SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
ELEPHANT & CASTLE GROUP INC.
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(Name of Registrant as Specified in Its Charter)
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ELEPHANT & CASTLE GROUP INC.
5th Floor, 856 Homer Street
Vancouver, B.C.
Canada V6B 2W5
(604) 684-6451
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NOTICE OF EXTRAORDINARY GENERAL MEETING
November 12, 1998 at 1:00 p.m.
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TO ELEPHANT & CASTLE GROUP INC. SHAREHOLDERS:
An Extraordinary General Meeting of Shareholders of Elephant & Castle Group Inc.
(the "Company") will be held on Thursday, November 12, 1998, at 1:00 p.m. local
time, at the headquarters of the Company, 5th Floor, 856 Homer Street,
Vancouver, BC CANADA, V6B 2W5, for the following purposes:
1. To pass a special resolution amending the Company's Memorandum
and Articles of Association to increase the authorized capital
from 10,000,000 Common Shares without par value to 20,000,000
Common Shares without par value, and to authorize the creation
of 5,000,000 Preferred Shares with a par value of $10.00 U.S.
per share; and
2. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Shareholders of record at the close of business on October 16, 1998
will be entitled to vote at the Special Meeting or any adjournments or
postponements thereof. All shareholders are cordially invited to attend the
Special Meeting.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE EXTRAORDINARY GENERAL MEETING, YOU ARE
REQUESTED TO FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND TO MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE
EXTRAORDINARY GENERAL MEETING. IN THE EVENT YOU DECIDE TO ATTEND THE
EXTRAORDINARY GENERAL MEETING IN PERSON, YOU MAY, IF YOU DESIRE, REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
By the Order of the Board of Directors,
/s/Jeffrey Barnett
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Jeffrey Barnett
Chairman
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ELEPHANT & CASTLE GROUP INC.
5th Floor, 856 Homer Street
Vancouver, B.C.
Canada V6B 2W5
(604) 684-6451
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PROXY STATEMENT
Extraordinary General Meeting
November 12, 1998 at 1:00 P.M.
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SOLICITATION OF PROXIES
General Information
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This Proxy Statement is being furnished to all shareholders of Elephant
& Castle Group Inc. (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board of Directors") for
use at an Extraordinary General Meeting of Shareholders (the "Extraordinary
General Meeting") to be held on the 12th day of November, 1998 at 1:00 p.m., at
the headquarters of the Company, 5th Floor, 856 Homer Street, Vancouver, B.C.
Canada, and at any adjournments or postponements thereof. This Proxy Statement
and the accompanying proxy are first being mailed to the shareholders of the
Company on or about October 20, 1998.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by use of the
mails, but certain officers and employees of the Company may, without additional
compensation, use their personal efforts, by telephone or otherwise, to obtain
proxies.
The Company currently has only one class of capital stock (the "Common
Shares"). Only holders of record of the Company's Common Shares at the close of
business on October 16, 1998, will be entitled to notice of and to vote at the
Extraordinary General Meeting and any adjournment thereof. The securities of the
Company outstanding as of October 16, 1998, the record date for the Special
Meeting, consist of 3,306,334 Common Shares, each such share being entitled to
one vote.
This proxy statement solicits the vote of the shareholders of the
Company FOR to increase the authorized capital stock from 10,000,000 Common
Shares without par value to 20,000,000 Common Shares without par value, and to
authorize the creation of 5,000,000 Preferred Shares, with a par value of $10.00
U.S. per share. See Schedule "A" attached for the proposed amendment to the
Memorandum and Schedule "B" attached for the proposed amendment to the Articles
of Association setting out the proposed rights and restrictions to the Preferred
Shares. The enclosed proxy, when
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properly signed and returned to the Company will be voted at the Extraordinary
General Meeting, as directed. Proxies in which no direction is given will be
voted FOR Proposal No. 1. While the Board of Directors knows of no other matters
to be presented at the Extraordinary General Meeting or any adjournment thereof,
all proxies returned to the Company will be voted on any such other matter in
accordance with the discretion of the proxy holders.
If a proxy is executed, it may be revoked at any time before it is
voted by the execution and delivery of a proxy bearing a later date or by
notification in writing given to the Secretary of the Company prior to the
meeting. The proxy may also be revoked by attending the meeting and electing to
vote in person.
