SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. N/A )
Filed by the Registrant |X|
Filed by a Party other than the Registrant
Check the appropriate box:
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 Rule 14a-11(c) or Rule 14a-12
Computer Petroleum Corporation
(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), 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:
Common Stock
(2) Aggregate number of securities to which transaction applies:
3,082,035
(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): $3.8935 Transaction price is
fixed at $12,000,000.00. See (4) below.
(4) Proposed maximum aggregate value of transaction: $12,000,000.00
(5) Total fee paid: $2,400.00
|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:
COMPUTER PETROLEUM CORPORATION
WORLD TRADE CENTER
30 EAST 7TH STREET, SUITE 510
ST. PAUL, MINNESOTA 55101
--------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
-------------------------------
To The Stockholders of
COMPUTER PETROLEUM CORPORATION:
A special meeting of the stockholders of Computer Petroleum Corporation
will be held at the corporate offices of Computer Petroleum Corporation (the
"Company") at World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota 55101, on Friday, August 23, 1996, at 9:00 a.m., for the following
purposes:
1. To consider and vote upon approval of an Agreement and Plan of
Merger, dated June 21, 1996, among the Company, United Communications Group
Limited Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition
Corp., a Maryland corporation and a wholly- owned subsidiary of UCG, providing
for the merger of the Company with and into UCG Acquisition Corp., pursuant to
which each outstanding share of the Company's common stock (other than shares as
to which the holders have exercised their dissenter's rights under Minnesota
law) will be converted into the right to receive approximately $3.89 in cash
without interest, all as more fully described in the accompanying Proxy
Statement and the Agreement and Plan of Merger, a copy of which is attached as
Exhibit I to the Proxy Statement.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE AGREEMENT AND
PLAN OF MERGER IS IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS A VOTE FOR THE APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
Only stockholders of record at the close of business on July 8, 1996
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
Pursuant to Minnesota law, each shareholder has the right to exercise
dissenter's rights. An explanation of dissenters' rights is included in the
Proxy Statement, together with a copy of Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, as amended.
YOUR VOTE IS IMPORTANT. SINCE ADOPTION OF THE AGREEMENT AND PLAN OF
MERGER REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMPANY'S OUTSTANDING
SHARES OF COMMON STOCK, A FAILURE TO VOTE, IN PERSON OR BY PROXY, WILL HAVE THE
SAME EFFECT AS A NEGATIVE VOTE. PLEASE PROMPTLY COMPLETE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE, WHETHER OR NOT
YOU INTEND TO BE PRESENT AT THE MEETING. YOU MAY NEVERTHELESS VOTE IN PERSON IF
YOU DO ATTEND THE MEETING. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Charles G. Schiefelbein
Charles G. Schiefelbein
Chairman of the Board
St. Paul, Minnesota
July 25, 1996
COMPUTER PETROLEUM CORPORATION
WORLD TRADE CENTER
30 EAST SEVENTH STREET, SUITE 510
ST. PAUL, MINNESOTA 55101
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 23, 1996
This Proxy Statement is being furnished to the stockholders of Computer
Petroleum Corporation, a Minnesota corporation (the "Company"), in connection
with the solicitation on behalf of the Company's Board of Directors of proxies
to be voted at a Special Meeting of Stockholders to be held at the Company's
offices at World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota 55101, on Friday, August 23, 1996, at 9:00 a.m., and any adjournment
thereof (the "Special Meeting"). This Proxy Statement, the Notice and the
accompanying proxy card and related materials are first being mailed to the
Company's stockholders on or about July 25, 1996.
At the Special Meeting, stockholders will be asked to consider and vote
upon the approval of an Agreement and Plan of Merger, dated June 21, 1996 (the
"Merger Agreement"), among the Company, United Communications Group Limited
Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a
Maryland corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"). A
copy of the Merger Agreement is attached as Exhibit I to this Proxy Statement.
Under the terms of the Merger Agreement, (i) the Company will be merged with and
into UCG Acquisition Corp. (the "Merger"), and (ii) each outstanding share of
the Company's Common Stock, $.01 par value ("Common Stock"), other than shares
as to which the holders have exercised their dissenter's rights in accordance
with Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act,
as amended, will be converted into the right to receive approximately $3.89 in
cash, without interest. If the Merger is not consummated for any reason, the
Board of Directors expects to continue the business of the Company as described
under "BUSINESS OF THE COMPANY."
Pursuant to Minnesota law, each shareholder has the right to exercise
dissenter's rights. In order for a shareholder to exercise dissenter's rights,
the shareholder must not vote for the proposal to approve the Merger and must
comply with the applicable requirements of Minnesota law. An explanation of
dissenter's rights is included in this Proxy Statement, and a copy of Sections
302A.471 and 302A.473 of the Minnesota Business Corporations Act, is included as
III to this Proxy Statement.
Copies of the Company's Annual Report to Stockholders for the year
ended January 31, 1996 and its Quarterly Report on Form 10-QSB for the quarter
ended April 30, 1996, are being furnished herewith to all stockholders.
PROXY STATEMENT
TABLE OF CONTENTS
Page
SUMMARY OF PROXY STATEMENT....................................................1
GENERAL INFORMATION...........................................................4
THE MERGER....................................................................5
Background of the Merger....................................................5
Recommendation of the Board of Directors....................................6
Opinion of Investment Banker................................................7
Agreement and Plan of Merger................................................9
Interests of Certain Persons in the Merger.................................12
Financing of the Merger....................................................13
Federal Income Tax Consequences............................................13
Rights of Dissenting Stockholders..........................................14
BUSINESS OF UNITED COMMUNICATIONS GROUP LIMITED PARTNERSHIP..................16
BUSINESS OF THE COMPANY......................................................17
MARKET PRICES OF COMMON STOCK................................................17
SELECTED FINANCIAL DATA......................................................18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT...............................................................19
INDEPENDENT PUBLIC ACCOUNTANTS...............................................20
OTHER MATTERS................................................................20
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING................................20
DOCUMENTS INCORPORATED BY REFERENCE..........................................21
EXHIBITS:
I. Agreement and Plan of Merger, excluding Exhibits and Schedules
II. Opinion of Greene Holcomb & Lannin LLC
III. Sections 302A.471 and 302A.473 of the Minnesota Business Corporation
Act
SUMMARY OF PROXY STATEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED IN
THIS PROXY STATEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT AND THE
EXHIBITS ATTACHED HERETO. STOCKHOLDERS ARE URGED TO READ THE ENTIRE PROXY
STATEMENT, INCLUDING THE EXHIBITS AND THE OTHER DOCUMENTS ACCOMPANYING THE PROXY
STATEMENT.
