<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Cedar Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
CEDAR GROUP, INC.
April 25, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cedar Group, Inc. (the "Company") which will be held at 11:00 A.M. on Wednesday,
May 15, 1996, at the Ritz Carlton Hotel, 1228 Rue Sherbrooke Ouest, Montreal,
Quebec. Your Board of Directors and management look forward to personally
greeting those stockholders able to attend.
As part of our effort to improve the quality and effectiveness of
communications with our stockholders, we have changed the presentation of
certain information in this year's Proxy Statement. Management's Discussion and
Analysis of the Company's Financial Condition and Results of Operations, which
is included in the Company's filing with the Securities Exchange Commission each
year, is included as Exhibit "B" to the Proxy Statement.
At the meeting, stockholders will be asked to elect two directors, to
approve a change in the Company's name to "Dominion Bridge Corporation," to
approve an amendment to the Company's Certificate of Incorporation to increase
the number of shares of Common Stock and Preferred Stock the Company is
authorized to issue, to ratify the appointment of Deloitte & Touche as the
Company's auditors, and to consider such other matters as may properly come
before the meeting. These matters are discussed in greater detail in the
accompanying proxy statement.
Your Board of Directors recommends a vote FOR the election of directors,
FOR the change in name, FOR the amendment to the Company's Certificate of
Incorporation to increase the amount of authorized Common Stock and Preferred
Stock and FOR the ratification of Deloitte & Touche as the Company's independent
auditors.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the meeting. You
are requested to sign, date and mail the enclosed proxy promptly.
We wish to thank our stockholders for their participation and continued
support.
Sincerely,
MICHEL L. MARENGERE
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
CEDAR GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1996
April 25, 1996
To the Stockholders of CEDAR GROUP, INC.:
The Annual Meeting of Stockholders of Cedar Group, Inc. (the "Company")
will be held at the Ritz Carlton Hotel, 1228 Rue Sherbrooke Ouest, Montreal,
Quebec, on Wednesday, May 15, 1996, at 11 o'clock a.m., for the following
purposes:
(1) to elect two directors in accordance with the By-Laws;
(2) to change the name of the Company to "Dominion Bridge
Corporation";
(3) to consider and vote for an amendment to the Company's Certificate
of Incorporation to:
(a) increase the number of shares of Common Stock the Company is
authorized to issue; and
(b) increase the number of shares of Preferred Stock the Company is
authorized to issue;
(4) to ratify the appointment of Deloitte & Touche, independent
auditors, as auditors for the Company; and
(5) to transact such other business as may properly come before the
meeting and at any adjournment(s) thereof.
A copy of the Annual Report for the fiscal year ended September 30, 1995 is
enclosed for your information.
Only stockholders of record as of the close of business on April 11, 1996
will be entitled to vote at the meeting. Stockholders are entitled to vote at
the Annual Meeting either in person or by proxy. THOSE WHO ARE UNABLE TO ATTEND
THE MEETING ARE REQUESTED TO READ, COMPLETE, SIGN AND MAIL THE ENCLOSED FORM OF
PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
MICHELINE PRUD'HOMME
Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, OR
TELEFAX BOTH SIDES OF THE PROXY TO (514) 634-2448
<PAGE> 4
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cedar Group, Inc. (the "Company") to be
voted at the Annual Meeting of Stockholders of the Company on May 15, 1996 and
at any adjournment or adjournments of the meeting (the "Meeting") for the
purposes described in the foregoing notice of the Meeting. Proxies which are
validly executed by stockholders and which are received by the Company no later
than the business day preceding the Meeting will be voted in accordance with the
instructions contained thereon. If no instructions are given, a proxy will be
voted for the election of the two nominees proposed for election as directors,
for the amendment to change the name of the Company to "Dominion Bridge
Corporation," for the approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock, for
the approval of an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Preferred Stock and for the
ratification of Deloitte & Touche as auditors of the Company.
The securities entitled to vote at the Meeting consist of shares of Common
Stock of the Company. The number of outstanding shares of Common Stock at the
close of business on April 11, 1996 was 15,897,582. Each share of Common Stock
is entitled to one vote, and nominees receiving a plurality of the votes cast
will be elected as directors. Only holders of record at the close of business on
April 11, 1996 will be entitled to vote at the Meeting. The holders of a
majority of the outstanding shares of Common Stock must be present in person or
represented by proxy at the Meeting in order to constitute a quorum for the
transaction of business. Abstentions and broker non-votes will be counted for
the purpose of determining a quorum but neither will be counted in the election
of directors, in the voting on the change of the Company's name, the amendment
to the Certificate of Incorporation to authorize additional shares of Common and
Preferred Stock as described herein or in the voting on the ratification of
Deloitte & Touche as auditors of the Company.
A copy of the Company's Annual Report for the fiscal year ended September
30, 1995 accompanies this Proxy Statement. No material contained in the Annual
Report is to be considered a part of the proxy solicitation material.
The mailing address of the Company's executive office is 500 Rue Notre
Dame, Lachine, Quebec H8S 2B2. The approximate date on which this Proxy
Statement and the form of proxy was first mailed or given to stockholders was
April 25, 1996.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the form of proxy accompanying this Proxy Statement
are officers of the Company. A stockholder of the Company has the right to
appoint a person other than the persons specified in such form of proxy, who
need not be a stockholder of the Company, to attend and act for him and on his
behalf at the Meeting. Such right may be exercised by striking out the names of
the persons specified in the form of proxy, inserting the name of the person to
be appointed in the blank space so provided, signing the form of proxy and
returning it in the reply envelope or otherwise to the Company at 500 Rue Notre
Dame, Lachine, Quebec, H8S 2B2.
Any stockholder who executes and returns a form of proxy may revoke it:
(a) by depositing an instrument in writing executed by him or by his
attorney authorized in writing at the principal office of the Company, 500
Rue Notre Dame, Lachine, Quebec, H8S 2B2, at any time up to and including
the last business day preceding the Meeting or any adjournment thereof;
(b) by depositing such instrument in writing with the Chairman of the
Meeting on the day of the Meeting or any adjournment thereof; or
(c) by any other manner permitted by law.
IN LIEU OF MAILING THE SIGNED AND DATED PROXY TO THE COMPANY, A STOCKHOLDER
MAY DELIVER A SIGNED AND DATED PROXY BY FACSIMILIE TO THE COMPANY (PLEASE
REMEMBER TO SEND BOTH SIDES) AT (514) 634-2448.
