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As filed with the Securities and Exchange Commission on July 2, 1998
Registration Number 333-46277
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Pre-Effective Amendment No 2
To
Form S-3
Registration Statement Under the Securities Act of 1933
CCAIR, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 56-1428192
(State or other jurisdiction or incorporation or organization) (I.R.S. Employer Identification
Number)
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P. O. Box 19929
Charlotte, North Carolina 28219-0929
(Address of principal executive offices)
Kenneth W. Gann, President
CCAIR, Inc.
P. O. Box 19929
Charlotte, North Carolina 28219-0929
(704) 359-8990
(Name, address and telephone number, including area code, of agent for service)
Copy to:
W. Scott Cooper, Esquire
Rayburn, Moon & Smith, P.A.
227 W. Trade Street, Suite 1200
Charlotte, NC 28202
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
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If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Calculation of Registration Fee
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to Offering Price Aggregate Amount of
To be Registered Be Registered Per Share Offering Price Registration Fee
Common Stock (par value
$.01 per shares) 545,000 shares $3.1875(1) $1,737,187.50 $ 512.47
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the average of the high and low prices of the Company's Common Stock as
of February 11, 1998, as reported on the Nasdaq SmallCap Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED July 2, 1998
PROSPECTUS
CCAIR, INC.
545,000 Shares of Common Stock
This Prospectus relates to an aggregate of 545,000 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of CCAIR, Inc., a
Delaware corporation (the "Company"), being sold by certain shareholders of the
Company (the "Selling Shareholders"). See "Selling Shareholders." The Company
will not receive any proceeds from the sale of the Shares by the Selling
Shareholders.
The Company has registered the Shares under the Securities Act of 1933, as
amended (the "Securities Act"), for sale by the Selling Shareholders. The
Selling Shareholders have advised the Company that they may from time to time
sell all or part of the Shares in one or more transactions (which may involve
block transactions) in the over-the-counter market, on the Nasdaq SmallCap
Market (or any exchange on which the Shares may then be listed), in negotiated
transactions, through the writing of options on the Shares (whether such options
are listed on an options exchange or otherwise), or a combination of such
methods of sale, at market prices prevailing at the time of such sales or at
negotiated prices. The Selling Shareholders may effect such transactions by
selling the Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders or purchasers of the Shares for whom
they may act as agent (which compensation may be in excess of customary
commissions). The Selling Shareholders may also pledge the Shares as collateral
for margin accounts or loans and the Shares could be resold pursuant to the
terms of such accounts or loans. In connection with such sales, the Selling
Shareholders and any participating brokers and dealers may be deemed to be
"underwriters" as defined in the Securities Act. Neither the Company nor the
Selling Shareholders can presently estimate the amount of commissions or
discounts, if any, that will be paid by the Selling Shareholders on account of
their sale of the Shares from time to time. The Company will pay all expenses,
estimated to be approximately $31,000, in connection with this offering,
other than underwriting and brokerage commissions, discounts, fees and counsel
fees and expenses incurred by the Selling Shareholders.
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The Company's Common Stock is listed on the Nasdaq SmallCap Market under the
symbol ("CCAR"). On June 29, 1998, the last reported sale price for the
Common stock was $4.19 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 2, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Northeast Regional Office, 7 Word Trade
Center, Suite 1300, New York, NY 10048 and at the Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such materials may
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Copies of each
document may also be obtained through the Commission's Internet address at
http://www.sec.gov. The Common Stock of the Company is quoted on the Nasdaq
SmallCap Market. Reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the Nasdaq Stock Market, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act with respect to the
Shares offered hereby. This Prospectus, which is a part of the Registration
Statement, does not contain all the information set forth in, or annexed as
exhibits to, the Registration Statement, certain portions of which have been
omitted pursuant to rules and regulations of the Commission. For further
information with respect to the Company and the Shares, reference is made to the
Registration Statement, including the exhibits thereto. Copies of the
Registration Statement, including the exhibits, may be obtained from the Public
Reference Section of the Commission at the aforementioned address upon payment
of the fee prescribed by the Commission. Copies of each document may also be
obtained through the Commission's internet address at http://www.sec.gov. The
summaries contained in this Prospectus of additional information included in the
Registration Statement or any exhibit thereto are qualified in their entirety by
reference to such information or exhibit.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents which have been filed by the Company with the Commission
pursuant to the Exchange Act or the Securities Act are incorporated by reference
in this Prospectus:
(i) The Company's Definitive Proxy Statement on Schedule 14A, as
filed with the Commission on May 22, 1998 (File No. 0-17846);
(ii) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, as filed with the Commission on May 15,
1998 (File No. 0-17846);
(iii) The Company's Transition Report on Form 10-K for the six-month
period ended December 31, 1997, as filed with the Commission
on May 11, 1998 (File No. 0-17846);
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(iv) The Company's Current Report on Form 8-K, dated February 9,
1998, as filed with the Commission on February 10, 1998 (File
No. 0-17846); and
(v) The Company's Registration Statement on Form 8-A dated June
26, 1989, as filed with the Commission on June 27, 1989 (File
No. 0-17846).
