<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 2)
Under the Securities Exchange Act of 1934
Toreador Royalty Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.15625 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
891041105
-------------------------------------------------------
(CUSIP Number)
Janice V. Sharry, Esq.
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
(214) 651-5562
--------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 10, 1998
-------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of section 240.13d-1(e), (f) or (g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See section 240.13d-7(b) 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> 2
SCHEDULE 13D
CUSIP No. 891041105 Page 2 of 6 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lee Global Energy Fund, L.P.
75-2569264
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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NUMBER OF 7 SOLE VOTING POWER
SHARES 532,500
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 532,500
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
532,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 3
This Amendment No. 2 to Schedule 13D (this "Amendment") amends and
supplements the Amendment No. 1 to Schedule 13D filed by Lee Global Energy Fund,
L.P. (the "Fund"), by furnishing the information set forth below. Unless set
forth below, all previous Items are unchanged.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended by the addition of the following paragraph:
The Fund acquired an additional 24,500 Shares from October 6, 1997 to April
3, 1998, in open market transactions for an aggregate purchase price of
$87,915.30. The 24,500 Shares were acquired utilizing working capital of the
Fund.
Item 4. Purpose of Transaction.
Item 4 is hereby amended in its entirety as follows:
The Fund initially acquired the Shares in the ordinary course of business
for investment purposes. After reviewing the Company's performance, the
Reporting Person is of the opinion that the Shares are currently undervalued.
The Reporting Person believes that the Board of Directors and management of the
Company have not during the last two years actively managed the Company and its
assets and have not taken action which the Reporting Person believes would
maximize long-term stockholder value consistent with the best interests of the
Company's stockholders. Although the Company has previously disclosed that it is
evaluating certain strategic alternatives and has hired Dain Rauscher
Corporation to assist in these endeavors, the Reporting Person believes that the
Company has not actively pursued all alternatives available in order to maximize
the long-term value of the Company for all stockholders and may have instead
embarked on a course of action which the Reporting Person believes might not be
in the best interests of all stockholders. At various times, the Reporting
Person has requested meetings or otherwise attempted to communicate with the
Company and/or its management to discuss the various alternatives which the
Reporting Person believes should be considered. In furtherance thereof, the
Reporting Person sent a letter to the Board of Directors of the Company on July
31, 1997 (a copy of which was previously filed as Exhibit 7.1 to Amendment No. 1
to Schedule 13D and is incorporated herein by reference). No meeting occurred
with the Company and its management following this letter and several other
requests for meetings have not been granted by the Company.
As a significant investor in the Company, the Fund has engaged and may
continue to engage in communications with one or more stockholders and/or one or
more members of the Company's Board of Directors and management regarding the
Company, its operations and its prospects. With respect to communications with
other stockholders, the Fund has, through these discussions, determined and/or
confirmed that certain of these stockholders share the same concerns as the
Reporting Person with respect to the Company and its management. In particular,
during the last sixty days, the Fund has had a number of discussions with other
significant stockholders regarding their concerns about the Company. As a result
of these communications, on April 9, 1998, the Reporting Person sent an
additional letter to the various members of the Board of Directors regarding its
concerns (a copy of which letter is being filed as Exhibit 7.2 hereto and is
incorporated herein by reference).
In the event that the Reporting Person believes that the Board of Directors
and management of the Company do not promptly take meaningful actions to
actively manage the Company and its assets and to consider alternatives which
would maximize the long-term value of the Company consistent with its fiduciary
duties and in the best interests of the
<PAGE> 4
Company and its stockholders, the Reporting Person may request representation
on the Company's Board of Directors either immediately or in connection with the
next annual meeting of stockholders. The Reporting Person reserves the right,
subject to applicable law, to seek proxies, consents and/or ballots in support
of any such nominees or an entire slate of directors at the annual meeting of
stockholders or a subsequent meeting of stockholders or otherwise, or in support
of or against other matters that may come before the Company's stockholders for
their vote or consent. The Reporting Person also reserves the right to consider
taking any other actions which could result in a reconstitution of the Board of
Directors and management of the Company in the event the existing Board of
Directors does not cause the Company to evaluate such alternatives. In addition,
the Reporting Person may as a part of any such plan or as an alternative
consider purchasing additional Shares, commencing a tender offer for some or all
of the Shares, or entering into arrangements with third parties who may be
interested in joining with the Reporting Person to acquire control of the
Company through a proxy contest, tender offer or otherwise.