THE SPECIAL MEETING
The Special Meeting of the Stockholders (the "Special Meeting") of Computer
Petroleum Corporation, a Minnesota corporation (the "Company"), will be held at
the Company's offices at World Trade Center, 30 East Seventh Street, Suite 510,
St. Paul, Minnesota 55101, on Friday, August 23, 1996, at 9:00 a.m. At the
Special Meeting, stockholders will be asked (i) to consider and vote upon
approval of an Agreement and Plan of Merger, dated June 21, 1996 (the "Merger
Agreement"), among the Company, United Communications Group Limited Partnership,
a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a Maryland
corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"), and (ii)
to transact such other business as may properly come before the Special Meeting,
or any adjournment thereof. The affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock entitled to vote is
required for approval of the Merger Agreement. See "GENERAL INFORMATION."
THE MERGER
Under the terms of the Merger Agreement, the Company will be merged with and
into UCG Acquisition Corp. (the "Merger"), and each outstanding share of Common
Stock of the Company (other than shares as to which the holders shall have
exercised their dissenter's rights under Minnesota law) will be converted into
the right to receive approximately $3.89 in cash, without interest. Thereafter,
the separate existence of the Company will cease. A copy of the Merger Agreement
is attached as Exhibit I to this Proxy Statement. See "THE MERGER - Agreement
and Plan of Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company believes that the Merger is in the best
interests of, and is fair to, the Company's stockholders. The Board has
unanimously approved the Merger Agreement and unanimously recommends the
approval of the Merger Agreement by the stockholders of the Company. See "THE
MERGER - Recommendation of the Board of Directors."
OPINION OF INVESTMENT BANKER
Greene Holcomb & Lannin LLC, an investment banking firm, has delivered a written
opinion to the Board of Directors of the Company, based upon the review and
analysis described therein and subject to the assumptions set forth therein, to
the effect that the consideration to be received by the stockholders as a result
of the Merger is fair from a financial point of view. Stockholders are urged to
read the opinion, which is set forth as Exhibit II to this Proxy Statement. See
"THE MERGER - Opinion of Investment Banker."
EFFECTIVE TIME OF THE MERGER
The Merger shall become effective at such time as the Certificate of
Merger is duly filed with both the Secretary of State of the State of Minnesota
and the Secretary of State of the State of Maryland, or such later date set
forth in the Certificate of Merger (the "Effective Time"). See "THE MERGER -
Agreement and Plan of Merger."
CONDITIONS TO CONSUMMATION OF THE MERGER; TERMINATION; CERTAIN COVENANTS
Under the Merger Agreement, the respective obligations of the Company
and UCG to consummate the Merger are subject to satisfaction, at or before the
Effective Time, of certain conditions, including approval by the Company's
stockholders. The Merger Agreement may also be terminated for a number of
reasons, including the failure by the parties to complete the Merger by August
31, 1996. Pending completion of the Merger, the Company has agreed to conduct
its business in the ordinary course and to provide reasonable access to its
properties, books and records to representatives of UCG. See "THE MERGER -
Agreement and Plan of Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Company's directors and executive officers beneficially own, in the
aggregate, 863,940 shares (29.7 percent) of the Company's outstanding Common
Stock and will receive an aggregate of approximately $3,360,727 in the Merger
for such shares. Executive officers and other employees may enter into new
employment agreements with UCG Acquisition. The Company understands that the
assets of the Payne & Associates division of the Company are being sold by UCG
to a third party upon the Closing of the Merger, and that the Company's Chief
Executive Officer and Chief Financial Officer have entered into employment
agreements with this third party. See "THE MERGER - Interests of Certain Persons
in the Merger."
FINANCING OF THE MERGER
The total funds required for the financing of the Merger will be
$12,000,000 plus transaction costs. UCG intends to finance the Merger either
with existing funds or with borrowed funds See "THE MERGER - Financing of the
Merger."
FEDERAL INCOME TAX CONSEQUENCES
If the Merger is consummated, the receipt by stockholders of
approximately $3.89 per share in cash as a result of the Merger will be a
taxable transaction for federal income tax purposes, and each stockholder will
recognize gain or loss equal to the difference between such stockholder's basis
in the Common Stock of the Company surrendered and the amount of cash received.
Each stockholder is urged to consult a tax advisor with respect to the tax
consequences of the Merger. See "THE MERGER - Federal Income Tax Consequences."
RIGHTS OF DISSENTING STOCKHOLDERS
Stockholders of the Company who do not wish to accept the approximately
$3.89 per share in cash to be paid under the terms of the Merger Agreement may
dissent from the Merger and elect to have a judicial determination of the fair
value of their shares of Common Stock at the Effective Time of the Merger
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) by complying with the requirements of Sections
302A.471 and 302A.473 of the Minnesota Business Corporation Act, as amended, the
full text of which is attached as Exhibit III to this Proxy Statement. See "THE
MERGER - Rights of Dissenting Stockholders."
BUSINESS OF UCG
UCG is a publisher of over 70 print publications, online services and
ancillary products and sponsors trade seminars and conferences for the
energy/oil, healthcare, government, defense/military, telecommunications,
technology, mortgage banking and computer industries. See "BUSINESS OF UCG."
BUSINESS OF THE COMPANY
The Company is engaged in the business of providing information and
customized news, market analysis and commentary to the petroleum and
transportation markets through an electronic information network. See "BUSINESS
OF THE COMPANY."
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on NASDAQ Small Cap Market.
(Symbol: CPCO). The bid price of the Common Stock has ranged from $.75 per share
to $2.875 per share between February 1, 1994, and July 8, 1996. On June 20,
1996, the last trading day prior to the public announcement of the Merger, the
high and low bid prices for the Common Stock as reported by NASDAQ were $3.00
per share and $2.50 per share, respectively. See "MARKET PRICES OF COMMON
STOCK."
GENERAL INFORMATION
At the Special Meeting, stockholders will be asked to consider and vote
upon the approval of an Agreement and Plan of Merger, dated June 21, 1996 (the
"Merger Agreement"), between the Company, United Communications Group Limited
Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a
Maryland corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"). A
copy of the Merger Agreement is attached as Exhibit I to this Proxy Statement.
Under the terms of the Merger Agreement, (i) the Company will be merged with and
into UCG Acquisition Corp. (the "Merger"), (ii) each outstanding share of the
Company's Common Stock, $.01 par value ("Common Stock"), other than shares as to
which the holders have exercised their dissenter's rights in accordance with
Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, as
amended, will be converted into the right to receive approximately $3.89 in
cash, without interest.
UCG has agreed to pay $12,000,000 (the "Merger Consideration") for all
of the outstanding common stock of the Company, including shares issued to
officers and employees of the Company upon conversion of their Incentive Stock
Options to Common Stock immediately before the Closing. Since the number of
shares to be issued upon such conversions could change due to employee
departures before the closing, and the consequent cancellation or exercise of
such options, it is not possible to determine the precise dollar amount payable
per share of the Company's Common Stock outstanding. However, it is very
unlikely that any variation would be more than two or three cents per share
higher or lower than the estimated $3.89 per share.