<PAGE> 5
ELECTION OF DIRECTORS
The two persons listed below have been nominated by the Board of Directors
to serve as directors until the 1999 Annual Meeting of Stockholders. It is the
intention of the persons named in the accompanying form of proxy to vote such
proxy for the election as directors of the following nominees. In the event that
any nominee is unable to serve or will not serve as a director, it is intended
that the proxies solicited hereby will be voted for such other person or persons
as may be nominated by management. Vacancies in the Board of Directors may be
filled by the Board of Directors, and any director chosen to fill a vacancy
would hold office until the next election of the class for which such director
had been chosen.
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE AT YEAR IN WHICH SERVICE
THE 1999 ANNUAL MEETING PRINCIPAL OCCUPATION AS A DIRECTOR BEGAN
- ------------------------------------------ ----------------------------- ---------------------
<S> <C> <C>
Reynald Lemieux, 69....................... President, Placement R.N.S., 1995
Inc.
Rene Amyot, 68............................ Attorney (self-employed) 1993
</TABLE>
Reynald Lemieux was elected Director of the Company in February 1995. Mr.
Lemieux graduated in commerce from Laval University and has been involved in
real estate as an owner and developer for the past 40 years. He is currently a
director of a number of privately-held corporations in the real estate sector
and is also the President and majority shareholder of Placement R.N.S., Inc., a
firm specializing in real estate and other investments. Mr. Lemieux is a member
of the Audit Committee of the Board of Directors.
Rene Amyot was elected Director of the Company in October 1993. Mr. Amyot
graduated in law from Laval University in Quebec City and received a Masters
Degree in Business Administration (M.B.A.) from Harvard University. Mr. Amyot is
a Queen's Counsel in Canada, a member of the Order of Leopold in Belgium, and a
former Attache d'Affaires to the King of Belgium and to the Vatican. Mr. Amyot
was formerly Chairman of Air Canada, and has served on the Board of Directors of
the Bank of Nova Scotia, Rothman's Inc. and several other large international
companies.
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE YEAR IN WHICH SERVICE
AT THE 1997 ANNUAL MEETING PRINCIPAL OCCUPATION AS A DIRECTOR BEGAN
- ------------------------------------------ ----------------------------- ---------------------
<S> <C> <C>
Michel L. Marengere, 48................... Chairman and Chief Executive 1993
Officer of the Company
Louis Berlinguet, 69...................... President, Conseil de la 1995
Science et de la Technologie
du Quebec
</TABLE>
Michel L. Marengere was elected Chairman and Chief Executive Officer of the
Company effective as of October 7, 1993. Mr. Marengere graduated from the
University of Ottawa in business administration. During the previous five years,
prior to his appointment as Chairman and Chief Executive Officer of the Company,
Mr. Marengere was President and Chief Executive Officer of Edinov Corporation.
Louis Berlinguet was elected Director of the Company in August, 1995. Dr.
Berlinguet obtained a B.Sc. (Honours) from the University of Montreal in 1947
and a Ph.D. in Chemistry from Laval University in 1950. Dr. Berlinguet became an
officer of the Order of Canada (1974), an officer of the Order of Quebec (1990),
was elected to the Royal Society of Canada (1969) and was named a Fellow of the
Chemical Institute of Canada (1957). He has received honorary degrees from the
Universite du Quebec and the Universite du Sherbrooke. In 1981 he was awarded
the Jacques Rousseau Prize and in 1991 was elected member "Emeritus" by l'
ACFAS. In 1992, the Order of Professional Chemists made him a "Compagnon de
Lavoisier". He is now President of the "Conseil de la Science et de la
Technologie du Quebec" (1990-), President of the Order of Quebec, (1994-) and
President of the Quebec Advisory Committee on the Information Highway (1995-).
2
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE YEAR IN WHICH SERVICE
AT THE 1998 ANNUAL MEETING PRINCIPAL OCCUPATION AS A DIRECTOR BEGAN
- ------------------------------------------ ----------------------------- ---------------------
<S> <C> <C>
The Honourable Marc Lalonde, P.C., O.C., Partner in the law firm of 1995
Q.C., 66................................ Stikeman, Elliott in Montreal
</TABLE>
The Honourable Marc Lalonde was elected as Director of the Company on March
3, 1995. Mr. Lalonde graduated in law from the University of Montreal where he
received a Masters Degree in Law. He also attended Oxford University and
received a Masters Degree in political and economic sciences. During 1968-1972,
Mr. Lalonde served as principal secretary in the office of the then Canadian
Prime Minister, The Honourable Pierre E. Trudeau. He was elected a member of the
Canadian Parliament in 1972 for the Constituency of Outremont and was also
appointed Minister of Health and Welfare. Mr. Lalonde also served as Minister
responsible for the status of Women in Canada from 1974 to 1979. In 1977 and
1978 he also served as Minister responsible for Federal Provincial Relations. In
1978 he was appointed Minister of Justice and Attorney General of Canada, and in
1980 Mr. Lalonde was appointed Minister of Energy, Mines and Resources. Mr.
Lalonde served as Canada's Finance Minister from 1982-1984, and in December,
1989 he received from the Governor General of Canada the Order of Canada. In
1984, Mr. Lalonde joined the law firm of Stikeman, Elliott, an international law
firm with offices in Montreal and other locations. In addition to his law
practice, Mr. Lalonde is a member of the Board of Directors of Citibank Canada,
Candev, Inc., Resources Orleans, Inc., the American Arbitration Association, The
Hotel Dieu Hospital in Montreal, and is also a member of the International
Advisory Council to the Parliament of Ukraine. In 1992, he received an Honourary
Doctorate Degree from the University of Limbourg in Maastricht for his
innovative contributions to the health sector.
BOARD MEETINGS AND COMMITTEES
There are currently five (5) members of the Board of Directors. During the
fiscal year ended September 30, 1995, there were eleven (11) meetings of the
Board. All members of the Board attended at least 75% of the total number of
meetings of the Board and any committee of which they are a member. The Board of
Directors established an Audit Committee in February 1995. During the fiscal
year ended September 30, 1995, there were four (4) meetings of the Audit
Committee. All members of the Audit Committee attended at least 75% of the total
number of Audit Committee meetings.
The Audit Committee has primary responsibility to review accounting
procedures and methods employed in connection with audit programs and related
management policies. Its duties include (1) selecting the independent auditors
for the Company, (2) reviewing the scope of the audit to be conducted by them,
(3) meeting with the independent auditors concerning the results of their audit
and (4) overseeing the scope and accuracy of the Company's system of internal
accounting controls. The Audit Committee is the principal liaison between the
Board of Directors and the independent auditors for the Company. The members of
the Audit Committee presently consist of Messrs. Amyot (Chairman), Berlinguet
and Lemieux. During the fiscal year ended September 30, 1995, the members of the
Audit Committee were Rene Amyot (Chairman), Michel Marengere and Reynald
Lemieux.
