of its subsidiaries, or in the general
economic or financial market conditions in the United States or abroad,
which, in the sole judgment of the Company, is or may be materially
adverse to the Company and its subsidiaries or its shareholders or to
the value of the shares of the Preferred Stock or the Common Stock, or
there shall have been a significant decrease in the market prices of or
trading in the shares of the Preferred Stock or the Common Stock, or the
Company shall have become aware of any fact or occurrence which, in the
sole judgment of the Company, is or may be materially adverse with
respect to the value of the shares of the Preferred Stock or the Common
Stock or the Exchange Offer's contemplated benefits to the Company; or
(b) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or the over-the-counter market, (2) a declaration of
a banking moratorium or any suspension of payments in respect of banks
in the United States, (3) a declaration of a national emergency or a
commencement of a war, armed hostilities or other national or
international calamity directly or indirectly involving the United
States, (4) any limitation (whether or not mandatory) by any
governmental or regulatory authority on, or any other event which in the
sole judgment of the Company might affect, the nature or extension of
credit by banks or other financial institutions, (5) any significant
adverse change in the United States securities or financial markets, or
(6) in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, in the sole judgment of the Company,
a material acceleration, escalation or worsening thereof; or
(c) there shall have been any action taken or threatened, or any
statute, rule, regulation, pronouncement, judgment, order or injunction
proposed, sought, promulgated, enacted, entered, enforced or deemed
-31-
<PAGE>
applicable to the Exchange Offer by any local, state, Federal or foreign
government or governmental authority or by any court, domestic or
foreign, that, in the sole judgment of the Company, might, directly or
indirectly, (1) make the acceptance for exchange or issuance of shares
of Common Stock for some or all of the shares of the Preferred Stock
illegal or otherwise restrict or prohibit consummation of the Exchange
Offer, (2) result in a delay in, or restrict the ability of the Company
to, or render the Company unable to, accept for exchange some or all of
the shares of the Preferred Stock or to issue some or all of the shares
of Common Stock in exchange therefor, (3) otherwise adversely affect the
Company, or (4) result in a material limitation in the benefits expected
to be derived by the Company as a result of the Exchange Offer; or
(d) there shall be threatened, instituted or pending any action,
proceeding or claim by or before any court or governmental,
administrative or regulatory agency or authority or any other person or
tribunal, domestic or foreign, challenging the making of the Exchange
Offer, the acquisition by the Company of any shares of the Preferred
Stock, or seeking to obtain any material damages as a result thereof,
or, in the sole judgment of the Company, otherwise adversely affecting
the Company or the value of the shares of the Preferred Stock;
which in the sole judgment of the Company in any such case, and regardless of
the circumstances (including any action or omission by the Company or any of its
respective affiliates or subsidiaries) giving rise to any such condition, makes
it inadvisable to proceed with the Exchange Offer or such acceptance for
exchange of shares of the Preferred Stock or the issuance of the shares of
Common Stock in exchange therefor.
All the foregoing conditions are for the sole benefit of the Company
and may be asserted by the Company regardless of the circumstances giving rise
to such condition and may be waived by the Company, in whole or in part, at any
time and from time to time, in the sole discretion of the Company, subject to
any requirements to extend the Exchange Offer as described above under "The
Exchange Offer-Expiration; Extension; Termination; Amendment; Withdrawal Rights
and Conditions" p.23.
The failure by the Company at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the foregoing conditions shall
be final and binding.
If any of the foregoing conditions shall not be satisfied (or, with
respect to the above enumerated events, shall have occurred), the Company may,
subject to applicable law, (i) terminate the Exchange Offer and return all
shares of the Preferred Stock tendered pursuant to the Exchange Offer to
tendering security holders; (ii) extend the Exchange Offer and retain all
tendered shares of the Preferred Stock until the Expiration Time for the
extended Exchange Offer; or (iii) waive the unsatisfied conditions with respect
to the Exchange Offer and accept all shares of the Preferred Stock tendered
pursuant to the Exchange Offer.
-32-
<PAGE>
Fees and Expenses; Transfer Taxes
The costs of the Exchange Offer will be borne by the Company.
The Company will pay any transfer taxes with respect to transfer and
exchange of shares pursuant to the Exchange Offer.
Assuming that all outstanding shares of the Preferred Stock are
exchanged pursuant to the Exchange Offer, it is estimated that the expenses
incurred by the Company in connection with the Exchange Offer will aggregate
approximately $60,000. The Company will be responsible for paying all such
expenses and anticipates that they will be paid from available cash of the
Company.
Certain Federal Income Tax Consequences
The exchange of Preferred Stock for Common Stock in the Exchange Offer
will be treated for Federal income tax purposes as a tax-free recapitalization
under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"). As such, tendering Preferred shareholders generally will not recognize
gain or loss on the exchange of the Preferred Stock into shares of Common Stock.
However, a tendering Preferred shareholder will be deemed to receive a
distribution of property (i.e., Common Stock) from the Company in an amount
equal to the lesser of (1) the amount of dividends in arrears (currently $0.9103
per share) on the Preferred Stock or (2) the excess of the fair market value of
the Common Stock received over the issue price of the Preferred Stock
surrendered by such Preferred shareholders.
Under the Code, this deemed distribution will be treated as a dividend,
taxable as ordinary income, to the extent of the Company's current and
accumulated earnings and profits, which will not be determinable until the end
of the current fiscal year. Corporate Preferred shareholders may, subject to
various restrictions and limitations, be entitled to claim the "dividends
received deduction" with respect to the portion of the deemed distribution which
is treated as a dividend. To the extent that the deemed distribution exceeds the
Company's current and accumulated earnings and profits, the deemed distribution
will first reduce the tendering Preferred shareholder's tax basis in the shares
of Preferred Stock exchanged, and any further excess will result in the
Preferred shareholder recognizing capital gain (assuming that such Preferred
shareholder held the shares of Preferred Stock as a capital asset). A Preferred
shareholder's basis in shares of Preferred Stock then will be increased by the
full amount of the deemed distribution, and its basis in the shares of Common
Stock received upon exchange will equal the former basis in the shares of
Preferred Stock exchanged (as adjusted above), reduced by any cash received upon
exchange.
