<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a - 101)
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 under Rule 14a - 12.
DRUMMOND FINANCIAL CORPORATION
(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 14a-6(i)(1) 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
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:
--------------------------------------------------------------
[ ] 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:
(2) Form, Schedule or Registration Statement No.
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
DRUMMOND FINANCIAL CORPORATION
17 Dame Street
Dublin 2, Ireland
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On January 12, 2001
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,
4th Floor, 1206 Geneva, Switzerland, on January 12, 2001 at 9:00 a.m.
local time for the purposes of:
1. Electing one Class II director of the Company to hold office
until his successor is 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 24, 2000 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, 17 Dame Street, Dublin 2, Ireland.
By Order of the Board of Directors
--------------------------------------
Michael J. Smith
Secretary
December , 2000
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH IN THE
PROXY STATEMENT.
2
<PAGE> 3
DRUMMOND FINANCIAL CORPORATION
17 Dame Street
Dublin 2, Ireland
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On January 12, 2001
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 9:00 a.m. on January 12, 2001, or any
adjournment 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 , 2000. 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, which will be borne by
the Company, 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 CIBC Mellon Trust Company,
16th Floor, 2001 University Street, Montreal, Quebec, H3A 2A6, 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 24, 2000
(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 ? 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 Sutton Park
International Limited ("Sutton Park"), 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. Shareholders do not have cumulative voting rights
in the election of directors. The officers and directors of the Company
and the Company's largest shareholders, Ballinger, Sutton Park 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 nominee for director
A majority of the shareholders 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> 4
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, Mr.
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 following the fiscal year ending June
30, 2003, or until his successor is elected and qualified.
Mr. Smith 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>
Term Expires
Name Position with the Company Age
---- ------------------------- --- -----------
<S> <C> <C> <C>
Michael J. Smith President, Chief Executive 52 2000
Officer, Chief Financial
Office, Secretary and
Director
Young Soo Ko Director 42 2002
Oq-Hyun Chin<F1><F2> Director 61 2001
----------------
<FN>
<F1>
(1) Member of Audit Committee
<F2>
(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
an 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, which owns all of
the outstanding shares of Ballinger Corporation and Constable Investments
Ltd. and all of the outstanding shares of Preferred Stock of the Company.
Young Soo Ko. Mr. Ko was appointed a director on June 30, 1999. He
has been a Managing Director of Sung Sim Services Ltd., a Hong Kong
company that acts as agent and representative of manufacturers in handling
their raw material supply and export of finished goods, since 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. Mr. Chin is
also a director of MFC Bancorp.
2
<PAGE> 5
Meetings of the Board
The Board held no meeting(s) in fiscal 2000. The Board formally
acted 10 times in the fiscal year 2000 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 2000, 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 2000.
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 2000.
Stock Option and Compensation Committee. This Committee is charged
with developing and monitoring the Company's executive compensation and
stock option activities. This committee did not meet during fiscal year
2000. Mr. Chin is the sole member of this Committee currently.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning total
compensation earned or paid during the 2000 fiscal year to the Chief
Financial Officer, the Company's current executive officers who received
in excess of $100,000 in salary and bonus in fiscal 2000 and the Company's
Chief Financial Officer (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation
-------------------
Number of
Shares
Name and Principal Position Year Salary ($) Options
--------------------------- ---- ---------- ------- ---------
<S> <C> <C> <C> <C>
Michael J. Smith<F1> 2000 - - -
President, Chief Executive 1999 - - -
Officer and Chief Financial 1998 - - -
Officer
---------------------------
<FN>
<F1>
(1) Mr. Smith did not receive any compensation from the Company for
services as an executive officer in fiscal 1998, 1999 and 2000. Mr. Smith
declined to accept the grant of stock options for 25,000 shares of Common
Stock which are automatically granted to each non-employee director upon
appointment to the Board of Directors.
</TABLE>
Stock Options
There was no grant of stock options to any Named Executive Officers
during the year ended June 30, 2000.
At June 30, 2000, no stock options were held by any Named Executive
Officers.
3
<PAGE> 6
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, 1999 to June 30, 2000, the Company believes that all such required
reports were filed on a timely basis.
REPORT OF THE COMPENSATION COMMITTEE
Compensation of the Company's executive officers is determined on an
annual basis by the Stock Option and Compensation Committee in
consultation with the Board of Directors. The Company's goal is to
compensate the Company's executive officers in a manner which is
consistent with the Company's strategic plan of focusing on expanding its
merchant banking activities. The financial performance of the Company is
a major factor in determining levels of executive compensation. The
Company has not identified any opportunities which would further its
merchant banking activities which is reflected in the fact that net income
for the fiscal year 2000 was down from the previous year.
As a result of the foregoing, the Company did not compensate any of
its executive offices for the most recent fiscal year (except in their
capacity as directors of the Company).
Stock Option and Compensation Committee
Oq-Hyun Chin
PERFORMANCE GRAPH
Management of the Company caution that the stock price performance
shown in the graph below should not be considered indicative of potential
future stock price performance.
