Rule 424(b)
Registration No. 33-60358
1,491,891 Shares
AG SERVICES OF AMERICA, INC.
Common Stock
This Prospectus relates to the offering of up to 1,491,891 shares of
Common Stock, no par value per share (the "Shares"), of Ag Services of
America, Inc. (the "Company"). The Shares are issuable to holders of the
Company's outstanding 7% Convertible Subordinated Debentures due 2003 (the
"Debentures") upon conversion of the Debentures at a conversion price of
$9.25 per share.
The Company has elected and scheduled to call for redemption on July 10,
1996, (the "Redemption Date"), all of its outstanding Debentures at a
redemption price of 108.0% of the principal amount of Debentures (the
"Redemption Price"), plus accrued interest from May 31, 1996 to the
Redemption Date. The Debentures (or any portion thereof which is $1,000 or
an integral multiple thereof) may be converted into the Common Stock of the
Company at a conversion price of $9.25 of principal amount of Debentures per
share of Common Stock (equivalent to 108.108 shares of Common Stock for each
$1,000 principal amount of Debentures) at any time prior to 5:00 p.m. Central
Daylight Time on the Redemption Date. Cash will be paid in lieu of any
fractional shares of Common Stock issuable upon conversion of the Debentures.
No payment or adjustment to the conversion price will be made on account of
interest on the Debentures accruing after May 31, 1996. See "Alternatives
Available to Debenture Holders". ANY DEBENTURES NOT SO SURRENDERED FOR
CONVERSION ON OR BEFORE THE REDEMPTION DATE WILL BE REDEEMED.
The Company's outstanding Common Stock and any shares acquired through
conversion of Debentures are listed on the NASDAQ National Market System
("NASDAQ") under the symbol
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE 7, 1996
AGSV. On May 21, 1996, the closing sale price of the Common Stock, as
reported on the NASDAQ, was $14.00 per share. Based on the closing price of
$14.00 per share, if a holder of $1,000 principal amount of Debentures on
that date had converted such principal amount, such holder would have
received Common Stock (and cash in lieu of a fractional share) having a market
value equal to $1,513. The market price of the Common Stock received upon
conversion is subject to fluctuation, and the holder may incur various
transaction costs if the Common Stock is sold. So long as the market price
of the Common Stock is greater than $10.06 per share at the time of
conversion, a holder of Debentures who exercises such holder's conversion
rights will receive Common Stock, plus cash in lieu of any fractional share,
with a market value greater than the amount of cash the holder would
otherwise be entitled to receive upon the redemption of the Debentures
(before deducting any taxes, commissions and other costs which would likely
be incurred on sale of the Common Stock received upon conversion of the
Debentures).
AVAILABLE INFORMATION
The Company's Common Stock is traded on the NASDAQ National Market System
("NASDAQ") under the symbol AGSV. The Company is subject to the information
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and
in accordance therewith files reports, proxy or information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its regional offices located at 500 West Madison, Suite
1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Additional information regarding the Company and the Shares offered
hereby is contained in the Registration statement and the exhibits thereto
filed with the Commission under the Securities Act of 1933, as amended. For
further information pertaining to the Company and the Shares, reference is
made to the Registration Statement and the exhibits thereto, which may be
inspected without charge at, and copies thereof may be obtained at prescribed
rates from, the office of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission under
the Exchange Act, are incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
February 29, 1996 a copy of which will accompany this Prospectus;
(b) The description of the Company's securities contained in the
Company's Registration Statement under Section 12 of the Exchange
Act, and any and all amendments and reports filed for the purpose
of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Shares offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents which are not specifically incorporated by
reference in such documents). Requests for such copies should be directed to
Corporate Secretary, Dean C. Mohr, Ag Services of America, Inc., 2302 West
First Street, Cedar Falls, Iowa 50613.
The principal offices of Ag Services of America, Inc. are located at
2302 West First Street, Cedar Falls Iowa 50613, telephone number
(319) 277-0261.
USE OF PROCEEDS
The Company will receive no proceeds upon conversion of the Debentures.