A quorum, consisting of two shareholders entitled to vote at the
Extraordinary General Meeting, must be present in person or by proxy before any
action may be taken at the Extraordinary General Meeting. A Special Resolution
requires the favorable vote of seventy-five (75%) percent of the shares present
and voting at the meeting. If an executed proxy is returned and the shareholder
has abstained from voting or voted against the Proposal submitted, the Shares
represented by such proxy will be considered present for purposes of determining
a quorum and for purposes of calculating the vote. If an executed proxy is
returned by a broker holding shares in "street name" which indicates that the
broker does not have discretionary authority to vote the shares, such shares
will
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also be considered present at the meeting for purposes of determining a quorum,
but will not be considered to be represented at the meeting for purposes of
calculating the vote with respect to such matters.
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT,
AND CERTAIN BENEFICIAL OWNERS
As of the close of business on October 16, 1998, 3,306,334 Common
Shares were issued and outstanding. The following table sets forth, as of such
date, information relating to the beneficial ownership of the Company's Common
Shares by each person known to the Company to be beneficial owner of more than
5% of the Common Shares, by each director, by each of the named executive
officers and by all directors and executive officers as a group:
Approximate
Percentage of
Name and Address Number of Shares Outstanding Shares(3)
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Jeffrey M. Barnett(1)(2) 600,791 16.85
Peter J. Barnett(2) 498,375 13.97
George W. Pitman(1)(2) 127,250 3.58
William C. McEwen(1)(2) 7,100 *
Martin O'Dowd(1)(2) 118,960 3.34
David Wiederecht(1)(3) --- *
Anthony Mariani(1)(3) --- *
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Colin Stacey(2) 50,000 1.40
Richard H. Bryant(1)(2) 10,000 *
Daniel DeBou(2) 13,200 *
Paul Tilbury(2) 22,000 *
General Electric
Investment Private
Placement Partners II(4) 237,221 6.65
3003 Summer Street
Stamford, CT 06904-7900
All Directors and Executive 1,187,022 33.28
Officers as a Group (2)(4)
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(1) Each person is a director.
(2) Includes all currently exercisable vested options granted to directors
and executive officers.
(3) Messrs. Wiederecht and Mariani are employed by the general partner of
GEIPP II, the holdings of which are separately stated herein.
(4) Excludes up to 2,100,000 additional Shares subject to Warrants and
Subordinated Convertible Debentures held by
the Fund.
* = less than one percent.
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PROPOSAL - AMENDMENT TO ARTICLES OF ASSOCIATION
TO INCREASE THE AMOUNT OF AUTHORIZED COMMON SHARES AND
AUTHORIZE THE ISSUANCE OF A CLASS OF PREFERRED STOCK
The Board of Directors has unanimously approved, subject to the
approval of the shareholders, by way of Special Resolution, an amendment to the
Company's Memorandum and Articles of Association to increase the number of
authorized Common Shares, and to create an issue of authorized Preferred Shares.
The Board recommends that the shareholders approve the amendment by voting in
favor of the proposal (Proposal No. 1), after due consideration.
If adopted, the Proposal would amend the Memorandum and Articles of
Association of the Company to increase the authorized number of Common Shares
and to create 5,000,000 Preferred Shares. The Company currently has 10,000,000
Common Shares authorized, of which 3,306,334 are outstanding. However, an
additional 3,883,292 Common Shares are reserved for issuance pursuant to
existing Convertible Notes, Warrants and employee stock options. Under the
proposed amendment, the number of Common Shares authorized would be increased to
20,000,000. The Proposal also involves the creation of an issue of 5,000,000
Preferred Shares, with a par value of $10.00 U.S. per share. For the reasons
hereinafter stated, the Board believes adoption of this Proposal is in the best
interests of all of the shareholders and recommends that shareholders vote in
favor of its adoption.
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The newly authorized Common Shares will have the same voting rights,
dividend rights or rate, redemption rights or privileges, rights on liquidation
or dissolution, as the current issued and outstanding Common Shares.
The Board concluded that the additional Common Shares are necessary for
the potential future growth of the Company, including possible financings, and
that it would be appropriate to have available Common Shares, so that management
would have greater flexibility in arranging any mergers, acquisitions or other
such transactions. There are no mergers, acquisitions or similar transactions
currently under specific consideration.
The Proposal also authorizes the future issuance of up to 5,000,000
Preferred Shares in one or more series. The Board is currently planning to
authorize and issue the initial series of Preferred Shares. If the Preferred
Shares are authorized, the Board of Directors will have discretion, within the
parameters of the described Preferred Shares in Schedule B hereto, and without
any further action by the holders of the Company's Common Shares, to issue any
number of Preferred Shares, up to 5,000,000 Preferred Shares, constituting any
series of such Preferred Shares.