Any cash received by a tendering Preferred shareholder in lieu of
fractional shares of Common Stock will be treated as an amount paid in
redemption of such fractional shares. The holding period for the Common Stock
received upon exchange will include the tendering Preferred shareholder's
holding period in the shares of Preferred Stock exchanged. To the extent that
the cash received exceeds a Preferred shareholder's basis in the fractional
shares, the excess will be treated as capital gain.
Foreign Preferred shareholders generally will be subject to U.S. income
tax on the portion of any deemed distribution which is treated as a dividend at
the rate of 30% (or lower treaty rate).
-33-
<PAGE>
THE FOREGOING IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, PREFERRED SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS
AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXCHANGE OFFER TO THEM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
LAWS.
COMPARISON OF COMMON STOCK AND PREFERRED STOCK
The following is a summary description of the provisions of the Common
Stock and the Preferred Stock:
a) Description of Common Stock
The Common Stock of the Company, including its voting, dividend and
liquidation rights are described in detail in "The Exchange Offer-Description of
Common Stock Offered" p.22. Reference to such description is made for a
discussion of the terms and conditions of the Common Stock.
b) Description of Preferred Stock
Right to Cumulative Dividends - The holders of shares of Preferred
Stock are entitled to cumulative dividends as and when declared by the Board of
Directors of the Company out of funds legally available therefor at the annual
rate of $0.21 per share before any dividend may be declared on the Company's
Common Stock. Dividends on outstanding shares of Preferred Stock accrue from day
to day whether or not earned or declared and are cumulative so that if in any
quarterly period dividends at the rate of 12% per annum have not been paid or
declared and set apart, the amount of the deficiency is to be fully paid or
declared and set apart for payment before any distribution may be declared or
paid on, or set apart for the Common Stock.
Non-Voting Rights - Preferred shareholders are not entitled to vote,
except that the affirmative vote of at least a majority of the shares of
Preferred Stock, voting as a class, is required to authorize or validate any
amendment, alteration or repeal of the Company's Articles of Incorporation or
By-Laws which would materially adversely affect the rights and privileges of the
Preferred Stock or create or increase the authorized amount of any capital stock
of the Company ranking prior to the Preferred Stock.
Redemption Rights - The Preferred Stock is redeemable by the Company on
at least 30 days notice, in whole or in part at a redemption price of $2.25 per
share plus accrued dividends. Unless full accrued dividends have been provided
for all past periods and the current period on all outstanding shares of
Preferred Stock, or the retirement is effected pursuant to purchase offers to
all holders of Preferred Stock on a comparable basis, no outstanding Preferred
Stock may be redeemed or retired until all of the Preferred Stock is redeemed or
retired. Holders of shares of Preferred Stock may convert each share into one
share of the Company's Common Stock at any time unless previously redeemed,
subject to adjustment in the event of a subdivision or combination of the Common
Stock, change of Common Stock into any other class of stock, declaration of a
stock dividend on the Common Stock, or offers to the holders of shares of Common
Stock of rights to subscribe for shares or other securities of the Company.
-34-
<PAGE>
Liquidation or Merger - In the event of the liquidation or other winding
up of the Company, whether voluntary or involuntary, holders of Preferred Stock
are entitled to a liquidation preference of $1.75 per share plus the amount of
all accrued dividends before any distribution or payment is made to holders of
Common Stock. A consolidation or merger of the Company with or into any other
corporation is not deemed to be a liquidation for that purpose.
SPECIAL FACTORS
Fairness of the Exchange Offer
The Company believes that the Exchange Offer is fair to the holders of
shares of its Preferred Stock and to holders of its Common Stock. In considering
the fairness of the Exchange Offer, the Company considered the following
factors: (a) the likelihood that dividends would not be paid or declared on
shares of Preferred Stock for the foreseeable future; (b) the existing and
growing arrearage in the payment of dividends on shares of Preferred Stock; (c)
the relative market values of shares of Preferred Stock and shares of Common
Stock; (d) the advantages and savings to the Company that the Exchange Offer
would provide. See "The Exchange Offer-Purpose and Effect of the Exchange Offer"
p.22. The Company did not ascribe any particular weight to any of the foregoing
factors in relation to the other factors. Neither the Company nor the Board of
Directors received or reviewed any report, opinion or appraisals which are
materially related to the Exchange Offer, including but not limited to any
report, opinion or appraisal relating to the consideration to be offered to the
holders of shares of Preferred Stock of the Company or the fairness of the
transaction to the Company.
The Exchange Offer was unanimously approved by the Directors of the
Company, all of whom have indicated that they will tender their shares under the
Exchange Offer. The determination of the consideration offered was based on the
factors described above, as well as the relative market values of the shares of
Preferred Stock and the shares of Common Stock, the dividend arrearage on
Preferred Stock, and the claim of the Preferred shares to the continued accrual
of dividends and their liquidation preference.
All of the Directors who are not employees of the Company have approved
the Exchange Offer, although they have not retained any unaffiliated
representative to act solely on behalf of unaffiliated shareholders for the
purposes of negotiating or preparing a report reviewing the terms of the
Exchange Offer. Neither the Company nor the Board of Directors considered other
procedural safeguards in determining the fairness of the Exchange Offer.