In addition, all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Shares offered hereby shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of filing of such documents.
Any information contained herein or in a document incorporated by reference
herein shall be deemed to be modified or replaced for purposes of this
Prospectus to the extent that information contained herein or in any other
subsequently filed document which also is incorporated by reference herein
modifies or replaces such information. Any such information so modified or
replaced shall not be deemed, except as so modified or replaced, to constitute a
part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of any such person, a copy of any and all of
the above documents (not including exhibits to any of such documents unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Such requests should be addressed to the
Secretary, CCAIR, Inc., P. O. Box 19929, Charlotte, North Carolina 28219-0929.
THE COMPANY
CCAIR, Inc. (the "Company") is a Charlotte, North Carolina based regional air
carrier providing regularly scheduled passenger service to 26 cities in Georgia,
Kentucky, Ohio, North Carolina, South Carolina, Virginia, and West Virginia, as
well as Washington, D.C., primarily from a hub at the Charlotte/Douglas
International Airport. The Company currently operates a fleet of 26 turboprop
passenger aircraft with approximately 1,380 weekly scheduled departures over a
route system covering approximately 288,000 miles. The Company was incorporated
under Delaware law in July 1984 under the name Sunbird Airlines 1984, Inc., for
the purpose of purchasing substantially all of the assets of Sunbird Airlines,
Inc. The Company changed its name to CCAIR, Inc., in January 1986. The mailing
address and telephone number of the Company are:
CCAIR, Inc.
P. O. Box 19929
Charlotte, NC 28219-0929
(704) 359-8990
The Company's business has principally involved providing service for business
travelers from small- and medium-sized communities in its market area to
connecting flights of major carriers, principally US Airways, Inc. ("US
Airways"), at a hub operation of US Airways at the Charlotte/Douglas
International Airport. In addition, the Company operates a small number of
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flights into Raleigh, North Carolina. In order to market the Company's services,
the Company has an agreement with US Airways that permits the Company to operate
under the name "US Airways Express" and to charge their joint passengers on a
combined basis with US Airways. (See discussion under "Risk Factors Relationship
With US Airways" below). The Company believes that its use of US Airways' "US"
flight designator code continues to be the most significant factor contributing
to its ability to compete for passengers and to its historical growth.
The Company has changed its fiscal year-end from the twelve month period ended
June 30 to the twelve months ended December 31. The financial statements
incorporated by reference into this Prospectus from the Transition Report on
Form 10-K (See page 2) cover the period from July 1, 1997 through December 31,
1997 (the "Transition Period").
RISK FACTORS
The shares offered hereby involve a high degree of risk. Prospective investors
should carefully consider, among other things, the following factors before a
decision is made to purchase any shares. This Prospectus contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934 and the Company
intends that such forward-looking statements be subject to the safe harbors for
such statements under such sections. The forward-looking statements herein are
based on current expectations that involve a number of risks and uncertainties.
Such forward-looking statements are based on numerous assumptions, including,
but not limited to, the assumptions that the US Airways Agreement (as defined
below) will be extended, the introduction of new aircraft to the fleet will
yield improved operating results and a reduction in costs per available seat
mile, and the Company will obtain markets under an extended Agreement that will
provide opportunities for profitable operations.