The Board of Directors has fixed the close of business on July 8, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Special Meeting. As of such date, there were 2,904,009 shares
of Common Stock outstanding and entitled to vote, which were held of record by
approximately 63 stockholders. Each share entitles the holder thereof to one
vote, exercisable in person or by properly executed proxy, on each matter to be
considered at the Special Meeting. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
is necessary to constitute a quorum at the Special Meeting. The affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote is required for the approval of the Merger Agreement and the
transactions contemplated thereby. The Common Stock does not have cumulative
voting rights.
All shares represented at the Special Meeting by proxies in the form
accompanying this Proxy Statement which are received prior to or at the Special
Meeting will be voted in accordance with the instructions thereon, provided the
proxies are properly signed and dated. If no instructions are indicated thereon,
the proxies will be voted FOR the approval of the Merger Agreement. A failure to
vote on the Merger Agreement, in person or by proxy, will have the same effect
as a negative vote.
Abstentions and broker non-votes will have the effect of a vote against
the proposal to approve the Merger Agreement. With respect to abstentions, the
shares of Common Stock are considered present at the Special Meeting. They are
not, however, affirmative votes for the matter and, therefore, they will have
the same effect as votes against the matter. With respect to broker non-votes,
the shares of Common Stock are not considered present at the meeting as to which
the broker withheld authority. Consequently, broker non-votes are not counted.
The Board of Directors knows of no other matters which are expected to
come before the Special Meeting. If any other matters are presented at the
Special Meeting, the persons named in the proxies will have discretion to vote
thereon in accordance with their judgment.
Execution of a proxy will not prevent a stockholder from attending the
Special Meeting or from revoking his or her proxy and voting in person. Any
stockholder giving a proxy may revoke it at any time before it is voted by
giving the Secretary of the Company a written notice of revocation bearing a
later date than the proxy, by submitting a properly executed, later-dated proxy
or by voting in person at the Special Meeting. Attendance at the Special Meeting
will not, in and of itself, constitute a revocation of a proxy. Any written
notice revoking a proxy should be sent to Computer Petroleum Corporation, World
Trade Center, 30 East Seventh Street, Suite 510, St. Paul, Minnesota 55101,
Attention: Secretary.
The cost of solicitation of proxies pursuant to this Proxy Statement
will be borne by the Company. In addition to solicitation by use of the mails,
proxies may also be solicited by certain directors, officers and employees of
the Company in person or by telephone or telegram. Such persons will receive no
additional compensation for such services. The Company will reimburse brokerage
firms, banks and certain other institutions holding stock in their names or
those of their nominees on behalf of other persons for reasonable out-of-pocket
expenses in forwarding proxies and proxy material to such persons.
THE MERGER
BACKGROUND OF THE MERGER
From time to time over the last several years, various persons have
contacted management of the Company regarding the possibility of acquiring or
merging with the Company. None of these inquiries resulted in a definitive
agreement. However, for a number of reasons management came to believe that an
acquisition of the Company could be in the best interests of the Company's
stockholders. Prior to being approached in February, 1996 concerning a possible
acquisition of the Company, management believed that the Company's Common Stock
was undervalued in the public market. In addition, because the average daily
trading volume for the Common Stock was low historically, stockholders could not
sell a significant number of shares without adversely affecting the price. In
the opinion of management, this caused a serious lack of liquidity for the
stockholders. For additional reasons why the Company entered into the Merger
Agreement, see "Recommendations of the Board of Directors."
In March, 1996 Greene Holcomb & Lannin LLC ("GH&L"), investment
bankers, was retained by the Company to assist the Board of Directors in
evaluating options for maximizing the value of the Company for stockholders,
including the possible sale of the Company. The Company issued a press release
describing this step. In exploring the sale alternative, GH&L reviewed over 100
potential purchasers of the Company and, with the assistance of the Board of
Directors, selected 25 from that list to be contacted. Seventeen of that number
executed confidentiality agreements and were provided a memorandum describing
the Company. Prospective purchasers were asked to submit initial indications of
interest by April 17, 1996. Eight responded that they had an interest in
acquiring the Company. Four firms conducted due diligence visits to the Company
in May, 1996. At a special meeting of the Company's directors on May 31, the
discussions with interested acquirors were reviewed and evaluated. Consideration
was given to selling certain divisions, especially the software services
division, separately. Tax and securities law issues relating to the structuring
of the transaction, including the value of the Company's net operating loss
carry-forward, were reviewed by the Board of Directors and legal counsel. At
this time a Special Committee of the Board, comprised of non-management
directors, was appointed with authority to handle all matters relating to a
possible sale of the Company. Two firms presented written offers to acquire the
Company on June 4, 1996 and an oral indication of intent was submitted by a
third firm. Two other firms submitted offers to acquire the Company's software
services division, Payne & Associates. One of these firms intended to employ
certain members of the Company's management in operation of this division.
On June 13, 1996 the Special Committee of the Board met with its legal
counsel and representatives of GH&L to review the bidding process and evaluate
pending offers, two of which had been revised significantly upwards. The Special
Committee concluded that the best approach would be to sell the entire Company
to one purchaser, and that the $12 million cash offer from UCG, which the
Committee believed had the financial capability and strategic motivation to
complete the transaction, was higher than any other offer received and therefore
was superior to the other offer from a financial point of view for the Company's
stockholders. The Committee also concluded that, in light of the process that
has been followed, it was highly unlikely that any other bidder would now make a
superior offer. The Special Committee determined that UCG would be allowed one
week to complete its due diligence investigation and negotiate a definitive
agreement.
On June 20, 1996 the Special Committee met again with its legal counsel
and GH&L to review the draft of the Merger Agreement in detail. GH&L presented
its opinion that the proposed transaction was fair to the Company's
stockholders. The Committee approved the fairness opinion and the draft of the
Merger Agreement, subject to negotiation of certain matters. On June 21, 1996
the Committee approved the final draft of the Merger Agreement, which was then
signed by all parties. Later that afternoon, the Company made a public
announcement of its intent to merge into UCG Acquisition.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously approved the
Merger Agreement and believes that the Merger is in the best interests of the
stockholders of the Company. The Board of Directors unanimously recommends to
the stockholders that they vote FOR approval of the Merger Agreement. The Board
of Directors believes that the Company's stockholders will benefit from the
Merger.
In reaching these conclusions, the Board of Directors considered many
factors including, but not limited to, the following:
1. The terms of the Merger Agreement, including the
approximately $3.89 in cash to be paid to the Company's stockholders
for each share of the Company's Common Stock.
2. The opinion of Greene Holcomb & Lannin LLC that the
approximately $3.89 per share in cash to be paid to the stockholders is
fair to the stockholders from a financial point of view.
3. The ability of UCG to consummate the Merger promptly and
the availability of sufficient financing to do so.
4. The expressions of interest to acquire the Company made by
other companies, all of which the Board believes were inferior to UCG's
offer.
5. The historical and recent market prices of the Common Stock
and the relative lack of liquidity for the Company's stockholders. The
Common Stock has traded within a fairly narrow range over the past
several years, at a price significantly lower than that being offered
by UCG, and the trading volume has been low, resulting in limited
liquidity for shareholders.
