UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registrant [X]
[X] Preliminary Proxy Statement
Name of Registrant as Specified in its Charter:
HI-LO AUTOMOTIVE, INC.
Name of Person Filing Proxy Statement:
HWANG FAMILY LTD PARTNERSHIP, BY KWANG-CHOU HWANG
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PRELIMINARY PROXY STATEMENT SUBMITTED BY
HWANG FAMILY LTD. PARTNERSHIP
2432 KEYHOLE, IRVING, TX 75062
This proxy statement and the accompanying proxy card are
furnished to the shareholders of Hi-Lo Automotive, Inc., a
Delaware corporation, in connection with the solicitation by
Hwang Family Ltd. Partnership, for use at the upcoming 1997
Annual Meeting of Stockholders of the company ON May 20, 1997.
For the exact time and location, please refer to the proxy
statement mailed to you by the company. Definitive copies of this
material are intended to be released to stockholders around April
11, 1997.
The execution and return of the enclosed proxy will not
affect a stockholder's right to attend the meeting and vote in
person. A stockholder may revoke his or her proxy by appearing
at the meeting in person, or send a letter of revocation to this
solicitor at any time before it is exercised.
The solicitation is made by dissident shareholder, Hwang
Family Ltd. Partnership, that is contesting the nomination and
election of six new directors by the board of Hi-Lo Automotive.
The other participants are :
Kwang- chou Hwang, Ming-Ing H. Hwang, Larry D. Smith,
Fred J. Hwang, and Michael A. Ward.
The service of IECA will be used in the distribution of
Proxy Statement and proxy card to shareholders. The cost of
such service is estimated at $8,000.00, which will be borne by
the partnership.
Disclosure Regarding Participants
Hwang Family Ltd. Partnership, partners, Kwang-chou
Hwang, and Ming-Ing H. Hwang have not been convicted in a
criminal proceeding during the past ten years. The two partners
are both retirees, and reside at 2432 Keyhole Dr., Irving, Texas
75062. The partnership, together with the partners, beneficially
own 1050,950 shares of Hi-Lo common stock (par value $0.01), and
directly own 1000 shares of the same. Time and shares purchased
in the past two years were: May 1995, 5000 shares; May 1996,
20,000 shares; July 1996, 178,600 shares; August 1996, 451,000
shares; September 1996, 50,000 shares; October 1996, 136,350
shares; November 1996, 50,000 shares; December 1996, 68,600
shares; and January 1997, 92,400 shares. These shares were bought
in the open market with cash. They are not, and were not within
the past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of
Hi-Lo Automotive.
Larry D. Smith, age 59, is a retired M.D. and resides at
8207 Mason Rd., Manvel, Texas 77578. Dr. Smith is a beneficial
owner of 331,600 shares of Hi-Lo Automotive Inc. common stock
(par value $0.01), and a direct owner of none of the same. He
purchased all these shares in December, 1996 without any outside
financing. During the past ten years, he has not been convicted
in a criminal proceeding. He has not, and was not within the
past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of
Hi-Lo Automotive.
Fred J. Hwang is an anesthesiologist and is a partner of
North Hills Anesthesiology Associates, 8017 Glenview, Hurst,
Texas. During the past ten years, he has not been convicted in a
criminal proceeding. He owns 42,800 shares of Hi-Lo Automotive
common stock (par value $0.01) beneficially and none directly.
He bought 1000 shares on June 7, 1995, 18,800 shares in August
1996, 12,000 shares in September 1996, 8000 shares in November
1996, and 3000 shares on December 11, 1996. No borrowed funds
were used in these purchases. He is not, and was not within the
past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of
Hi-Lo Automotive.
Michael A. Ward is a partner of Coastal Securities, 1160
Dairy Ashford, Fifth Floor, Houston, Texas 77079. During the
past ten years, Mr. Ward has not been convicted in a criminal
proceeding. He is a beneficial owner of 4000 shares of Hi-Lo
common stock (par value $0.01) , and direct owner of 1000 share
of the same. He purchased 1000 shares on February 4, and 4000
shares on February 6, 1996. No indebtedness was involved in
purchasing of these shares. He is not, and was not within the
past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of
Hi-Lo Automotive.
Purpose and Intention
As you all know, Hi/Lo is in a precarious financial
situation, with dwindling market share and mounting losses
threatening to put it out of business. The management of the
company has not taken any meaningful measures to improve its
competitiveness. Instead of focusing on restoring reputation and
returning to profitability, the company is squandering more money
developing a central call station to serve all commercial
garages. This venture, like the California expansion, is bound to
fail simply because it does not make any business sense. If you
do not agree with this prediction, a chat with a local garage
manager should change your mind. The manager of the partnership
has conducted an extensive investigation to identify some of the
problems plaguing the company and has submitted various
recommendations to the company, hoping to see some improvements
in its operations. So far the management has not acted upon any
of the recommendations. Clearly something must be done to stem
the chilling trend.
The partnership attempts, with your support, to replace
three board members with investor friendly directors who have
been nominated for this upcoming election. Also PROPOSAL S to
search for a potential buyer of the company has been submitted
for shareholder approval. Your proxies, if properly executed and
returned, will be voted for electing these three candidates for
directors and rejecting all board nominated directors on the
ballot. Also an affirmative vote will be cast on PROPOSAL S.
