UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Equalnet Communications 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)
Brian W. Pusch, Esq.
Law Offices of Brian W Pusch
Penthouse Suite
29 West 57th Street
New York, New York 10019
212-980-0408
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 4, 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).
</PAGE>
<PAGE>
CUSIP No. 294408109
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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,00
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
British Virgin Islands
NUMBER 7 SOLE VOTING POWER: 0
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 22,500
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 22,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 22,500
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instruction): [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0.1%
14 TYPE OF REPORTING PERSON (See Instructions): CO
</PAGE>
<PAGE>
CUSIP No. 294408109
- -------------------
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 ITEMS 2(d) or 2(e):
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
NUMBER 7 SOLE VOTING POWER: 0
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 22,500
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 22,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 22,500
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instruction): [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0.1%
14 TYPE OF REPORTING PERSON (See Instructions): CO
</PAGE>
<PAGE>
CUSIP No. 294408109
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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 ITEMS 2(d) or 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
United States
NUMBER 7 SOLE VOTING POWER: 0
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 2,022,500
OWNED
BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER: 2,022,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,022,500
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instruction): [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 8.6%
14 TYPE OF REPORTING PERSON (See Instructions): IN
</PAGE>
<PAGE>
CUSIP No. 294408109
- -------------------
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: 0
OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 2,000,000
OWNED
BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER: 0
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): 8.5%
14 TYPE OF REPORTING PERSON (See Instructions): PN
</PAGE>
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 1 on Schedule 13D amends Items 1-5 of the
initial statement on Schedule 13D dated March 5, 1988 filed by the Reporting
Persons (as defined herein). This Amendment No. 1 relates to the Common
Stock, $.01 par value ("Common Stock") of Equalnet Communications Corp., a
Texas corporation, formerly known as EqualNet Holding Corp. (the "Issuer").
The Issuer's principal executive offices are located at 1250 Wood Branch Park
Drive, Houston, Texas 77079.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Amendment No. 1 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
Amendment No. 1 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:
Name Title
---- -----
W.R. Weber President
Trust Company of Willemstad NV Treasurer
InterCaribbean Services Ltd. Secretary; Director
Donald R. Morken Director
Tortola Corporation Company Ltd. Director
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 Mr. Weber is Senior Account Manager 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. Mr. Weber 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 Mr. Weber 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.
InterCaribbean 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.
(2) Genesee. The executive officers and directors of Genesee
are:
Name Title
---- -----
Donald R. Morken President and Treasurer; Director
Sonya A. Prata Vice President and Secretary; Director
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, Washington 98004-4332.
(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), 2(a)(2) and 2(a)(4).
(4) MCM. MCM is a Washington limited partnership. The sole
general partner of MCM is Mr. 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, Washington 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.
1,522,500 shares (the "March Shares") of Common Stock 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
March 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 (the "Series A
Preferred Shares") of Series A Convertible Preferred Stock, $.01 par value
(the "Series A Preferred Stock"), of the Issuer, 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 MCM.
On September 4, 1998, the Fund acquired 1,875 newly issued
shares (the "Series D Preferred Shares") of the Company's Series D Convertible
Preferred Stock, $.01 par value (the "Series D Preferred Stock"), in exchange
for 1,500,000 shares of Common Stock and $100,000 in cash. The 1,500,000
shares of Common Stock were acquired by the Fund on March 5, 1998 as part of
the March Shares. The $100,000 cash payment was made from the working capital
of the Fund. In connection with the Fund's acquisition of the Series D
Preferred Shares, on September 4, 1998, Genesee Fund Limited-Portfolio B, a
British Virgin Islands corporation ("GFL") which is a private investment fund
for which Genesee serves as investment manager, purchased the Company's Senior
Secured Convertible Note due 2001 (the "GFL Note") in the aggregate principal
amount of $1,500,000 and acquired warrants (the "GFL Warrants") to purchase
333,116 shares of Common Stock for cash consideration of $1,400,000. The
source of such funds was from the working capital of GFL.
The Series D Preferred Stock and the GFL Note are convertible
into shares of Common Stock at the lesser of (i) a fluctuating conversion
price representing a discount to the market price of the Common Stock during
specified periods prior to conversion or (ii) a specified ceiling price. The
right to convert Series D Preferred Stock and the GFL Note commences on the
earlier of (x) the date the Securities and Exchange Commission declares
effective the Company's registration statement to be filed under the
Securities Act of 1933, as amended, registering for resale the Common Stock
issuable upon such conversions and (y) December 3, 1998. The GFL Warrants are
exercisable at any time for $.9006 per share and expire on September 4, 2003.