The foregoing assumptions are based on judgments with respect to, among other
things, future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the Company's control. Accordingly, although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any such assumption could prove to be inaccurate and, therefore,
there can be no assurance that the results contemplated in forward-looking
statements will be realized. The forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from
those set forth in or implied by the forward-looking statements, including, but
not limited to, the risk of increases in the cost of fuel or the lack of
availability of fuel, the Company's inability to improve performance with new
aircraft, downturn in general economic conditions and in the operating condition
of US Airways in particular and the unavailability of pilots and other personnel
necessary for current or expanded operations.
Relationship with US Airways. Substantially all of the Company's passenger
revenue is generated by passengers who are connecting with US Airways flights
and is determined under an Agreement for the sharing of joint passenger fares
and division of revenue with US Airways (the "Agreement"). The Agreement expires
on October 31, 1998. The Agreement provides that it may be terminated upon 180
days prior written notice for any reason by either US Airways or the Company or
upon ten (10) days prior written notice by US Airways under certain conditions,
including if: (i) the Company fails to maintain at least a minimum required
operating schedule; (ii)
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during any one month the Company's flight completion percentage is less than 96%
due to cancellations attributable to maintenance or operational deficiencies
within the Company's control; (iii) the Company fails to comply with the
trademark licensing provisions of the Agreement; (iv) the initiation of a
bankruptcy or similar proceeding for the Company or its assets; or (v) there is
a change of control or ownership of 51% or more of the Company's Common Stock
without the consent of US Airways.
The Agreement provides that US Airways will set joint fares and the method of
proration of joint fares between US Airways and the Company. The Agreement also
provides that US Airways can establish the charges for handling passengers and
reservations for passengers carried by the Company. The Company consults with US
Airways in regard to changes in fares, proration and charges, but US Airways
does not need the consent of the Company to implement those fares, prorations or
charges. While US Airways requires the connecting passengers provided by the
Company for its operations, the Company's only method to object to those fares,
prorations or charges is to seek to cancel the Agreement. Cancellation of the
Agreement would require the Company to seek a new service agreement with another
major carrier, because its operations are not viable as a stand-alone carrier.
The Agreement does not prevent US Airways from serving markets that the Company
currently serves. If US Airways chose to serve a substantial number of routes
presently served by the Company or chose to replace Company flights with its own
flights or flights of its wholly owned regional carriers, there would be a
material adverse effect on the Company's business and the Company may have to
terminate its passenger operations as these presently exist. Although there is
no assurance that US Airways will not take any such actions or that the
Agreement will not be terminated or amended prior to the expiration date, the
Company believes that the Agreement is beneficial to both the Company and US
Airways and that there are significant incentives for the continuation of the
Agreement.
The Company and US Airways have begun negotiations for an extension of the
Agreement. The principal focus of these negotiations has been the locations that
the Company would service under the extended Agreement and the aircraft that the
Company would use to provide the service. As described below, the Company has
substantially completed a change of the composition of its fleet of aircraft.
During the last nine-month period, the Company has consistently exceeded US
Airways' performance goals. Thus, the Company believes that its relationship
with US Airways is good and that the Agreement will be extended for a minimum of
five (5) years. However, the extension of the Agreement is within the discretion
of US Airways. The Company can offer no assurances that an extension of the
Agreement will ultimately be obtained.
Because of the Company's relationship with US Airways, the Company's business
also could be adversely affected by events that adversely affect US Airways or
by changes in business strategies of US Airways. For example, if US Airways were
adversely affected by work stoppages or other labor difficulties, the Company's
connecting passenger traffic from US Airways would be reduced and the Company's
ability to provide service to passengers desiring US Airways connecting flights
likewise would be adversely affected. If US Airways were to decide to curtail
growth at its Charlotte hub or reduce its operations in Charlotte, the Company's
operations and prospects for continued growth would be adversely affected. The
Company is not aware of any such developments.
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Nature of the Airline Industry. The commercial airline industry in the United
States has undergone major structural changes since it was deregulated by
Congress in the latter part of 1978. In the ensuing period, there has been
substantial consolidation and integration of both major and regional carriers,
including the acquisition or association of most regional carriers by or with
major carriers. Such consolidation and integration, together with automated
computer reservation systems, "hub and spoke" route systems and marketing
programs such as frequent flyer programs have substantially influenced
competitive conditions. The Company believes that it has properly positioned
itself to benefit from these structural realities. However, any event which
causes a material change in the Company's ability to benefit from these factors,
such as termination or modification of its relationship with US Airways could
cause these forces to work against the Company and have a material adverse
effect on its results.
