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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
EqualNet Holding Corp.
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(Name of the Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
294408109
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(CUSIP Number)
Marion V. Larson
Graham & James LLP/Riddell Williams P.S.
4500 - 1001 Fourth Avenue Plaza
Seattle, WA 98154
206-389-1798
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 5, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 294408109 13D Page 1 of 10 Pages
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1 NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
Advantage Fund Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions):
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO NUMBER OF SHARES BENEFICIALLY OWNED
BY EACH REPORTING PERSON WITH ITEMS 2(d) or 2(e):
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
British Virgin Islands
NUMBER 7 SOLE VOTING POWER:
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 1,522,000
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 1,522,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,522,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.2%
14 TYPE OF REPORTING PERSON (See Instructions): CO
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CUSIP No. 294408109 13D Page 2 of 10 Pages
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1 NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
Genesee International, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions):
N/A
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ITEMS 2(d)
OR 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
NUMBER 7 SOLE VOTING POWER:
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 1,522,000
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 1,522,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,522,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
(See Instruction):
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.2%
14 TYPE OF REPORTING PERSON (See Instructions): CO
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CUSIP No. 294408109 13D Page 3 of 10 Pages
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1 NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
Donald R. Morken
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions): N/A
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH ITEMS 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
United States
NUMBER 7 SOLE VOTING POWER:
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 3,522,000
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 3,522,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 3,522,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instruction): [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 18.9%
14 TYPE OF REPORTING PERSON (See Instructions): IN
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CUSIP No. 294408109 13D Page 4 of 10 Pages
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1 NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
MCM Partners, a Washington Limited Partnership
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions): WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS [ ] IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Washington
NUMBER 7 SOLE VOTING POWER:
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER:
OWNED
BY 2,000,000
EACH
REPORTING 9 SOLE DISPOSITIVE POWER:
PERSON
WITH
10 SHARED DISPOSITIVE POWER:
2,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,000,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN
SHARES (See Instruction):
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 10.7%
(assuming conversion into Common Stock).
14 TYPE OF REPORTING PERSON (See Instructions): PN
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CUSIP No. 294408109 13D Page 5 of 10 Pages
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock, $.01 par value
("Common Stock") and the Series A Convertible Preferred Stock, $1,000 per share
stated value ("Convertible Preferred Stock"), of EqualNet Holding Corp., a Texas
corporation (the "Issuer"). The Issuer's principal executive offices are located
at 1250 Wood Branch Park Drive, Houston, TX 77079.
ITEM 2. IDENTITY AND BACKGROUND.
A. This Statement is being filed on behalf of Advantage Fund Ltd., a
British Virgin Islands corporation (the "Fund"), Genesee International, Inc., a
Delaware corporation ("Genesee"), Donald R. Morken ("Mr. Morken"), and MCM
Partners, a Washington Limited Partnership ("MCM"). The foregoing persons are
hereinafter sometimes collectively referred to as "Reporting Persons."
Information as to each Reporting Person set forth in this Statement has been
provided by such Reporting Person.
Set forth below is certain information with respect to each of
the Reporting Persons and each of the persons enumerated in General Instruction
C to Schedule 13D.
(1) The Fund. The executive officers and directors of the Fund
are:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
W. R. Weber President
J.M.S. Verhooren Vice President
Trust Company of Willemstad NV Treasurer
InterCaribbean Services Ltd. Secretary; Director
Donald R. Morken Director
Tortola Corporation Company Ltd. Director
</TABLE>
The Fund's principal business is serving as a privately held
investment fund engaged in securities investing and trading. The present
principal occupation and employment of Messrs. Weber and Verhooren Senior
Account Manager and Managing Director, respectively, of the International Funds
Services Division of CITCO Fund Services (Curacao) N.V., whose principal
business is fund administration, and whose business address is Kaya Flamboyan 9,
Curacao, Netherlands Antilles. Each of such natural persons is a citizen of The
Netherlands. The present principal occupation and employment of Mr. Morken is
serving as an officer or the general partner of the following entities which
provide investment management services to various investment funds: Genesee;
MCM; and DRE Partners, a Washington Limited Partnership ("DRE"). Mr. Morken is a
citizen of the United States.