ITEM 4. PURPOSE OF TRANSACTION.
The Fund acquired the March Shares and the Series D Preferred
Shares as part of its securities investing and trading activities. At any
time or from time to time, the Fund may sell the remaining 22,500 March Shares
or the Series D Preferred Shares or, subject to the certain limitations on
conversion, may convert the Series D Preferred Shares into Common Stock and
sell such Common Stock. MCM acquired the Series A Preferred Shares for
investment. At any time or from time to time, MCM may sell the Series A
Preferred Shares or convert such shares into Common Stock and sell such Common
Stock. 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. Subsequently, the
Board of Directors of the Issuer appointed Mr. Bodian as the President and
Chief Executive Officer of the Issuer. 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) Conversion Restrictions.
The terms of the Series D Preferred Stock, the GFL Note and
the GFL Warrants provide that a holder thereof may not convert or exercise any
portion of such securities if such conversion or exercise would cause such
holder's beneficial ownership of the Common Stock, including shares held by
all persons whose beneficial ownership would be aggregated with such holder,
(other than shares so owned through ownership of such unconverted securities
or other convertible securities containing similar restrictions) to exceed
4.9% of the outstanding Common Stock (collectively, the "Conversion
Restrictions"). Since Mr. Morken's beneficial ownership of the shares of
Common Stock issuable upon conversion of the Series A Preferred Shares and the
remaining 22,500 March Shares exceeds 4.9% of the outstanding Common Stock and
would be aggregated with the beneficial ownership of the Common Stock issuable
upon conversion or exercise of the Series D Preferred Shares, the GFL Note and
the GFL Warrants, the Conversion Restrictions currently prevent any conversion
or exercise of such securities. In addition, due to the required waiting
period before the initial right to convert Series D Preferred Stock and the
GFL Note commences as described in Item 3, the Reporting Persons believe that
they do not have the right to acquire the Common Stock issuable upon such
conversions within 60 days of the date of this Amendment No. 1. Accordingly,
none of the Reporting Persons or GFL beneficially own any shares of Common
Stock which would otherwise be issuable upon conversion of the Series D
Preferred Shares or the GFL Note or upon exercise of the GFL Warrants.
(b) Common Stock Owned by the Fund.
(1) As of the date of this Amendment No. 1, the Fund is the
direct beneficial owner of 22,500 shares of Common Stock (the "Common
Shares"). The Common Shares represent approximately 0.1% 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 Common 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 Common Shares. Except as described
in Item 5(b)(1) and in this Item 5(b)(2) no other person identified in Item
2(a) has or shares the power to dispose or the power to vote the Common
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 Common Shares beneficially owned by the Fund.
(c) Series A Preferred Stock Owned by MCM.
(1) As of the date of this Amendment No. 1, MCM is the direct
beneficial owner of all 2,000 Series A Preferred Shares. Assuming the
conversion of Series A Preferred Shares 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 8.5% 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 shares of Common Stock into
which the Series A Preferred Shares can be converted. The aggregate number of
shares of Common Stock beneficially owned by Mr. Morken as described in this
Item 5 is 2,022,500 shares, representing approximately 8.6% of the outstanding
shares* of Common Stock. Except as described in Item 5(c)(1) and in this Item
5(c)(2), no other person identified in Item 2(a) has or shares the power to
dispose or the power to vote the Series A Preferred Shares and shares of the
Common Stock into which it can be converted.
(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 Series A Preferred Shares or the Common Stock into which it can be
converted beneficially owned by MCM.
- ------------------
* 21,393,070 shares of Common Stock were reported as outstanding as of June
15, 1998 in the Issuer's proxy statement for its special meeting of
shareholders held on June 30, 1998.
</PAGE>
<PAGE>
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.
Dated: September 16, 1998
ADVANTAGE FUND LTD.
By: /s/ W.R. Weber
-------------------------------
W.R. Weber
President
GENESEE INTERNATIONAL, INC.
By: /s/ Donald R. Morken
-------------------------------
Donald R. Morken
President
/s/ Donald R. Morken
-------------------------------
Donald R. Morken
MCM PARTNERS, A WASHINGTON LIMITED
PARTNERSHIP
By: /s/ Donald R. Morken
-------------------------------
Donald R. Morken
General Partner