The Debentures will be retired and recorded as equity, see "Capitalization".
CAPITALIZATION
The following table sets forth the capitalization of the Company at
February 29, 1996, and as adjusted to give effect to the assumed conversion
of all the Debentures into approximately 1.5 million shares of Common Stock.
(The table does not reflect the pre-tax loss on Debentures that are redeemed
rather than converted arising from the excess of the redemption price for such
Debentures over their carrying value, which excess as of February 29, 1996,
equaled approximately $45 for each $1,000 principal amount of Debentures).
The financial data at February 29, 1996, in the following table are derived
from the Company's audited financial statements for the year ended
February 29, 1996.
February 29, As
1996 Adjusted
Long-Term Liabilities (1)
7% convertible subordinated debentures $13,800,000 $ --
----------- ----------
Stockholders' Equity (1)(2)(3)
Capital stock, common-approximately
3.6 million and 5.1 million shares
issued and outstanding, respectively $ 8,499,003 $21,678,803
Retained Earnings 11,921,804 11,921,804
----------- -----------
Total Stockholders' Equity $20,420,807 $33,600,607
----------- -----------
Total Capitalization $34,220,807 $33,600,607
=========== ===========
(1) For additional information regarding long-term liabilities (including
repayment requirements), Capital Stock and retained earnings, see notes
3, 6, and 8 to the audited financial statements included in the
Company's Annual Report on Form 10-K for the year ended February 29,
1996. See "Incorporation of Certain Documents by Reference."
(2) As of February 29, 1996, 1.5 million shares of Common Stock were
reserved for the conversion of the Debentures and 0.6 million shares of
Common Stock were reserved for the issuance of stock upon the exercise
of stock options.
(3) Assumed conversion of all the debentures net of unamortized debt
issuance costs of approximately $620,200.
ALTERNATIVES AVAILABLE TO DEBENTURE HOLDERS
The Company has elected and scheduled to call for redemption on the
Redemption Date, all of the Company's outstanding Debentures. As of May 21,
1996, $13,800,000 principal amount of Debentures was outstanding.
The following alternatives are available to holders of Debentures:
1. CONVERSION INTO COMMON STOCK. Holders may convert Debentures (or any
portion thereof which is $1,000 or an integral multiple thereof) into the
Common Stock of the Company at a conversion price of $9.25 of principal
amount of Debentures per share of Common Stock (equivalent to 108.108 shares
of Common Stock for each $1,000 principal amount of Debentures). No fractional
Shares of Common Stock will be issued upon conversion of Debentures. Instead
of issuing any fractional share of Common Stock that would otherwise be
issuable upon conversion of any Debenture, the Company will pay a cash
adjustment in respect of such fraction in an amount equal to the same
fraction of the conversion price per share of Common Stock. The Debentures
will not be convertible after 5:00 P.M., Central Daylight Time, on the
Redemption Date.
Holders of Debentures that convert their Debentures will not be entitled
to any payment of interest on such Debentures accruing after May 31, 1996.
Holders of Debentures of record on May 15, 1996, will be entitled to receive
the payment of interest due on the Debentures on May 31, 1996.
Debentures may be held in book-entry form through the facilities of The
Depository Trust Company (the "Depository"). Accordingly, in order for a
beneficial owner of an interest in a Debenture to exercise conversion rights,
such beneficial owner must comply with the procedures of the Depository, if a
participant in the Depository (a "participant"), or if such beneficial owner
is not a participant in the Depository, through the procedures of the
participant through which such beneficial owner owns its interest in the
Debentures, to effect a conversion.
The Company will decide, in its sole discretion, all questions as to the
form of documents and the validity, eligibility (including time of receipt)
and acceptance for conversion by the Company of any Debentures. Any defect or
irregularity in the surrender or delivery of any document in connection with
the conversion of Debentures may result in such Debentures not being
converted into Common Stock and, therefore, being redeemed on the Redemption
Date.