The business address of the Fund and Messrs. Weber and Verhooren
is c/o CITCO, Kaya Flamboyan 9, Curacao, Netherlands Antilles. The business
address of each of Mr. Morken, MCM and DRE is 10500 N.E. 8th Street, Suite 1920,
Bellevue, Washington 98004-4332.
Trust Company of Willemstad NV is a Netherlands corporation, its
principal business is providing business administrative services, and its
business address is Kaya Flamboyan 9, Curacao, Netherlands Antilles. Inter
Caribbean Services Ltd. is a British Virgin Islands corporation, its principal
business is providing business administrative services, and its business address
is CITCO Building, Wickhams Cay, P.O. Box 662, Road Town, Tortola, British
Virgin Islands. Tortola Corporation Company Ltd. is a British Virgin Islands
corporation, its principal business is providing business administrative
services, and its business address is CITCO Building, Wickhams Cay, P.O. Box
662, Road Town, Tortola, British Virgin Islands.
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CUSIP No. 294408109 13D Page 6 of 10 Pages
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(2) Genesee. The executive officers and directors of Genesee
are:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Donald R. Morken President and Treasurer; Director
Sonya A. Prata Vice President and Secretary; Director
</TABLE>
Genesee's principal business is serving as investment manager
for the Fund and other investment funds. The present principal occupation,
employment and citizenship of Mr. Morken is stated in Item 2(A)(1). The present
principal occupation of Sonya A. Prata ("Ms. Prata") is as a student. Ms. Prata
is a citizen of the United States.
The business address of Genesee is CITCO Building, Wickhams Cay,
P.O. Box 662, Road Town, Tortola, British Virgin Islands. The business address
of Mr. Morken is stated in Item 2(A)(1). The address of Ms. Prata is c/o 10500
N.E. 8th Street, Suite 1920, Bellevue, WA 98004.
(3) Mr. Morken. Mr. Morken is the President, a director and the
controlling stockholder of Genesee. His daughter, Ms. Prata, is the only other
stockholder of Genesee. Other information with respect to Mr. Morken is set
forth in Items 2(A)(1) and 2(A)(2) and 2(A)(4).
(4) MCM. MCM is a Washington limited partnership. The sole
general partner is Donald R. Morken.
MCM's principal business is the providing of investment
management services to various investment funds.
The business address of MCM is 10500 N.E. 8th Street, Suite
1920, Bellevue, WA 98004-4332.
(B) During the last five years, none of the persons listed in Item 2(A)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(C) During the last five years, none of the persons listed in Item 2(A)
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction the result of which was to subject such person to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The 1,522,000 shares (the "Shares") of Common Stock reported as
beneficially owned by the Fund, Genesee and Mr. Morken in this Statement were
acquired by the Fund on March 5, 1998 pursuant to an Agreement of Merger and
Plan of Reorganization dated December 2, 1997, as amended on December 19, 1997
and February 12, 1998, between the Issuer, EQ Acquisitions Sub, Inc., Netco
Acquisition, LLC, ("Netco") and Netco Acquisitions Corp. (the "Merger
Agreement"). Upon closing of the Merger Agreement, the Fund was issued the
shares in cancellation of working capital loans made by the Fund to Netco. The
source of the funds used to make the working capital loans to Netco was from the
working capital of the Fund. In addition, upon closing of the Merger Agreement,
MCM, a member of Netco, received 2,000 shares of Convertible Preferred Stock,
which shares are convertible into 2,000,000 shares of Common Stock. MCM's
interest in Netco was acquired in exchange for the release of a $2,000,000 loan
encumbering the assets owned by Netco. The MCM loan was made from the working
capital of the partnership.
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CUSIP No. 294408109 13D Page 7 of 10 Pages
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ITEM 4. PURPOSE OF TRANSACTION.
The Fund acquired the Shares as part of its securities investing
and trading activities. The Fund may sell such Shares at any time or from time
to time. MCM acquired the shares of Convertible Preferred Stock for investment.
MCM may sell such Convertible Preferred Stock or convert such stock into Common
Stock and sell such Common Stock at any time or from time to time. Pursuant to
the Merger Agreement MCM received the right to designate one nominee to be
elected as a director of the Issuer at the March 5, 1998 annual meeting of
shareholders of the Issuer, and MCM's nominee, Mr. Mitchell H. Bodian, was
elected as director at the annual meeting. Subject to the foregoing, none of the
Reporting Persons has plans or proposals which relate to or would result in:
(A) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(B) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Issuer or any of its subsidiaries;
(C) A sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(D) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancy on the board of directors of the
Issuer;
(E) Any material change in the present capitalization or dividend policy
of the Issuer;
(F) Any other material change to the Issuer's business or corporate
structure;
(G) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(H) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(I) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(J) Any action similar to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(A) Common Stock Owned by the Fund.