6. The operating results of the Company over the past several
years.
OPINION OF INVESTMENT BANKER
At the June 20, 1996 meeting of the Company's Special Committee of the
Board of Directors, Greene Holcomb & Lannin LLC ("GH&L") delivered its opinion
in writing to the effect that, as of such date, the transaction contemplated by
the Merger Agreement is fair to the Company's shareholders, from a financial
point of view. See Exhibit II.
GH&L is an investment banking firm with special expertise in mergers
and acquisitions and, among other things, valuing businesses and their
securities. The Board selected GH&L because of its principals' experience and
expertise in performing valuation analyses. GH&L received a non-contingent fee
of $30,000, plus reimbursement of out-of-pocket expenses, in connection with its
fairness opinion analysis. GH&L does not beneficially own any interest in the
Company.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The
following is a brief summary and general description of the valuation
methodologies followed by GH&L. The summary does not purport to be a complete
statement of the analyses and procedures applied, the judgments made or the
conclusion reached by GH&L. GH&L believes, and so advised the Board, that its
analyses must be considered as a whole, and that selecting portions of its
analyses and the factors considered by it, without considering all factors and
analyses, could create an incomplete view of the process underlying its analyses
and opinion.
In connection with its opinion, GH&L has reviewed, among other things,
(i) the Company's annual reports to shareholders and Form 10-KSB for the three
fiscal years ended January 31, 1994, 1995 and 1996, and the 10-QSB for the
quarterly period ended April 30, 1996; and (ii) the Company's internal
projections for fiscal 1997-2000. In addition, GH&L has interviewed certain of
the directors, senior management and shareholders of the Company regarding the
operations, financial condition, future prospects and projected operations and
performance of the Company and has inspected the Company's headquarters in St.
Paul, Minnesota and its facility in Peoria, IL. GH&L has also reviewed the
reported prices and trading activity of the Company's common stock, compared
certain financial and stock market information for the Company with that of
certain other similar companies with publicly-traded securities, reviewed
certain recent business combinations it deemed relevant, reviewed a summary of
discussions with other parties potentially interested in acquiring the Company,
reviewed a draft of the Merger Agreement, and performed such other studies and
analyses as it considered appropriate.
As a basis for its fairness analysis, GH&L applied the following
valuation methodologies in determining appropriate value for the Company.
Selected Comparable Public Company Analysis. GH&L reviewed selected
financial, operating and stock market information for the Company in comparison
with corresponding information of selected comparable public companies. The
selected comparable public companies in the computer information services
industry were: American Business Information, Inc., Avert, Inc., Compuflight,
Inc., Data Transmission Network Corporation, Desktop Data, Inc., Euroamerican
Group, Inc., Individual, Inc., Information Resources, Inc., PC Quote, Inc.,
Quick Response Services, Seitel, Inc., and Telescan, Inc. (collectively referred
to as the "Comparative Public Companies"). The purpose of these analyses was to
ascertain how the Company compared to its respective peers in relation to
certain financial indicators. The multiples and ratios for each of the selected
companies were based on the most recent publicly available information and
selected analyst's earnings estimates, adjusted to correlate with the Company's
respective fiscal year ending dates.
Premium Analysis. GH&L reviewed 14 transactions announced and completed
between June 1, 1995 and June 18, 1996 within industries similar to the
Company's. The purpose of this review was to compare the premium to be paid by
UCG over the Company's last trade price of $2.63 on June 14, five trading days
prior to the announcement of the offer (48.7%) with the average premium paid for
computer software, supplies and service companies during 1995 (43.3%).
Discounted Cash Flow Analysis. GH&L also performed a discounted cash
flow (DCF) analysis, relying on certain information, including financial
projections, provided by the Company to estimate the present value of a stream
of projected free cash flows, and including a terminal value that estimates
ongoing value of the Company. Discount rates utilized ranged from 17.5% to 22.5%
and terminal value multiples ranged from 8X to 12X.
Historical Stock Trading Analysis. GH&L reviewed the trading prices and
volumes for the Company's common stock.
Comparable Transaction Analysis. GH&L performed analyses of certain
recent transactions in the information retrieval services and other related
industries including but not limited to, transactions involving Information
Services, Disclosure, Inc., Datis Corp., DATEQ Information Network, Occupational
Health Services, AdvaCare, Inc., IBAX Healthcare Systems, Inc. and BRS Software
Products. With respect to each transaction, GH&L compared the final purchase
price with the trading price of the target company's common stock over varying
time periods prior to announcement of the transaction. GH&L also reviewed
certain transaction multiples determined based upon the ratio of total purchase
price over representative levels of sales, earnings and cash flow, and book
value.
These analyses were prepared solely for the purposes of GH&L providing
its opinion and are not appraisals or representations of prices at which
businesses or securities may actually be sold. Analyses based on forecasts of
future results are not necessarily indicative of actual future results, which
may be more or less favorable than suggested by such analyses. These analyses
are based upon numerous factors and events that are beyond the control of the
parties and their respective advisors. Hence, none of the Company, GH&L, or any
other person, assumes responsibility if future results are materially different
from those forecast.
GH&L has not independently verified the accuracy and completeness of
the information supplied to it with respect to the Company and does not assume
any responsibility with respect to it. GH&L has not made any independent
appraisal of any of the properties or assets of the Company. GH&L's opinion is
necessarily based on business, economic, market and other conditions as they
exist and can be evaluated by it at the date of its opinion.
AGREEMENT AND PLAN OF MERGER
General. The Merger Agreement provides that, subject to the approval of
the Merger Agreement by the stockholders of the Company and the satisfaction or
waiver of certain other conditions, the Company will be merged with and into UCG
Acquisition. and the separate existence of the Company will cease. At the
effective time of the Merger, each share of Common Stock then issued and
outstanding (other than shares held by stockholders exercising their dissenter's
rights) will, by virtue of the Merger and without any action on the part of the
holders of such shares, be converted into the right to receive approximately
$3.89 in cash, without interest. Stockholders who do not vote in favor of the
Merger Agreement and who otherwise comply with the provisions of Sections
302A.471 and 302A.473 of the Minnesota Business Corporation Act have the right
to seek a judicial determination of the fair value of their shares of Common
Stock and to be paid such amount. See "Rights of Dissenting Stockholders." After
the Merger, holders of Common Stock will possess no interest in or rights as
stockholders of the Company; their only right in respect of their shares of
Common Stock will be to receive payment as described above. The Merger will be
treated as a purchase for accounting purposes.
All references to and summaries of the Merger Agreement in this Proxy
Statement are qualified in their entirety by reference to the text of the Merger
Agreement, which is attached as Exhibit I to this Proxy Statement.
Effective Time. The effective time of the Merger will occur at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Minnesota and the Secretary of State of the State of Maryland or
such later date as may be set forth in the Certificate of Merger, all in
accordance with the Minnesota Business Corporation Act and the Maryland Business
Corporation Act, as amended (the "Effective Time"). The required filings are
expected to be made as soon as practicable after the approval of the Merger
Agreement by the Company's stockholders at the Special Meeting and the
satisfaction or waiver of all other conditions to the consummation of the
Merger. See "Conditions to the Merger."
