SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant X
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 Rule 14a-11(c) or Rule 14a-12
Drummond Financial Corporation
(Names of Registrant as Specified in Its Charter)
(Names of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check appropriate box):
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3). |_| Fee computed on table below per Exchange Act rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computes
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:
|_| 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
DRUMMOND FINANCIAL CORPORATION
6, Cours de Rive, 1211 Geneve 3
Switzerland
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 16, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of Drummond Financial Corporation, a Delaware
corporation (the "Company"), will be held at 6, Cours de Rive, 1211 Geneve 3,
Switzerland, on Friday, January 16, 1998 at 10:00 a.m. local time for the
purposes of:
1. Electing one Class I, Class II and Class III director of the
Company to hold office until their successors are elected and
qualified.
2. All other matters that properly come before the meeting and any
adjournment thereof.
Shareholders of record at the close of business on November 17, 1997 are
entitled to notice of, and to vote at, the meeting and any adjournment thereof.
A list of such shareholders will be available at the time and place of the
meeting and, during the ten days prior to the meeting, at the office of the
Secretary of the Company, 6, Cours de Rive, 4th Floor, 1211 Geneve 3,
Switzerland.
By Order of the Board of Directors
Roy Zanatta
Secretary
Geneva, Switzerland
December 9, 1997
If you do not expect to be present at the meeting, please fill in, date and sign
the enclosed proxy and return it promptly in the enclosed return envelope.
<PAGE>
DRUMMOND FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 16, 1998
SOLICITATION AND REVOCATION OF PROXIES
The enclosed Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Drummond Financial Corporation (the "Company") of
proxies to be used at the Annual Meeting of Shareholders to be held at 10:00
a.m. on Friday, January 16, 1998, or any adjournments thereof (the "Annual
Meeting"). The accompanying Notice of Annual Meeting, this Proxy Statement and
the accompanying proxy are being first sent to Shareholders on or about December
10, 1997. Any shareholder giving a proxy has the power to revoke it by giving
notice to the Company in writing, or in open meeting before any vote is taken.
The shares represented by the enclosed proxy will be voted if the proxy is
properly signed and received by the Company prior to the time of the Annual
Meeting. The expense of making the solicitation will consist of preparing and
mailing the proxies and proxy statements and the charges and expenses of
brokerage houses and other custodians, nominees, or fiduciaries for forwarding
documents to security owners.
Please sign, date and return your proxy to Drummond Financial Corporation,
Attention: Roy Zanatta, 6, Cours de Rive, 1211 Geneva 3, Switzerland, using the
pre-addressed envelope.
VOTING RIGHTS
The shareholders of record of the Company's outstanding $0.01 par value common
shares (the "Common Stock"), and Series 1, Preferred Stock (the "Preferred
Stock") at the close of business on November 17, 1997 (the "Record Date"), are
entitled to vote on matters to come before the meeting. On that date, there were
issued and outstanding 2,718,600 shares of Common Stock held by approximately 34
shareholders of record. Each share of Common Stock is entitled to one vote on
each matter submitted to vote.
As of the Record Date, there were 3,000,000 shares of Preferred Stock
outstanding, all of which was owned by MFC Bancorp Ltd. ("MFC Bancorp"). The
Preferred Stock has variable voting rights which entitle the holders thereof to
votes per share of Preferred Stock, so that the total voting power of the
holders of the Preferred Stock plus any Common Stock they own will equal an
aggregate of 47.9% of the outstanding shares entitled to vote at the Annual
Meeting. MFC Bancorp, the sole owner of the Preferred Stock, also controls
940,900 shares of Common Stock through its ownership of Ballinger Corporation
("Ballinger"). Accordingly, based on the number of outstanding shares of Common
Stock on the Record Date, holders of the Preferred Stock will be entitled to an
aggregate of 693,491 votes, or .2312 votes per share of Preferred Stock.
A quorum of the shareholders is constituted by the presence, in person or by
proxy, of holders of record of Common Stock representing a majority of the
number of votes entitled to be cast. A plurality of the votes present in person
or represented by proxy is required for the election of directors. Stockholders
do not have cumulative voting rights in the election of directors. The officers
and directors of the Company and the Company's largest shareholder, Ballinger
and MFC Bancorp intend to vote their shares of Common Stock and Preferred Stock
(which together constitute 47.9% of the votes eligible to be cast at the Annual
Meeting) in favor of the nominees for director.
A majority of the stockholders present or represented at the Annual Meeting,
whether or not a quorum is present, may vote to adjourn the Annual Meeting
without notice other than as announced at the Annual Meeting. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned
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meeting, a notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the meeting.
