SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(3)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BADGER PAPER MILLS, INC.
(Name of Registrant as Specified in its Charter)
___________________________________
(Name of person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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 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:
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BADGER PAPER MILLS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held January 23, 1997
To the Shareholders of Badger Paper Mills, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Badger
Paper Mills, Inc. will be held on Thursday, January 23, 1997, at 10:00
a.m., local time, at the Best Western Riverfront Inn, 1821 Riverside Ave.,
Marinette, Wisconsin, for the following purposes:
1. To consider and act on a shareholder proposal from a group of
shareholders controlled by James D. Azzar (the "Azzar Group") to
approve the restoration of voting power pursuant to Section 180.1150
of the Wisconsin Business Corporation Law, if such proposal is
presented at the meeting.
2. To consider and act on any other business as may properly come before
the meeting or any adjournment or postponement thereof.
The close of business on December 20, 1996, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof.
A proxy for the meeting and a proxy statement are enclosed herewith.
By Order of the Board of Directors
BADGER PAPER MILLS, INC.
Miles L. Kresl, Jr.
Corporate Secretary
Peshtigo, Wisconsin
January 3, 1997
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED PROXY,
WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY HOW YOUR NAME
APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE>
BADGER PAPER MILLS, INC.
200 West Front Street
Peshtigo, Wisconsin 54157-0149
PROXY STATEMENT
For
SPECIAL MEETING OF SHAREHOLDERS
To Be Held January 23, 1997
This proxy statement is being furnished to shareholders by the
Board of Directors (the "Board") of Badger Paper Mills, Inc. (the
"Company") beginning on or about January 3, 1997, in connection with a
solicitation of proxies by the Board for use at the Special Meeting of
Shareholders to be held on Thursday, January 23, 1997, at 10:00 a.m.,
local time, at the Best Western Riverfront Inn, 1821 Riverside Ave.,
Marinette, Wisconsin, and all adjournments or postponements thereof (the
"Special Meeting") for the purposes set forth in the attached Notice of
Special Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will
not affect a shareholder's right to attend the Special Meeting and to vote
in person. Presence at the Special Meeting of a shareholder who has
signed a proxy does not in itself revoke a proxy. Any shareholder giving
a proxy may revoke it at any time before it is exercised by giving notice
thereof to the Company in writing at or before the Special Meeting.
A proxy, in the enclosed form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with
the instructions contained therein. The shares represented by executed
but unmarked proxies will be voted (i) "AGAINST" the shareholder proposal
to restore voting power to the Azzar Group, and (ii) on such other
business or matters which may properly come before the Special Meeting in
accordance with the best judgment of the persons named as proxies in the
enclosed form of proxy. Other than the proposed shareholder resolution,
the Board has no knowledge of any other matters to be presented for action
by the shareholders at the Special Meeting.
Only holders of record of the Company's common stock, no par
value (the "Common Stock"), as of the close of business on December 20,
1996, are entitled to vote at the Special Meeting. On that date, the
Company had outstanding and entitled to vote 1,945,130 shares of Common
Stock, each of which is entitled to one vote per share.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of December 20, 1996 by: (i) each
director; (ii) the executive officers required to be named in the Summary
Compensation Table set forth in the Proxy Statement distributed in
connection with the 1996 Annual Meeting of shareholders; (iii) all of the
directors, nominees and executive officers (including the executive
officers named in the Summary Compensation Table) as a group; and (iv)
each person or other entity known by the Company to own beneficially more
than 5% of the class of Common Stock. Except as otherwise indicated in
the footnotes, each of the holders listed below has sole voting and
investment power over the shares beneficially owned.
Shares of Percent of
Common Stock Common Stock
Name of Beneficial Owner Beneficially Owned Beneficially Owned
Edwin A. Meyer, Jr., Chairman
of the Board . . . . . . . 360,074(1) 18.5%
Bennie C. Burish, Director . . 100,948(2) 5.2%
Earl R. St. John, Jr., Director 11,000(3) *
Claude L. Van Hefty, Director,
President and Chief 4,350(4) *
Executive Officer . . . .