High Operating and Financial Leverage. As is characteristic of the airline
industry, the Company is subject to a high degree of financial and operating
leverage. Due to high fixed costs, the expenses of each flight do not vary
proportionately with the number of passengers carried, but the revenues
generated from a particular flight are directly related to the number of
passengers carried. Accordingly, while a decrease in the number of passengers
carried would cause a corresponding decrease in revenue if not offset by higher
fares, it may result in a disproportionately greater decrease in profits.
The airline industry is also sensitive to cyclical downturns in the general
economy. Because a substantial portion of airline travel, both personal and to
lesser extent business, is discretionary, the industry has historically tended
to experience weaker financial results during economic downturns. The operating
and financial results of the Company may be negatively impacted by any downturn
in national or regional economic conditions.
Aircraft Fuel Costs. The cost of fuel is a major component of operating expense
for all airlines. In the last two fiscal years, the Company experienced
significant increases in fuel expense as the price of fuel rose from 67.1(cents)
per gallon to 93.8(cents) per gallon. While the price per gallon has dropped to
approximately 63(cents) per gallon in April 1998, there can be no assurance that
increases in fuel costs will not be substantial, or that supplies will remain
plentiful. Substantial increases in the cost of fuel, or a reduction in fuel
supplies, can have an adverse effect on the Company's income and growth
prospects if increases are not passed on to its passengers through higher fares,
or adequate fuel cannot be acquired to support operations.
Pilot Turnover. In addition, in certain areas of the country, pilot turnover has
become a significant issue among regional carriers as major carriers have
satisfied their expanding demand for experienced commercial pilots by hiring
increasing numbers of regional pilots. To date, pilot turnover has not been a
major problem for the Company since there has been a ready supply of candidates
in the Company's operating area and the Company has been able to hire and train
sufficient numbers of new pilots to maintain its operations. However, no
assurance can be given that pilot turnover will not become a major problem in
the future, particularly as major carriers expand and require significant
additional pilots. Similarly, there can be no assurance that sufficient numbers
of new pilots will be available to support any future growth even if pilot
turnover does not become a major problem for the Company.
Maintenance Personnel Turnover. Aircraft maintenance personnel turnover is
becoming an important matter in the regional and major carrier airlines. As the
commercial aviation industry
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grows, with resulting expansion of aircraft fleets, the demand for qualified and
experienced maintenance personnel will also increase. To date, the Company has
been able to retain sufficient numbers of aircraft mechanics. However, no
assurance can be given that turnover and recruitment will not become a major
difficulty in the future, especially if the industry continues to experience
prosperity and growth.
New Aircraft Types; Change in Fleet Plan. On July 1, 1997, the start of the
Transition Period, the Company's passenger aircraft fleet consisted of nine (9)
Shorts 360 aircraft, fourteen (14) Jetstream 31 aircraft and four (4) de
Havilland Dash 8 aircraft. In anticipation of an extension of the Agreement with
US Airways and as a means to reduce operating expense, the Company restructured
its fleet. The Shorts 360 aircraft were not compatible with the anticipated
service requirements under an extended Agreement and maintenance expense for
these aircraft had dramatically increased due to age and the availability of
parts. The Jetstream 31 aircraft had limitations that were causing the
profitability of those aircraft to be restricted. The Company has an agreement
with the lessor for the Shorts 360 aircraft whereby the Company returned the
aircraft to the lessor in exchange for a promissory note in the amount of
$9,725,000. The Company has also entered into an agreement with the lessor for
the Jetstream 31 aircraft whereby the Company has exchanged its fleet of 14
Jetstream 31 aircraft for 20 newer and more powerful Jetstream Super 31
aircraft. The Company believes that these acquisitions will reduce operating
expense and improve performance measures, such as on-time departures and
arrivals, denied boardings and cancellations; however, there can be no assurance
that improved operating results will materialize or that the Agreement will be
extended as a result by US Airways.
Financial Effects of Change in Fleet Plan. The change in fleet plan described
above resulted in a charge to earnings of $11,397,000 relating to the settlement
of obligations for the returned aircraft and to a reduction in value of all
assets and leasehold improvements related to the returned aircraft. In addition,
the Company adopted a change in accounting principle with respect to overhauls
for engines, propellers, and landing gear. The Company implemented this change
so that the method of accounting would more closely emulate the requirements and
expenses of overhauls for those components under its new lease agreements.