In April, 1995, the Board of Directors also established a Search Committee
for the purpose of selecting executive officers for the Company. The members of
the Search Committee are Messrs. Lemieux (Chairman), Amyot and Lalonde. During
the fiscal year ended September 30, 1995, there were seven (7) meetings of this
Committee and all of its members attended at least 75% of the meetings of the
Committee.
Similarly, in April, 1995, the Board of Directors established a
Compensation Committee, which includes as its members Messrs. Lalonde
(Chairman), Amyot and Lemieux. The Committee was established to review the 1995
Stock Option Plan and to assess the compensation payable to any executive
officers joining the Company. The Committee met two (2) times during the fiscal
year ended September 30, 1995, and all of its members attended the two meetings
held by the Committee.
3
<PAGE> 7
EXECUTIVE COMPENSATION
The following table discloses, for the fiscal year ended September 30, 1995
("Fiscal 1995") and September 30, 1994 ("Fiscal 1994"), individual compensation
information relating to the Chief Executive Officer and the President and Chief
Operating Officer of the Company. No other executive officer received
compensation in excess of $100,000 during Fiscal 1995. Neither of the named
individuals were employed by the Company prior to October 1, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
--------------------------------
AWARDS
ANNUAL COMPENSATION -------------------- PAYOUTS
---------------------------- RESTRICTED OPTIONS/ ----------
SALARY BONUS OTHER ANNUAL STOCK SARS LTIP/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION AWARD(S)($) (#) PAYOUTS($) COMPENSATION
- ------------------------------- ---- ------- ----- ------------ ----------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michel L. Marengere............ 1995 360,000 0 0 0 500,000 0 0
Chairman of the Board of
Directors, Chief Executive
Officer and Director 1994 0 0 0 0 175,000 0 $228,883
Nicolas Matossian.............. 1995 240,000 0 0 0 300,000 0 0
President and Chief Operating
Officer 1994 0 0 0 0 0 0 0
</TABLE>
The following table discloses individual grants of stock options and
freestanding SARs made to the named executive officers.
GRANT OF STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS/
SECURITIES SARS GRANTED
UNDERLYING FOR EMPLOYEES EXERCISE OR
OPTIONS/SARS IN FISCAL BASE PRICE
NAME GRANTED(#) YEAR ($/SH) EXPIRATION DATE
- ----------------------------------- ------------ -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Michel L. Marengere................ 500,000 35.9% $4.12 February 1, 1998
Nicolas Matossian.................. 365,000 26.2% $4.12 February 1, 1998
</TABLE>
The following table shows information regarding the exercise of stock
options during Fiscal 1995 by the named executives and the number and value of
any unexercised stock options held by them as of September 30, 1995:
AGGREGATED OPTION EXERCISES IN 1995 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FY-END(#) AT FY-END ($)
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE(1)
- ------------------------------------------ ----------- -------- ------------ ----------------
<S> <C> <C> <C> <C>
Michel L. Marengere....................... 0 $0 675,000/0 $1,349,750/0
Nicolas Matossian......................... 0 $0 300,000/0 $ 487,500/0
</TABLE>
- ---------------
(1) The value of the options is calculated based upon the market price of the
Company's Common Stock as of September 30, 1995, $5.75 per share, as
reported on NASDAQ.
4
<PAGE> 8
The Company has no retirement, pension or profit-sharing plans covering its
officers and directors and does not contemplate implementing any such plans at
this time. Although the Company has no formal bonus arrangements, bonuses will
be granted at the discretion of the Board of Directors or by the Compensation
Committee.
DIRECTORS' COMPENSATION
Directors of the Company who are not employees of the Company are paid an
annual stipend of $10,000, plus a fee of $500 for each Board meeting attended.
During the fiscal year ended September 30, 1995, Mr. Amyot, one of the directors
of the Company, was granted an option to purchase 50,000 shares of Common Stock
exercisable at $4.125 until February 1, 1998.
CHANGE IN CONTROL ARRANGEMENTS
Employment Agreements
Effective February 1, 1995, the Company entered into agreements with Michel
L. Marengere as Chairman and Chief Executive Officer and Nicolas Matossian as
President and Chief Operating Officer.
The employment agreements with Messrs. Marengere and Matossian contain
"change in control" language which provides the executive with certain benefits
if the executive is terminated for "good reason," as that term is defined in the
employment agreements, following a change in control of the Company. The
employment agreements provide that a "change in control" shall mean a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A, as in effect on the date hereof,
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that, without limitation, such a change in control
shall be deemed to have occurred if (A) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), except for Michel L. Marengere,
or a company controlled by him, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding securities; (B) there
occurs a contested proxy solicitation of the Company's stockholders that results
in the contesting party obtaining the ability to vote securities representing
20% or more of the combined voting power of the Company's then outstanding
securities; (C) there occurs a sale, exchange, transfer or other disposition of
substantially all of the assets of the Company to another entity, except to an
entity controlled directly or indirectly by the Company, or a merger,
consolidation or other reorganization of the Company in which the Company is not
the surviving entity, or a plan of liquidation or dissolution of the Company
other than pursuant to bankruptcy or insolvency laws is adopted; or (D) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period. Notwithstanding the foregoing, a "change in control"
shall not be deemed to have occurred for purposes of the employment agreements
(i) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Company, or a merger, consolidation or
other reorganization involving the Company and an executive, alone or with other
officers of the Company, or any entity in which an executive (alone or with
other officers) has, directly or indirectly, at least a 25% equity or ownership
interest or (ii) in a transaction otherwise commonly referred to as a
"management leveraged buy-out."
If a "change in control" had occurred during Fiscal 1995, Michel L.
Marengere and Nicolas Matossian, the two reporting officers, would have been
entitled to receive $1,080,000 and $720,000, respectively, based on their base
salaries pursuant to the employment agreements of $360,000 and $240,000 per
annum, respectively. In addition, since their employment agreements are for
three year terms ending January 31, 1998, they would also be entitled to receive
their base compensation during the terms of their respective employment
agreements.