Miles L. Kresl, Jr., Vice
President/ Administration,
Treasurer and Corporate 5,300 *
Secretary . . . . . . . .
Thomas J. Kuber, Director . . . 1,010 *
Ralph D. Searles, Director . . 800 *
All directors and executive
officers as a group (11
persons) . . . . . . . . . 485,882(5) 25.0%
Walter F. Adrian . . . . . . .
112,000(6) 5.8%
James D. Azzar . . . . . . . .
276,864(7) 14.2%
____________________________
*Denotes less than 1%.
(1) Amounts shown include 49,766 shares owned by Lorraine Meyer, and
21,744 shares owned by Carol Coffey Sheridan, as to which Mr. Meyer
has voting rights but disclaims beneficial ownership. The amounts
shown do not include 9,512 shares of Common Stock owned by Gloria L.
Meyer, Mr. Meyer's wife, as to which he disclaims voting and
dispositive power.
(2) Amounts shown do not include 11,500 shares of Common Stock owned by
Donna M. Burish, Mr. Burish's wife, as to which he disclaims voting
and dispositive power.
(3) Amounts shown include 11,000 shares of Common Stock held in trust as
to which Mr. St. John has sole voting and dispositive power. Amounts
shown do not include 11,000 shares of Common Stock held in trust for
the benefit of Rosemary St. John, Mr. St. John's wife, as to which he
disclaims voting and dispositive power.
(4) Amounts shown include 2,000 shares of Common Stock owned by Mr. Van
Hefty and Karen J. Van Hefty, Mr. Van Hefty's wife, as joint tenants
as to which they share voting and investment power.
(5) In the aggregate, directors and executive officers have sole voting
and dispositive power with respect to 367,020 shares; in the
aggregate, directors and executive officers have sole voting rights
only with respect to 72,510 shares; and in the aggregate, directors
and executive officers have shared voting and dispositive power with
respect to 2,700 shares.
(6) The share amount listed is from the Schedule 13G dated April 17, 1995
filed with the Securities and Exchange Commission and the Company.
Mr. Adrian's address is 201 Emery Avenue, South, Peshtigo, Wisconsin
54157.
(7) According to a report of beneficial ownership on an amendment to
Schedule 13D dated December 10, 1996, James D. Azzar ("Azzar"),
Bomarko, Inc. ("Bomarko") and Extrusions Division, Inc. ("EDI")
(collectively referred to as the "Azzar Group") constitute a "group"
with respect to the acquisition of Common Stock. Of the reported
shares, 276,664 are owned by Bomarko and 200 are owned by EDI. Azzar
is deemed to beneficially own all of such shares in his capacity as
chairman of the board, chief executive officer and director of, and
investor in, Bomarko, and president, sole director and sole
shareholder of EDI. Azzar's address is 208 Pioneer Club Road, East
Grand Rapids, Michigan 49506. The address of Bomarko's principal
office is North Oak Road, P.O. Box K, Plymouth, Indiana 46563. The
address of EDI's principal office is 208 Pioneer Club Road, East
Grand Rapids, Michigan 49506.
SHAREHOLDER PROPOSAL TO RESTORE FULL VOTING POWER
Under Section 180.1150 of the Wisconsin Business Corporation Law
("WBCL"), the voting power of shares of Common Stock held by any person,
or group acting in concert, in excess of 20% of the aggregate of all
shares eligible to vote in the election of Company directors is limited in
voting on any matter to 10% of the full voting power of such excess
shares, unless Company shareholders have voted to restore full voting
power. Shares held or acquired under certain circumstances are excluded
from the application of Section 180.1150, but such exceptions are not
relevant in the matter being voted upon. If a shareholder requests, the
Board must call a meeting of shareholders to consider and act upon a
proposal to restore full voting power of the shares.
