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SCHEDULE 14A INFORMATION
Consent Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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|X| Preliminary Consent Statement
|_| Definitive Consent Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Northstar Health Services, Inc.
(Name of Registrant as Specified In Its Charter)
Thomas W. Zaucha
(Name of Person(s) Filing Consent Statement)
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|_| Check box if any part of the fee is offset as provided by Exchange Act
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CONTACT:
Mark H. Harnett
MacKenzie Partners, Inc.
(212) 929-5877
FOR IMMEDIATE RELEASE:
TOM ZAUCHA, FORMER CHAIRMAN AND CEO, SUES
NORTHSTAR HEALTH BOARD TO
PERMIT SHAREHOLDER VOTE TO ELECT NEW DIRECTORS
INDIANA, PA, February 20, 1997 -- Thomas W. Zaucha who is leading a proxy fight
to regain control of Northstar Health Services, Inc. (NSTRE) announced today
that he had commenced litigation in Delaware Chancery Court seeking to
invalidate recent entrenchment actions by Northstar's board. The challenged
Board measures attempt to strip stockholders of numerous corporate governance
rights, including stockholders' statutory right to replace the Board of
Directors of the Company by written consent.
As previously announced, Zaucha, who is the Company's largest stockholder, and
the Committee to Protect Northstar Health are seeking the support of a majority
of Northstar's stockholders through the solicitation of stockholders "consents",
to replace the Board of Directors with new independent directors. The Committee
believes the current Board has engaged in a continuous pattern of self-dealing
and self-enrichment to the neglect of the interests of stockholders.
Northstar, which currently trades at $2.125 per share, is presently delisted
from national trading markets and has not held a stockholders' meeting in almost
two years.
Steven Brody and Robert Smallacombe, as self-described "independent" Board
members, took more than $400,000 in consulting fees from the Company in the last
eight months prior to assuming any executive responsibilities, and, at a
December 1996 Board meeting persuaded the Board, over Zaucha's objections, to
grant themselves and other Board members options to purchase more than 650,000
shares at an exercise price of $1.75 per share. The Company has approximately
6,300,000 shares outstanding.
Mr. Zaucha stated: "It's high time for Northstar shareholders to exercise their
rights as owners. I think that stockholders will be as outraged as I am at the
way directors Steve Brody and Bob Smallacombe are enriching themselves at our
expense." Zaucha also noted that as soon as it learned of his impending proxy
fight, the Board removed him as Chairman and Chief Executive Officer.
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The Committee to Protect Northstar Health is comprised of its founding member
Mr. Zaucha, Basil J. Asciutto, the Chief Operating Officer of the investment
banking firm Commonwealth Associates, and Joseph F. Micalleff, the Chief
Executive Officer of Associated Sales Tax Consultants, Inc., who own an
aggregate of 1,009,958 shares of the company's common stock, representing
approximately 16.21% of the Company's shares currently outstanding.
In addition, Commonwealth Associates, the Committee's financial advisor and a
market-maker in the Common Stock in the ordinary course of its brokerage
business, holds 1,257,785 shares of Company Common Stock, constituting
approximately 20.19% of outstanding shares. Commonwealth's customers have sole
voting and dispositive power over such shares, and Commonwealth and the
Committee disclaim any beneficial ownership thereof, although Commonwealth
intends to recommend to its customers that they support the recommendation of
the Committee.
Editors' note: For further information and copies of Mr. Zaucha's material,
please contact Mark Harnett, MacKenzie Partners Inc., New York, NY 10019,
telephone (212) 929-5877.
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CONTACT:
Mark H. Harnett
MacKenzie Partners, Inc.
(212) 929-5877
FOR IMMEDIATE RELEASE:
COMMONWEALTH ASSOCIATES RETAINED
BY ZAUCHA FOR PROXY FIGHT
NEW YORK, NY, February 20, 1997 -- Commonwealth Associates
("Commonwealth") announced that it has been engaged by Thomas Zaucha, the
largest shareholder of Northstar Health Services, Inc. (NSTRE) and the Committee
to Protect Northstar Health (the "Committee") to assist the Committee in its
efforts to replace a majority of the incumbent Northstar Board of Directors.
Since acting as lead manager of Northstar's successful 1995 secondary offering
of common stock, Commonwealth has been Northstar's principal market maker.