Implementation of this change necessitated the write-off of previously
capitalized items in an amount of $12,982,000. As a result, the Company reports
a working capital deficit of approximately $16,733,628 as of March 31, 1998,
meaning that the Company does not have sufficient current assets to retire its
current liabilities. The Company plans to reduce this deficit by increasing its
current assets and reducing current liabilities and by converting current
liabilities into long-term liabilities. The restructuring of the aircraft fleet
is expected to reduce operating costs and provide cash flow to reduce current
liabilities. However, the Company's ability to achieve increases in cash flow is
dependent upon many factors outside of its control, such as fare discounting
that would adversely impact revenues, and increases in fuel costs that would
increase expenses. The Company intends to replace the $9,725,000 short-term note
referred to above with a long-term obligation. The Company's ability to change
the nature of its obligation will depend upon the net proceeds achieved from
sales by the lessor of the Company's common stock and the payment by the Company
of any deficiencies in the net proceeds achieved. The Company can offer no
assurances that cash flow increases or the conversion of short-term to long-term
liabilities will result in a significant reduction of its working capital
deficit.
Liquidity. The Company's ability to meet its liquidity requirements is dependent
upon its ability to obtain sufficient cash flow from operations. At March 31,
1998, the Company had cash and cash equivalents of $20,956. In addition to the
normal operating expenses incurred in scheduled airline operations, the Company
anticipates incurring expenditures related to the return of the Jetstream
aircraft. The return conditions entail performing certain engine overhauls and
other major component overhaul and repair per the original leases. These
expenditures are currently estimated to be approximately $700,000 in the
aggregate.
The key element to the operating results of the Company is the level of the
yield per revenue per passenger mile. While the yield for March and April, 1998
has met Company projections, the future yield could be affected by fare
discounting beyond the control of the Company. If operating cash flows and the
Company's $4,000,000 line of credit with an affiliate of British Aerospace are
insufficient to meet obligations, the Company may issue shares of Common Stock,
secure short-term loans from officers and directors or extend terms with trade
creditors. To the extent that the Company uses equity financing, shareholders'
interest in the Company will be diluted.
Competition. The principal competition for the Company is the air service
provided by major and other regional air carriers operating from hub airports in
Atlanta, Cincinnati, and Raleigh/Durham. From these hub airports, Delta Air
Lines ("Delta"), Midway Airlines ("Midway") and their affiliates offer service
to some destinations also served by US Airways through its hub operations at the
Charlotte/Douglas International Airport. The Company competes with Delta and
Midway and with regional air carriers that have joint marketing agreements with
them for passengers traveling to destinations served through hub airports. The
principal customers for these services are business travelers and competition is
based upon scheduling and flight connections, reliability and, to a lesser
extent, pricing. The Company constantly reviews its scheduling and the frequency
of its flights to reduce the layover time experienced in connecting with a US
Airways flight, in order to
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minimize the length of the combined trip and to compete with similar service
offered by Delta or Midway.
Reliance on Key Employee. The Company's operations are dependent upon the
services of its President, Mr. Kenneth W. Gann. The loss of Mr. Gann's services
could have a material adverse effect on the Company. The Company maintains a
$600,000 key-man life insurance policy on Mr. Gann, the proceeds of which are
payable to the Company. Mr. Gann serves the Company under a three-year renewable
employment agreement.
Dilution. The consummation of the offering made hereby will not result in
substantial dilution of existing shareholders of the Company. However, the
Company is not able to predict the effect, if any, this offering will have on
the market price for the Company's Common Stock.
Issuance of Additional Shares. The Company will continue to use shares of its
common stock to satisfy obligations and to provide cash flow. The Company has
issued rights to acquire shares of common stock as additional consideration for
loans, for services rendered to the Company and in connection with certain lease
arrangements. While the Company has issued those rights with exercise prices
equivalent to the market value of the shares on the date of issue, the rights
will generally be exercised only if the exercise price is less than the current
market price. In addition, the Company intends to use its shares of common stock
to satisfy obligations to the lessor of the Shorts aircraft returned by the
Company. Under agreement with that lessor, the lessor will sell shares in open
market transactions and credit the net proceeds of such sales to the obligations
owed by the Company. These transactions will increase the number of shares of
the Company's common stock that are held for sale and may adversely affect the
market price and the liquidity of the Company's common stock.
