SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No.___)
Check the appropriate box:
[ ] Preliminary Information Statement
[X] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
COUNTRY STAR RESTAURANTS, INC.
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(Name of Registrant As Specified in its Charter)
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[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] 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
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COUNTRY STAR RESTAURANTS, INC.
4929 WILSHIRE BOULEVARD
SUITE 428
LOS ANGELES, CALIFORNIA 90010
323/634-5588
INFORMATION STATEMENT
OCTOBER 23, 1998
To Shareholders of
Country Star Restaurants, Inc.
Relating to the Amendment of the Certificate
of Incorporation to effect a one-for two hundred
reverse stock split of the outstanding shares
of Common Stock of Country Star Restaurants, Inc.
This Information Statement relates to the amendment of the Certificate
of Incorporation of Country Star Restaurants, Inc. (the "Company") to effect a
one-for-two hundred reverse stock split (the "Reverse Stock Split") of all the
outstanding shares of common stock (the "Common Stock") of the Company. This
Information Statement was first mailed or delivered to shareholders on or about
October 23, 1998.
On October 6, 1998, the Board of Directors of the Company approved the
Reverse Stock Split. The Reverse Stock Split has also been approved by
shareholders of the Company holding at least a majority of the votes represented
by the outstanding Common Stock of the Company, which shareholder approval was
obtained by written consents in lieu of a shareholder's meeting pursuant to
Section 228 of the Delaware General Corporation Law. Accordingly, the Reverse
Stock Split as described herein will not be submitted to the other shareholders
of the Company for a vote. This Information Statement is being furnished to
shareholders solely to provide them with certain information concerning the
Reverse Stock Split in accordance with the requirements of the Securities
Exchange Act of 1934 as amended (the "Exchange Act") and the regulations
promulgated thereunder including particularly Regulation 14C, and Section 228 of
the Delaware General Corporation Law.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
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INFORMATION STATEMENT
GENERAL
The Company will bear the entire cost of mailing this Information
Statement and any additional information furnished to common stockholders.
Copies of the Information Statement and additional materials will be furnished
to banks, brokerage houses, fiduciaries and custodians holding shares of the
Company's Common Stock in their names which are beneficially owned by others to
forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners for their costs of forwarding the Information
Statement to such beneficial owners.
The Company intends to mail this Information Statement on or about
October 23, 1998, to all stockholders.
REVERSE STOCK SPLIT
The Board of Directors has determined that it is advisable to amend the
Company's Certificate of Incorporation to (i) effect a one-for-two hundred
reverse split of the Company's issued and outstanding shares of Common Stock,
and (ii) provide for the payment of cash in lieu of fractional shares otherwise
issuable, all substantially as set forth in the form of Amendment to Certificate
to Incorporation attached as Appendix A (the "Amendment").
The Board of Directors will authorize the filing of the Amendment with
the Secretary of the State of Delaware on November 16, 1998. The Amendment to
the Company's Certificate of Incorporation will result in one post-split share
of Common Stock being issued in exchange for every two hundred shares of Common
Stock issued and outstanding on the effective date of the Reverse Stock Split.
PRINCIPAL EFFECTS OF REVERSE SPLIT: Based upon the 26,174,000 shares of Common
Stock outstanding as of October 13, 1998, the Reverse Stock Split will result in
approximately 130,870 post-split shares of Common Stock outstanding, subject to
adjustment as a result of the elimination of fractional shares. Similarly, the
aggregate number of shares of Common Stock reserved for issuance upon exercise
of warrants and options will decrease from approximately
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700,000 shares of Common Stock to approximately 3,500 shares of Common Stock,
subject to adjustment as a result of the elimination of fractional shares.
Each outstanding option or warrant will automatically become an option
or warrant, as the case may be, to purchase one-two hundredth (1/200th) the
number of shares subject to the option or warrant immediately prior to the
Reverse Stock Split at an exercise price which will be appropriately adjusted to
reflect the Reverse Stock Split, subject to adjustment as a result of the
elimination of fractional shares. In addition, the shares available for issuance
under the Company's Incentive Stock Option Plan and non-qualified Stock Option
Plan will be reduced to reflect the Reverse Stock Split, subject to adjustments
required to eliminate fractional shares, and the other relevant terms and
provisions of the Company's stock option plans will be appropriately adjusted to
reflect the Reverse Stock Split.
The Reverse Stock Split will not affect the par value of each
authorized and unissued, and each outstanding share of common stock, which will
be $.01 par value per share. The Reverse Stock Split will not affect the number
or par value of the authorized Preferred Shares, which will remain at 2,000,000
Preferred Shares, $.001 par value per share. The Amendment will decrease the
number of shares outstanding and reserved for issuance pursuant to the exercise
of options and warrants and will result in an increase in the number of shares
available for issuance. Subject to the provisions for the elimination of
fractional shares, consummation of the Reverse Stock Split will not result in a
change in the relative equity interest in the Company or the voting power or
other rights, preferences or privileges of the holders of Common Stock.
The Company has been advised that: (i) the proposed Reverse Stock Split
will not be a taxable transaction to the Company; (ii) the Company's
stockholders who do not receive any cash will not recognize any gain or loss as
a result of the Reverse Stock Split; (iii) the aggregate tax basis of the Common
Stock received by the stockholders pursuant to the Reverse Stock Split will
equal the aggregate tax basis of the stockholders' Common Stock prior to the
Reverse Stock Split; and (iv) the holding period of the Common Stock received by
the Company's stockholders will include the holding period of the stockholders'
Common Stock before the Reverse Stock Split, provided the Common Stock was a
capital asset in the hands of such stockholder. This discussion should not be
considered as tax or investment advice, and the tax consequences of the Reverse
Stock Split may not be the same for all stockholders. Stockholders should
consult their own tax advisors to ascertain their individual federal, state,
local and foreign tax consequences.