If the enclosed proxy is properly executed and received by the Company, the
shares represented thereby will be voted in accordance with the instructions
specified therein. If no specific instructions are given, the shares represented
by the proxy will be voted for the election of the nominee for director as
described in this Proxy Statement.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Initially, Class I
directors were elected to serve for one year, Class II directors for two years
and Class III directors for three years. Successors to the class of directors
whose term expires at any annual meeting shall be elected for three year terms.
The term of the Class II director, Michael J. Smith, expires at the Annual
Meeting, and accordingly, he is to be elected to the Board of Directors for a
three-year term to serve until the annual meeting of stockholders in 2000, or
until his successor is elected and qualified.
Prior to the Annual Meeting, two directors of the Company, Mr. Leonard Petersen
and Mr. Rene Randall, resigned as directors. Mr. Roy Zanatta was elected by the
Board of Directors to fill the vacancy created by Mr. Petersen's resignation and
serves as a Class I director. Mr. Oq-Hyun Chin was elected by the Board of
Directors to fill the vacancy created by Mr. Randall's resignation and serves as
a Class III director. Each of Mr. Zanatta and Mr. Chin are standing for election
as a director at the Annual Meeting. Mr. Zanatta is to be elected to serve until
the annual meeting of shareholders following the end of the 1999 fiscal year and
Mr. Chin is to be elected to serve until the annual meeting of shareholders
following the 1998 fiscal year, or until their successors are elected and
qualified.
Each of Mr. Smith, Mr. Zanatta and Mr. Chin has indicated that he is willing and
able to serve as a director. If for any unforeseen cause he should decline or be
unable to serve, the proxies will be voted to fill such vacancy so arising in
accordance with the discretionary authority of the persons named in the proxy,
unless contrary instructions are given.
Directors
The following table sets forth information regarding each nominee for election
as director and each director whose term of office will continue after the
Annual Meeting:
<TABLE>
<CAPTION>
To Be Elected to
Serve Until the
Name Position with the Company Age Annual Meeting in
<S> <C> <C> <C>
Michael J. Smith President, Chief Executive Officer, Chief 49 2000
Financial Officer and Director
Roy Zanatta (2) Vice President, Secretary and Director 33 1999
Oq-Hyun Chin (1)(2) Director 59 1998
(1) Member of Audit Committee
(2) Member of Stock Option and Compensation Committee
</TABLE>
Michael J. Smith. Mr. Smith was appointed as a director in March 1995, and
served as Chairman of the Board until May 26, 1995, at which time he was
appointed President and Chief Executive Officer. In June 1995, Mr. Smith also
assumed the duties of Chief Financial Officer. He is officer and director of
Ballinger Corporation, the Company's largest shareholder. He was a Trustee of
Mercer International, Inc. ("MII") and was the Executive Vice
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President, Chief Financial Officer and Secretary of MII from 1988 to 1996. Mr.
Smith was one of the founders of Prentiss Howard Group, a company organized in
1979 which assists domestic and international companies with investments,
mergers and acquisitions. Mr. Smith is also President and a director of MFC
Bancorp Ltd. ("MFC Bancorp"), which owns all of the outstanding shares of
Ballinger Corporation and all of the outstanding shares of Preferred Stock of
the Company.
Roy Zanatta. Mr. Zanatta is currently an employee and director of MFC Bancorp
Ltd., and has been associated with MFC Bancorp Ltd. in various capacities since
1993. Mr. Zanatta joined Drummond Financial Corporation as Secretary in March
1995 and became a Vice President in May 1995. During 1992 and 1993, he was
employed as a management consultant by the British Columbia Hydro and Power
Authority, a major electric utility. From 1991 to 1992, Mr. Zanatta was employed
as a project manager with the Canadian Standards Association. Mr. Zanatta earned
a B.Sc. Degree in 1987 from the University of British Columbia, and an MBA from
McGill University in 1991.
Oq-Hyun Chin. Mr. Chin was appointed a director in November 1997. He has been an
advisor on foreign investment to the City of Weihai, Shandong Province, People's
Republic of China since April 1993. From April 1990 until March 1993, he was an
advisor to Art Group Architects and Engineers, Ltd. From 1967 to 1987, he worked
in executive and managerial positions with banks and investment companies in
Seoul, Korea.
Meetings of the Board
The Board held 1 meeting in fiscal 1997 at which all of the active directors
attended. The Board also formally acted 10 times in fiscal year 1997 through
written consents. Non-employee directors receive an annual retainer of $6,000
and do not receive additional compensation for attending meetings of the Board.