[Graph showing Comparison of Cumulative Total Return among Drummond
Financial Corporation, NASDAQ Market Index and SIC Code Index]
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.
4
<PAGE> 7
<TABLE>
<CAPTION>
Number of Shares Beneficially
Owned Directly or Indireclty
-----------------------------
Common Preferred Percent of Class
Name and Address
---------------- ------ --------- ----------------
<S> <C> <C> <C>
Gibralt Holding Ltd.
1177 West Hastings Street, Suite 2000 606,150 0 22.3
Vancouver, British Columbia V6E 2K3
Ballinger Corporation
700 West Georgia Street, Suite 1900 940,900 0 34.6
Vancouver, British Columbia V7Y 1G5
MFC Bancorp Ltd.
17 Dame Street, Dublin 2, Ireland 1,344,250<F1> 3,000,000 76.0
Sutton Park International Limited
P.O. Box 146, Road Town, 308,350 0 11.3
Tortola, British Virgin Islands
Michael J. Smith
17 Dame Street, Dublin 2, Ireland 1,344,250<F2> 3,000,000<F2> 76.0
Oq-Hyun Chin
3, 4/7L, Kyung An Bldg. 0 0 0
831-28 Yeoksam-Dong
Kanynam-Ku
Seoul, Korea
Young Soo Ko
Room 1202, 12/F Wing On Centre 0 0 0
111 Connaught-Road
Central, Hong Kong
All executive officers and directors
as a group (3 persons) 1,344,250<F2> 3,000,000<F2> 76.0
------------------------------------
<FN>
<F1>
(1) MFC Bancorp is the sole shareholder of Ballinger Corporation and
Sutton Park International Limited 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 and Sutton Park International
Limited.
<F2>
(2) Includes the 940,900 shares of Common Stock owned directly by
Ballinger Corporation and the 308,350 shares of Common Stock owned
by Sutton Park International Limited, for which Mr. Smith serves as
an officer and 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 of which
shares Mr. Smith is deemed to be the indirect beneficial owners
pursuant to the rules of the SEC. Mr. Smith disclaims beneficial
ownership of all of such shares.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with MFC Bancorp
During the fiscal years ended June 30, 2000 and 1999, the Company
paid an aggregate of $600,000 and $600,000, respectively, in fees to MFC
Bancorp Ltd. and Logan International Corp. for accounting and
administrative services provided to the Company and reimbursement for
office expenses. During fiscal 2000, the Company paid $300,000 in
dividends on its Preferred Stock to a subsidiary of MFC Bancorp and
collected $300,000 in dividends on preferred stock from another subsidiary
of MFC Bancorp.
ANNUAL REPORT
The Company's Annual Report which contains audited financial
statements for the fiscal year ended June 30, 2000 accompany or have
preceded the mailing of this Proxy Statement. Upon the written
5
<PAGE> 8
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-K for the fiscal year ended June 30, 2000, 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-K. The written request must be directed to the
attention of Michael J. Smith, Secretary of the Company, 6 Cours de rive,
4th Floor, 1206 Geneva, Switzerland. Such reports are not part of the
Company's soliciting material.
AUDITORS
Davidson & Company, Chartered Accountants, the independent public
auditors for the Company for the fiscal year 2000 and the current fiscal
year, will not be present at the Annual Meeting.
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, 2002.
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, 2001. In addition, a
shareholder proposal received by the Company, which is presented otherwise
than in accordance with Rule 14a-8 under the Securities Exchange Act of
1934, will be considered untimely if received after November 1, 2001, and
the Company will have discretionary authority to vote its proxies with
respect to any such proposal.
By Order of the Board of Directors
------------------------------------------
Michael J. Smith
Secretary
December , 2000
6
<PAGE> 9
PROXY
DRUMMOND FINANCIAL CORPORATION
17 Dame Street, Dublin 2,
Ireland
This Proxy is solicited on behalf of the Board of Directors of Drummond
Financial Corporation.
Revoking any such prior appointment, the undersigned, a shareholder
of Drummond Financial Corporation (the "Company") hereby appoints Michael
J. Smith attorney and agent of the undersigned, with full power of
substitution, to vote all shares of the Common Stock of the undersigned in
said Company at the Annual Meeting of Shareholders of said Company to be
held at 6 Cours de rive, 4th Floor, 1206 Geneva, Switzerland on January
12, 2001 at 9:00 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 attorney
and agent or his substitute may lawfully do in place of the undersigned as
indicated below.
1. Election of the Board of Directors:
[ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for the nominee
to the contrary below) listed below
(Instruction: To withhold authority to vote for a nominee, strike a
line through the nominee's name in the list below.)
Michael J. Smith
2. In their discretion, the Proxy holders are authorized to vote
upon such other business as may properly come before the meeting.
This proxy when properly executed will be voted as directed herein
by the undersigned shareholder. If no direction is indicated, this proxy
will be voted FOR proposal 1 above.
Please sign exactly as your name appears on your share certificates.
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 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.
------------------------------
Print Name
Please sign exactly as name appears.
Dated ------------------------
------------------------------
Signature
------------------------------
Signature if held jointly
------------------------------
Number of shares owned
7