No Dividends. The Company has not paid any dividends on its Common Stock and
does not intend to pay dividends in the foreseeable future.
Listing; "Penny Stock" Rules. Although the Common Stock is listed on the Nasdaq
SmallCap Market, there can be no assurance that such listing will be maintained.
The Company currently does not meet certain of the Nasdaq listing maintenance
requirements and the Company has requested a temporary exception to these
requirements. There can be no assurance that Nasdaq will grant the exception. If
no exception is granted, the Common Stock would be subject to the rules
promulgated under the Securities Exchange Act of 1934 relating to "penny stocks"
which apply to non-Nasdaq Companies whose stock trades at less than $5 per share
or whose tangible net worth is less than $2,000,000. These rules require brokers
who sell securities subject to such rules to persons other than established
customers and "accredited investors" to complete certain documentation, make
suitability inquiries of investors and provide investors with certain
information concerning the risks of trading in the security. These rules may
restrict the ability of brokers to sell the Company's Common Stock and may
affect the ability of purchasers in this offering to sell such Common Stock in
the secondary market.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares
being offered by the Selling Shareholders hereunder. Expenses expected to be
incurred by the Company in connection with this offering are estimated at
approximately $31,000.
SELLING SHAREHOLDERS
The Shares covered by this Prospectus were acquired from the Company in a
private offering pursuant to a Common Stock Purchase Agreement (the "Purchase
Agreement") for an aggregate purchase price of $1,498,750 ($2.75 per share). The
offer and sale by the Company of the Common Stock to the Selling Shareholders
pursuant to the Purchase Agreement was made pursuant to an exemption from the
registration requirements of the Securities Act provided by Section 4(2)
thereof. The Purchase Agreement contains representations and warranties as to
each Selling Shareholder's status as an "accredited investor" as such term is
defined in Rule 501 promulgated under the Securities Act. In addition, the
Company agreed to reimburse certain legal expenses incurred by the Selling
Shareholders in connection with the sale of the Shares by the Company pursuant
to the Purchase Agreement in the amount of $9,500.
8
<PAGE>
Pursuant to the Purchase Agreement, each Selling Shareholder has represented
that he, she or it acquired the Shares for its own account as principal, for
investment purposes only, and not with a present view to, or for, the resale
distribution thereof, in whole or in part, within the meaning of the Securities
Act. The Company agreed, in the Purchase Agreement, to prepare and file a
registration statement no later than 10 business days after the effective date
of the Purchase Agreement and to bear all expenses in connection with the
offering, other than selling commissions, underwriting fees and stock transfer
taxes applicable to the Shares and all fees and disbursements of counsel for any
Selling Shareholder. Accordingly, in order to permit the Selling Shareholders to
sell the Shares when each deems appropriate, the Company has filed with the
Commission a Registration Statement on Form S-3, of which this Prospectus forms
a part, with respect to the resale of the Shares from time to time as described
herein and has agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep the Registration Statement
effective for a period of five (5) years or until all Shares offered hereby have
been sold pursuant thereto.
Prior to the acquisition of the Shares, only two of the Selling Shareholders had
a material relationship with the Company. Par Investment Partners, L.P., through
open market purchases, acquired 460,000 shares of Common Stock of the Company,
representing approximately 5.9% of the then outstanding shares of Common Stock,
prior to the acquisition of the Shares. Jonathan G. Ornstein is a limited
partner in Barlow Partners, L.P., a Texas limited partnership, that owned
approximately 6.6% of the outstanding shares of Common Stock of the Company
prior to the issuance of the Shares. Barlow Partners, L.P., has served as a
financial advisor and consultant to the Company in connection with the
replacement of the Shorts 360 aircraft. Upon consummation of the return of the
Shorts 360 aircraft, Barlow Partners, L.P., was issued warrants to acquire
150,000 shares of Common Stock. Mr. Ornstein made a short-term loan in the
amount of $350,000 to the Company in November 1997, and received warrants to
purchase 8,750 shares of Common Stock. Mr. Ornstein has also made short-term
loans in the amount of $350,000 in the months of March, April and May and has
received warrants to purchase an additional 26,250 shares of Common Stock.