In late February 1996, the Company received a shareholder
resolution and notice pursuant to Section 180.1150 from the Azzar Group.
Pursuant to the WBCL, the Azzar Group requested that a shareholder
resolution restoring full voting power to the Azzar Group be submitted to
a vote of the shareholders at the 1996 Annual Meeting. The Board
submitted the resolution at the 1996 Annual Meeting and the resolution was
defeated by the shareholders, with 1,233,130 shares or approximately 73%
of the shares represented at the meeting voting against the resolution,
456,228 shares or approximately 27% of the shares represented at the
meeting voting in favor of the resolution, and 7,577 of the shares
represented at the meeting abstaining.
On December 13, 1996, the Company received another shareholder
resolution and notice pursuant to Section 180.1150 from the Azzar Group.
Pursuant to the WBCL, the Azzar Group has requested that the following
shareholder resolution be submitted to a vote of the shareholders and that
the Special Meeting be held. Therefore, as provided by the WBCL, the
Board is required to submit the following resolution at the Special
Meeting and is including the resolution and notice in the exact form they
were received from the Azzar Group.
Notice of Proposed Resolution
"NOTICE OF PROPOSED RESOLUTION
This Notice and the accompanying Resolution are
submitted to the shareholders of Badger Paper Mills, Inc.
("Badger") pursuant to Wis. Stat. Section 180.1150 on behalf of
Bomarko, Inc. ("Bomarko"), Extrusions Division, Inc. ("EDI"),
and James D. Azzar (collectively referred to as the
"Investors"). The Investors hereby request a shareholder vote
to approve restoration of full voting power to the Investors in
the event that the Investors purchase shares of Badger in excess
of 20% of the voting power in the election of directors.
Recent strategic actions by the Issuer and continuing
substantial operating losses have caused the Investors to
reevaluate the risks and prospects of their investment in
Badger. Investors now believe that the most viable strategy by
which the Investors and other stockholders can limit the risk of
further substantial losses in the value of their investment in
Badger may be to pursue a prompt sale of Badger or its assets.
The Investors intend to communicate with management and take
other appropriate measures to maximize stockholders' value,
including, if feasible, a sale of Badger or its assets.
The Investors may acquire additional shares of the
Issuer for the purpose of enhancing their ability to influence
management, to promote a sale of the Issuer, or to supplement or
protect their investment. However, the Investors believe that
purchases of shares without full voting rights would not further
this purpose. The Investors believe that approval of the
proposed resolution, perhaps accompanied by further purchases of
Shares, would tend to enhance the Investors' ability to
encourage the board of directors and management to maximize
shareholder value.
At this time, the Investors propose to acquire more
than 20 percent but less than 50 percent of the total Badger
Shares outstanding. The Investors propose to acquire such
shares with cash on hand or obtained from the sale of other
investment securities, or from existing lines of credit.
Purchases will be made on the open market and in privately
negotiated transactions with individual shareholders of Badger.
Although the Investors have no present intention to purchase
shares otherwise than as set forth above, they reserve the right
to acquire shares by any lawful means.
If Badger is offered for sale, the Investors might or
might not offer to acquire Badger or some or all of its assets.
However, the desire of the Investors to pursue a sale of the
Issuer is not primarily motivated by an intent to acquire Badger
or any substantial portion of its assets. The Investors believe
that the defensive provisions included in the Issuer's articles
of incorporation and certain laws available to the board of
directors of the Issuer in the state of Wisconsin render it
comparatively unlikely that the Investors could acquire control
of Badger or its assets without the support of the present board
of directors.
Bomarko beneficially owns 276,664 shares of Badger
common stock and KDI beneficially owns 200 Badger shares. Mr.
Azzar beneficially owns 276,864 Badger shares, or over 14% of
the voting power in the election of directors, including shares
beneficially owned by Bomarko and KDI. Bomarko is a converter
and manufacturer of coated and printed paper products. In the
ordinary course of its business, it purchases substantial
quantities of paper of types manufactured by Badger. Bomarko is
a competitor of Badger in some product lines.
