SCHEDULE 13 D
DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT
November 2,2000
1.NAME OF REPORTING PERSON
Phillip Goldstein
__________________________________________________________
2.CHECK THE BOX IF MEMBER OF A GROUP [ ]
__________________________________________________________
3.SEC USE ONLY
____________________________________________________________
4.SOURCE OF FUNDS
WC
____________________________________________________________
5.CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURUSANT TO ITEMS 2(d) or 2 (e) [ ]
____________________________________________________________
6.CITIZENSHIP OR PLACE OF ORGANIZATION
USA
____________________________________________________________
_
7.SOLE VOTING POWER
198,000
____________________________________________________________
8.SHARED VOTING POWER
0
____________________________________________________________
9.SOLE DISPOSITIVE POWER
198,000
____________________________________________________________
10. SHARED DISPOSITIVE POWER
0
____________________________________________________________
11.AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
198,000
__________________________________________________________
12.CHECK IF THE AGGREGATE AMOUNT EXCLUDES CERTAIN SHARES [ ]
___________________________________________________________
13.PERCENT OF CLASS REPRESENTED BY ROW 11
5.1%
____________________________________________________________
14.TYPE OF REPORTING PERSON
IA
____________________________________________________________
Item 1. SECURITY AND ISSUER
This schedule 13D relates to the shares of Common Stock (the
"Common Stock") of Brantley Capital Corp("Brantley"). The
principal executive offices of Brantley are located at 20600
Chagrin Blvd., Suite 1150, Cleveland, OH 44122.
Item 2. IDENTITY AND BACKGROUND
(a)-(f)
This statement is filed on behalf of Phillip Goldstein, 60
Heritage Drive, New York, NY 10570.
Mr. Goldstein is a self-employed investment advisor. He is
also president of Kimball and Winthrop, Inc., 60 Heritage
Drive, Pleasantville, NY 10570, an investment advisory firm.
During the last 5 years Mr. Goldstein has not been convicted
in a criminal proceeding, nor been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which he was or is subject to a
judgement, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation
with respect to such laws.
Mr. Goldstein is a US citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERAIONS
Mr. Goldstein, an independent investment advisor, has
accumulated shares of Brantley on behalf of accounts that
are managed by Mr. Goldstein. All funds that have been
utilized to purchase shares of Brantley are from such
accounts or from margin loans from broker dealers where
these accounts are held.
ITEM 4. PURPOSE OF TRANSACTION
Mr. Goldstein purchased shares of Brantley because they have
been trading at a significant discount to net asset value
for a long time. Brantley's net asset value on June 30, 2000
was $13.97 per share and the closing price of Brantley's
stock on November 9, 2000 was $7.875. Mr. Goldstein's
intention is to take actions to close the gap between the
stock price and net asset value. In connection with this
objective, he has submitted a wake-up letter (see Exhibit 1)
and a shareholder proposal (see Exhibit 2) to change the
investment advisory fee so that it shall be based on the
performance of Brantley's stock price. Assuming that the
discount does not narrow significantly, he may also present
one or more additional proposals to enhance shareholder
value and may nominate a slate of directors at Brantley's
2001 annual meeting. Mr. Goldstein intends to solicit
proxies to pass his proposal(s) and elect his nominees. In
addition, he may conduct a tender offer or purchase
additional shares of Brantley in the market.
ITEM 5. INEREST IN SECURITIES OF THE ISSUER
a. As per a quarterly report for the quarter ended June 30,
2000 there were 3,810,535 shares of Common Stock
outstanding. The percentage set forth in this item (5a) was
derived using such number.