PURPOSES OF THE REVERSE SPLIT: The Reverse Stock Split will decrease the number
of shares of Common Stock outstanding and
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presumably increase the per share market price for the post-split shares. The
Company's Board of Directors believes that the relatively low market price per
share of the Company's Common Stock may impair the marketability of the Common
Stock to institutional investors and members of the investing public. The Board
also recognizes that many leading brokerage firms are reluctant to recommend
lower-priced securities to their clients. The Company has no intention of
terminating the registration of its Common Stock under the Securities Exchange
Act of 1934, even though it may be eligible to do so.
The decrease in the number of shares of Common Stock outstanding
resulting from the Reverse Stock Split and the anticipated corresponding
increased price per share may stimulate interest in the Company's Common Stock
and promote greater liquidity for the Company's stockholders. However, there is
no assurance that the Reverse Stock Split will achieve these results. In
addition, it is possible that the liquidity of the post-split shares of Common
Stock may be adversely affected by the reduced number of shares outstanding when
the proposed Reverse Stock Split is effected. In addition, the Reverse Stock
Split may leave some stockholders with one or more "odd-lots" of the Company's
Common Stock (stock in amounts of less than 100 shares). These shares may be
more difficult to sell, or require a greater commission per share to sell, than
shares in even multiples of 100.
When the Reverse Stock Split becomes effective, the additional shares
of post-split Common Stock available for issuance by the Board of Directors of
the Company may be used for raising additional capital, stock options,
acquisitions, stock splits, stock dividends or other corporate purposes. There
are no arrangements, understandings or plans for the issuance of any such
additional shares, other than shares reserved for issuance upon the exercise of
stock options and warrants outstanding or authorized for issuance under existing
plans.
EXCHANGE OF CERTIFICATES AND ELIMINATION OF FRACTIONAL SHARE INTERESTS: When the
proposed Amendment becomes effective, each two hundred pre-split shares of
Common Stock will automatically be combined and changed into one post-split
share of Common Stock and each certificate representing pre-split shares of
Common Stock will represent for all purposes one-two hundredth (1/200th) of that
number of post-split shares of Common Stock. Stockholders will then be requested
to exchange their certificates representing Common Stock held prior to the
Reverse Stock Split for new certificates representing Common Stock issued as a
result of the Reverse Stock Split. Stockholders will be furnished the necessary
materials and instructions to effect such exchange. Stockholders should not
submit any certificates until requested to do so.
No scrip or fractional post-split Common Stock will be issued to any
stockholder in connection with the Reverse Stock Split. Accordingly, all
stockholders of record who would otherwise be entitled to receive fractional
post-split Common
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Stock, will, upon surrender of their certificates representing pre-split Common
Stock, receive a cash payment in lieu thereof equal to the fair value of such
fractional share. Holders of less than two hundred pre-split shares of Common
Stock as a result of the Reverse Stock Split, will on the effective date of the
Reverse Stock Split no longer be stockholders of the Company. The fair value of
the Common Stock will be based on the closing price of the Common Stock on the
effective date, or, if there are no reported sales on such date, the average of
the last reported high bid and low asked prices on such day shall be used.
The Company's Annual Report on Form 10-KSB for the year ended December
31, 1997 includes the Company's audited financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," which
are incorporated by reference in this Information Statement. A copy of the
Annual Report on Form 10-KSB accompanies this Information Statement.
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APPENDIX "A"
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
COUNTRY STAR RESTAURANTS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is:
COUNTRY STAR RESTAURANTS, INC.
2. The Certificate of Incorporation of the Corporation
is hereby amended by adding to Article Fourth thereof a new paragraph (c) as
follows:
(c) REVERSE STOCK SPLIT. Effective as of the close of
business on the date of filing this Amendment to the
Certificate of Incorporation with the Secretary of
State of Delaware, there shall be effected a reverse
split of the outstanding shares of Common Stock on
the basis of one new share of common stock for each
two hundred then issued and outstanding shares of
Common Stock. Without any action by the holders of
outstanding shares of Common Stock, certificates
representing each two hundred outstanding shares of
Common Stock shall represent for all purposes, and
each two hundred shares of Common Stock then issued
and outstanding shall automatically be converted
into, one share of Common Stock.
No scrip or fractional shares of Common Stock shall
be issued in connection with such reverse split. In
lieu thereof each record holder of shares of Common
Stock who would otherwise have been entitled to
receive a fractional share of common stock shall be
entitled to receive a cash payment equal to
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the closing sale price of one share on the date of
filing of this Amendment, or, if there are not
reported sales on such date, the average of the last
reported high bid and low asked prices on such day,
multiplied by the fractional share which would
otherwise be issuable after giving effect to the
reverse split, and such amount shall in no event
accrue any interest. Any such fractional shares shall
not represent equity interests in the Corporation,
and shall not be entitled to any voting, dividend or
other rights, but shall represent only the right to
receive the cash payment described in this paragraph.
When this Amendment becomes effective (i) the
aggregate amount of capital represented by all issued
and outstanding shares of Common Stock immediately
after the effectiveness of this Amendment will not be
less than the aggregate amount of capital represented
by all issued and outstanding shares of Common Stock
immediately before the effectiveness of the Amendment
and, therefore, the capital of the Corporation will
not be reduced under or by reason of this Amendment
and (ii) the par value of the Corporation's
authorized shares of Common Stock shall be $.01 per
share.
Signed and attested to
on __________ __, 1998
/s/ DAN J. RUBIN
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Dan J. Rubin, President
Attest:
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Secretary
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