SINCE IT IS THE TIME OF ACTUAL RECEIPT THAT DETERMINES WHETHER
DEBENTURES HAVE BEEN PROPERLY PRESENTED FOR CONVERSION, SUFFICIENT
TIME SHOULD BE ALLOWED FOR A BOOK-ENTRY TRANSFER TO BE MADE, PRIOR TO
5:00 P.M., CENTRAL DAYLIGHT TIME, ON THE REDEMPTION DATE. DEBENTURES
NOT ACTUALLY RECEIVED FOR CONVERSION BY A BOOK-ENTRY TRANSFER PRIOR
TO SUCH TIME WILL BE REDEEMED AS SET FORTH BELOW.
2. SALE IN OPEN MARKET. Holders may sell the Debentures in the open
market. Holders of Debentures who wish to sell their Debentures in the open
market should consult with their own advisors regarding if and when they
should sell their Debentures and the tax consequences thereof. Holders may
incur various fees and expenses in connection with any such sale.
3. REDEMPTION. Holders may allow the Debentures to be redeemed on the
Redemption Date. Pursuant to the terms of the Indenture between the Company
and Norwest Bank Minnesota, National Association, as Trustee, dated as of
April 30, 1993, holders of the Debentures will be entitled to receive upon
redemption 108.0% of the principal amount of Debentures (the "Redemption
Price"), plus accrued interest from May 31, 1996 to the Redemption Date. The
holder of $1,000 principal amount of Debentures redeemed at the Redemption
Price plus accrued interest would receive $1,087.78 in cash. Payment of the
Redemption Price plus accrued interest will be made by Norwest Bank
Minnesota, National Association, as paying and conversion agent (the "Paying
and Conversion Agent") upon surrender of Debentures to the Paying and
Conversion Agent by holders of Debentures. On and after the Redemption Date,
interest will cease to accrue and holders of Debentures will not have any
rights as such holders other than the right to receive the Redemption Price,
plus accrued interest from May 31, 1996, to the Redemption Date, upon such
surrender for redemption.
On May 21, 1996, the closing price of the Common Stock as reported on
the NASDAQ was $14.00 per share. Based on the closing price of $14.00 per
share, if a holder of $1,000 principal amount of Debentures on that date had
converted such principal amount, such holder would have received Common Stock
(and cash in lieu of a fractional share) having a market value equal to
$1,513, which amount is higher than the amount ($1,087.78) to be received
upon redemption. The market price of the Common Stock received upon
conversion, however, is subject to fluctuation, and the holder may incur
various transaction costs if such Common Stock is sold. Holders of
Debentures are urged to obtain current market quotations for the Common Stock.
SO LONG AS THE MARKET PRICE OF THE COMMON STOCK IS GREATER THAN
$10.06 PER SHARE AT THE TIME OF CONVERSION, A HOLDER OF DEBENTURES WHO
EXERCISES SUCH HOLDER'S CONVERSION RIGHTS WILL RECEIVE COMMON STOCK,
PLUS CASH IN LIEU OF ANY FRACTIONAL SHARE (DETERMINED AS SET FORTH
ABOVE), WITH A MARKET VALUE GREATER THAN THE AMOUNT OF CASH THE
HOLDER WOULD OTHERWISE BE ENTITLED TO RECEIVE UPON THE REDEMPTION OF
THE DEBENTURES (BEFORE DEDUCTING ANY TAXES, COMMISSIONS AND OTHER
COSTS WHICH WOULD LIKELY BE INCURRED ON SALE OF THE COMMON STOCK
RECEIVED UPON CONVERSION OF THE DEBENTURES).
For a discussion of certain United States federal income tax
considerations, see "Certain Federal Income Tax Considerations".
PAYING AND CONVERSION AGENT AND INFORMATION AGENT
<TABLE>
Norwest Bank Minnesota, National Association has been appointed as
Paying and Conversion Agent for the redemption and conversion of the Debentures.
