SCHEDULE 14C INFORMATION
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Information Statement Pursuant to 14(c)
of the Securities Exchange Act of 1934
(Amendment No. N/A)
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2)
/ / Definitive Information Statement
American Resources of Delaware, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate
box):
/X/ No fee required
/ / Fee computed on table below per Exchange
Act Rules 15c-5(g) and 0-11.
(1) Title of each class of securities to which
transaction applies:
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(2) Aggregate number of securities to which
transaction applies:
- ---------------------------------------------
(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):
- ---------------------------------------------
(4) Proposed maximum aggregate value of
transaction:
- ---------------------------------------------
(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration State-
ment No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY
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AMERICAN RESOURCES OF DELAWARE, INC.
160 Morgan Street, P.O. Box 87
Versailles, Kentucky 40383
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NOTICE OF CORPORATE ACTION
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Notice is hereby given that the record holders of a majority
of the issued and outstanding shares of the Company's Series 1993
8% Convertible Preferred Stock (the "1993 Preferred Stock") have
consented to the Board of Directors of the Company creating a new
series of preferred stock with dividend, redemption and
liquidation rights senior to the 1993 Preferred Stock.
As of the close of business on June 30, 1998 (the "Record
Date"), 265,517 shares of the Company's 1993 Preferred Stock were
issued and outstanding, all of which were held by fourteen (14)
record holders.
As of the Record Date, Rick G. Avare, the President and
Chief Executive Officer of the Company, owned 187,500 shares
(70.62%) of the 1993 Preferred Stock and Douglas M. Hawthorne,
Chairman of the Board of the Company, owned 3,334 shares (1.26%)
of the 1993 Preferred Stock. On the Record Date, Messrs. Avare
and Hawthorne consented in writing to the Board of Directors of
the Company authorizing, creating and, from time to time issuing,
a new series of preferred stock with dividend, redemption and
liquidation rights senior to the 1993 Preferred Stock.
This Information Statement will be mailed, on or about July
, 1998, to record holders of the 1993 Preferred Stock as of
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the Record Date.
Karen M. Underwood
Corporate Secretary
Versailles, Kentucky
July , 1998
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WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY
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AMERICAN RESOURCES OF DELAWARE, INC.
160 Morgan Street, P.O. Box 87
Versailles, Kentucky 40383
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INFORMATION STATEMENT
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THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY DESCRIBED
HEREIN.
This Information Statement is furnished to the record
holders of American Resources of Delaware, Inc. (the "Company")
$12.00 par value Series 1993 8% Convertible Preferred Stock
("1993 Preferred Stock") to inform them of the consent by the
holders of a majority of the issued and outstanding shares of the
Company's 1993 Preferred Stock to the Company's Board of
Directors designating a new series of preferred stock with
dividend, redemption and liquidation rights senior to the 1993
Preferred Stock.
CAPITAL STOCK
The Company's Restated Certificate of Incorporation, as
amended, (the "Certificate of Incorporation), authorizes the
issuance of 50,000,000 shares of $0.00001 par value common stock
("Common Stock"), 1,000,000 shares of 1993 Preferred Stock, and
2,000,000 shares of $0.00001 par value preferred stock ("Series
Preferred Stock"), issuable from time to time in one or more
series as determined by the Board of Directors; however, the
Board of Directors has not heretofore designated a series of
Series Preferred Stock.
1993 PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of 1993
Preferred Stock. Each outstanding share of 1993 Preferred Stock
is (i) entitled to four votes and votes together as a single
class with the holders of Common Stock, (ii) convertible into one
(1) share of Common Stock at the option of the holders thereof
(subject to adjustment for the subsequent issuance of Common
Stock dividends and other changes in the number of outstanding
shares of Common Stock for which the Company receives no monetary
consideration),(iii) entitled to a liquidation preference of
$12.00 per share, and (iv) is entitled to receive, as and when
declared by the Board of Directors out of funds legally available
therefor, 8% cumulative annual dividends payable in Common Stock
on the basis of one (1) share of Common Stock for each $1.00 of
dividends. Dividends are payable semi-annually and interest
accrues on unpaid dividends at the rate of ten percent (10%) per
annum. There are no
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accrued and unpaid dividends on the 1993 Preferred Stock. The
1993 Preferred Stock is not redeemable and is senior to the
Common Stock with respect to dividends and liquidation rights.