Certain Effects of the Exchange Offer; Plans of the Company After the Exchange
Offer
Following the consummation of the Exchange Offer, the business and
operations of the Company will be continued by the Company substantially as they
are currently being conducted. Except as disclosed in this Circular, the Company
has no present plans or proposals that would result in (i) the acquisition by
any person of any material amount of additional securities of the Company, or
the disposition of any material amount of securities of the Company, (ii) an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation or sale or transfer of a material amount of assets involving the
Company or any of its subsidiaries, (iii) any change in the present Board of
-35-
<PAGE>
Directors or management of the Company, including, but not limited to, a plan or
proposal to change the number or term of the Directors, to fill any existing
vacancy on the Board of Directors or to change any material term of the
employment contract of any executive officer, (iv) any material change in the
present dividend rate or policy or indebtedness or capitalization of the
Company, (v) any other material change in the Company's corporate structure or
business or (vi) any changes in the Company's charter, By-Laws or instruments
corresponding thereto or any other actions which may impede the acquisition or
control of the Company by any person.
Following the expiration of the Exchange Offer, the Company may, in its
sole discretion, determine to redeem the shares or to purchase any remaining
shares of the Preferred Stock through privately negotiated transactions, open
market purchases or another exchange or tender offer or otherwise, on such terms
and at such prices as the Company may determine from time to time, the terms of
which purchases or offers could differ from those of the Exchange Offer, except
that the Company will not make any such purchases of shares of the Preferred
Stock until the expiration of ten business days after the termination of the
Exchange Offer. Any possible future purchases of shares of the Preferred Stock
will depend upon the Company's business and financial position, alternative
investment opportunities available to the Company, the results of the Exchange
Offer and general economic and market conditions.
Holders of shares of the Preferred Stock who do not tender their shares
in the Exchange Offer will continue to hold such shares and will be entitled to
all of the rights and preferences, and will be subject to all of the
limitations, applicable thereto.
All shares of the Preferred Stock exchanged by the Company pursuant to
the Exchange Offer will be retired and cancelled. Upon cancellation, the shares
become authorized but unissued shares of Preferred Stock, no par value, and may
be issued as part of another series of Preferred Stock, no par value. Any shares
of the Preferred Stock remaining outstanding after the Exchange Offer has
expired will continue to be redeemable at the option of the Company. See
"Comparison of Common Stock and Preferred Stock-Description of the Preferred
Stock-Redemption Rights" p.34. Upon liquidation or dissolution of the Company,
holders of shares of the Preferred Stock are entitled to receive a liquidation
preference in the amount of $1.75 per share plus dividends accrued and
accumulated but unpaid to the redemption date, prior to payment of any amounts
to the holders of the Common Stock.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD EXCHANGE ANY OR ALL OF SUCH
SHAREHOLDER'S SHARES OF THE PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER.
SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO EXCHANGE THEIR SHARES OF
THE PREFERRED STOCK.
-36-
<PAGE>
MARKET AND TRADING INFORMATION
The shares of the Preferred Stock are listed on the Nasdaq SmallCap Market. The
following table sets forth for the calendar periods indicated the high and low
closing bid prices for the shares of the Common Stock and Preferred Stock per
share as reported in published financial sources. The data reflects inter-dealer
prices without retail markup or markdown and commission and may not represent
actual transactions:
<TABLE>
<CAPTION>
Common:
1996
---------------------------------------------------------------------
Quarter 1st 2nd 3rd
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
High Bid 4 1/8 2 7/8 2 7/8
Low Bid 2 5/8 2 1/4 2 5/8
<CAPTION>
1995
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 5/16 2 3/8 4 3/4 4 7/8
Low Bid 1 3/4 1 1/4 2
<CAPTION>
1994
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 3/4 1 3/8 1 3/8
Low Bid 1/2 3/8 1/8 5/8
<CAPTION>
Preferred:
1996
---------------------------------------------------------------------
Quarter 1st 2nd 3rd
---------------------------------------------------------------------
High Bid 4 1/8 3 3
Low Bid 2 5/8 2 5/8 2 5/8
<CAPTION>
1995
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 3/4 2 1/4 4 3/4 4 7/8
Low Bid 1 1/8 3/4 1 1/2 2
<CAPTION>
1994
------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
------------------------------------------------------------------------------------------
High Bid 1 1/8 3/4 1 5/8 1 3/4
Low Bid 1/2 7/16 1/4 5/8
</TABLE>
-37-
<PAGE>
On November 12, 1996, three trading days prior to the commencement of
the Exchange Offer, the closing bid price of the shares of the Preferred Stock
was $2.00 per share and the Common Stock was $2.00 per share. There can be no
assurance concerning the prices at which the shares of the Preferred Stock or
Common Stock might be traded following the Exchange Offer.
The exchange of shares of the Preferred Stock pursuant to the Exchange
Offer will reduce the number of shares of the Preferred Stock that might
otherwise trade publicly and the number of holders of such shares, and depending
on the number of shares of the Preferred Stock exchanged, could adversely affect
the liquidity and market value of the remaining shares of the Preferred Stock
held by the public. Due to the number of shares of the Preferred Stock exchanged
pursuant to the Exchange Offer, the Preferred Stock may no longer meet the
requirements of the NASD for continued listing and may no longer continue to be
registered under the Exchange Act, either of which could adversely affect the
market for the Preferred Stock. See "Special Factors-Certain Effects of the
Exchange Offer; Plans of the Company After the Exchange Offer" p.35.
Holders of shares of the Preferred Stock are urged to obtain current
information with respect to the sales prices of shares of the Preferred Stock.
TRANSACTIONS AND ARRANGEMENTS CONCERNING
THE SHARES OF THE PREFERRED STOCK
Based upon the Company's records and upon information provided to the
Company by its Directors, executive officers and affiliates, neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any of
the Directors or executive officers of the Company or any of its subsidiaries,
nor any associates of any of the foregoing, has effected any transactions in the
Preferred Stock in 1995 or 1996.