Payment for Shares. The Merger Agreement provides that Norwest Bank
Minnesota, N.A. shall serve as UCG's agent (the "Exchange Agent"), for the
purpose of exchanging the certificates formerly representing shares of Common
Stock for the approximately $3.89 to be paid for each of such shares in the
Merger.
As soon as practicable after the Effective Time, the Exchange Agent
will send a Letter of Transmittal to each holder of a certificate or
certificates theretofore evidencing Common Stock of record as of the Effective
Time, other than certificates representing dissenting shares, advising such
holder of the effectiveness of the Merger and the procedure for sending the
Exchange Agent such certificates in exchange for the cash to be received
therefor as a result of the Merger.
Upon surrender to the Exchange Agent of such certificates, together
with a properly completed Letter of Transmittal and other documents as may be
reasonably requested by the Exchange Agent, such holders will be entitled to
receive a check representing approximately $3.89 multiplied by the number of
shares of Common Stock represented by such surrendered certificates. Until so
surrendered, after the Effective Time each certificate shall be deemed to
represent for all purposes only the right to receive such cash, and no other
right, with regard to the Company, UCG or UCG Acquisition. After the Effective
Time, there shall be no further registration of transfers of shares of Common
Stock. If payment for shares of Common Stock surrendered is to be paid to a
person other than the registered holder of such shares, the certificate so
surrendered must be properly endorsed or otherwise in proper form for transfer.
Any portion of the Merger consideration remaining with the Exchange
Agent six months after the Effective Time will be turned over to UCG
Acquisition, after which time stockholders will be entitled to look, subject to
applicable escheat and other similar laws, only to UCG Acquisition for payment
for their shares of Common Stock.
STOCKHOLDERS SHOULD NOT SURRENDER THEIR COMMON STOCK CERTIFICATES
BEFORE RECEIVING TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT AND, ACCORDINGLY,
SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
Conditions to the Merger. Under the Merger Agreement, the obligations
of both the Company and UCG and UCG Acquisition are subject to the satisfaction,
at or before the Effective Time, of certain conditions or the waiver thereof. If
any condition required to be satisfied by a party is not satisfied by such
party, and is not waived by the other party, the Merger will not be consummated.
Among such conditions are that, at or prior to the Effective Time, (i) the
stockholders of the Company shall have duly approved the Merger Agreement; (ii)
no final, nonappealable injunction or other order by any governmental entity
which prevents the consummation of the Merger shall have been issued and remains
in effect, and (iii) all necessary consents, authorizations and approvals shall
have been obtained. Consummation of the Merger is not subject to the receipt of
any state or federal approvals or authorizations.
The obligation of UCG and UCG Acquisition to consummate the Merger is
further subject to a number of additional conditions, any of which may be waived
in whole or in part to the extent permitted by applicable law. These additional
conditions are that, at or prior to the Effective Time, (i) all representations
and warranties of the Company contained in the Merger Agreement shall continue
to be true and correct; (ii) the Company shall have performed or complied with
those actions, undertakings, covenants or agreements set forth in the Merger
Agreement; (iii) shares held by stockholders exercising their right to dissent
shall aggregate no more than 10 percent of the outstanding Common Stock; and
(iv) there shall have been no material adverse change in the business or
financial condition of the Company.
The obligation of the Company to complete the Merger is also subject to
a number of additional conditions, any of which may be waived in whole or in
part to the extent permitted by applicable law. These additional conditions are
that, at or prior to the Effective Time, (i) all representations and warranties
of UCG and UCG Acquisition contained in the Merger Agreement shall continue to
be true and correct; (ii) UCG and UCG Acquisition shall have performed or
complied with those actions, undertakings, covenants or agreements set forth in
the Merger Agreement; and (iii) the Merger Consideration shall have been
deposited with the Exchange Agent in accordance with the Merger Agreement.
The representations and warranties made by both the Company and UCG and
UCG Acquisition in the Merger Agreement include various representations and
warranties typically found in such agreements. See Articles 2 and 3 of the
Merger Agreement attached hereto as Exhibit I.
Certain Covenants. With respect to the conduct of the Company's
business prior to the Effective Time, the Company has agreed that it will not,
among other things, (i) make any change in its Articles of Incorporation or
Bylaws; (ii) issue or sell any shares of its capital stock, issue any other
securities except upon conversion of the Company's outstanding Preferred Stock
and conversion of options outstanding under the Company's Employee Incentive
Stock Option Plans to Common Stock of the Company, or make any other changes in
its capital structure; (iii) declare, pay or make any dividend with respect to,
or purchase or redeem, any of the Common Stock; or (iv) enter into, amend,
modify or terminate any material agreement, commitment or transaction other than
in the ordinary course of business.
The Company has also agreed that it will not directly or indirectly
solicit, initiate, or participate in any discussions or proposals from any
person other than UCG or any affiliate or associate of UCG relating to any
merger with the Company or acquisition or purchase of all or a material amount
of the Company's assets or capital stock, except that the Company and the Board
of Directors can passively receive proposals from third parties and can provide
information to, or participate in discussions or negotiations with, any party
that has actually made a proposal and which the Board believes, in good faith,
would be capable of effecting an acquisition of the Company on terms that are
superior, from a financial point of view, to the transaction contemplated by the
Merger Agreement. The Company has also agreed to notify UCG promptly of any such
proposal or offer after it is made.
Termination. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after its approval by the stockholders
of the Company, (i) by the mutual written consent of the Company and UCG, (ii)
by either the Company or UCG if the stockholders of the Company have not
approved the Merger Agreement by August 31, 1996, (iii) by either the Company or
UCG if the Merger has not been consummated by September 30, 1996, provided that
such termination may not be effected by a party whose failure to fulfill any of
its obligations under the Merger Agreement was the reason for such
non-consummation, or (iv) by either the Company or UCG in the event of a
material misrepresentation, material breach of warranty or breach of a material
obligation by the other party. The Merger Agreement also provides that UCG may
terminate the agreement if the Company's Board of Directors withdraws or
modifies its recommendation of the Merger to the Company's stockholders. The
Merger Agreement provides that the Company may terminate the agreement if a
third party makes a bone fide tender offer or merger offer which the Company's
Board of Directors determine offers a material economic improvement to the
Company's stockholders when compared to the transaction contemplated by the
Merger Agreement.
In the event of termination of the Merger Agreement, neither party will
have any liability to the other unless the termination results from a party's
material breach of any representation, warranty covenant or obligation. In
addition, in the event the Merger Agreement is terminated by the Company by
reason of a breach by UCG, within two days after written demand UCG will pay the
Company $3,000,000 in liquidated damages. In the event the Company's Board of
Directors fail to recommend approval of the Merger Agreement to the Company's
stockholders, or withdraws or modifies such recommendation, or if the members of
the Board of Directors fail to vote shares owned by them in favor of the Merger
Agreement, or if the Merger Agreement is terminated by reason of acceptance of a
tender offer or merger offer described in the preceding paragraph, within two
days after written demand the Company will pay UCG $1,000,000.