The Preferred Shares generally shall be entitled to a cumulative annual
dividend of no less than five (5%) percent on the par value of the Preferred
Shares and no greater than fifteen (15%) on the par value thereof, payable
quarterly in cash or Common Stock
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valued at the market price at the time of dividend declaration. The Preferred
Shares shall also be convertible, at the option of the holder, into Common
Shares at a ratio to be fixed at the time of issuance of the Preferred Shares or
any series thereof, based upon market conditions at the time, so as to reflect a
premium to the market price for the Common Shares. The Company shall be entitled
to redeem the Preferred Shares at par plus a redemption premium, not to exceed
25% of the par value of the Preferred Shares. The Preferred Shares shall have a
preference on the payment of dividends and in the event of any liquidation,
dissolution or winding-up of the Company. The holders of the Preferred Shares
shall not have the right to vote in Company affairs, including the election of
directors, except as a separate class on certain specific matters affecting the
class. See Schedule "B" for further detail. Any separate series of Preferred
Shares may have rights, privileges and designations different from any other
series, provided both series are within the parameters of the proposed Amendment
to the Articles of Association, if approved.
The Initial Transaction
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If Proposal 1 is approved, the Board of Directors proposes to use such authority
to designate the rights, preferences and privileges of an initial class of
Preferred Shares to be offered to a limited number of investors in connection
with a Private Placement, as to which discussions are presently pending. General
Electric Private
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Placement Partners II, which is the owner of 237,221 Common Shares, and Notes
and Warrants convertible or redeemable into 2,100,000 additional Common Shares
has been identified as a potential purchaser of a fraction of the Preferred
Shares. If authorized, the Preferred Shares would also be available to
management for mergers, acquisitions and similar transactions, and the Board of
Directors would be authorized to determine the terms and conditions relating to
the issuance of such Preferred Shares. In the opinion of the Board, the
existence of the Preferred Shares would serve as a valuable tool in aiding
management's current search for additional equity capital for expansion.
Any issuance of additional Common Shares and/or Preferred Shares could
have the effect of diluting the earnings per share and book value per share of
the existing Common Shares, and such additional securities will have the effect
of diluting, whether or not dilutive of financial results, the absolute
percentage ownership of existing holders.
Such Preferred Shares could therefore be issued to parties, or on other
terms, which might make acquisition of the Company or a controlling interest in
the Company more difficult or more costly. The Preferred Shares could also be
potentially used to create voting impediments or to frustrate persons seeking to
effect a merger or otherwise gain control of the Company. The Preferred Shares
could be privately placed with purchasers committed to side
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with the management of the Company in opposing a hostile tender offer or other
attempt to change operating control. In such ways, the authorization of the
Preferred Shares and the prospective issuance thereof could be seen as an
anti-takeover device which might preclude shareholders from taking advantage of
an economic situation which they might otherwise consider to be favorable to
their interests.
The Board of Directors is not aware of any effort to change control of
the Company, and the Board has no present intention of authorizing the issuance
of Common Shares or Preferred Shares to any holder other than on economic and
financial terms deemed to be in the Company's best interests.
The affirmative vote of 75% of the Common Shares present and voting at
the meeting is necessary to approve Proposal One. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE FOLLOWING RESOLUTION THAT WILL BE PRESENTED AT THE
EXTRAORDINARY GENERAL MEETING:
RESOLVED, that the Memorandum of the Company be, and it hereby
is, amended to read generally as set forth in Exhibit A to
this Proxy Statement, and the Articles of Association be, and
it hereby is, amended to read generally as set forth in
Exhibit "B" to this Proxy Statement, distributed in
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connection with the Extraordinary General Meeting of
Shareholders of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE SPECIAL RESOLUTIONS AS SET FORTH IN PROPOSAL ONE.
Shareholders Proposals
The proxy rules of the Securities and Exchange Commission permit
shareholders of the Company, after timely notice to the Company, to present
proposals for shareholder action in the Company's proxy statement, where such
proposals are consistent with applicable law, pertain to matters appropriate for
shareholder action and are not properly omitted by Company action in accordance
with the proxy rules. The Elephant & Castle Group Inc. proxy material for the
1999 Annual Meeting of Shareholders is expected to be mailed approximately six
weeks prior to the meeting. Shareholder proposals prepared in accordance with
the proxy rules should be received by the Company on or before February 28,
1999.
Other Business
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All items of business intended by the management to be brought before
the meeting are set forth in the Proxy Statement, and the management knows of no
other business to be presented. If other matters of business not presently known
to the Board of Directors are properly raised at the Annual General Meeting, it
is the
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intention of the persons named in the proxy to vote on such matters in
accordance with their best judgment.