The following table sets forth the names of the Selling Shareholders, the number
of shares of Common Stock owned beneficially by the Selling Shareholders as of
July 2, 1998 and the number of shares which may be offered by each of them
pursuant to this Prospectus. This information is based upon information provided
by the Selling Shareholders. There are currently no agreements, arrangements or
understandings with respect to the sale of any of the Shares by the Selling
Shareholders. The Shares are being registered to permit public secondary trading
of the Shares, and the Selling Shareholders may offer the Shares for resale from
time to time.
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Number of
Shares Beneficially Owned Shares Shares Beneficially Owned
Name of Prior to Offering Offered Hereby After The Offering(1)
-------- -------- -------------- ---------------------
Selling Shareholder Shares Percentage(2) Shares Percentage(2)
------------------- ------ ------------- ------ -------------
Robert Priddy 187,014 2.2% 100,000 87,014 1.0%
Bonderman Family
Limited Partnership 200,000 2.4% 200,000 0 --
Hakatak Enterprises, Inc.
Nominee(3) 223,750 2.7% 100,000 123,750 1.5%
Par Investment Partners, L.P. 685,000 8.1% 100,000 585,000 7.0%
Jonathan G. Ornstein(4) 459,700 5.5% 45,000 414,700 4.9%
---------- ---- -------- ---------- -----
Total 1,755,464 20.9% 545,000 1,210,464 14.4%
========= ===== ======= ========== =====
- ---------------
</TABLE>
(1) Assumes all Shares registered hereby are sold. Since the Selling
Shareholders may sell all, some or none of their Shares, no actual estimate
can be made of the aggregate number of Shares that each Selling Shareholder
will own upon completion of the offering to which this Prospectus relates.
(2) The total number of shares of common stock outstanding on July 2, 1998 was
8,415,695.
(3) Hakatak Enterprises, Inc., Nominee is the nominee name for shares held by
(a) HP Partners, L.P., a California limited partnership, the general
partner of which is Hakatak Enterprises, Inc., and (b) Tamir Hacker and
Terri Hacker. The shares shown are beneficially owned by Tamir Hacker and
Terri Hacker.
(4) Included are 370,200 shares owned of record by Barlow Partners, L.P., a
Texas limited partnership, that Mr. Ornstein may be deemed to own
beneficially on the basis of certain provisions in the partnership
agreement for Barlow Partners, L.P.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they may from time to
time sell all or part of the Shares in one or more transactions (which may
involve block transactions) in the over-the-counter market, on the Nasdaq
SmallCap Market (or any exchange on which the Shares may then be listed), in
negotiated transactions, through the writing of options on the Shares (whether
such options are listed on an options exchange or otherwise), or a combination
of such methods of sale, at market prices prevailing at the time of such sales
or at negotiated prices. The Selling Shareholders may effect such transactions
by selling the Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders or purchasers of the Shares for whom
they may act as agent (which compensation may be in excess of customary
commissions). The Selling
10
<PAGE>
Shareholders may also pledge the Shares as collateral for margin accounts or
loans and the Shares could be resold pursuant to the terms of such accounts or
loans. In connection with such sales, the Selling Shareholders and any
participating brokers and dealers may be deemed to be "underwriters" as defined
in the Securities Act. Neither the Company nor the Selling Shareholders can
presently estimate the amount of commissions or discounts, if any, that will be
paid by the Selling Shareholders on account of their sale of the Shares from
time to time. In addition to sales under the Registration Statement, Shares may
be sold by the Selling Shareholders through an applicable exemption from
registration, including, without limitation, pursuant to Rule 144 under the
Securities Act.
Under the securities laws of certain states, the Shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
certain states the Shares may not be sold unless the Shares have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.
The Selling Shareholders and other persons participating in the distribution of
the Shares offered hereby are subject to the applicable requirements of
Regulation M promulgated under the Exchange Act in connection with the sale of
the Shares. Under Rule 101 of Regulation M, the Selling Shareholders and other
persons participating in the distribution may not engage in market activities
with respect to the Common Stock for the applicable period thereunder prior to
the commencement of the distribution. In addition, Rule 102 of Regulation M will
prohibit Selling Shareholders and their affiliated purchasers from bidding for,
purchasing or attempting to induce any person to bid for or purchase shares of
Common Stock until the Selling Shareholders' participation in the distribution
is completed.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby has been passed upon
for the Company by Rayburn, Moon & Smith, P.A., Charlotte, North Carolina.