5
<PAGE> 9
Pursuant to the Company's 1995 Stock Option Plan, nonqualified and
incentive stock options and limited stock appreciation rights may be granted to
Messrs. Marengere and Matossian. Under the 1995 Stock Option Plan, limited stock
appreciation rights entitle the optionee upon a "change in control" of the
Company, as defined in the 1995 Stock Option Plan, to receive, upon surrender of
the related stock option and exercise of any limited stock appreciation right,
cash in an amount equal to the difference between the exercise price per share
of Common Stock under the option and the fair market value of a share of Common
Stock.
If a change in control had occurred during Fiscal 1995, based on a market
price per share of Common Stock of $5.75, and assuming Messrs. Marengere and
Matossian exercised all of their stock options, the Company would have been
required to pay $812,500 to Mr. Marengere and $593,125 to Mr. Matossian.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 11, 1996, certain information
concerning the stock ownership of all persons known by the Company to own
beneficially more than 5% of the Company's outstanding Common Stock, based upon
filings with the Securities and Exchange Commission, as well as the beneficial
ownership of such Common Stock, as of such date, of all officers and directors,
individually and as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OWED BENEFICIALLY PERCENTAGE OF
BENEFICIAL OWNER AND OF RECORD OUTSTANDING SHARES(1)
- ---------------------------------------------------- ------------------------- ---------------------
<S> <C> <C>
Michel Marengere.................................... 2,109,403(2) 13%
500 Rue Notre Dame
Lachine, Quebec, Canada H8S 2B2
Rene Amyot.......................................... 135,000(3) (4)
523 Cote Ste. Anne
Ste. Anne de Beaupre
Quebec, Canada G0A 3C0
Nicolas Matossian................................... 415,000(5) 3%
500 Rue
Lachine, Quebec, Canada H8S 2B2
Reynald Lemieux..................................... 0 0
1340 Duquet
Sillery, Quebec, Canada G1S 1A9
Hon. Marc Lalonde................................... 0 0
Stikeman, Elliot
1155 Rene-Levesque Blvd. West,
36th Floor
Montreal, Quebec, Canada H8S 2B2
Louis Berlinguet.................................... 0 0
500 Rue Note Dame
Lachine, Quebec, Canada H8S 2B2
All Directors and Officers.......................... 3,104,730(3) 19%
as a group (6 persons)
</TABLE>
- ---------------
(1) Except as otherwise indicated, percentages are presented after rounding to
the nearest tenth, and include the total number of shares outstanding and
the number of shares which each person has the right to acquire, within 60
days through the exercise of options, pursuant to Item 403 of Regulation S-B
and Rule 13d-3 (d)(1), promulgated under the Securities Exchange Act of
1934. Percentages for the total of all persons and the total of all officers
and directors include all outstanding shares and all shares which such
persons have the right to acquire within 60 days.
(2) Includes 1,631,766 shares held of record by Fidutech Technologies, Inc. as
to which Mr. Marengere has shared voting and investment power. Mr. Marengere
is the sole stockholder of Gestion Edinov Inc. and Services M.L. Marengere,
Inc. which own, in the aggregate, 75% of Fidutech. Also includes 175,000
immediately exercisable stock options to purchase shares of the Company's
Common Stock held of record by Mr. Marengere. Also includes 500,000 shares
of Common Stock that may be issued pursuant to stock options exercisable at
$4.125.
(3) 50,000 of which represent immediately exercisable options to purchase shares
of the Company's Common Stock.
(4) Less than 1%.
(5) Includes 300,000 shares of Common Stock that may be issued pursuant to stock
options exercisable at $4.125.
7
<PAGE> 11
LEGAL PROCEEDINGS
By Complaint dated November 7, 1995, certain stockholders (the
"Plaintiffs") brought a stockholders' derivative suit in the Chancery Court of
the State of Delaware against the Company and Michel L. Marengere, Micheline
Prud'homme, a former director of the Company, and Rene Amyot, individually. The
Complaint alleges certain interested and self dealing transactions by Mr.
Marengere. Plaintiffs seek judgment for the damages suffered by the Company as a
result of the alleged transactions, costs and expenses of the action, including
reasonable attorneys' fees and any other relief that the Court may deem just and
proper. The Company and the individual defendants have filed a motion to dismiss
the derivative suit, which is currently pending in the Chancery Court.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During Fiscal 1995, the Company advanced $994,000 to a shareholder, Groupe
Fidutech International, Inc. ("GFI"). Of this amount, $577,000 was repaid during
Fiscal 1995. The balance of $417,000 was repaid in December 1995.
As of September 30, 1995, a subscription receivable in the aggregate amount
of $1,885,000 was owed to the Company by Mr. Marengere or his affiliates.
At September 30, 1994, Mr. Marengere was indebted to the Company in the
amount of $565,000. This outstanding debt has been satisfied in full.
During Fiscal 1994, the Company advanced $1,734,000 to a stockholder,
Fidutech Technologies, Inc. and its affiliates. As of July 1, 1994, $1,155,000
of this amount was assumed by the acquirer of Edinov. The balance of $781,000 is
non-interest bearing and has no fixed repayment terms. In December, 1995,
Fidutech Technologies, Inc. repaid $84,000 of the balance.
In December 1994, GFI bought from United Dominion Industries Ltd Cdn.
$2,700,000 of Class A Preferred Shares of Dominion Bridge Inc. Subsequently,
pursuant to the terms of the Class A Preferred Shares of Dominion Bridge Inc.,
GFI exchanged the Cdn. $2,700,000 of Class A Preferred Shares into 450,000
shares of Common Stock of the Company. Mr. Marengere, who is the Chairman and
Chief Executive Officer of the Company, is also the Chairman of GFI and through
his share ownership, beneficially owns 75% of GFI. Additionally, Mr. Amyot who
is a director of the Company, is also a director of GFI and beneficially owns
25% of GFI.
PROPOSAL 1
CHANGE OF COMPANY NAME
At the Meeting, stockholders will vote on a proposal to amend the
Certificate of Incorporation of the Company to change the name of the Company
from "Cedar Group, Inc." to "Dominion Bridge Corporation". The Board of
Directors unanimously approved a resolution amending the Company's Certificate
of Incorporation as follows:
"First: The name of the Corporation is Dominion Bridge Corporation."
The Company proposes to change its name to more nearly identify the Company
with its principal operating subsidiary, Dominion Bridge Inc. ("Dominion
Bridge"). Dominion Bridge has been in operation for over 115 years and has
developed significant goodwill associated with its name which the Company
expects to take advantage of by changing its name as proposed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CHANGE IN THE COMPANY
NAME.