The Investors have no present plans to gain control of
Badger. In furtherance of their desire to enhance stockholders'
value, the Investors may seek to change the present board of
directors or management of Badger or change Badger's articles of
incorporation or bylaws, although they have no specific present
intention to do so. The Investors have no specific present
plans or proposals to liquidate Badger, to sell substantially
all of its assets, or merge it or exchange its shares with any
other person, to change the location of its principal office or
a material portion of its business activities, to change
materially its management or policies of employment, to alter
materially its relationship with suppliers or customers or the
communities in which it operates, or make any other material
change in its business, corporate structure, management or
personnel. However, the Investors do intend to encourage the
board of directors and management to sell Badger or its assets,
and such a sale may affect any or all of these factors."
Shareholder Resolution
The Azzar Group is expected to offer the following resolution
for consideration by shareholders at the Special Meeting:
RESOLVED, that pursuant to Wis. Stat. Section 180.1150,
full voting power is hereby approved and restored to all shares
of this corporation to be acquired or held by Bomarko Inc.,
Extrusions Division, Inc., and James D. Azzar in excess of 20%
of the voting power in the election of directors.
Board's Statement of Position
The Board unanimously recommends that Company shareholders vote
"AGAINST" this shareholder proposal. The Azzar Group states its intention
to purchase more than 20% but less than 50% of the Company's Common Stock.
As the Board has noted previously, a shareholder could seize effective
control of the Company with less than 50% of the Common Stock. The Board
cannot support a proposal, such as this, which would allow one shareholder
to acquire effective control of the Company and leave the remaining
shareholders with no voice in Company policy or operations, and without
compensation for their loss of control.
This is the second time within a year that the Azzar Group has
utilized Section 180.1150 of the WBCL to require the Board to submit this
resolution to the Company's shareholders. As previously mentioned, the
proposed resolution was rejected at the Company's 1996 Annual Meeting of
Shareholders held on May 14, 1996, with approximately 73% of the shares
represented at the meeting voting against the proposed resolution, while
approximately 27% of the shares represented at the meeting voted in favor
(with less than 1% of the shares represented at the meeting abstaining)
(the Azzar Group itself owned approximately 14.2% of the shares entitled
to vote at the 1996 Annual Meeting).
The Azzar Group advances its proposal on the premise that the
Azzar Group will maximize shareholder value, chiefly by influencing
management to sell the Company or its assets. The Azzar Group denies its
primary motivation in advancing its proposal is to acquire the Company or
any substantial portion of its assets; however, the Azzar Group reserves
the right to attempt to acquire the Company or its assets if they are
offered for sale.
In his "Message to Shareholders" contained in the Company's 1995
Annual Report, Claude L. Van Hefty, the Company's President and Chief
Executive Officer, noted that the Company had embarked on a long-term
strategic planning process beginning in 1995. This strategic planning
process is focused on the long-term success of the Company and maximizing
shareholder value. As part of the strategic planning process, the Company
retained PaineWebber, Inc. in early 1996 to provide investment banking
advice and to assist in evaluating various strategic alternatives. The
strategic review process is ongoing, and the Company continues to explore
various strategic alternatives to maximize shareholder value.
The Board strongly believes that the concentration of voting
power in the hands of a single shareholder, or a small number of
shareholders, could damage the manner in which the Company has
successfully done business for more than 60 years. Such concentration
could inappropriately narrow the future actions of the Company to those
that suit the shareholder with the most voting power. Today, no single
shareholder owns more than 20% of the Company's common stock. Diverse
ownership protects small shareholders from the whim of a single or small
group of shareholders able to exert a substantial or controlling vote.
The Azzar Group has concluded its best interests may be served
by selling the Company or its assets. It is unclear whether the Azzar
Group, which includes Bomarko, a customer of the Company and a competitor
of the Company in certain product lines, can fairly consider the best
interests of other shareholders at the same time it looks out for its own
interests. It is important to note that the Azzar Group's intentions may
change once or many times. If the Azzar Group is granted the authority it
seeks in its proposal, it could effectively control the Company without an
additional shareholder vote and without purchasing the stock of all the
other shareholders.