The Reporting Persons are the beneficial owners of 198,000
shares of Common Stock, which constitutes approximately 5.1%
of the outstanding shares of Common Stock.
b. Power to vote and to dispose of the securities resides
with Mr. Goldstein.
c. During the last sixty days, the following shares of
common stock were traded:
9/15/00 Bot 7500 BBDC @ 8.25
11/2/00 Bot 500 BBDC @ 7.875
11/3/00 Bot 2800 BBDC @ 7.875
11/6/00 Bot 700 BBDC @ 7.875
11/8/00 Bot 1500 BBDC @ 7.875
11/10/00 Bot 1800 BBDC @ 8
d. None
e. NA
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
None.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Wake Up Letter to Brantley
Exhibit 2. Shareholder Proposal
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: November 10, 2000
By: /s/ Phillip Goldstein
Name: Phillip Goldstein
EXHIBITS:
Exhibit 1. Wake Up Letter to Brantley
60 Heritage Drive
Pleasantville, MY 10570
(914) 747-5262
August 28, 2000
Michael J. Finn
President
Brantley Capital Corporation
20600 Chagrin Blvd., Suite 1150
Cleveland, OH 44122
Dear Michael:
After speaking with you on the telephone last week, I
have decided to write to explore further what can be done to
enhance shareholder value.
You may recall visiting me about a year ago to discuss
the large discount at which Brantley's shares were trading.
You said that you felt Brantley could generate returns to
shareholders of 25% per year over time. I gave you some
suggestions about how to narrow the large gap between
Brantley's stock price and its net asset value. In
particular, I suggested that the discount would probably
narrow if shareholders were assured that they could exit at
NAV at some time in the future. I also said that if you
delivered on your promise of solid gains for shareholders,
you would have no problem starting another fund.
Shortly thereafter, I began to purchase shares of
Brantley for my clients. As of today, we own about 170,000
shares. As you know, shareholders who bought stock in the
IPO at $10 per share in late 1996 have actually lost money
on their investment during a period in which the stock
market has been red hot and investors in technology-oriented
venture capital funds have enjoyed eye-popping gains.
The last stated NAV as of June 30, 2000 was $13.97.
The stock price is about $9.125, a discount of 35% from NAV.
Shareholders have received a total of $0.47 in
distributions. Thus, an original Brantley shareholder has
lost about 4% of the value of his investment in almost four
years.
On the other hand, management has done quite well for
itself. By the end of this year, Brantley Capital
Management will have been paid about $5 million. That is
quite a lot of money considering Brantley's market
capitalization is only $35 million and that initial
shareholders have yet to make a dime on their investment.
Let me make my position clear. I have no problem with
management being well compensated if that compensation is
commensurate with the wealth it creates for shareholders.
As far as I am concerned, Bill Gates and Warren Buffet
deserve every penny of the billions they have earned. On
the other hand, I see a serious problem when management is
being well paid while shareholders are treading water. I
hope you agree that Brantley, as a public company, exists
for the benefit of its shareholders, not to provide a
lucrative annuity for management.
As noted, management has thus far failed to take any
concrete action to enhance shareholder value. I think
shareholders have been extremely patient with the mediocre
stock performance and the whopping discount. After speaking
to a few other Brantley shareholders, my sense is that their
patience is waning. They are looking for action, not
excuses. Therefore, I strongly urge management to take some
meaningful action in the very near future to enhance
shareholder value. Any such action will likely mean
temporarily lower fees for management until the stock price
rises. Nevertheless, it is difficult to justify continuing
to collect hefty management fees quarter after quarter while
shareholder returns languish.
You said you know of satisfied long-term Brantley
shareholders. I would appreciate it if you would direct me
to a few of them because the way I see it, the only ones
other than management and the underwriters who have made any
money from Brantley are the value investors and bottom
fishers who bought shares at a 40% or greater discount. I
would also appreciate responses to the following questions:
Do you think management has any responsibility for
increasing Brantley's stock price or is it only
responsible for increasing the NAV?
Would you consider revising management's compensation so
that it is more closely aligned with shareholder
returns?
If the discount remains at current levels, would you
consider commencing an orderly liquidation of Brantley
at some time in the future?
Would management oppose a bid for the company at a
premium to the market price?
If you would like to further discuss what could be done
to enhance shareholder value, I would be happy to do so.