Except as set forth in this Exchange Offer, neither the Company nor, to
the best of the Company's knowledge, any of its affiliates, Directors or
executive officers or any of the executive officers or Directors of its
subsidiaries, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Exchange Offer with respect to any securities of the Company (including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer of the voting of any such securities, joint ventures, loan or
option arrangement, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies, consents or authorizations). As of
November 15, 1996, neither the Company nor any subsidiary or affiliate nor, to
the Company's knowledge, any of their respective Directors or executive
officers, owns any of the shares of the Preferred Stock, except as follows:
<TABLE>
<CAPTION>
Preferred Shares
----------------
<S> <C>
Louis V. Aronson II 166,979
Robert A. Aronson 566
Barton P. Ferris, Jr. 25,411
Erwin M. Ganz 7,843
Justin P. Walder 13,603
Saul H. Weisman 4,568
Daryl K. Holcomb 100
Ronson Corporation Retirement Plan 91,487
</TABLE>
-38-
<PAGE>
All officers, Directors and 10% shareholders of the Company who own
shares of Preferred Stock, have advised the Company that they intend to accept
the Exchange Offer as described herein and that they will tender their shares
for exchange as provided herein. The Ronson Corporation Retirement Plan, the
Company's primary pension plan, which holds 91,487 shares of Preferred Stock is
restricted from accepting the Exchange Offer at this time, due to constraints
imposed by the Employee Retirement Income Security Act. The Company intends to
make an application to the DOL to permit the plan to participate in the Exchange
Offer.
EXCHANGE AGENT AND INFORMATION AGENT
Registrar and Transfer Company will act as Exchange Agent for the
Exchange Offer. All correspondence in connection with the Exchange Offer, the
Letter of Transmittal and the Notice of Guaranteed Delivery should be addressed
to the Exchange Agent as follows:
REGISTRAR AND TRANSFER COMPANY
BY HAND ONLY: BY MAIL/OVERNIGHT COURIER:
Tenders & Exchanges
c/o The Depository Trust Co. Tenders & Exchanges
Transfer Agent Drop 10 Commerce Drive
55 Water Street, 1st Floor Cranford, NJ 07016
New York, NY 10041-0099
Confirm by Telephone:
1-800-368-5948
Shareholder Inquiries Regarding Lost Certificates:
1-800-368-5948
The Exchange Agent is also the transfer agent for the Preferred Stock
and the Common Stock of the Company.
-39-
<PAGE>
Morrow & Co., Inc. will act as Information Agent for the Exchange Offer.
In such capacity, the Information Agent will assist with the mailing of the
Circular and related materials to owners of shares of the Preferred Stock,
respond to inquiries of and provide information to holders of shares of the
Preferred Stock in connection with the Exchange Offer and provide other similar
advisory services as the Company may request from time to time. All inquiries
relating to the Exchange Offer should be directed to the Information Agent as
follows:
MORROW & CO., INC.
909 Third Avenue
New York, New York 10022
Call toll-free:
1-800-566-9058
The Company will pay the Information Agent and the Exchange Agent their
reasonable and customary compensation for their services in connection with the
Exchange Offer. In addition, the Company will reimburse the Exchange Agent and
the Information Agent for their reasonable out-of-pocket expenses, and will
indemnify the Exchange Agent and the Information Agent against certain
liabilities and expenses in connection with their services, including certain
liabilities under the Federal securities laws. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Circular
and related documents to beneficial holders of shares of the Preferred Stock,
and in handling or forwarding tenders or consents for their customers.
Directors, officers and regular employees of the Company, none of whom
will be specifically compensated for such services, may contact holders of
shares of the Preferred Stock by mail, telephone, facsimile transmission, telex,
telegraph and personal interviews regarding the Exchange Offer, and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward this Circular (and all related materials) to beneficial owners of shares
of the Preferred Stock.
-40-
<PAGE>
LETTER OF TRANSMITTAL
To Accompany Certificates Representing Shares of 12% Cumulative Convertible
Preferred Stock, No Par Value, of
RONSON CORPORATION
EXCHANGE AGENT: REGISTRAR AND TRANSFER COMPANY
For Information:
1-800-368-5948 x760
By Hand, Overnight By Hand Only:
Courier or Mail: c/o The Depository
Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street,
1st Floor
New York, NY
10041-0099
<TABLE>
DESCRIPTION OF CERTIFICATE(S) SURRENDERED
- ---------------------------------------------------------------------------------------------------------------------------
Certificate(s) Enclosed (Attach list if necessary)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Number of
(See Instructions) Certificate Shares Represented
Name and Address of Registered Holder(s) Number(s) by Certificate(s)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES
</TABLE>
PLEASE READ CAREFULLY THE INSTRUCTIONS ON THE REVERSE SIDE
Ladies and Gentlemen:
The undersigned hereby accepts the Exchange Offer made to the holders of
shares of 12% Cumulative Convertible Preferred Stock, no par value ("Preferred
Stock") of Ronson Corporation ("Ronson") pursuant to the terms of the Offering
Circular dated November 15, 1996, as amended. The shares represented by the
above described Ronson Preferred Stock certificate(s) are herewith surrendered
to you in exchange for certificate(s) representing shares of Common Stock of
Ronson at a rate of 1.7 shares of Common Stock for each share of Preferred Stock
surrendered. The undersigned hereby represents that he/she has full power and
authority to submit, sell, assign and transfer the stock certificate(s)
described above. Upon request, the undersigned will execute and deliver any
additional documents deemed appropriate or necessary by Ronson or the Exchange
Agent in connection with the surrender of such certificate(s).
<PAGE>
NOTE: For information on the Federal income tax consequences of the
Exchange, see "Federal Income Tax Consequences" at page 33 of the Offering
Circular. RONSON PREFERRED SHAREHOLDERS SHOULD CONSULT THEIR OWN ADVISORS AS TO
THE TAX CONSEQUENCES OF THE EXCHANGE ON INDIVIDUAL SHAREHOLDERS, INCLUDING STATE
AND LOCAL TAX EFFECTS.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful attorney-in-fact of the undersigned with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to exchange certificate(s) formerly representing
shares of Preferred Stock, together with all accompanying evidence of transfer
and authenticity, for certificate(s) representing shares of Common Stock. All
authority herein conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding on
the heirs, personal representatives, successors and assigns of the undersigned.