CONSENT REQUIRED
The Certificate of Incorporation provides in part:
"...so long as any shares of the Series 1993 Preferred
Stock remain outstanding, the affirmative vote or
consent of the holders of at least a majority of the
shares of the Series 1993 Preferred Stock outstanding
at that time, given in person or by proxy, either in
writing or at a meeting (voting as a class with the
holders of all other series of Series 1993 Preferred
Stock ranking on a parity with the Series 1993
Preferred Stock upon a liquidation, dissolution or
winding up of [the] Corporation), will be necessary to
permit, effect or validate: (i) the authorization,
creation or issuance, or any increase in authorized or
issued amount, of any class or series of stock ranking
equal or prior to the Series 1993 Preferred Stock with
respect to the payment of dividends, rights to
redemption or the distribution of assets on
liquidation, dissolution, of winding up of [the]
Corporation..."
SERIES PREFERRED STOCK
The Company is authorized 2,000,000 shares of $0.00001
Series Preferred Stock which are issuable from time to time in
one or more series as determined by the Board of Directors. The
Certificate of Incorporation vests in the Board of Directors the
authority to establish and designate by resolution or resolutions
the number of shares to be included in each such series and to
fix the designations, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or
restrictions thereof.
SERIES A PREFERRED STOCK
The Board of Directors proposes to designate shares of the
Series Preferred Stock with an aggregate liquidation preference
of up to $30,000,000 as Series A Cumulative Convertible Preferred
Stock (hereinafter called the Series A Preferred Stock"). The
definitive powers, rights, preferences and limitations of the
Series A Preferred Stock cannot be determined until negotiations
with the investor or investors are completed (See "Purpose"
below); however, based on the Company's present knowledge and
intention, it is currently proposed that the Series A Preferred
Stock will have the following general characteristics:
Priority. Senior to the Common Stock and 1993 Preferred
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Stock with respect to dividend, liquidation and redemption
rights.
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Dividends. Cumulative annual dividends at a rate and payment
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frequency to be determined pursuant to negotiations with the
investors or investors.
Liquidation. A liquidation preference of $25.00 to $50.00
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per share.
Redemption. Redeemable at the option of the Company after a
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date certain for the liquidation preference per share plus a
premium.
Voting. Non-voting except (i) holders of a majority of the
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outstanding shares will be entitled to elect up to three
preferred directors if cumulative dividends are in arrears for
more than a certain number of dividend periods and (ii) the
holders of two-thirds of the outstanding shares must consent to
the designation of additional series of preferred stock that
would be senior to dividend, liquidation or redemption rights of
the Series A Preferred Stock
Conversion. Convertible at the option of the holders into
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shares of Common Stock based on a conversion price which may be
in excess of the market price of the Common Stock on the date of
issuance; provided that such conversion price may, in certain
circumstances, be reduced in the event of a change of control of
the Company.
PURPOSE
The purpose of designating and issuing the Series A
Preferred Stock is to raise additional equity capital for the
Company to reduce indebtedness and to provide working capital.
The Company currently proposes to sell all or substantially all
of the shares to one or more accredited investors with which it
is currently negotiating, pursuant to the exemption afforded by
Rule 506 of Regulation D under the Securities Act of 1933, as
amended (the "Act"). The accredited investor or investors may
resell the shares to qualified institutional buyers pursuant to
the exemption afforded by Rule 144A under the Act.
EFFECTIVE DATE
The Company will file a Certificate of Designation
authorizing the Series A Preferred Stock with the Delaware
Secretary of State not earlier than twenty days after this
Information Statement is mailed to the record holders of the 1993
Preferred Stock.
SECURITY OWNERSHIP
The following table reflects certain information regarding
the beneficial ownership of the outstanding equity securities of
the Company as of June 30, 1998, to the extent known to the
Company's
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Board of Directors. Such information is included for (i) persons
who own 5% or more of such equity securities, (ii) directors,
(iii) executive officers and (iv) officers and directors of the
Company as a group. Unless otherwise indicated, the Company
believes that each person named below has the sole power to vote
and dispose of the equity securities beneficially owned by such
person.
Beneficial Owner Title Beneficially Percent
Name/Address Of Class Owned(1) Of Class(2)
- ------------ -------- -------- --------
Douglas L.
Hawthorne(7) 1993 Pfd 3,334 1.26%
4325 Delco
Dell Road Common 487,163 4.70%
Kettering, OH
45429
Southern Gas
Holding Co., Inc.
160 Morgan Street
Versailles, KY 40383 Common 643,623 6.43%
Leonard K. Nave
(3)(6)
160 Morgan Street
Versailles, KY 40383 Common 948,462 9.23%
Leonard K. Nave,
Trustee(3)(4)
160 Morgan Street
Versailles, KY 40383 Common 643,623 6.43%
Rick G. Avare (5)
160 Morgan Street 1993 Pfd 187,500 70.62%
Versailles, KY 40383 Common 1,886,250 17.46%
Prima Capital LLC
1532 Lake Wood Drive
Lexington, KY 40502 Common 602,008 6.02%
David J. Fox, Jr.