Employee directors receive no compensation for attending meetings of the Board.
The directors also receive periodic grants of stock options issued under the
Company's 1993 Stock Option Plan.
Committees of the Board
Audit Committee. Mr. Chin is the sole member of the Audit Committee, which
oversees the financial controls of the Company and interfaces with the Company's
outside auditors to monitor the compliance by the Company with financial
disclosure laws and regulations. This committee met once during fiscal year
1996.
Stock Option and Compensation Committee. Messrs. Zanatta and Chin comprise the
Stock Option and Compensation Committee and are charged with developing and
monitoring the Company's executive compensation and stock option activities.
This committee did not meet during fiscal year 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon the Company's review of the reports filed with the Securities
and Exchange Commission ("SEC") by the Company's current and former officers,
directors and 10 percent shareholders for the period July 1, 1996 to June 30,
1997, the Company believes that all such required reports were filed on a timely
basis.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning total compensation earned
or paid during the 1997 fiscal year to the Chief Executive Officer, the
Company's current executive officers who received in excess of $100,000 in
salary and bonus in fiscal 1997 and the Company's Chief Executive Officer
(collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Options
Name and Principal Position Year Salary Number of Shares
<S> <C> <C> <C>
Michael J. Smith (1) 1997 --- ---
President, Chief Executive Officer and Chief 1996 --- ---
Financial Officer 1995 --- ---
- -----------
(1) Mr. Smith did not receive any compensation from the Company for services
as an executive officer in fiscal 1995, 1996 and 1997. Mr. Smith did
however receive the $6,000 annual fee for service as a director in each
of those years. Mr. Smith declined to accept the grant of stock options
for 25,000 shares of Common Stock which are automatically granted to each
nonemployee director upon appointment to the Board of Directors.
</TABLE>
Stock Options
There was no grants of stock options to the Named Executive Officers
during the year ended June 30, 1997.
At June 30, 1997, no stock options were held by any Named Executive
Officer.
Profit Sharing Plan
As an incentive to key employees who contribute to the success of the Company,
the Board of Directors adopted a profit sharing plan ("Profit Sharing Plan") to
enable key employees and directors to participate in the Company's success as
reflected by its earnings. The Board of Directors recently amended the Profit
Sharing Plan to provide that it is to be funded by crediting the Incentive Fund
under the Profit Sharing Plan with 10% of pre-tax earnings for fiscal 1996, 7.5%
for fiscal 1997 and 5.0% for each fiscal year thereafter. The Plan is
administered by the Stock Option and Compensation Committee of the Company's
Board of Directors. Selection to participate in the Profit Sharing Profit
Sharing Plan and the amount to be awarded under the Plan is determined by the
Committee upon the recommendation of the Company's Chairman and the President
and Chief Financial Officer. For the fiscal year ended June 30, 1997, no
payments were made by the Company pursuant to the Profit Sharing Plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, the information with
respect to Common Stock and Preferred Stock ownership of each person known by
the Company to own beneficially more than 5% of the shares of the Common Stock
or Preferred Stock, each of the Named Executive Officers, each director, and all
officers and directors as a group. This does not include holders holding in
"street" and "nominee" name. Except as noted, the persons named have sole voting
and investment power with respect to all of the shares of Common Stock and
Preferred Stock owned by them.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Name and Address Directly or Indirectly Percent of Class
Preferred Common
<S> <C> <C> <C>
Gibralt Holdings Ltd. 558,150 20.53%
1177 West Hastings Street, Suite 2000
Vancouver, British Columbia V6E 2K3
Ballinger Corporation 940,900 26.8
700 West Georgia Street, Suite 1900
Vancouver, British Columbia V7Y 1G5
MFC Bancorp Ltd. 3,000,000 940,900(1) 47.9
6, Cours de Rive
P.O. Box 3540
1211 Geneve 3, Switzerland
Michael J. Smith 3,000,000(4) 940,900(2) 47.9
6, Cours de Rive
P.O. Box 3540
1211 Geneve 3, Switzerland
Oq-Hyun Chin 0 0
3, 4/7L, Kyung An Bldg.
831-28 Yeoksam-Dong
Kanynam-Ku
Seoul, Korea
Roy Zanatta 3,000,000(4) 940,900(2) 47.9
2 Stratford Place
London, W1N 9AE, United Kingdom
All Directors and Officers as a group 3,000,000 940,900(2) 47.9
(3 persons)
------------
(1) MFC Bancorp is the sole shareholder of Ballinger Corporation and,
pursuant to the rules of the SEC, is deemed to be the indirect beneficial owner
of all of the shares owned by Ballinger Corporation.