It is understood that cash will be paid in lieu of fractional shares at the rate
determined pursuant to the Offering Circular.
Please issue the certificate(s) for the shares of Common Stock in the
above name and mail to the undersigned at the address shown above, unless
special instructions are shown below.
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
To be completed ONLY if certificate(s) are to be issued and mailed to OTHER than
the registered holder(s).
Stock must be properly assigned and signatures guaranteed. (See Instruction 2 &
3.)
Issue and mail certificate(s) to (please print):
Name:__________________________________________
(Please Print)
Address:_______________________________________
_______________________________________________
_______________________________________________
(including Zip Code)
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if certificate(s) are to be issued to the registered
holder(s) but mailed to OTHER than the address of record.
Mail certificate(s) to (please print):
Name:_________________________________________
(Please Print)
Address:______________________________________
______________________________________________
______________________________________________
(including Zip Code)
Very truly yours,
Signature(s) of registered holder(s) exactly as name appears on the
certificate(s) or by person(s) authorized to become registered holder(s) by
certificate(s) and document(s) transmitted herewith.
<PAGE>
This Letter of Transmittal must be signed by registered holder(s) exactly
as name appears on the certificate(s), or by the authorized agent of such
registered holder(s), or by person(s) to whom the certificate(s) are to be
issued. (See Instructions 3 & 4.)
IMPORTANT-PLEASE SIGN AND DATE BELOW AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
(See Instruction 4 on the reverse hereof)
Dated:_______________________________
____________________________________ _____________________________________
Signature(s) of Shareholder(s) or Agent
Telephone Number:____________________________
_____________________________________________________________
Signature(s) (Authorized
Guaranteed Signature)
(See Instruction 2 and 3 on the reverse hereof)
<PAGE>
PAYER'S NAME:
SUBSTITUTE
Form W-9
(See Instruction 8)
Please fill in your name and address below.
__________________________________________
Name
__________________________________________
Address (number and street)
__________________________________________
City, State and Zip Code
Department of the Treasury
Internal Revenue Service
Payer's Request for Taxpayer
Identification Number
<PAGE>
Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW.
__________________________________________
Social Security Number(s)
OR
__________________________________________
Employer Identification Number(s)
<PAGE>
Part 2 -- Certification -- Under Penalties of Perjury, I certify that:
(1) The number shown on the form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of
failure to report all interest or dividends or (c)the IRS has notified me
that I am no longer subject to backup withholding.
Part 3 -- Awaiting TIN [ ]
Part 4 -- For Payee Exempt from Backup Withholding
Exempt [ ]
Certificate Instructions -- You must cross out Item (2) in Part 2 above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding, you received another notification from the IRS stating that you are
no longer subject to backup withholding, do not cross out Item (2). If you are
exempt from backup withholding, check the box in Part 4 above.
SIGNATURE __________________________________________ DATED _________, 199__
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
INSTRUCTION 8 BELOW REGARDING CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number to you within 60 days, you are required
to withhold 31% of all reportable payments thereafter made to me until I provide
a number.
SIGNATURE __________________________________________ DATED _________, 199__
<PAGE>
INSTRUCTIONS FOR SURRENDERING CERTIFICATE(S)
Forming Part of the Terms and Conditions of this Letter of Transmittal
1. General. The Letter of Transmittal properly filled in and signed by or
on behalf of the registered holder(s) (or properly constituted assignees) of the
surrendered certificate(s) must accompany certificate(s) for shares of Ronson
Common Stock surrendered to the Exchange Agent, Registrar and Transfer Company,
at the addresses set forth on the face of this Letter of Transmittal. For your
convenience, a return envelope addressed to the Exchange Agent is enclosed.
The method of delivery of the certificate(s) is at the option and risk of
the shareholder, but if the certificate(s) or documents are sent by mail, it is
suggested that insured or registered mail be used for the shareholder's
protection.
Insert in the box at the top of the Letter of Transmittal the certificate
number(s) of the Preferred Stock certificate(s) which you are surrendering
herewith and the number of shares represented by each certificate. If the space
provided is insufficient, attach a separate sheet listing this information.
2. Issuance in Same Name. If the certificate(s) for shares of Common Stock
are to be issued to the registered holder(s) of the surrendered stock
certificate(s), the surrendered certificate(s)need not be endorsed or
accompanied by instruments of assignment and transfer, nor is a signature
guarantee required.
3. Special Issuance Instructions. If the certificate(s) for shares of
Common Stock are to be issued to a person other than the registered holder(s) of
the surrendered certificate(s), the surrendered certificate(s) must be endorsed
to such person or accompanied by appropriately endorsed stock powers. In either
event, signatures must be guaranteed by an eligible financial institution or
broker who is a member/participant in a Medallion Program approved by the
Securities Transfer Association, Inc. The person to whom the certificate(s) for
shares of Common Stock are to be issued must furnish a correct Taxpayer
Identification Number and sign and date the substitute Form W-9.
4. Endorsement; Authority. In case any endorsement is executed by an agent,
attorney, executor, administrator, trustee, guardian or other fiduciary, or by a
person acting in any other fiduciary or representative capacity, or by an
officer of a corporation on behalf of the corporation, the full title of such
person must be given and proper documentary evidence of his appointment and
authority to act in such capacity (including, where necessary, By-Laws,
corporate resolutions and court orders) must be forwarded with the surrendered
stock certificate(s) and this Letter of Transmittal.
5. Denominations of Certificate(s). Unless specific denominations are
requested at the time of exchange, a single certificate will be issued in
exchange for those surrendered with this Letter of Transmittal.
6. Lost Certificate(s). If the certificate(s) which a registered holder (or
transferee) wants to surrender has been lost or destroyed, that fact should be
indicated on the face of this Letter of Transmittal which should then be
delivered to the Exchange Agent after being otherwise properly completed and
duly executed. In such event, the Exchange Agent will forward additional
documentation necessary to be completed in order to effectively replace such
lost or destroyed certificate(s).