However, the ball is in management's court and the clock is
ticking. I personally believe that when a stock is trading
at far below its intrinsic value for a long period of time,
management has a fiduciary duty to try to close the gap.
Furthermore, I think it is unacceptable for management to
continue to be paid such lucrative fees until shareholders
can enjoy commensurate investment results.
I look forward to a timely response.
Very truly yours,
Phillip Goldstein
Exhibit 2. Shareholder Proposal
60 Heritage Drive
Pleasantville, NY 10570
(914) 747-5262
October 17, 2000
Michael J. Finn
President
Brantley Capital Corporation
20600 Chagrin Blvd., Suite 1150
Cleveland, OH 44122
Dear Mr. Finn:
Please substitute this letter (which contains minor
changes in our supporting statement) for the one dated
October 16, 2000. We now beneficially own almost 5% of
Brantley Capital's outstanding shares and have beneficially
owned shares valued at more than $2,000 for more than one
year. We expect to continue ownership through the date of
the next annual meeting. Since you have not responded to
our previous letter, we are submitting the following
proposal and supporting statement pursuant to Rule 14a-8 of
the Securities Exchange Act of 1934 for inclusion in
management's proxy statement for the next annual meeting of
stockholders or any earlier meeting.
We hope that the board of directors will support this
proposal since it is clearly in the best interests of
shareholders to link the advisory fees to shareholder
returns. (By the way, isn't that done in the private
investment partnerships that you manage?) In any event, we
are always willing to discuss options to increase
shareholder value.
RESOLVED: The investment advisory fee shall be based on the
performance of Brantley's stock price.
Supporting Statement
Do you ever feel like a passenger on a ship that's
slowly sinking while the captain is relaxing in a lifeboat
sipping champagne? Since its inception in late 1996,
Brantley's stock price has sunk from $10 per share to about
$8.50 recently. Our investment advisor, on the other hand,
has collected fees of approximately $5 million (or about
$1.30 per share). We think it's time that the advisor and
shareholders sink or swim together.
Currently, our advisor gets an annual fee of 2.85% of
Brantley's net asset value ("NAV"). That translates to
about $1.5 million to manage a fund whose market
capitalization is less than $35 million. There are two
sound reasons to tie the advisory fee to the price
performance of Brantley stock:
? The bulk of Brantley's portfolio consists of non-public
securities. The NAV is determined by management and thus
is inherently unreliable. Because its fees are based on
a self-determined NAV, our advisor may be tempted to
inflate it in order to generate higher fees. The price
of Brantley stock, on the other hand, is an accurate
measure of shareholder value.
? Despite a stated NAV of almost $14 per share, in October
2000 Brantley's share price was only $8.50. So, while
our shares are only worth sixty cents for each dollar of
NAV, our advisor's fee is based on 100% of NAV. Tying
the fee to Brantley's stock price will better align its
interests with ours.
Investors expect venture capital funds like Brantley to
generate returns of 20% or more over time. Unfortunately,
thus far most shareholders have only losses to show for the
$5 million in fees that we have paid. If Brantley's stock
price were to turn around, our advisor certainly deserves to
be adequately compensated. For example, if Brantley's stock
price increases from $10 to $12, its market capitalization
would increase by about $7.6 million. A fee of 20% of that
increase is roughly the same fee that our advisor is getting
now. However, until shareholders see some upward movement
in the stock price, it is unfair for our advisor to collect
such a handsome fee.
One can understand why management would oppose this
proposal. Who wouldn't like to get $1.5 million per year
regardless of performance? But shouldn't our advisor first
have to demonstrate that we are getting our money's worth by
producing a higher stock price? Unless you don't care if
your Brantley stock ever becomes a profitable investment or
you believe that Brantley exists primarily to provide an
annuity for our advisor, you should vote FOR this proposal.
*******************
Once again, we are asking management to take some
concrete steps to enhance shareholder value. Support of
this proposal would be a beginning.
Very truly yours,
Judy and Phillip Goldstein