As outlined above and in the Company's 1996 annual meeting
materials, the Wisconsin Legislature enacted legislation protecting
smaller shareholders by limiting the voting rights of a single shareholder
who owns more than 20% of a company's shares. Our lawmakers have given
you, the shareholders, the ability to decide whether you want a single
investor to wield controlling power. Small shareholders now have a voice
in the operation and management of the Company; a vote in favor of the
Azzar Group proposal will mute this voice. The Azzar Group made a similar
proposal for consideration at the Company's 1996 annual meeting; the
shareholders overwhelmingly defeated that proposal. The Board urges you
to defeat it again.
Recommendation
THE BOARD BELIEVES THAT THE ACCUMULATION OF VOTING RIGHTS IN
EXCESS OF 20% BY ANY ONE SHAREHOLDER OR GROUP OF SHAREHOLDERS IS CONTRARY
TO THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THE SHAREHOLDER PROPOSAL.
SHARES OF COMMON STOCK REPRESENTED BY EXECUTED BUT UNMARKED PROXIES WILL
BE VOTED "AGAINST" THE SHAREHOLDER PROPOSAL.
Vote Required
The number of votes cast "FOR" the shareholder proposal at the
Special Meeting must exceed the number of votes cast "AGAINST" the
shareholder proposal to approve the shareholder proposal.
MISCELLANEOUS
Shareholder Proposals
In order to be entitled to submit proposals to be considered at
the Company's annual meeting a shareholder must be a record or beneficial
owner of at least 1% or $1,000 in market value of Common Stock at the time
the proposal is submitted, shall have held such Common Stock for at least
one year, and shall continue to own such Common Stock through the date on
which the annual meeting is held. Proposals which shareholders of the
Company intend to present at and have included in the Company's proxy
statement for the 1997 annual meeting must have been received by the
Company by the close of business on December 15, 1996. Although the
deadline for submission of proposals for the 1997 annual meeting has
passed, prior to the deadline and in addition to the shareholder proposal
described in this proxy statement, the Azzar Group submitted a shareholder
proposal which will be taken up at the Company's 1997 annual meeting,
unless withdrawn by the Azzar Group prior to such meeting.
The cost of soliciting proxies will be borne by the
Company. In addition to soliciting proxies by mail, proxies may be
solicited personally and by telephone by certain officers and regular
employees of the Company. The Company will reimburse brokers and other
nominees for their reasonable expenses in communicating with the persons
for whom they hold Common Stock.
By Order of the Board of Directors
BADGER PAPER MILLS, INC.
Miles L. Kresl, Jr.
Corporate Secretary
January 3, 1997
<PAGE>
BADGER PAPER MILLS, INC. PROXY THIS PROXY IS SOLICITED ON
Peshtigo, Wisconsin 54147 BEHALF OF THE BOARD OF
DIRECTORS.
The undersigned hereby appoints Claude L. Van Hefty and Mark D. Burish,
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Badger Paper Mills, Inc., held of record by the
undersigned on December 20, 1996, at the special meeting of shareholders
to be held January 23, 1997, and any adjournment or postponement thereof.
1. SHAREHOLDER RESOLUTION TO RESTORE FULL VOTING POWER.
[__] FOR [__] AGAINST [__] ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "AGAINST" THE SHAREHOLDER RESOLUTION IN ITEM 1 AND ON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING IN ACCORDANCE
WITH THE BEST JUDGMENT OF THE PROXIES NAMED HEREIN.
Please sign exactly as name appears below.
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 check here if you plan
to attend the special meeting
in person.
Dated _________________, 1997
Signature
_________________________________
Please mark, sign, date, and
promptly return the proxy card, Signature, if held jointly
using the enclosed envelope.
_________________________________