7. Validity of Surrender; Irregularities. All questions as to validity,
form and eligibility of any surrender of certificate(s) will be determined by
Ronson (which may delegate the power to so determine in whole or in part to the
Exchange Agent), and such determination shall be final and binding. Ronson
reserves the right to waive any irregularities or defects in the surrender of
any certificate(s) and its interpretation of the terms and conditions of this
Letter of Transmittal or any other documents delivered therewith with respect to
such irregularities or defects shall be final and binding. A surrender will not
be deemed to have been validly made until all irregularities and defects have
been cured or waived.
<PAGE>
8. Substitute Form W-9. Each surrendering shareholder is required to
provide the Exchange Agent with such holder's correct Taxpayer Identification
Number ("TIN") on the Substitute Form W-9 and to certify whether the shareholder
is subject to backup withholding. Failure to provide such information on the
form may subject the surrendering shareholder to Federal income tax withholding
at a rate of 31% on payments made to such surrendering shareholder with respect
to the shares.
9. Inquiries. All inquiries with respect to the surrender of certificate(s)
of Preferred Stock should be made directly to the Exchange Agent, Registrar and
Transfer Company at 1-800-368-5948, or to the Information Agent, Morrow & Co.,
Inc., at 1-800-566-9058.
<PAGE>
EXECUTIVE OFFICES
RONSON
CORPORATION
CORPORATE PARK III CAMPUS DRIVE TELEPHONE:908-469-8300
P.O. BOX 6707 SOMERSET, NEW JERSEY 08875-6707 FAX: 908-469-6079
November 15, 1996
To Owners of Ronson 12% Cumulative
Convertible Preferred Stock:
The accompanying documents offer you the opportunity to exchange your shares of
12% Cumulative Convertible Preferred Stock for shares of Common Stock at a 70%
premium. This Exchange Offer will terminate on December 16, 1996, unless
extended.
PREMIUM OFFERED: By tendering your shares of Preferred Stock under the Exchange
Offer, you will obtain 1.7 shares of Common Stock for each share of Preferred, a
70% stock premium over the stock's conversion rate of one share of Common for
one share of Preferred.
This means that under this Exchange Offer, you will receive shares of Common
Stock having a market value of $3.40, based on a market price of $2.00 per
share, a price within the Common Stock's market trading range during the past
month. There is, of course, no assurance of the price at which the Common Stock
will trade.
The Company has the right to redeem the Preferred Stock at any time at a
redemption price of $2.25 per share plus accrued dividends ($0.9103 per share as
of November 15, 1996), for a total redemption price of $3.1603 per share. The
redemption price is substantially below the premium price available under the
Exchange Offer, assuming the Common Stock continues to trade around $2.00 per
share.
PURPOSE OF THE EXCHANGE OFFER: The decision was reached by the Board of
Directors that it is appropriate at this time to offer an exchange of Preferred
Stock for Common Stock at a 70% premium rather than redeeming the Preferred
Stock. This procedure avoids a potential heavy drain on the Company's cash
resources, which might occur if the Company elected to redeem the Preferred
shares. The Exchange Offer will enable the Company to eliminate its liability
for present and future Preferred dividends through the issuance of Common Stock.
Moreover, the Company believes that the issuance of the shares of Common Stock
will increase the Common Stock's market liquidity.
POSSIBLE NEGATIVE CONSEQUENCES OF NOT TENDERING: It is important that Preferred
shareowners not tendering under the Exchange Offer be aware of certain possible
negative consequences in the event it becomes effective:
<PAGE>
(1) Due to the small number of Preferred shares which would remain
outstanding, it is possible that trading interest in the Preferred
Stock will decrease and that it may be delisted by NASDAQ from its
SmallCap market. (2) The Preferred Stock may no longer continue to be
registered under the Securities Exchange Act.
(3) The Company will continue to have the right to redeem Preferred
shares not tendered at the lower redemption price of $3.1603 per share,
adjusted for future Preferred dividends as they accrue. Moreover, if a
shareowner elected to convert the Preferred shares to avoid redemption,
it would be on the basis of one share of Common for one share of
Preferred.
TAX CONSEQUENCES: The transaction will be deemed a tax-free exchange with the
exception of the value of the accrued dividends of $0.9103 per share as of
November 15, 1996, which would be taxable. We suggest you discuss this matter
with your tax attorney or tax advisor to determine the extent of your tax
liability.
CONDITION OF EXCHANGE OFFER: The Exchange Offer is conditioned on the receipt of
tenders of a minimum of 550,000 Preferred shares of the total 837,595 Preferred
shares outstanding. Of these shares, a total of 219,070 Preferred shares are
owned by officers and directors of the Company, including 166,979 Preferred
shares owned by me. The officers and directors have stated that they will tender
their Preferred shares for Common in accordance with the Exchange Offer. The
Company retains the right to accept all Preferred shares tendered if the minimum
number of shares is not reached.
We urge you to read the accompanying documents carefully. If you have any
questions, contact the Information Agent, Morrow & Co., Inc., telephone
1-800-566-9058.
If your Preferred shares are held in the name of a broker, bank or other
intermediary, you will be receiving special instructions as to how to have your
shares tendered.
Sincerely,
/s/Louis V. Aronson II
-------------------
Louis V. Aronson II
President & Chief Executive Officer
<PAGE>
EXECUTIVE OFFICES
RONSON
CORPORATION
CORPORATE PARK III CAMPUS DRIVE TELEPHONE:908-469-8300
P.O. BOX 6707 SOMERSET, NEW JERSEY 08875-6707 FAX: 908-469-6079
November 15, 1996
To Owners of Ronson Common Stock:
There has been mailed today to all owners of shares of the Company's 12%
Cumulative Convertible Preferred Stock an Offer to exchange their shares for
shares of Common Stock at the rate of 1.7 shares of Common for each share of
Preferred.
