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):
|_| No fee required.
|_| 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 Rue Charles-Bonnet
1206 Geneva, Switzerland
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 14, 1999
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, 3rd Floor, 1211
Geneva 3, Switzerland, on Thursday, January 14, 1999 at 10:00 a.m. local time
for the purposes of:
. Electing one Class III director of the Company to hold office until his
successor is elected and qualified.
. All other matters that properly come before the meeting and any
adjournment thereof.
Shareholders of record at the close of business on November 27, 1998 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, c/o 6, Cours de Rive, 4th Floor, 1211 Geneva ,
Switzerland.
By Order of the Board of Directors
Roy Zanatta
Secretary
Geneva, Switzerland
December __, 1998
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 14, 1999
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 Thursday, January 14, 1999, 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
__, 1998. 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 Rue Charles-Bonnet, 1206 Geneva, 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 27, 1998 (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"). Under
the Certificate of Incorporation, if any person or group controls more than
47.9% of the voting power of the Company, then each share of Preferred Stock has
one vote per share on all matters. Since MFC Bancorp Ltd. controls 1,344,250
shares (49.4%) of Common Stock through its ownership of Ballinger Corporation
("Ballinger") and Constable Investments Ltd. ("Constable")., at the Annual
Meeting, the Preferred Stock has one vote per share on all matters subject to a
shareholder vote Since MFC Bancorp is the sole owner of the Preferred Stock, at
the Annual Meeting it will have voting rights to 4,344,250 shares or 76.0% of
the voting power at the Annual Meeting.
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,
Constable and MFC Bancorp intend to vote their shares of Common Stock and
Preferred Stock (which together constitute 76.0% 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 meeting, a notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting.
<PAGE>
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 III director, Oq-Hyun Chin, 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 following the fiscal year
ending June 30, 2001, or until his successor is elected and qualified.
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>
Name Position with the Company Age Term Expires
<S> <C> <C> <C>
Michael J. Smith President, Chief Executive Officer, Chief 50 2000
Financial Officer and Director
Roy Zanatta (2) Vice President, Secretary and Director 34 1999
Oq-Hyun Chin (1)(2) Director 60 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 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.
<PAGE>
Meetings of the Board
The Board held no meeting(s) in fiscal 1998. The Board formally acted nine times
in fiscal year 1998 through written consents. Non-employee directors are
entitled to an annual retainer of $6,000 and do not receive additional
compensation for attending meetings of the Board. Since there were no meetings
in fiscal 1998, the retainer was not paid to the non-employee directors.
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, although no options were granted in fiscal
1998.
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 did not meet during fiscal year
1998.
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 1998.
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, 1997 to June 30,
1998, the Company believes that all such required reports were filed on a timely
basis.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning total compensation earned
or paid during the 1998 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 1998 and the Company's Chief Executive Officer
(collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Position Year Salary Options
Number of Shares
<S> <C> <C> <C>
Michael J. Smith (1) 1998 --- ---
President, Chief Executive Officer and Chief 1997 --- ---
Financial Officer 1996 --- ---
- -----------
(1) Mr. Smith did not receive any compensation from the Company for services
as an executive officer in fiscal 1996, 1997 and 1998. Mr. Smith did
however receive the $6,000 annual fee for service as a director in 1996
and 1997. 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, 1998.
At June 30, 1998, no stock options were held by any Named Executive Officer.
<PAGE>
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 1,344,250(1) 76.0
6 Rue Charles-Bonnet
1206 Geneva, Switzerland
Constable Investments Ltd. 308,350 11.3
8 Queensway House
Queen Street
St. Helier, Jersey
Channel Islands JF2 4WD
Michael J. Smith 3,000,000(4) 1,344,250(2) 76.0
6, Cours de Rive
P.O. Box 3540
1211 Geneva 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) 1,344,250(2) 76.0
2 Stratford Place
London, W1N 9AE, United Kingdom
All Directors and Officers as a group 3,000,000 1,344,250(2) 76.0
(3 persons)
<PAGE>
- ------------
(1) MFC Bancorp is the sole shareholder of Ballinger Corporation and
Constable Investments, Ltd. 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 and the 308,350 shares of Common Stock owned by Constable
Investments, Ltd., 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>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with MFC Bancorp and MII
During the years ended June 30, 1997 and 1998, the Company paid an aggregate of
$606,000 and $600,000, respectively, in fees to MFC Bancorp and Logan
International Corp. for accounting and administrative services provided to the
Company and reimbursement for office expenses.
ANNUAL REPORT
The Company's Annual Report which contains audited financial statements for the
fiscal year ended June 30, 1998 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, 1998, 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 Rue Charles-Bonnet, 1206 Geneva,
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 January 2000. 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 July 31, 1999. In addition, a shareholder proposal received
by the Company, which is presented otherwise then in accordance with Rule 14a-8
under the Securities Exchange Act of 1934, will be considered untimely if
received after November 1, 1999.
By Order of the Board of Directors
Roy Zanatta
Secretary
Geneva, Switzerland
December __, 1998
Please complete, date, and sign the enclosed proxy and return it promptly in the
enclosed reply envelope.
<PAGE>
DRUMMOND FINANCIAL CORPORATION
PROXY
6 Rue Charles-Bonnet
1206 Geneva, Switzerland
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 3rd Floor,
6, Cours de Rive, 1211 Geneva 3, Switzerland on January 14, 1999 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.
For the Annual General Meeting
To Be Held Thursday, January 14, 1999
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 |_|
Nominee: Oq-Hyun Chin
(Instruction: to withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below.)
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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, 199__ please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
- ------------------------------
Print Name
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 Company of any change in your address.