The Paying and Conversion Agent:
<C> <C>
By Hand or Overnight Courier: By Mail: In Person:
(registered or certified mail
recommended)
Norwest Bank Minnesota, Norwest Bank Minnesota, Northstar East Building
National Association National Association 608 2nd Ave. South
Corporate Trust Operations Corporate Trust Operations 12th Floor
Norwest Center P. O. Box 1517 Corporate Trust Services
Sixth and Marquette Minneapolis, MN 55480-1517 Minneapolis, MN
Minneapolis, MN 55479-0113
</TABLE>
The Company will pay the Paying and Conversion Agent their reasonable
and customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DESCRIPTION OF CAPITAL STOCK
The following statements with respect to the capital stock of the
Company are summaries and are subject to the detailed provisions of the
Company's Articles of Restatement, as amended (the "Articles of
Restatement"), and by-laws, as amended (the "By-Laws"). These statements do not
purport to be complete, or to give full effect to the provisions of statutory
or common law, and are subject to, and are qualified in their entirety by
reference to, the terms of the Certificate of Incorporation and the By-Laws,
copies of which are filed as exhibits to the Registration Statement and are
incorporated by reference into this Prospectus.
GENERAL
The Articles of Restatement authorizes the issuance of 10,000,000 shares
of common stock, without par value. On February 29, 1996, approximately 3.6
million shares of Common Stock were outstanding.
VOTING RIGHTS
The holders of the Common Stock will elect all directors and are
entitled to one vote per share. All shares of Common Stock will participate
equally in dividends when and as declared by the Board of Directors (see
"Dividend Policy") and in net assets on liquidation. All outstanding shares
are, and the shares to be issued by the Company pursuant to this offering
will be, duly authorized, validly issued, fully paid and nonassessable.
The Bylaws of the Company contain provisions requiring the affirmative
vote of the holders of a majority of the shares entitled to vote in the
election of Directors to remove directors or amend the Bylaws.
DIVIDEND POLICY
Other than dividends paid prior to September 1989 to its then parent
corporation, which was subsequently merged into the Company, the Company has
not paid a cash dividend on its Common Stock. The Company has no present
intention of paying dividends. The Company presently intends to retain
earnings to finance growth. The Company's credit agreement limits the
payment of dividends to an aggregate maximum of $100,000 per year.
TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is Norwest Bank
Minnesota National Association.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal
income tax considerations relevant to the conversion, redemption or sale of
Debentures by a beneficial owner of Debentures. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
(including Proposed Regulations and Temporary Regulations) promulgated
thereunder, Internal Revenue Service ("IRS") rulings, official pronouncements
and judicial decisions, all as in effect on the date hereof and all of which
are subject to change, possibly with retroactive effect, or different
interpretations. This summary is applicable only to holders who are United
States persons for federal income tax purposes and who hold Debentures as
capital assets and who will hold any Common Stock received on conversion of
Debentures as capital assets.
This summary does not discuss all the tax consequences that may be
relevant to a particular holder in light of the holder's particular
circumstances and it is not intended to be applicable in all respects to all
categories of investors, some of whom--such as insurance companies, tax-exempt
persons, financial institutions, regulated investment companies, dealers in
securities or currencies, persons that the Debentures as a position in a
"straddle," as part of a "synthetic security," "hedge," "conversion
transaction" or other integrated investment or persons whose functional
currency is other than United States dollars--may be subject to different
rules not discussed below. In addition, this summary does not address any
state, local or foreign tax considerations that may be relevant to a
particular holder.
Legislative proposals have been under consideration that would reduce
the rate of federal income taxation of certain capital gains. Such
legislation, if enacted, might apply only to gain realized on dispositions
occurring after a date specified in the legislation. It cannot be predicted
whether any such legislation ultimately will be enacted and, if enacted, what
its effective date will be.
HOLDERS OF DEBENTURES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE CONVERSION, SALE OR REDEMPTION OF THE DEBENTURES
IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
CONVERSION OF DEBENTURES
In general, no gain or loss will be recognized on conversion of
Debentures solely into Common Stock. The tax basis for the Common Stock
received upon such conversion will be equal to the tax basis of the
Debentures converted (reduced by the portion of such basis allocable to any
fractional Common Stock interest paid in cash). The holding period for the
Common Stock generally will include the holding period of the Debentures
converted. A holder generally will recognize gain (or loss) upon a
conversion to the extent that any cash paid in lieu of a fractional share of
Common Stock exceeds (or is less than) its tax basis in such fractional share.