To the extent the Exchange Offer is accepted by the Preferred shareowners, the
Offer will enable the Company to eliminate its liability for present unpaid and
future Preferred dividends through the issuance of Common Stock. It is the
intention of the Board of Directors to retire all of the Preferred shares which
the Company acquires under the Offer.
ACCRUED DIVIDEND LIABILITY: The unpaid and accrued dividends on the Preferred
Stock constitute a liability senior to the Common Stock. As of November 15,
1996, the accrued dividends amount to $0.9103 per Preferred share, representing
a total corporate liability of approximately $762,000. Dividends accumulate at
the annual rate of $0.21 per share or approximately $176,000 each year. Under
the terms of the Preferred Stock, no dividends may be paid on Common Stock until
all accrued Preferred dividends have first been paid.
Your Board believes it unlikely that the Company will be in a position to pay
any dividends on the Preferred Stock any time in the foreseeable future. To
avoid the inevitable increase in the burden on the Company and its underlying
financial strength, your Board decided it was in the best interest of the
Company to make the Exchange Offer to the Preferred shareowners.
PURPOSE OF THE EXCHANGE OFFER: Your Board believes there are substantial
advantages and benefits under this Exchange Offer for the owners of the Common
Stock as well as for the owners of the Preferred Stock:
o The elimination of the accrued and unpaid dividends, a right senior
to the rights of the Common Stock, will increase the Company's ability
to obtain capital and strengthen the value of the Common shares.
o The elimination of the accrued Preferred dividend liability will
allow the Company to direct its cash resources into programs for the
development of new products, to strengthen the Company's marketing
efforts, and to assure the growth and financial strength of the
Company.
o The Company's financial statements will be simplified. The retirement
of the Preferred Stock will increase the book value per Common share to
$0.79 per share compared to $(0.04) per share, an increase of $0.83 per
share.
o The issuance of additional Common shares will increase the Common
Stock's market liquidity, creating greater stability in the pricing of
the stock.
<PAGE>
THE RIGHT TO REDEEM THE PREFERRED STOCK: The Board considered the Company's
right to redeem the Preferred shares at the stated redemption price of $2.25 per
share plus accrued dividends ($0.9103 per share) at a total cost of $3.1603 per
share. This option was rejected because of the potential heavy drain on the
Company's cash resources in the event holders of a significant number of
Preferred shares decided to accept the cash rather than elect the option of
converting the Preferred shares for an equal number of Common shares.
In the event less than all the Preferred shares are tendered and accepted under
the Exchange Offer, the Company will continue to have the right to redeem the
remaining outstanding Preferred Stock.
CONDITION OF THE EXCHANGE OFFER: The Exchange Offer is conditioned on the tender
of 550,000 Preferred shares of the total of 837,595 Preferred shares
outstanding. Of these shares, a total of 219,070 Preferred shares are owned by
officers and directors of the Company, including 166,979 Preferred shares owned
by me. The officers and directors have stated that they will tender their
Preferred shares for Common in accordance with the Exchange Offer. The Company
retains the right to accept all Preferred shares tendered if the minimum number
of shares is not reached.
If you are not also a holder of Preferred Stock and wish to receive a copy of
the Exchange Offer, please contact the Information Agent, Morrow & Co., Inc.,
telephone 1-800-566-9058.
Sincerely,
/s/Louis V. Aronson II
-------------------
Louis V. Aronson II
President & Chief Executive Officer
<PAGE>
EXECUTIVE OFFICES
RONSON
CORPORATION
CORPORATE PARK III CAMPUS DRIVE TELEPHONE:908-469-8300
P.O. BOX 6707 SOMERSET, NEW JERSEY 08875-6707 FAX: 908-469-6079
November 15, 1996
To Owners of Preferred Stock held in the
name of an intermediary nominee:
There has been mailed today to all owners of record of shares of the Company's
12% Cumulative Convertible Preferred Stock an Offer to exchange their Preferred
shares for shares of Common Stock at the rate of 1.7 shares of Common Stock for
each share of Preferred Stock. Since your shares are held in a nominee name,
your copies of the documents and instructions for acceptance will be sent to you
by your broker, bank or other intermediary.
Please note that the expiration date of the Exchange Offer is December 16, 1996,
unless extended. For your information pending your receipt of the Exchange Offer
material, we are enclosing a copy of the covering letter which has been mailed
to Preferred stockholders of record which briefly outlines the nature of the
Exchange Offer. Before acting on this Exchange Offer, we urge you to read the
official documents.
If you have any questions, please contact the Information Agent, Morrow & Co.,
Inc., telephone 1-800-566-9058.
Sincerely,
/s/Louis V. Aronson II
-------------------
Louis V. Aronson II
President & Chief Executive Officer
<PAGE>
November 15, 1996
RONSON CORPORATION
OFFER TO EXCHANGE
Common Stock for
12% Cumulative Convertible Preferred Stock
At a Ratio of 1.7 Shares of Common for Preferred
To Our Clients:
Enclosed for your consideration are documents relating to the Offer by Ronson
Corporation to exchange 1.7 shares of Ronson Common Stock for each share of
Ronson 12% Cumulative Convertible Preferred Stock.
This material is being forwarded to you as the beneficial owner of shares of
Ronson Preferred Stock carried by us for your account and not registered in your
name.
A tender of shares can only be made by us as the registered holder of the stock
and pursuant to your instructions. Accordingly, if you wish to tender your
shares of Preferred Stock, please instruct us by completing, signing and
returning to us the Instruction Form which appears on the reverse side of this
letter.
If you have any questions concerning this matter, please feel free to contact
our representative responsible for your account.
Because the Offer by its terms will expire at 5:00 p.m., New York City time on
December 16, 1996, it is important that we receive your instructions promptly.
Unless previously accepted, tendered shares may be withdrawn at any time after
January 15, 1997.