VOTE REQUIRED
The affirmative vote of holders of at least the majority of the shares of
Common Stock which are entitled to vote at the meeting is required in order to
approve this proposal. Therefore, failure to vote has the same
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<PAGE> 12
effect as a negative vote. Accordingly, if stockholders are in favor of this
proposal and do not vote their shares either in person or by proxy, such
stockholders will have effectively voted against the proposal. If approved, this
change of name will be effective upon filing of a Certificate of Amendment to
the Certificate of Incorporation of the Company with the Secretary of State of
Delaware which is expected to follow shortly after the meeting.
PROPOSAL 2
At the Meeting, stockholders will vote on a proposal to amend the Company's
Certificate of Incorporation to:
(a) Increase the number of shares of Common Stock the Company is
authorized to issue; and
(b) Increase the number of shares of Preferred Stock the Company is
authorized to issue.
On March 1, 1996, the Board of Directors of the Company authorized, subject
to approval by the Company's stockholders, an amendment to the Company's
Certificate of Incorporation increasing the number of shares of Common Stock the
Company is authorized to issue from 20,000,000 to 50,000,000 and the number of
shares of Preferred Stock the Company is authorized to issue from 5,000,000 to
25,000,000. The resolution of the Board of Directors, subject to approval by the
Company's stockholders, amends Article Fourth of the Company's Certificate of
Incorporation as provided in Exhibit A to this Proxy Statement.
Approval of an increase in the authorized shares of Common Stock is not
dependent on approval of an increase in authorized shares of Preferred Stock nor
is approval of an increase in the authorized shares of Preferred Stock dependent
on approval of an increase in the authorized shares of Common Stock.
A. DESCRIPTION AND REASON FOR THE PROPOSED AMENDMENT TO COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE
The Certificate of Incorporation of the Company presently authorizes the
issuance of up to 20,000,000 shares of Common Stock, par value $.001 per share.
At April 11, 1996, there were 15,897,582 shares of Common Stock issued and
outstanding. As a result, as of April 11, 1996 only approximately 4,102,418
shares of Common Stock remain authorized and available for issuance.
As of April 11, 1996, approximately 1,500,000 shares were reserved for
issuance under the Company's 1995 Stock Option Plan, and 750,334 Shares were
reserved for issuance in connection with the acquisition of the Class "A"
Preferred Shares of Dominion Bridge. In addition, the Company is required to
issue 650,000 shares of Common Stock in connection with the exercise of various
stock options and warrants granted pursuant to various employment agreements
between the Company and its executive officers and other key employees as well
as grants of options to the Company's directors. The Company is also required to
issue an additional 700,000 shares of Common Stock upon exercise of various
outstanding warrants.
On or about October 31, 1995, Cedar Group (TCI) Inc., LLC, ("TCI"), a
limited life company duly incorporated and established under the laws of the
Turks and Caicos Islands, British West Indies, a wholly owned subsidiary of the
Company, accepted subscriptions in the approximate amount of $8.5 million of 6%
Cumulative Convertible Preferred Shares of TCI at $8.50 per share (the "Original
Preferred Shares"). The net proceeds realized by TCI from the offering of the
Original Preferred Shares were loaned to the Company (the "Loan"), with interest
calculated and payable semi-annually by the Company to TCI at a rate of 6% per
annum. The Company utilized the net proceeds of the Loan to provide additional
working capital and to fund portions of the purchase price of Steen Contractors
Ltd. and McConnell Dowell Corporation Limited of Australia ("MDC"). The Loan is
repayable by the Company issuing shares of its Common Stock to satisfy the
conversion of the Original Preferred Shares.
On or about March 15, 1996, TCI issued approximately an additional $13
million of Preferred Shares (the "Additional Preferred Shares") which funds were
likewise advanced to the Company to finance its tender
9
<PAGE> 13
offer for MDC Limited of Australia. This latest advance is also repayable by the
conversion of the Additional Preferred Shares into shares of Common Stock of the
Company.
Each Original Preferred Share is convertible into one share of Company
Common Stock at a price of $7.375 per share. Each Additional Preferred Share is
convertible into Company Common Stock at a discount ranging from 12% to 15% from
the market price of the Common Stock on the date of the conversion. Holders of
the Original and Additional Preferred Shares will be able to convert their
Preferred Shares into shares of Common Stock of the Company at the option of the
holder at any time during the Conversion Period which runs from May 31, 1996 up
to and including October 31, 1998 (the "Maturity Date"). It is anticipated that
the Board of Directors of the Company will consider a change in the conversion
terms of the Original Preferred Shares to be the same as the conversion terms
for the Additional Preferred Shares.
As presently structured, the day following the Maturity Date (the
"Redemption Date"), all of the remaining unconverted Original Preferred Shares
will automatically be converted into shares of Common Stock of the Company at a
price equal to the lesser of the weighted average of the closing price of the
Company's Common Stock traded on NASDAQ during the twenty (20) trading days
proceeding the Maturity Date and $7.375.
As a result of the above described offerings of TCI Preferred Shares, the
Company is obligated to issue additional shares of Common Stock between May 31,
1996 and November 1, 1998. The Board of Directors believes that increasing the
number of authorized shares of Common Stock in order to effectuate the issuance
of Company Common Stock as described above, and for the additional reasons
described below, is in the best interest of the Company. By doing so, the
Company will have the ability to convert approximately $21.5 million of debt
into capital of the Company thereby increasing stockholders equity by $21.5
million.
The Company has agreed to file by May 31, 1996 a Registration Statement
under the Securities Act of 1933 to permit the resale of Company Common Stock
issuable upon the exercise of the Original Preferred Shares and the Additional
Preferred Shares.
B. DESCRIPTION FOR THE PROPOSED AMENDMENT TO COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE
The Certificate of Incorporation of the Company presently authorizes the
issuance of 5,000,000 shares of "blank check" Preferred Stock, par value $.001
per share. At April 11, 1996, there were no shares of Preferred Stock issued and
outstanding. As explained below, the Board of Directors believes that approval
of this amendment will assist the Company in effectively meeting its continued
capital needs. The Company does not presently have any intention of issuing
shares of Preferred Stock.