Should any special meetings were called, your proxies will be
voted for candidates representing investor interest. Any
additional business that may come up at these meetings will be
voted with investor interest in mind. If you have any questions,
please call us at (972) 570-7718
If proxies from a majority of shareholders are received, we
should be able to take control of the company, and the following
plan will be implemented immediately: (a). A committee will be
formed to look for a buyer of the company. (b). Concurrently,
various measures will be taken to improve Hi/Lo's operations.
These include improving our inadequate computer system, improving
our warehouse operations, matching competitors' prices across the
board, decentralizing the current management structure, and try
to sell unprofitable stores to store managers or any other
interested parties. We are confident that these actions should
improve our bottom line so that even if we do not succeed in
finding a reasonable buyer, the company should become more
competitive and profitable.
Nominees Supported by Solicitor
All three nominees for directorship who are supported by the
partnership have a common commitment and understanding that, if
elected, they will work vigorously toward enhancing shareholder
value. They are all firm believers in the doctrine that the
board should be controlled by shareholders. These nominees are:
MICHAEL A. WARD---Age 44, B.S., Business Administration, Univ. of
Kansas, 1979. Has worked in the financial fields for 18 years,
of which 12 years has been in bankruptcy/turnaround markets. Has
been a partner at Coastal Securities, Houston, Texas for 6
years. Currently holds 5000 shares of Hi/Lo common stock. If
elected, will work with other board members to improve stock
value by implementing various strategies.
KWANG-CHOU HWANG----Age 64, Ph.D Chem Eng., California Institute
of Technology, 1965. Senior Engineering Specialist, Space and
Aircraft systems, Garrett Corp., Los Angeles, 1966 to 1979.
Managed real estate and securities investments, 1979 to 1997.
Stockholder of Hi/Lo, 1995 to 1997, currently a beneficial owner
of 9.8 % of outstanding shares. He is managing partner of Hwang
Family Ltd. Partnership, Irving, TX. Committed to fight to
improve shareholder value if elected.
FRED J. HWANG----Age 32, B.S. Biochem, University of Dallas,
1986, M.D. University of Texas Health Sciences, Houston, 1990.
Completed Anesthesiology residency, St. Louis University
Hospitals, 1994. Currently a partner at North Hills
Anesthesiology Associates, Hurst, TX.. Throughout his young
life, he has been a hot rod enthusiast. Motorcycles, fast cars,
you name it. He is very much interested in anything mechanical,
which includes auto parts. Being son of Kwang-chou Hwang, and
also a beneficial owner of 42,800 shares of Hi/Lo, he vows to
work for maximizing shareholder value.
Proposal Supported by Solicitor
The proposal submitted by the patnership for voting at the
Annual Stockholders' Meeting is given below:
PROPOSAL S----To form a search committee, consisting of two
largest shareholders, to search for the best sale or merger deal
for Hi/Lo. The committee will report its findings to the board
and shareholders for final approval.
REASONS FOR PROPOSAL:
1. Hi/Lo is too small to compete in the over-competitive auto
parts business. We can not even afford competent in-house
personnel to maintain our electronic catalog and computer system,
thus depending entirely on an outside service, which is
unreliable at best. Neither can we match the prices offered by
Auto-Zone, which continues to start a store next to ours and grab
most of our customers.
2. The company has lost money in its entire existence. Per
share year-end book value was $7.87 in 1991 and $5.50 in 1996.
Positive equity has been maintained through offerings of Hi/Lo
shares. The stock price has been declining steadily with no end
in sight.
3. The outlook for small companies like Hi/Lo is dismal as
larger and more successful companies like AutoZone and Pep Boys
are all planning to expand rapidly in coming years.
4. Since there is hardly any hope for our bottom line to
improve in the foreseeable future, it would seem prudent to put
up the company for sale, before shareholders' equity completely
disappears.
The three nominees and Proposal S listed above may not
appear on the proxy card mailed to you by the company, but do not
let that bother you. This is an attempt by the management to
thwart dissident shareholders' effort to prevent the company from
going bankrupt. These items, according to Mr. Michael Young, are
scheduled to be presented and voted on at the meeting, and the
partnership will vote your proxies for these candidates and the
proposal.
Your support is crucial at this moment in time and will be
greatly appreciated.
/s/ Kwang-chou Hwang
Kwang-chou Hwang
Managing Partner, Hwang Family Ltd. Partnership
Irving, TX 75062
Tel: (972) 570-7718
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PROXY AUTHORIZATION BY SHAREHOLDERS
Th undersigned, beneficial owners of ______________shares of
Hi/Lo Automotive, Inc. common stock (par value $0.o1), hereby
appoint Hwang Family Ltd. Partnership of Irving, Texas as sole
proxy, with full authority to vote these shares at the 1997
Annual Meeting of Hi/Lo Stockholders, or any adjourned meeting
thereof, or any special meeting called thereafter.
Date:_________________ Shareholders:_______________________
Signatures:__________________________