Shareholders may receive without charge a copy of the Company's Annual
Report and Form 10-KSB, including financial statements and schedules thereto, as
filed with the Securities and Exchange Commission, by writing to: Elephant &
Castle Group Inc., 854 Homer Street, Vancouver, BC CANADA V6B 2W5, or by calling
the Company at (604) 684-6451.
By Order of the Board of Directors
/s/Jeffrey Barnett
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Jeffrey Barnett
Chairman
Dated: Vancouver, B.C.
October 19, 1998
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SCHEDULE "A"
Proposed Amendment to
the Memorandum of
Elephant & Castle Group Inc.
(the "Company")
BE IT RESOLVED THAT the Memorandum of the Company be altered so as to be in the
following form:
MEMORANDUM
(Altered)
ELEPHANT & CASTLE GROUP INC.
1. The name of the Company is "ELEPHANT & CASTLE GROUP INC.".
2. The Authorized Capital of the Company consists of 25,000,000 shares divided
into:
a) 20,000,000 Common Shares without par value; and
b) 5,000,000 Preference Shares with a par value of $10.000 each
and having attached thereto the special rights and
restrictions set out in the Articles of the Company.
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SCHEDULE "B"
Proposed Amendment to
the Articles of Association of
Elephant & Castle Group Inc.
(the "Company")
24 SPECIAL RIGHTS AND RESTRICTIONS
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24.1 The Preferred Shares shall have attached thereto the following special
rights and restrictions:
(a) the Preferred Shares may be issued in series;
(b) the holders of the Preferred Shares shall be entitled to an
annual dividend no less than five (5%) percent on the par
value of the Preferred Shares and no greater than fifteen
(15%) percent on the par value of the Preferred Shares,
payable quarterly in cash or in Common Shares of the Company
valued at the market price of such Common Shares at the time
of the dividend declaration date. All dividends declared shall
be cumulative. The dividend rate shall be fixed by the Board
of Directors at the time of issuance of the Preferred Shares,
or any series thereof;
(c) the Preferred Shares, at the option of the holder thereof,
shall be convertible into Common Shares of the Company at any
time at a conversion ratio which will be determined by market
conditions for the Common Shares at the time of the issuance
of the Preferred Shares so as to reflect a premium to the
market price for the Common Shares at the time of issuance of
the Preferred Shares. The conversion rate shall be fixed by
the Board of Directors at the time of issuance of the
Preferred Shares, or any series thereof;
(d) the Company shall be entitled, at its option, to redeem the
Preferred Shares at par plus a redemption premium, not to
exceed 25% of the par value of the Preferred Shares. The
redemption premium, and the terms and conditions for
redemption shall be fixed by the Board of Directors at the
time of issuance of the Preferred Shares, or any series
thereof;
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Schedule "B" Page 2
(e) the Company may maintain a sinking fund coverage from the
Company's fiscal year 2000 onwards with sinking fund
repayments if coverage is not met, with such coverage to be
determined by the Board of Directors at the time of issuance
of the Preferred shares;
(f) in the event of liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the
Preferred Shares shall be entitled to receive from the
property and assets of the Company an amount equal to the par
value per share, together with any unpaid but declared
dividends;
(g) the holders of the Preferred Shares shall have a preference on
the payment of dividends ahead of the holders of the Common
Shares;
(h) the holders of the Preferred Shares shall have the right to
vote as a separate class on certain specific matters affecting
that class, but shall not have the right to vote with respect
to the election of directors or otherwise, except as so
provided hereinabove; and
(i) the Preferred Shares will be denominated in U.S. Dollars, as
will the dividends payable thereon.
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FORM OF PROXY
EXTRAORDINARY GENERAL MEETING
ELEPHANT & CASTLE GROUP INC.
November 12, 1998 at 1:00 P.M.
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned shareholder of Elephant & Castle Group Inc. (herein the
"Company") hereby appoints Jeffrey M. Barnett and Martin O'Dowd the proxies of
the undersigned (with power of substitution) to vote such shareholder's shares
at the Extraordinary General Meeting of the Shareholders of the Company to be
held on November 12, 1998, at 1:00 p.m. and at any adjournments and
postponements thereof, with respect to the proposal more fully described in the
Proxy Statement for the Extraordinary General Meeting in the manner specified,
and on any other business that may properly come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS SET FORTH BELOW
1. Proposed Amendment to the Memorandum and Articles of Association to increase
the authorized capital of the Company:
[ ] FOR [ ] AGAINST
In their discretion, the Proxies are also authorized to vote upon such other
business as may properly come before the meeting.
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Signature
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Signature, if held jointly
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Dated:
Please sign exactly as name appears on your stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in full partnership name by authorized
person.