C. GENERAL REASONS FOR THE PROPOSED AMENDMENT TO COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AND PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE
The Board of Directors believes that in order to meet the Company's
continued capital needs, it is likely that offerings of Common Stock or
Preferred Stock, or other securities convertible into or exchangeable for Common
Stock will be desirable. While the Company has not made definite arrangements to
engage in an offering of this type, except as described above, it is likely that
the Company will seek to raise capital by offering and selling securities during
1996 and thereafter. Increasing the authorized number of shares of Common Stock
and/or Preferred Stock the Company may issue will provide the Company with the
ability and flexibility to take prompt advantage of market conditions and avoid
the expense and delay, and possible loss of opportunity, that could result if a
need for additional authorized Common Stock or Preferred Stock arose but a
special meeting of stockholders had to be held prior to the issuance of the
stock. The Board of Directors further believes that if the proposed amendment to
the Company's Certificate of Incorporation is not approved by the stockholders,
the Company's ability to raise capital will be unduly restricted.
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<PAGE> 14
VOTE REQUIRED
The affirmative vote of holders of at least the majority of the shares of
Common Stock which are entitled to vote at the Meeting is required in order to
approve this proposal. Therefore, failure to vote has the same effect as a
negative vote. Accordingly, if stockholders are in favor of this proposal and do
not vote their shares either in person or by proxy, such stockholders will have
effectively voted against the proposal.
Approval of this proposal requires separate votes for (1) an increase in
the Common Stock and (2) an increase in the Preferred Stock. A vote for one will
not be counted as a vote for the other and approval of either is not dependent
on approval of the other. If approved, this increase in the number of shares of
Common Stock and/or Preferred Stock the Company is authorized to issue will be
effective upon filing of a Certificate of Amendment to the Certificate of
Incorporation of the Company with the Secretary of State of Delaware which is
expected to follow shortly after the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK AND PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE.
PROPOSAL 3
RELATING TO THE RATIFICATION OF DELOITTE & TOUCHE, INDEPENDENT AUDITORS, AS
AUDITORS TO THE COMPANY
Deloitte & Touche has been selected by the Board of Directors as auditors
for the Company for the fiscal year ended September 30, 1996. This election is
being presented to the stockholders for ratification. The Board of Directors
recommends ratification of the selection of Deloitte & Touche as the Company's
auditors. If the stockholders do not ratify this election, the appointment of
other auditors will be considered by the Board of Directors. A representative of
Deloitte & Touche is expected to be present at the Meeting to make a statement
if desired and to respond to appropriate questions.
On April 3, 1996, the Company engaged Deloitte & Touche as the Company's
principal independent accountant. Prior to Deloitte & Touche's engagement, Ernst
& Young, independent certified public accountants, had served as the principal
accountant for the Company. The recommendation to change accountants was made by
management of the Company and was approved by the Audit Committee and the Board
of Directors.
In connection with the most recent fiscal years and the interim period
preceding the Board's actions, there were no disagreements with Ernst & Young on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to Ernst & Young's satisfaction, would have caused them to make reference in
connection with their opinion on the subject matter of disagreement. Ernst &
Young's reports on the Company's financial statements for the most recent fiscal
years did not contain any adverse opinion or disclaimer of opinion, nor were
such reports qualified in any respect.
VOTE REQUIRED
The affirmative vote of a majority of the shares present in person or by
proxy is required for approval of the ratification of Deloitte & Touche.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF DELOITTE &
TOUCHE.
OTHER MATTERS
The Board of Directors does not know of any other matter which is intended
to be brought before the Meeting, but if such matter is presented, the persons
named in the enclosed proxy intend to vote the same according to their best
judgment.
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<PAGE> 15
The enclosed proxy may be revoked by a later-dated proxy, by giving notice
to the Secretary of the Company in writing prior to the Meeting or by personal
notification at the meeting prior to the voting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
To the knowledge of the Company, each of the Company's directors, executive
officers and 10% beneficial owners has complied with the requirements of Section
16(a) of the Securities Exchange Act of 1934, except that Mr. Berlinguet failed
to file timely a Form 3 upon his election to the Board of Directors, and Messrs.
Marengere and Matossian failed to file timely Form 4's upon the grant of options
under the Company's 1995 Stock Option Plan.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Company without additional compensation. The Company will
reimburse brokers and other persons holding stock in their names or in the names
of nominees for their expenses incurred in sending proxy material to principals
and obtaining their proxies.
1997 STOCKHOLDER PROPOSALS AND
CERTAIN PROVISIONS OF THE BY-LAWS
In order for stockholder proposals for the 1997 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement, they
must be received by the Company at its principal office in Lachine, Quebec, on
or before December 24, 1996. The Company's By-Laws provide that a stockholder
may nominate a person for election as a director if written notice of the
stockholder's intent to nominate a person for election as a director at a
meeting is received by the Secretary of the Company (1) in the case of an Annual
Meeting, not less than 150 days prior to the date of the Annual Meeting or (2)
in the case of a special meeting at which directors are to be elected, not later
than seven days following the day on which notice of the meeting was first
mailed to stockholders. The notice must contain specified information about the
stockholder and the nominee, including such information as would be required to
be included in a proxy statement pursuant to the rules and regulations
established by the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
By Order of the Board of Directors
MICHELINE PRUD'HOMME
Secretary
Dated: April 25, 1996
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<PAGE> 16
EXHIBIT A
FOURTH: CAPITAL STOCK.
(a) Authorized Shares. The total of shares of all classes of capital stock
which the Corporation shall have authority to issue is seventy-five million
(75,000,000), consisting of fifty million (50,000,000) shares of Common Stock,
par value $.001 per share ("Common Stock"), and twenty-five million (25,000,000)
shares of Preferred Stock, par value $.001 per share ("Preferred Stock").
(b) Preferred Stock. The Board of Directors of the Corporation is hereby
authorized to issue from time to time shares of Preferred Stock in series and to
fix the number of shares in each series and the designations, powers,
preferences and relative, participating, optional or other special rights
thereof and the qualifications, limitations, or restrictions thereon, including,
without limitation, any of the following: (i) provisions relating to voting
rights of each share in such series including multiple or fractional votes per
share, (ii) provisions relating to the call or redemption thereof, including,
without limitation, the times and prices for such calls or redemptions and
provisions relating to sinking funds therefor and the retirement thereof, if any
, (iii) provision relating to the right to receive dividends, including without
limitation, participation in dividends with shares of any other class or series
of capital stock of the Corporation and/or preferential dividends, the rate of
such dividends, whether such dividends shall be cumulative or noncumulative and
the conditions on which such dividends shall be accrued and paid, and any
preferential rights thereto or rights in relation to dividends payable on any
other classes or series of stock of the Corporation, (iv) the rights thereof
upon the dissolution of, or upon any distribution of the assets of the
Corporation, and (v) except as otherwise explicitly prohibited by the
Certificate of Incorporation, provisions relating to the conversion thereof
into, or the exchange thereof for shares of any class or any other series of the
same class of stock of the Corporation or exchange for any other security of the
Corporation or any other company.