(2) Includes the 940,900 shares of Common Stock owned directly by Ballinger
Corporation, for which Mr. Smith serves as an officer and sole director, and
indirectly by MFC Bancorp, and the 3,000,000 shares of Preferred Stock owned
directly by MFC Bancorp, for which Mr. Smith serves as President and a director,
and Mr. Zanatta serves as Secretary and a director, and of which shares Mr.
Smith and Mr. Zanatta are deemed to be the indirect beneficial owners pursuant
to the rules of the SEC. Mr. Smith and Mr. Zanatta each disclaim beneficial
ownership of all of such shares.
</TABLE>
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with MFC Bancorp and MII
During the years ended June 30, 1996 and 1997, the Company paid an aggregate of
$456,000 and $300,000, respectively, in fees to MFC Bancorp, MII and a third
affiliate for accounting and administrative services provided to the Company and
reimbursement for office expenses.
During the year ended June 30, 1996, MFC Bancorp purchased 3,000,000 shares of
Preferred Stock from the Company for $6,000,000 cash. During such year, the
Company also purchased 60,000 shares of preferred stock of Logan International
Corp. for $6,000,000 cash. MFC Bancorp owns 70.2% of the outstanding Common
Stock of Logan International Corp.
ANNUAL REPORT
The Company's Annual Report which contains audited financial statements for the
fiscal year ended June 30, 1997 accompany or have preceded the mailing of this
Proxy Statement. Upon the written request of any person who represents in such
request that such person is an owner of record of the Company's shares on the
Record Date, the Company will send such person, without charge, a copy of the
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997, including
financial statements, which the Company has filed with the SEC. Upon written
request and payment of a copying charge of $0.20 per page, the Company will also
furnish to any such shareholder a copy of the exhibits to the Annual Report on
Form 10-KSB. The written request must be directed to the attention of Roy
Zanatta, Corporate Secretary of the Company, 6, Cours de Rive, 1211 Geneva 3,
Switzerland. Such reports are not part of the Company's soliciting material.
OTHER MATTERS
The Company has received no notice of any other items submitted for
consideration at the meeting except for reports of operations and activities by
management, which are for informational purposes only and require no action of
approval or disapproval. The Board of Directors neither knows of, nor
contemplates, any other business to be presented for action by the shareholders
at the meeting.
The next annual meeting is expected to be held during December, 1998. Any
shareholder proposal intended to be presented at the next annual meeting of
shareholders must be received by the Company for inclusion in the Company's
proxy materials by June 30, 1998.
By Order of the Board of Directors
Roy Zanatta
Secretary
Geneva, Switzerland
December 9, 1997
Please complete, date, and sign the enclosed proxy and return it promptly in the
enclosed reply envelope.
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<PAGE>
DRUMMOND FINANCIAL CORPORATION
PROXY
6, Cours de Rive
1211 Geneva 3, Switzerland
For the Annual General Meeting
To Be Held Friday, January 16, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY Revoking
any such prior appointment, the undersigned, a shareholder of Drummond Financial
Corporation hereby appoints Roy Zanatta and Michael J. Smith and either of them,
attorneys and agents of the undersigned, with full power of substitution, to
vote all shares of the Common Stock of the undersigned in said Corporation at
the Annual Meeting of Shareholders of said Corporation to be held at 6, Cours de
Rive, 1211 Geneva 3, Switzerland on January 16, 1998 at 10:00 A.M. local time
and at any adjournments thereof, as fully and effectually as the undersigned
could do if personally present and voting, hereby approving, ratifying and
confirming all that said attorneys and agents or their substitutes may lawfully
do in place of the undersigned as indicated below.
This proxy when properly executed will be voted as directed. If no
direction is indicated, this proxy will be voted FOR the following proposal:
Proposal 1. Election of the Board of Directors:
FOR |_| WITHHOLD VOTE |_|
Nominees: Michael J. Smith; Roy Zanatta; Oq-Hyun Chin
(Instruction: to withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.)
-----------------------------------------------------------------------
With respect to the transaction of such other business as may properly come
before the Meeting, Proxyholder, in his sole discretion, will vote the proxy as
he may see fit. When shares are held by joint tenants, both should sign. When
signing as attorney, as 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
partnership name by authorized person.
Please sign exactly as name appears.
Dated __________________________, 199__
_________________________________________
Signature
_________________________________________
Signature if held jointly
Please mark, sign, date and return the proxy card promptly using the
enclosed envelope. Your name and address are shown as registered --
please notify the Corporation of any change in your address.
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