Amendments to the Merger Agreement. The Merger Agreement may be
amended, modified or supplemented at any time before the Effective Time by
written agreement of the Company, UCG and UCG Acquisition. After approval of the
Merger by the Company's stockholders, no amendment to the Merger Agreement which
reduces the amount payable to the stockholders can be made without their
approval.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of July 8, 1996, directors and executive officers of the Company
beneficially owned, in the aggregate, 863,940 shares (29.7 percent) of the
Company's outstanding Common Stock. Such directors and executive officers will
receive an aggregate of approximately $3,360,727 for their shares of Common
Stock upon consummation of the Merger, and are expected to vote for the Merger.
Some of these executive officers and other employees of the Company may enter
into new employment agreements with UCG Acquisition, but no such agreements have
been entered into as of the date hereof.
It is the Company's understanding that UCG has entered into an
agreement with XATA Corporation for the sale of the assets of the Company's
software services division (Payne & Associates) following Closing of the Merger
Agreement. As part of this arrangement, the Company also understands that
William G. Leonard, President and Chief Executive Officer of the Company, and
Gary C. Thomas, Vice President and Chief Financial Officer of the Company, have
entered into agreements to be employed by XATA Corporation in the event the
Merger and that sale of assets are consummated.
FINANCING OF THE MERGER
The total funds required to pay the Merger Consideration of
approximately $3.89 per share for each outstanding share of Common Stock will be
$12,000,000. UCG intends to finance this amount, and any amount necessary to pay
transaction costs, with existing funds or, in whole or in part, with borrowed
funds. Consummation of the Merger is not contingent upon UCG's ability to obtain
borrowed funds.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of the federal income tax
consequences of the Merger. However, it does not take into account the facts and
circumstances of any particular stockholder of the Company. Each stockholder
should consult his or her adviser about the specific tax consequences to him or
her of the Merger, including the application and effect of state, local,
foreign, and other tax laws.
Except for shares acquired upon the exercise of stock options
immediately prior to the Merger, stockholders will recognize gain or loss for
federal income tax purposes measured by the difference between the tax basis of
their shares and the cash received therefor. Such gain or loss will be treated
as a capital gain or loss if the Company shares exchanged for cash are held as
capital assets on the Effective Date. The receipt of cash pursuant to the
exercise of dissenter's rights with respect to the Merger will be a taxable
transaction to stockholders receiving such cash, and a dissenting stockholder
will recognize gain or loss measured by the difference between the cash so
received and such stockholder's tax basis in the Company shares exchanged
therefor. Such gain or loss will be treated as a capital gain or loss if such
shares are held as capital assets on the Effective Date.
With respect to shares acquired upon exercise of stock options
immediately prior to the Merger, stockholders will recognize income for federal
tax purposes measured by the difference between their exercise price for the
options and the cash received therefor. Such income will be treated as
additional income to such stockholders taxable as ordinary income. Such income
may be subject to federal income tax withholding.
Under the backup withholding rules contained in the Internal Revenue
Code, the Exchange Agent may be required to withhold 31 percent of the gross
amount of any payments to certain stockholders. In order to avoid such backup
withholding, each stockholder (other than corporations and other persons exempt
from such backup withholding) should provide the Exchange Agent with a Form W-9
with such stockholder's taxpayer identification number (i.e., social security
number or employer identification number) in accordance with instructions to be
included in the Letter of Transmittal.
THE FEDERAL INCOME TAX DISCUSSION IN THIS PROXY STATEMENT IS BASED UPON
CURRENT LAW AND IS INTENDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS
URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL, AND OTHER TAX LAWS.
RIGHTS OF DISSENTING STOCKHOLDERS
Pursuant to Sections 302A.471 and 302A.473 (the "Sections") of the
Minnesota Business Corporation Act, holders of the Company's Common Stock are
entitled to exercise dissenter's rights in connection with the Merger and obtain
payment of the "fair value" of their Common Stock, provided that such
stockholders comply with the requirements of the Sections. The following is a
summary of the statutory procedures to be followed by holders of Common Stock
electing to exercise their dissenter's rights in order to perfect such rights
under the Sections and is qualified in its entirety by reference to the
Sections, the full text of which is attached to this Proxy Statement as Exhibit
III. The Sections should be reviewed carefully by stockholders who wish to
assert their dissenter's rights or who wish to preserve the right to do so,
since failure to comply with those procedures will result in the loss of such
dissenter's rights.
Holders of the Company's Common Stock who elect to exercise dissenter's
rights must satisfy each of the following conditions: (i) such holders must file
with the Company before the taking of the vote with respect to the Merger
written notice of their intention to demand payment of the fair value of their
shares of Common Stock (this written notice must be in addition to and separate
from any proxy or vote against the Merger; neither voting against nor a failure
to vote for the Merger will constitute such a notice within the meaning of the
Sections), and (ii) such holders must not vote in favor of the Merger (a failure
to vote will satisfy this requirement, but a vote in favor of the Merger, by
proxy or in person, will constitute a waiver of such holder's dissenter's rights
and will nullify any previously filed written notice of intent to demand
payment). The Company will consider a signed proxy that is returned by a
stockholder without indicating a direction as to how it should be voted as
constituting such a waiver and a vote for the Merger. If the Merger is
consummated, stockholders who fail to comply with either of these conditions
will be entitled to receive approximately $3.89 per share in cash as provided in
the Merger Agreement, but will have no dissenter's rights with respect to their
shares.
All written notices should be addressed to: Computer Petroleum
Corporation, World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota, Attention: Secretary, should be filed before the taking of the vote
on the Merger at the Special Meeting and should be executed by, or with the
consent of, the holder of record. The notice must reasonably inform the Company
of the identity of the stockholder and the intention of such stockholder to
demand dissenter's rights. In the notice the stockholder's name should be stated
as it appears on the stock certificates. A notice may be given by a beneficial
owner of shares only if a written consent of the stockholder of record is
submitted to the Company at the time of or prior to the assertion of the
dissenter's rights.
After a vote approving the Merger, the Company will give written notice
to each stockholder who has filed a written notice of intent to exercise
dissenter's rights and who did not vote in favor of the Merger setting forth the
address to which a demand for payment and stock certificates must be sent by
such stockholder in order to obtain payment, and the date by which they must be
received. This notice shall also include a form for demanding payment to be
completed by the stockholder and a request for certification of the date on
which the stockholder (or the person on whose behalf the stockholder is
asserting dissenter's rights) acquired beneficial ownership of the shares of
Common Stock. Stockholders who fail to demand payment or deposit their stock
certificates as required by the notice within 30 days after the notice is given
will irrevocably forfeit their dissenter's rights and will be bound by the terms
of the Merger.