Appalachian
Production Company
605 9th Street,
Ste. 519
Huntington, WV
25701 Common 43,834 *
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Beneficial Owner Title Beneficially Percent
Name/Address Of Class Owned(1) Of Class(2)
- ------------ -------- -------- --------
Len Aldridge
1999 Richmond Road
Suite 2-A
Lexington, KY 40502 Common 101,000 1.01%
Joseph P. Shields
250 Medjay Lane
Tom's River, NJ 08755 Common 0 *
Ralph A. Currie
160 Morgan Street
Versailles, KY 40383 Common 75,000 *
William M. Gray
340 Fairfield Dr.
New Orleans, LA 70124 Common 2,500 *
David J. Stetson (9)
160 Morgan Street
Versailles, KY 40383 Common 76,000 *
Whispering Pines of
Thomasville, Inc.
P. O. Box 638
Thomasville, GA 1993 Pfd 28,334 10.67%
Andrew J. Kacic (8)
6119 N. Black Bear
Loop
Tucson, AZ 85715 Common 711,540 6.65%
Karen M. Underwood
(10) Common 120,138 *
3929 Rock Ledge Lane
Lexington, KY 40513
Directors and
Executive Officers
as a group
(10 persons) Common 3,740,347 32.4%
1993 Pfd 190,834 71.9%
* Represents less than 1% of the Company's outstanding stock
for the indicated class.
(1) Share information reflects the 1-for-4 reverse stock split
of the Common Stock effected on June 8, 1994. The 1993
Preferred Stock is convertible into Common Stock at the rate
of one share of Common Stock for each share of 1993
Preferred Stock.
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(2) Percentage assumes full exercise of outstanding options and
warrants to purchase shares of the Common Stock and
conversion of the 1993 Preferred Stock into Common Stock.
(3) Includes 643,623 shares of Common Stock owned by Southern
Gas Holding Company, Inc. ("SGH"). SGH is owned 7.5% by
Leonard K. Nave, individually, and 32.5% by Leonard K. Nave,
as Trustee (See Note 4). Mr. Nave, individually and as
trustee, disclaims the beneficial ownership of such shares
of the Common Stock to the extent they exceed his percentage
ownership of SGH.
(4) Leonard K. Nave is both the grantor and trustee of a trust
which owns 325 shares (32.5%) of SGH. The Trust Agreement
provides that 75 shares (7.5%) shall be distributed to each
of his three children and 100 shares (10%) shall be
distributed to his wife not later than April 30, 2000.
Neither Mr. Nave's wife nor children have a right to vote
the shares or to cause the trust to sell or otherwise
dispose of them.
(5) Includes 680,704 shares subject to options and conversion
rights exercisable within 60 days, 602,088 shares owned by
Prima Capital, LLC in which Mr. Avare owns a 20% interest,
and 1,134 shares owned by JJR Investments, a Kentucky
general partnership. Mr. Avare disclaims beneficial
ownership of 80% of the shares of the Common Stock owned by
Prima.
(6) Includes 271,603 shares subject to options exercisable
within 60 days.
(7) Includes 357,649 shares subject to options and conversion
rights exercisable within 60 days, 121,400 shares held in
Mr. Hawthorne's retirement plan and 1,792 shares to which
Mr. Hawthorne is entitled as a 1/3 beneficiary of the
Frances R. Hawthorne Trust.
(8) Includes 690,590 shares subject to options exercisable
within 60 days, 6,750 shares owned by the Andrew J. Kacic
Profit Sharing Plan, 6,390 shares held by Advisory Services
and 7,810 shares held by Andrew J. Kacic & Associates.
(9) Includes options to purchase 50,000 shares which are
exercisable within 60 days.
(10) Includes options to purchase 105,000 shares which are
exercisable within 60 days.
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FINANCIAL STATEMENTS
The Company's audited financial statements included in its
1997 Annual Report to Stockholders, which was previously mailed
to the record holders of the 1993 Preferred Stock, is
incorporated herein by reference.
The Company will promptly mail, first class postage prepaid,
a copy of its 1997 Annual Report to Stockholders, without charge,
upon written or oral request, to each person to whom this
Information Statement is delivered. Correspondence should be
addressed to Ms. Karen M. Underwood, Vice President and
Secretary, American Resources of Delaware, Inc., 160 Morgan
Street, P. O. Box 87, Versailles, Kentucky 40383.
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