<PAGE>
INSTRUCTIONS REGARDING TENDER
The undersigned acknowledges receipt of documents relating to the Ronson
Corporation Offer to Exchange.
[ ] Tender my shares of Ronson Preferred Stock held by you for my account.
[ ] DO NOT tender my shares of Ronson Preferred Stock held by you for my
account.
Date: ____________________ ________________________________________________
________________________________________________
Signature(s)
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN ABOVE,
YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER
YOUR SHARES OF RONSON PREFERRED STOCK.
<PAGE>
RONSON PRESS
CORPORATION INFORMATION
RONSON CORPORATION P.O. BOX 6707
PUBLIC RELATIONS OFFICE SOMERSET, NJ 08875
November 14, 1996
RONSON OFFERS EXCHANGE OF
1.7 COMMON SHARES FOR EACH PREFERRED SHARE
Ronson Corporation (NASDAQ SmallCap Market: Common RONC, Preferred
RONCP) announced today an Offer to owners of its 12% Cumulative
Convertible Preferred Stock to exchange their shares of Preferred Stock
for shares of Common Stock at the rate of 1.7 shares of Common for each
share of Preferred. The Exchange Offer will expire on December 16,
1996, unless extended. The specific terms and conditions of the
transaction are set forth in the Offering documents which are being
mailed and distributed tomorrow.
The terms of the Exchange Offer represent a 70% premium over the stated
conversion rate of one share of Common for each share of Preferred. The
Exchange Offer exceeds the Redemption Price of the Preferred and will
result in a significant increase in the market value of the
shareowner's investment in the Company.
"Through the issuance of Common Stock for Preferred," Louis V. Aronson
II, President and Chief Executive Officer, stated, "the Company will be
able to eliminate its liability for presently unpaid and future
Preferred dividends, which are becoming an increasing burden on the
Company's future." Preferred shares tendered and accepted will be
retired.
The Company stated its expectation that the issuance of the additional
Common shares will increase the Common Stock's market liquidity and
serve to promote the growth and financial strength of the Company. The
Company is barred by the terms of the Preferred Stock from paying
dividends on the Common Stock until all accrued dividends on the
Preferred have first been paid.
The issuance of additional Common Stock will increase the book value
per Common share to $0.79 compared to a current $(0.04) per share, an
increase of $0.83 per share.
Ronson Corporation is the owner of Ronson Consumer Products Corporation
and Ronson Corporation of Canada, Ltd., manufacturers and marketers of
Ronson consumer products, including butane and liquid fuel lighters and
components, a multi-use penetrant spray, a spot remover and a surface
protectant; and Ronson Aviation, Inc., a fixed base operator of
aircraft operations including aircraft sales, charters, hangar
facilities, avionics and other services.
Further information concerning the Exchange Offer may be obtained by
contacting the Information Agent, Morrow & Co., Inc., (telephone
1-800-566-9058).
<PAGE>
RONSON CORPORATION
NOTICE OF GUARANTEED DELIVERY
(Not to be used for Signature Guarantee)
As set forth in the Offering Circular dated November 15, 1996 (the
"Offering Circular") in the section entitled "The Exchange Offer-Guaranteed
Delivery Procedures", this form or one substantially equivalent hereto must be
used to accept the Exchange Offer if certificates for shares of Preferred Stock,
no par value, of Ronson Corporation are not immediately available or time will
not permit such holder's certificates or other required documents to reach the
Exchange Agent prior to the Expiration Time (as defined in the Offering
Circular) of the Exchange Offer. This form may be delivered by hand or mail to
the Exchange Agent.
To: Registrar and Transfer Company, Exchange Agent
By Mail, Hand or By Hand Only:
Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
c/o The Depository Trust Co.
Transfer Agent Drop
10 Commerce Drive 55 Water Street, 1st Floor
Cranford, NJ 07016 New York, NY 10041-0099
For information:
1-800-368-5948
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the Instructions thereto, such
signature guarantee must appear in the applicable space provided in this notice
and in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Ronson Corporation the shares of
Ronson Corporation Preferred Stock listed below, upon the terms of and subject
to the conditions set forth in the Offering Circular and the related Letter of
Transmittal and the instructions thereto, receipt of which is hereby
acknowledged, pursuant to the guaranteed delivery procedures set forth in the
Offering Circular, as follows:
Certificate No. Number of Shares
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Sign Here
___________________________________
___________________________________
Signature(s)
___________________________________
Number and Street or P.O. Box
Dated:_______________,1996 ___________________________________
City, State, Zip Code
__________________________________ ___________________________________
Signature(s) Guaranteed Authorized Signature(s)
<PAGE>
GUARANTEE
(Not to be used for Signature Guarantee)
The undersigned, a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program, (a) represents and guarantees
that the above-named person(s) "own(s)" the shares of Ronson Corporation
Preferred Stock tendered hereby within the meaning of Rule 14c-4 of the
Securities Exchange Act of 1934, as amended, and (b) guarantees delivery to the
Exchange Agent of certificates for the shares of Ronson Corporation Preferred
Stock tendered hereby, in proper form for transfer or delivery of such shares of
Ronson Corporation Preferred Stock pursuant to procedures for book-entry
transfer, in either case with delivery of a properly completed and duly executed
Letter of Transmittal and any other required documents, unless an Agent's
Message is utilized, all within three trading days after the date hereof.
_______________________________
Firm Name (Print)
_______________________________
Authorized Signature
_______________________________
Number and Street or P.O. Box
_______________________________
City, State, Zip Code
_______________________________
Area Code and Telephone Number
Date:____________________,1996
DO NOT SEND CERTIFICATE OR ANY OTHER REQUIRED DOCUMENTS WITH
THIS FORM. THEY SHOULD BE SENT WITH THE LETTER OF
TRANSMITTAL (UNLESS A BOOK-ENTRY TRANSFER FACILITY IS USED).