If a demand for payment and deposit of stock certificates is duly made
by a stockholder who was a beneficial owner on or before June 21, 1996, the date
of the first public announcement of the Merger (the "Public Announcement Date"),
then upon the Effective Date or the receipt of the demand, whichever is later,
the Company will pay the stockholder an amount which the Company estimates to be
the fair value of the shares of Common Stock, with interest, if any. For the
purpose of a stockholder's dissenter's rights under the Sections, "fair value"
means the value of the shares of Common Stock immediately before the Effective
Date and "interest" means interest commencing five days after the Effective Date
until the date of payment at the rate provided in the Sections.
The Company may withhold its remittance with respect to shares of
Common Stock for which the stockholder demanding payment was not the beneficial
owner on the Public Announcement Date. Following the Effective Date, the Company
shall mail to each such stockholder which has validly demanded payment its
estimate of the fair value of such stockholder's shares of Common Stock and
offer to pay this amount, with interest, if any, to the stockholder upon receipt
of such stockholder's agreement to accept this amount in full satisfaction. If
such stockholder believes that the Company's offer is for less than the fair
value of the shares of Common Stock, with interest, if any, such stockholder
must give written notice to the Company of his or her own estimate of the fair
value of the shares of Common Stock, with interest, if any, and demand payment
of this amount. This demand must be mailed to the Company within 30 days after
the mailing of the Company's offer. If the stockholder fails to make this demand
within the 30-day time period, such stockholder shall be entitled only to the
amount offered by the Company.
If the Company and the stockholder (including both a stockholder who
purchased shares of Common Stock prior to the Public Announcement Date and a
stockholder who purchased shares of Common Stock after the Public Announcement
Date who have complied with their respective demand requirements) cannot settle
the stockholder's demand within 60 days after the Company receives the
stockholder's estimate of the fair value of his or her shares of Common Stock,
then the Company shall file an action in a court of competent jurisdiction in
Ramsey County, Minnesota, requesting that the court determine the fair value of
Common Stock, with interest, if any. All stockholders whose demands are not
settled within the applicable 60-day settlement period shall be made parties to
this proceeding.
After notice to the stockholder, the court shall institute proceedings
to determine the fair value of the shares of Common Stock. The court may appoint
one or more persons as appraisers to receive evidence and make recommendations
to the court. The court shall determine the fair value of the shares of Common
Stock, taking into account any and all factors the court finds relevant,
computed by any method or combination of methods that the court, in its
discretion, sees fit to use. The fair value of the shares of Common Stock as
determined by the court is binding on all stockholders. If the court determines
that the fair value of the shares of Common Stock is in excess of the amount, if
any, which the Company has remitted to the dissenting stockholders, then the
court will enter a judgment in favor of the dissenting stockholders in an amount
equal to such excess, plus interest.
Costs of the court proceeding shall be determined by the court and
assessed against the Company except that part or all of these costs may be
assessed against stockholders whose action in demanding supplemental payments
are found by the court to be arbitrary, vexatious or not in good faith.
If the court finds that the Company did not substantially comply with
the Sections, the court may assess the fees and expenses, if any, of attorneys
or experts against the Company. Such fees and expenses may also be assessed
against any party if the court finds that such party has acted arbitrarily,
vexatiously or not in good faith.
BUSINESS OF UNITED COMMUNICATIONS GROUP LIMITED PARTNERSHIP
United Communications Group Limited Partnership (UCG) is a Maryland
limited partnership with 225 employees, headquartered in Rockville, Maryland.
UCG has additional offices in Lakewood, New Jersey, and Needham, Massachusetts.
UCG is an information provider to the energy, telecommunications, healthcare,
mortgage banking, government contracting and defense, and computer industries.
UCG publishes over 70 print products, including over 50 newsletters, provides
online information and other database products, and holds over 100 conferences
and training seminars annually. UCG's customers number in the hundreds of
thousands worldwide, including many Fortune 500 companies. UCG has won more
awards given by the Newsletter Publishers Association for editorial/content
excellence than any other company.
Founded in 1977, UCG has made over 20 acquisitions in its 19 year
history. These acquisitions have included the Center for Communications
Management Information from McGraw-Hill in 1990, the ECHO Network from Bell
Canada in 1991, and the National Information Data Center from NRP in 1993. The
executive offices of UCG are located at 11300 Rockville Pike, Suite 1100,
Rockville, Maryland 20852-3030, and its telephone number is (301) 816-8950.
BUSINESS OF THE COMPANY
Computer Petroleum Corporation is in the business of providing
information and customized news, market analysis and commentary to the petroleum
and transportation markets through an electronic information network. The
Company gathers, stores, customizes and redistributes petroleum market
information to meet particular customer needs, primarily in segments of the
petroleum industry. Over 3,600 customers are served, including many of the
world's largest oil companies such as Shell, Exxon, Texaco and British
Petroleum. Other customers include the United States government, the American
Automobile Association, and many petroleum distributors and customers.
The Company was incorporated in 1979 as a regional petroleum price
information business and has since expanded to become a national provider of
retail and wholesale price information, cash-market prices, futures market news,
market trends and projections, truckstop prices, on-line historical data,
customized software and custom-programmed pricing studies. The Company does not
trade in energy products.
MARKET PRICES OF COMMON STOCK
Since May 21, 1991, the Company's Common Stock has been traded on the
National Association of Securities Dealers Automated Quotation (NASDAQ) system
under the symbol CPCO. The following table displays the high and low bid prices
as reported by NASDAQ for the fiscal quarters during fiscal years ended January
31, 1997, 1996 and 1995. NASDAQ quotations are interdealer prices without
adjustment for retail mark-up, markdown or commissions, and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996 Fiscal 1995
High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First Quarter...................... 2 1/4 1 2 1 1/4 1 3/4 3/4
Second Quarter ................... 1 3/4 1 1 1/2 1
(through July 8, 1996) ....... 3 5/8 1 1/2
Third Quarter...................... - - 2 1 1 1/2 1
Fourth Quarter..................... - - 1 3/4 1 1/4 2 1
</TABLE>
On June 20, 1996, the date preceding the day the Merger Agreement was
publicly announced, the high and low bid prices of the Company's Common Stock as
reported by NASDAQ were $3.00 per share and $2.50 per share, respectively.
STOCKHOLDERS. As of July 8, 1996, there were approximately 63 record
holders of the Company's Common Stock and an estimated 500 beneficial owners
whose shares were held by nominees or broker dealers.
DIVIDENDS. The holders of Common Stock and preferred stock are entitled
to receive dividends when and as declared by the Board of Directors. Since its
incorporation, the Company has not paid any dividends on its Common Stock.
Holders of preferred stock are entitled to dividends of $.10 per share per
annum, payable semi-annually on March 15 and September 15. A $.05 per share
dividend was paid to holders of preferred stock on March 15, 1996. No Common
Stock dividend payments are contemplated in the foreseeable future.