EXPERTS
The financial statements incorporated by reference in this prospectus and
registration statement have been audited by Arthur Andersen LLP, independent
public accountants and are incorporated herein by reference, in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
report.
11
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE 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.
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
PAGE
Available Information ..................................................................................... 2
Incorporation of Certain Information by Reference ......................................................... 2
The Company ................................................................................................ 3
Risk Factors ............................................................................................... 4
Use of Proceeds ............................................................................................ 8
Selling Shareholders ....................................................................................... 8
Plan of Distribution ...................................................................................... 10
Legal Matters .............................................................................................. 11
Experts .................................................................................................... 11
</TABLE>
545,000 SHARES
CCAIR, INC.
COMMON STOCK
----------------------------------------------
PROSPECTUS
----------------------------------------------
July 2, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as follows:
<TABLE>
<CAPTION>
<S> <C>
AMOUNT
------
Registration Fee ....................................................... $ 512.47
Nasdaq Listing Fee ..................................................... 5,450.00
Legal fees and expenses ................................................ 17,000.00
Accounting fees and expenses ........................................... 2,800.00
Miscellaneous .......................................................... 5,000.00
--------
Total ......................................................... $30,762.47
</TABLE>
ITEM 15..INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under provisions of Delaware law and the Company's Bylaws, directors, officers
and controlling persons of the Company may be entitled to indemnification by the
Company against liabilities arising out of any suit or proceeding, whether
civil, criminal, administrative or investigative, including a suit or proceeding
under the Securities Act of 1933, to which they were a party by reason of
serving as a director, officer, employee or agent of the Company. Such
provisions require the Company to indemnify any such person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding upon a determination, by a majority vote of a quorum of the
Board of Directors consisting of directors who were not parties to such action,
suit or proceeding, or by independent legal counsel in a written opinion, or by
the stockholders of the Company, that such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Absent such determination,
the Company may, by a vote of the disinterested directors or the stockholders
and to the extent permitted by applicable law, indemnify any such person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such suit or proceeding.
ITEM 16. EXHIBITS
The following exhibits are included as a part of this Registration Statement:
II-1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
4.1 Form of Common Stock Purchase Agreement*
5.1 Opinion of Rayburn, Moon & Smith, P.A.*
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Rayburn, Moon & Smith, P.A. (contained in
Exhibit 5.1)*
24.1 Reference is made to the Signatures section of this
Registration Statement for the Power of Attorney
contained therein
- ---------------
*Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the shares offered therein, and the offering
of such shares at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment any of
the shares being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the shares offered therein, and the offering of such shares at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the shares being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on this Pre-Effective Amendment No. 2 to Form S-3
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Charlotte, North Carolina, as of
July 2, 1998.
CCAIR, Inc.
By: /s/
--------------------
Kenneth W. Gann
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Kenneth W. Gann and Eric W. Montgomery true and
lawful attorneys-in-fact, each acting alone, with full powers of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all amendments, including any post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact or their substitutes, each acting alone, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated as of July 2, 1998.
/s/
- -----------------------------------------------------
Kenneth W. Gann, Chief Executive Officer,
President and Director (Principal Executive Officer)
/s/
- -----------------------------------------------------
Eric W. Montgomery, Vice President,
Secretary, Treasurer and Controller and Director
(Principal Financial Officer)
/s/
- -----------------------------------------------------
George Murnane, III, Director
/s/
- -----------------------------------------------------
Dean E. Painter, Jr., Director
/s/
- -----------------------------------------------------
Gordon Linkon, Director
/s/
- -----------------------------------------------------
K. Ray Allen, Director
<PAGE>
EXHIBIT INDEX
EXHIBIT
4.1 Form of Common Stock Purchase Agreement*
5.1 Opinion of Rayburn, Moon & Smith, P.A.*
23.1 Consent of Arthur Andersen LLP
- ---------------
*Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated April 17, 1998, on the Company's 1997
financial statements and schedules included in the Company's Transition Report
on Form 10-K for the six-month period ended December 31, 1997, into this
Pre-Effective Amendment No. 2 to the Registration Statement on Form S-3.
Arthur Andersen LLP
Charlotte, North Carolina
July 1, 1998
<PAGE>