A-1
<PAGE> 17
EXHIBIT B
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS(1)
BACKGROUND
From its inception, the Company has operated in the industrial fasteners
segment. However, since the effectiveness of the Plan of Reorganization with the
shareholders of Edinov on September 30, 1993, all of the Company's growth has
been as a result of various acquisitions, principally in the infrastructure
engineering and manufacturing services segment. In Fiscal 1994, the Company
acquired Dominion Bridge and Unimetric and in Fiscal 1995 it acquired Steen.
Each of these acquisitions was accounted for in the Result of Operations from
the effective dates of the acquisition which were March 9, 1994, January 1, 1994
and April 1, 1995, respectively.
During Fiscal 1994, the Company divested its Canadian commodity fastener
distribution businesses that were carried on by Edinov and its subsidiaries. The
divestiture was completed on December 22, 1994 (effective July 1, 1994) and the
Company sold all of the shares that it held in Edinov and all of the shares of
George Hegedus Enterprises Ltd., Atto-Renaud Industries Inc. and Specialty
Fasteners Ltd., which were owned directly or indirectly by Edinov.
Currently, the infrastructure engineering and manufacturing services
business accounts for approximately 97% of all of the revenues of the Company.
The industrial fasteners segment of the Company's business, which accounted for
approximately 3% of sales, has been unprofitable and adversely impacted the
Company's operating income by $1,316,000, decreasing the Company's earnings per
share by $0.09. In an effort to return this segment to profitability, the
Company has made key management changes and marketing and production
improvements which it believes will return this segment to profitability in the
short term.
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales for Fiscal 1995 of $155,750,000 were 129% higher than those for
Fiscal 1994 of $67,959,000. This increase is primarily attributable to the
inclusion of a full year of Dominion Bridge's operations during Fiscal 1995 as
opposed to seven months during Fiscal 1994, as well as the acquisition of Steen.
On a pro-forma basis (as though each of the acquisitions had occurred on October
1, 1993) net sales increased 11% in Fiscal 1995 to $177,459,000 from
$159,162,000 in Fiscal 1994.
Gross margin as a percentage of sales was 10.5% in Fiscal 1995 versus 12.7%
in Fiscal 1994. Gross margin declined due to the acquisition of Steen, which
operates with a lower gross margin than Dominion Bridge.
Selling, general and administrative expenses increased 90% from $8,107,000
in Fiscal 1994 to $15,433,000 in Fiscal 1995. The increase was primarily due to
the expending of approximately $1,691,000 of marketing and development costs in
Asia and Latin America as well as the inclusion of twelve months of such
expenses in Fiscal 1995 for Dominion Bridge versus seven months in Fiscal 1994.
Excluding the extraordinary marketing and development costs referred to above,
selling, general and administrative expenses declined from 11.9% of sales in
Fiscal 1994 to 8.8% of sales in Fiscal 1995.
During Fiscal 1995 the Company undertook certain one-time adjustments which
significantly reduced the Company's net income and its earnings per share. These
adjustments included:
i) The expensing in the period of most of the previous and current
year costs associated with various foreign joint ventures aggregating a
total of $1,691,000;
- ---------------
(1) The following is the Management's Discussion and Analysis or Plan of
Operations for the Company as provided in the Company's Annual Report on Form
10-KSB/A filed with the Securities and Exchange Commission on February 15, 1996.
The information provided is as of that date. Subsequently, the Company completed
its offering of TCI Preferred Shares as described in the Proxy Statement under
Proposal 2.
B-1
<PAGE> 18
ii) A write-off of $348,000 of certain assets that remained on the
books of the Company at the time of its September 30, 1993 plan of
arrangement which resulted in Cedar Group, Inc.'s exiting from Chapter 11;
iii) A write-down of $283,000 for certain pension assets that had been
overstated in Fiscal 1994; and
iv) The expensing of $682,000 of financing costs representing the
Company's costs on the Steen transaction.
Furthermore, the Company's income did not include the following deferred
income items;
i) The sum of approximately $2,054,000 of contract gains not included
in income as they are considered contingent gains; and
ii) The deferral by Dominion Bridge of the value of its interest in a
judgment pertaining to mining assets and mineral claims by approximately
$778,000 which the Company plans to realize in fiscal 1996.
Although the above one-time adjustments have decreased the Company's income
and earnings for the period, management believes that this decision will enhance
the Company's financial position and its balance sheet while positioning it
strongly for its planned expansion program.
Exchange rates used in this discussion for the translation of financial
results for the periods 1994 and 1995 from Canadian to U.S. dollars were Cdn
$1.00 equals US $.7387 and US $.7270 respectively.
A significant portion of the operating profit earned by Steen is generated
by the joint venture, which is scheduled to complete the Hibernia Project during
1997. Steen is actively pursuing large scale projects to replace the income
which will be lost with the completion of the Hibernia Project, such as the
Atlantic City District Heating and Cooling Plant, although there can be no
assurance that the completion of the Hibernia Project will not have a material
effect on the Company's results of operations.
FISCAL 1994 COMPARED TO 1993
Net sales for Fiscal 1994 of $67,959,000 were 870% higher than those for
Fiscal 1993 of $7,003,000. This increase is primarily attributable to the
purchase of Dominion Bridge.
In accordance with technical requirements for consolidation under U.S.
GAAP, the Company was obligated to consolidate the results of Dominion Bridge as
of March 9, 1994 and not as at January 1, 1994 as the parties presumed. On a pro
forma basis (as though the Dominion Bridge and Unimetric acquisitions had
occurred as of October 1, 1992), net sales declined to $118,999,000 from
136,049,000. The decline would be attributable to the Company streamlining its
operations and being more selective in the projects that it undertakes with a
view to increasing its profit margins.
Gross margin as a percentage of sales was 12.7% in Fiscal 1994 versus 32.1%
in Fiscal 1993. Gross margin declined due to the change in the Company's
business as a result of the acquisition of Dominion Bridge.
Selling, general and administrative expenses increased 225.8% from
$2,488,000 in Fiscal 1993 to $8,107,000 in Fiscal 1994. The increase was
primarily due to acquisition and financing costs related to Dominion Bridge and
to the overall increase in the size of the Company.
A comparative analysis of Dominion Bridge, the Company's principal
operating subsidiary, is as follows:
In 1993, Dominion Bridge, before the Company obtained control, lost
$11,293,000 on sales of $125,994,000, and in 1992, it lost $2,926,000 on sales
of $174,672,000. Dominion Bridge, for the seven months since acquisition by the
Company realized an operating profit of $860,000 on sales of $58,181,000 thus
achieving an effective turnaround of over $12,153,000 in operating income.