Commonwealth customers hold approximately 1,257,785 shares in Commonwealth's
brokerage accounts, and Commonwealth intends to recommend to its customers that
they support the recommendation of the Committee.
According to the preliminary consent statement filed by the
Committee with the Securities and Exchange Commission on February 7, 1997, as
amended on February 19, 1997 (the "Preliminary Consent Statement"), in the weeks
preceding that filing members of the Northstar board led by Steven Brody, over
Mr. Zaucha's objections, granted themselves options to purchase more than
650,000 Northstar shares at $1.75 per share. The Board had previously approved
consulting agreements and directors' fees as a result of which Mr. Brody and
fellow Northstar board member Robert Smallacombe have received more than
$400,000 in the last eight months. Following the adoption of measures designed
to reduce shareholders' rights to call special meetings of the shareholders and
to eliminate the statutory right of shareholders to replace the board of
directors of the Company by written consent, Mr. Zaucha commenced a proxy fight
to remove and replace the majority of the Board.
Michael Lyall, managing director of corporate finance at
Commonwealth, said:
"The information vacuum created by Steve Brody around Northstar and its
affairs had grown intolerable to Commonwealth and its customers. When
Tom Zaucha came to New York to seek our advice, it soon became clear
that Mr. Brody and other unelected board members were attempting to
hijack the Company from its shareholders.
"We believe that Mr. Zaucha has put together a first-class
slate of accomplished businesspeople and healthcare professionals,
who are well-suited to assist him in leading Northstar back to
health. Mr. Zaucha is a recognized leader in the physical therapy
field who built two-thirds of what is now Northstar through 16
years of sound, effective management. We
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believe that Mr. Zaucha is the person most qualified to put
Northstar back on the road to growth and added shareholder value."
According to the Preliminary Consent Statement, in 1995
following the merger of Mr. Zaucha's former company, Keystone Rehabilitation
Systems, Inc., with Northstar, Northstar uncovered what appeared to be certain
financial irregularities involving Northstar's former chairman, Mark DeSimone.
Mr. Zaucha demanded and received the resignations of Mr. DeSimone and certain of
his associates.
Mr. Lyall noted:
"The Brody/Smallacombe Board has made spurious and unsupported
allegations attempting to imply that Mark DeSimone is somehow behind
Commonwealth's efforts on Mr. Zaucha's behalf. These speculative
charges are unequivocally denied and the fact that they were made is a
measure of the desperate mood of the Brody/Smallacombe board."
The 1995 secondary stock offering yielded gross proceeds to
Northstar of $12.8 million, with Commonwealth, its co-manager and syndicate
members sharing an aggregate of $1.3 million in customary underwriting
discounts, commissions and fees. In addition, in November 1995 Commonwealth
arranged and advised the Company in connection with a $16 million credit
facility for a fee of $240,000. Commonwealth also performed certain financial
advisory functions in connection with Northstar's merger with Keystone and
Northstar's acquisition of Penn Vascular for which it received an advisory fee
of $200,000. Mr. Lyall noted:
"The Brody/Smallacombe board, unable to answer Mr. Zaucha's penetrating
indictment of its actions, has misleadingly characterized these
ordinary course banking relationships, and falsely attributed one
hundred percent of the customary underwriting discounts, commissions
and fees to Commonwealth. In addition, as of yesterday, Commonwealth
has also complied with all subpoenas and other information requests it
has received from the Company."
The Committee to Protect Northstar Health is comprised of its
founding member Mr. Zaucha, Basil J. Asciutto, the Chief Operating
Officer of the investment banking firm Commonwealth Associates,
and Joseph F. Micalleff, the Chief Executive Officer of
Associated Sales Tax Consultants, Inc., who own an aggregate of
1,009,958 shares of the company's common stock, representing
approximately 16.21% of the Company's shares currently outstanding.
In addition, Commonwealth Associates holds on behalf of its
customers approximately 20.19% of outstanding shares of
Northstar Common Stock. Commonwealth's customers have sole
voting and dispositive power over such shares, and Commonwealth
and the Committee disclaim any beneficial ownership thereof.
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Editors' note: For further information and copies of Mr. Zaucha's material,
please contact Mark Harnett, MacKenzie Partners Inc., New York, NY 10019,
telephone (212) 929-5877.
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