(1) As of the date of this Statement, the Fund is the direct
beneficial owner of all 1,522,000 Shares. The Shares represent approximately
9.2% of the outstanding shares* of Common Stock.
(2) Genesee, in its capacity as investment manager for the Fund,
shares with the Fund the power to direct the disposition and direct the vote of
the Shares owned directly by the Fund. Mr. Morken, by reason of his position as
the President and Treasurer, a director and the controlling stockholder of
Genesee, may be deemed to indirectly share the power to direct the disposition
and direct the vote of the Shares. Except as described in Item 5(A)(1) and in
this Item 5(A)(2) no other person identified in Item 2(A) has or shares the
power to dispose or the power to vote the Shares.
(3) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the Shares beneficially owned by the Fund.
(B) Convertible Preferred Stock Owned by MCM.
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CUSIP No. 294408109 13D Page 8 of 10 Pages
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(1) As of the date of this Statement, MCM is the direct
beneficial owner of all 2,000 shares of Convertible Preferred Stock. Assuming
the conversion of the Convertible Preferred Stock into Common Stock (without
giving effect to any other convertible securities, warrants or options of the
Issuer), the 2,000,000 shares of Common Stock acquired upon conversion would
represent approximately 10.7% of the outstanding shares* of Common Stock.
(2) Mr. Morken, individually, by reason of his position as sole
general partner of MCM, may be deemed to indirectly share the power to direct
the disposition and direct the vote of the Convertible Preferred Stock. Except
as described in Item 5(B)(a) and in this item 5(B)(b), no other person
identified in Item 2(A) has or shares the power to dispose or the power to vote
the Convertible Preferred Stock.
(3) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of
the Convertible Preferred Stock (or the Common Stock into which it can be
converted) beneficially owned by MCM.
* 16,616,023 shares of Common Stock were reported as outstanding as of March 5,
1998 in the Issuer's Current Report on Form 8-K dated March 5, 1998.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
There exist no contracts, arrangements, understandings or
relationships between any of the persons identified in Item 2(a) and any other
person with respect to the securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following is filed herewith as an Exhibit to this Statement:
Exhibit No. 1: Joint Filing Agreement, dated March 13, 1998,
among the Reporting Persons.
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CUSIP No. 294408109 13D Page 9 of 10 Pages
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this Statement
is true, complete and correct.
ADVANTAGE FUND LTD.
Dated: March 13, 1998
By: /s/ W. R. Weber
-------------------------------
Name: W. R. Weber
Title: President
GENESEE INTERNATIONAL, INC.
By: /s/ Donald R. Morken
-------------------------------
Name: Donald R. Morken
Title: President
/s/ Donald R. Morken
-------------------------------
Donald R. Morken
MCM PARTNERS, A WASHINGTON LIMITED
PARTNERSHIP
By: /s/ Donald R. Morken
-------------------------------
Name: Donald R. Morken
Title: General Partner
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CUSIP No. 294408109 13D Page 10 of 10 Pages
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EXHIBIT 1
JOINT FILING AGREEMENT
This will confirm the agreement by and among the undersigned
that the Schedule 13D filed with the Securities and Exchange Commission on or
about the date hereof with respect to the beneficial ownership of the
undersigned of shares of Common Stock and Convertible Preferred Stock of
EqualNet Holding Corp., a Texas corporation, is being filed, and all amendments
thereto will be filed, on behalf of each of the persons and entities named below
in accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, as
amended. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
March 13, 1998 ADVANTAGE FUND LTD.
By: /s/ W. R. Weber
-------------------------------
Name: W. R. Weber
Title: President
GENESEE INTERNATIONAL, INC.
By: /s/ Donald R. Morken
-------------------------------
Name: Donald R. Morken
Title: President
/s/ Donald R. Morken
-------------------------------
Donald R. Morken
MCM PARTNERS, A WASHINGTON LIMITED
PARTNERSHIP
By: /s/ Donald R. Morken
-------------------------------
Name: Donald R. Morken
Title: General Partner