SALE OR REDEMPTION OF DEBENTURES
Generally, the sale or redemption of a Debenture will result in taxable
gain or loss equal to the difference between the amount realized and the
holder's adjusted tax basis in the Debentures. Except as discussed below
under "Market Discount", such gain or loss will be capital gain or loss and
will be long term gain or loss if, at the time of such disposition, the
Debentures had been held for more than one year.
MARKET DISCOUNT
Special rules will apply to Debentures acquired with market discount. A
market discount note is, generally, a note the stated redemption price at
maturity of which exceeds the holder's basis in the note immediately after
acquisition. Generally, any gain recognized on the sale or redemption of a
market discount note will be treated as ordinary income to the extent of the
accrued market discount on such note not previously included in income.
Market discount accrues either ratably or at a constant yield to maturity, at
the election of the holder. A holder of a market discount note also may elect
to take market discount into income as it accrues.
Although the matter is not free from doubt, a holder of a Debenture with
market discount should not have to recognize income on the conversion of the
Debenture, even with respect to market discount that has accrued but has not
been taken into account. Market discount not recognized on conversion will
carry over to the Common Stock acquired upon conversion thereof and will be
recognized as ordinary income to the extent of gain recognized upon the
disposition of such Common Stock, including any deemed disposition of
fractional shares of Common Stock for cash at the time of conversion.
SALE OR DISPOSITION OF COMMON STOCK
A holder will recognize gain or loss on the sale or exchange of Common
Stock received upon conversion of a Debenture equal to the difference between
the amount realized on such sale or exchange and the holder's adjusted tax
basis in the Common Stock sold or exchanged. Except as noted above under
"Market Discount", such gain or loss would be long-term capital gain or loss if
the holder's holding period for the Common Stock were more than one year. See
"Conversion of Debentures".
BACKUP WITHHOLDING
A holder of a Debenture or Common Stock issued upon conversion of a
Debenture may be subject to backup withholding at a rate of 31% with respect
to dividends on, or the proceeds of a sale, exchange, or redemption of, such
Debenture or Common Stock, as the case may be, unless (i) such holder is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable backup withholding rules.
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus would be issued upon conversion of
the Debentures. The Shares offered by this Prospectus are not being
underwritten.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
are being passed upon for the Company by Gray, Plant, Mooty, Mooty, and
Bennett, P.A., 3400 City Center, 33 South Sixth Street, Minneapolis,
Minnesota 55402-3796. Certain attorneys employed by Gray, Plant, Mooty and
Bennett, P.A. own shares of Common Stock of the Company having an aggregate
value of less than $50,000 based on the market value of the Company's Common
Stock on May 21, 1996.
EXPERTS
The Company's annual report on Form 10K for the fiscal year ended
February 29, 1996, incorporated by reference in this Prospectus and elsewhere
in the Registration Statement have been audited by McGladrey & Pullen, LLP
independent public accountants, as indicated in their reports with respect
thereto. The financial statements and schedule are incorporated by reference
in reliance upon the reports of said firm and upon the authority of said firm as
experts in accounting and auditing.
______________________________________________________________________________
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THE OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE OF THIS PROSPECTUS OR THE DOCUMENTS INCORPORATED BE REFERENCE
HEREIN.
Table of Contents
Page
----
Available Information..................... 2
Incorporation of Certain Documents
by Reference............................ 2
Use of Proceeds........................... 3
Capitalization............................ 3
Alternatives Available to
Debenture Holders....................... 4
Paying and Conversion Agent and
Information Agent....................... 6
Description of Capital Stock.............. 7
Certain Federal Income Tax
Considerations.......................... 8
Legal Matters............................. 10
Experts................................... 10
1,491,891 Shares
AG SERVICES OF AMERICA, INC.
Common Stock
PROSPECTUS
June 7, 1996