The main components of this turnaround consist of:
a) A reduction in variable costs as a percentage of sales from 88.4%
in 1993 to 76.3% in 1994, reflecting significant productivity improvements.
B-2
<PAGE> 19
b) Significant improvement in gross margin, from a 2.3% gross margin
in 1993 to 10.3% in 1994. In addition, Dominion Bridge's backlog at
September 30, 1994 is estimated to reflect margins consistent with those
achieved in 1994.
Exchange rates used in this discussion for the translation of financial
results for the periods 1994 and 1995 from Canadian to U.S. dollars were Cdn
$1.00 equals US $.7387 and US $.7270, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of operating capital have traditionally
been the private placements of the Company's Common Stock and cash generated by
operations. Currently, the Company's cash flow is being generated by the
operations of Dominion Bridge and Steen which are expected to cover the cash
flow requirements of the Company. In addition to the cash generated from
operations, the Company has received a line of credit from a Canadian chartered
bank to provide Dominion Bridge with a $12 million revolving line of credit for
working capital purposes. No funds have been advanced on this line of credit
which is guaranteed by the Company. Steen presently has a line of credit of Cdn
$7 million, of which Cdn $2.4 million has been drawn down to date. Furthermore,
the Company is continuing to pursue expansion internally as well as through
acquisitions, and, accordingly, may require additional capital in the form of
convertible debt or equity.
In order to complete the transactions for the purchase of Dominion Bridge
and Unimetric, the Company obtained approximately $10.9 million in cash in March
1994 through a private placement of the Company's securities consisting of
3,354,346 shares of Common Stock and 3,354,346 two-year share purchase warrants.
The warrants were exercisable on a one for one basis for shares of Common Stock
at US 93.75 for the first year and at US $4.00 thereafter. In July and August
1994, all of the 3,354,346 warrants were exercised at US $3.75, thereby adding
approximately $12.6 million to the Company's capital resources.
Additionally, the Company has established Cedar Group (TCI) Inc. LLC, a
limited life company under the laws of the Turks and Caicos Islands, which is in
the process of finalizing an offering consisting of 3,000,000 6% Convertible
Preferred Shares at $8.50 per share. The Preferred Shares are convertible into
shares of Common Stock of the Company, at the option of the holder, at any time
after January 31, 1997 and up until maturity on October 31, 1998 at a price of
$8.50 per share. On the day following the maturity date of October 31, 1998, all
of the remaining unconverted 6% Convertible Preferred Shares will automatically
convert into shares of Common Stock of the Company at a price equal to the
weighted average price of the Company's shares traded on NASDAQ during the 20
previous trading days. Accordingly, if the weighted average price of the shares
of Common Stock of the Company is greater than $8.50, the conversion will be
$8.50. If the weighted average price is less than $8.50, then the weighted
average price will be the actual conversion price. Consequently, investors will
receive a number of shares of Common Stock of the Company such that the actual
value of those shares is equivalent to an investor's full investment of $8.50
per Preferred Share.
The proposed private placement by Cedar Group (TCI) Inc., LLC has not been
fully completed, however, $11 million has been received to date in
subscriptions.
The Company is subject to a risk of claims for product liability. If a
product liability claim exceeding the Company's insurance coverage or its own
available resources was to be successfully asserted against the Company, it
could have a material adverse effect on the Company's financial condition. The
Company has general liability insurance of approximately $5 million per
occurrence, with a maximum of $5 million of claims payable during any policy
year. There is no assurance that such coverage will be sufficient to fully
insure against claims brought against the Company and its subsidiaries, or that
the Company will be able to maintain such insurance at affordable rates or
obtain additional insurance covering the products.
EFFECT OF INFLATION
The Company's operating costs are subject to general economic and
inflationary pressures. While operating costs have increased during the past
years, the Company does not believe that its operations have been significantly
affected by inflation.
B-3
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CEDAR GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michel L. Merengere or, in his absence,
Nicolas Matossian , as proxy with power to appoint a substitute and hereby
authorizes him to represent and to vote all shares of Common Stock of Cedar
Group, Inc. held of record by the undersigned on April 11, 1996 at the Annual
Meeting of Stockholders of Cedar Group, Inc. to be held on May 15, 1996 and at
any adjournments thereof, and to vote as directed on the reverse side of this
form and, in their discretion, upon such other matters not specified as may come
before said meeting.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS Change of Address and Comments
Nominees: Rene Amyot
Reynald Lemieux ------------------------------------------------------
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(If you have written in the above space, please mark
the corresponding box on the reverse side of this form.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED, FOR THE ELECTION OF
DIRECTORS, FOR APPROVAL OF THE CHANGE IN THE NAME OF THE COMPANY, FOR THE
APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AND PREFERRED STOCK THE COMPANY IS AUTHORIZED
TO ISSUE, AND FOR APPROVAL OF THE RATIFICATION OF DELOITTE & TOUCHE AS AUDITORS
FOR CEDAR GROUP, INC.
- --------------------------------------------------------------------------------
SEE REVERSE SIDE
<PAGE> 21
<TABLE>
<S> <C>
1. Election of Directors FOR / / WITHHELD / / Change of Address/ / /
Comments on Reverse
Side
For, except vote withheld from the following nominee(s):
-------------------------------------------------
2. Proposal 1 -- Approval of change in Company name to "Dominion Bridge Corporation".
FOR / / AGAINST / / ABSTAIN / /
3. Proposal 2 -- (A) Approval of an amendment to the Certificate of Incorporation to increase the number of shares of common
stock the Company is authorized to issue.
FOR / / AGAINST / / ABSTAIN / /
(B) Approval of an amendment to the Certificate of Incorporation to increase the number of shares of preferred stock the
Company is authorized to issue.
FOR / / AGAINST / / ABSTAIN / /
4. Proposal 3 -- Approval of the ratification of Deloitte & Touche as auditors for Cedar Group, Inc.
FOR / / AGAINST / / ABSTAIN / /
</TABLE>
PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.
NOTE: Please sign name(s) exactly
as printed hereon. Joint
owners should each sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
------------------------------------
SIGNATURE(S)
------------------------------------
DATE
PROXIES MAY ALSO BE TELEFAXED TO THE COMPANY AT (514) 634-2448. PLEASE REMEMBER
TO FAX BOTH SIDES OF THIS CARD.