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended January
31, 1996 have been derived from the Company's Annual Report to Stockholders for
the year ended January 31, 1996, a copy of which accompanies this Proxy
Statement. The following selected financial data for the three-month periods
ended April 30, 1995 and 1996 have been derived from the Company's Quarterly
Report on Form 10-QSB for the quarter ended April 30, 1996, a copy of which
accompanies this Proxy Statement:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $4,409,308 $3,927,786 $3,064,772 $2,761,824 $2,897,270
Net Income (Loss) 7,100 937 (558,399) (621,538) 47,847
Net Income (Loss)
Per Common Share -------- -------- (.20) (.21) .02
Total Assets 2,728,316 2,303,872 2,050,685 2,768,664 2,726,316
Long-Term Debt 326,565 345,539 241,960 291,744 5,751
Stockholders' Equity 1,536,077 1,444,227 1,443,290 2,031,689 2,553,227
Book Value
Per Common Share .529 .497 .497 .702 .906
THREE MONTHS ENDED APRIL 30
1996 1995
---- ----
Revenues $1,272,521 $1,060,888
Net Income 100,914 10,573
Net Income
Per Common Share 0.03 0.00
Total Assets 2,741,185 2,270,898
Long-term Debt 312,930 311,085
Stockholders' Equity 2,741,185 1,454,800
Book Value
Per Common Share .562 .501
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of
the Company beneficially owned as of July 8, 1996 by each person known to the
Company to be the beneficial owner of five percent or more of the Company's
Common Stock, by each director and executive officer, and by all directors and
executive officers as a group, and the percentage of outstanding shares so owned
at that time:
NAME AND ADDRESS UNT OF NATURE OF PERCENT
OF BENEFICIAL OWNER EFICIAL OWNERSHIP OF CLASS
Charles G. Schiefelbein 604,800 20.8
2920 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Cherry Tree Ventures II(1) 485,315 16.7
1400 Northland Plaza
3800 West 80th Street
Minneapolis, MN 55431
Ronald A. Brandow 339,972 11.7
10681 Haddington
Houston, TX 77043
Winton Family Partnerships(2) 310,001 10.7
1910 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Parship River Company 224,199 7.7
c/o Winton Partners
4422 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Bruce C. Huber(3) 48,590 1.7
Anton J. Christianson(4) 30,887 1.1
Charles M. Osborne 1,000 *
William G. Leonard(5) 156,800 5.4
All directors and officers as
a group (7 persons)(5) 863,940 29.7
- --------------------
*Less than one percent.
(1) Anton J. Christianson, a director of the Company, is one of two
Managing General Partners of Cherry Tree Ventures II.
(2) Includes 156,918, 116,326, 27,678, 5,030 and 4,049 shares,
respectively, owned by Reynolds Creek Limited Partnership, Sutter Creek
Limited Partnership, Table River Limited Partnership, Kerry Lake
Company and Winton Associates, all of which have the same general
partner.
(3) Excludes shares of Piper Jaffray Companies, Inc. and related entity
Piper, Jaffray & Hopwood investors. Mr. Huber is a Managing Director of
Piper Jaffray Companies, Inc.
(4) Excludes shares of Cherry Tree Ventures II, of which Mr. Christianson
is one of two Managing General Partners.
(5) Includes shares deemed beneficially owned by virtue of the right to
acquire them within 60 days pursuant to exercise of options granted
under the Company's Incentive Stock Option Plan as follows: Mr. Leonard
- 112,250 shares; all directors and officers as a group - 127,500
shares.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of McGladrey and Pullen, LLP has been retained by
the Company since 1994 to examine the Company's accounts, and to perform other
appropriate accounting services. Representatives of the firm are not expected to
attend the Special Meeting.
OTHER MATTERS
As of the date of this statement, management of the Company has no
knowledge of any other business which will be presented for consideration at the
meeting. However, if any matters other than those referred to above should
properly come before the meeting, it is the intention of the persons named in
the enclosed Proxy to vote such Proxy in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
It is not now anticipated that there will be an annual meeting in 1996.
However, if the Merger is not consummated, an annual meeting will be held later
in 1996, and stockholder proposals will be submitted if received within a
reasonable period of time before the meeting.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
January 31, 1996;
(b) The sections in the Company's Annual Report to the stockholders for
the year ended January 31, 1996 entitled Selected Financial Data, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
Common Stock Information; and
(c) The Company's Quarterly Report on Form 10-QSB for the quarter ended
April 30, 1996; and
(d) All other reports filed by the Company pursuant to Section 13 or 15
of the Securities Exchange Act of 1934 since January 31, 1996.
The Company will provide without charge to each stockholder, upon
written or oral request and by first class mail or other equally prompt means
within one business day of receipt of such request, a copy of any and all of the
documents referred to above which have been incorporated in this Proxy Statement
by reference, other than exhibits to such documents which are not specifically
incorporated by reference into the information that this Proxy Statement
incorporates. Requests for such copies should be directed to Mr. William G.
Leonard, President and Chief Executive Officer, Computer Petroleum Corporation,
World Trade Center, 30 East Seventh Street, Suite 510, St. Paul, Minnesota,
telephone number (612) 225-9550.
COMPUTER PETROLEUM CORPORATION
PROXY
SPECIAL STOCKHOLDERS' MEETING
AUGUST 23, 1996
The undersigned stockholder of Computer Petroleum Corporation hereby
appoints Charles G. Schiefelbein and Anton J. Christianson, and each of them,
his or her proxy, each with full power of substitution, to attend the Special
Meeting of the stockholders of Computer Petroleum Corporation, to be held at the
corporate offices of Computer Petroleum Corporation at World Trade Center, 30
East Seventh Street, Suite 510, St. Paul, Minnesota, on Friday, August 23, 1996,
at 9:00 a.m., and at any and all adjournments thereof, and there to act for and
to vote all stock of the corporation owned of record by the undersigned, in the
manner specified below, upon the following matters.
1. To consider and vote upon approval of an Agreement and Plan of
Merger, dated June 21, 1996, among the Company, United Communications Group
Limited Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition
Corp., a Maryland corporation and a wholly owned subsidiary of UCG, providing
for the merger of the Company with and into UCG Acquisition Corp., pursuant to
which each outstanding share of the Company's common stock (other than shares as
to which the holders have exercised their dissenter's rights under Minnesota
law) will be converted into the right to receive approximately $3.89 in cash,
without interest.
|_| FOR |_| AGAINST |_| ABSTAIN
2. In their discretion on any other matter that may properly come
before the meeting or any adjournment or adjournments thereof.
PLEASE FILL IN, SIGN ON REVERSE SIDE
AND MAIL IN THE ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND
PLAN OF MERGER. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE MEETING
AND OF THE PROXY STATEMENT.
DATED THIS ____ DAY OF _________________, 1996.
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(PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS HEREON. IF SIGNED
FOR ESTATES, TRUSTS OR
CORPORATIONS, TITLE OR
CAPACITY SHOULD BE STATED. IF
SHARES HELD JOINTLY, EACH
HOLDER MUST SIGN.)