In furtherance of the foregoing, on April 9, 1998, the Reporting Person
requested from the Company certain information (a copy of which letter is being
filed as Exhibit 7.3 hereto and is incorporated herein by reference).
The Reporting Person may, consistent with applicable legal standards,
continue communicating with other stockholders of the Company to determine if
they share the same concerns as the Reporting Person with respect to its desire
to have changes made in the constitution of the Board of Directors and/or its
management or other changes necessary to effectuate a consideration of all
alternatives to maximize long-term stockholder value.
As part of its review process, the Reporting Person also is currently
exploring and may explore from time to time in the future, a variety of plans
and proposals with respect to the Company which could relate to or result in one
or more such actions which consist of the following: (a) the acquisition of
additional securities of the Company, or the disposition of securities of the
Company, (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation of the Company or involving the Company or any of
its subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) a change in the present Board of
Directors or management of the Company; (e) a material change in the present
capitalization or dividend policy of the Company; (f) any other material change
in the Company's business or corporate structure; (g) changes in provisions in
the Company's certificate of incorporation or bylaws; (h) causing a class of
securities of the Company 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 Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Act; or (j) any action similar to any of those
enumerated above.
There can be no assurance that the Reporting Person will develop any plans
or proposals with respect to any of the foregoing matters. Any strategies that
the Reporting Person may pursue will depend upon a number of factors, including,
without limitation, current and anticipated future trading prices for the
Shares, the financial condition, results of operations and prospects of the
Company and its businesses, the relative attractiveness of alternative business
and investment opportunities, the actions of the management and the Board of
Directors of the Company, and general economic, market and industry conditions.
Depending upon the foregoing factors, the Reporting Person may also sell all or
part of the Shares owned by it, or buy additional Shares in the open market or
privately negotiated transactions at any time without further prior notice.
Except as set forth above, the Reporting Person has no plans or proposals
with respect to any of the matters set forth in paragraphs (a) through (j) of
Item 4 of Schedule 13D.
<PAGE> 5
Item 5. Interest in Securities of the Issuer.
(a) - (b) The Fund beneficially owns 532,500 Shares (which is approximately
10.7% of the shares of Common Stock outstanding on March 17, 1998 based on
information reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 filed with the Securities and Exchange Commission). The
Fund has sole voting and dispositive power with respect to the Shares.
(c) In the past sixty days, the only transactions in the Shares by the Fund
were (i) the purchase of 5,000 Shares on March 11, 1998 for a purchase price per
share of $3.6875, (ii) the purchase of 7,000 Shares on April 1, 1998 for a
purchase price per share of $3.5625, (iii) the purchase of 2,000 Shares on April
2, 1998 for a purchase price per share of $3.5625, and (iv) the purchase of
13,500 Shares on April 3, 1998 for a purchase price per share of $3.7639. The
transactions were effected through a registered broker dealer on the open
market.
(d) The Fund does not know any other person who has the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale
of, any Shares beneficially owned by the Fund.
(e) Not applicable.
Item 7. Material to be filed as Exhibits.
Item 7 is hereby amended in its entirety as follows:
7.1 Letter dated July 31, 1997, from the Fund to the Company's Board of
Directors (previously filed as Exhibit 7.1 to Amendment No. 1 to Schedule 13D).
7.2 Letter dated April 9, 1998, from the Fund to the Company's Board of
Directors.
7.3 Letter dated April 9, 1998, from the Fund to the Company's Corporate
Secretary.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: April 10, 1998
LEE GLOBAL ENERGY FUND, L.P.
By: Gralee Partners, L.P., its general partner
By: Gralee Capital Corp., its general partner
By: /s/ G. THOMAS GRAVES, III
--------------------------------------
Name: G. Thomas Graves, III
Title: President
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
7.1 Letter dated July 31, 1997, from the Fund to the Company's Board of
Directors (previously filed as Exhibit 7.1 to Amendment No. 1 to
Schedule 13D).
7.2 Letter dated April 9, 1998, from the Fund to the Company's Board of
Directors.
7.3 Letter dated April 9, 1998, from the Fund to the Company's Corporate
Secretary.
</TABLE>
<PAGE> 1
[GRALEE CAPITAL CORP. LETTERHEAD]
April 9, 1998
VIA FEDERAL EXPRESS
Board of Directors
Toreador Royalty Corporation
530 Preston Commons West
8117 Preston Road
Dallas, Texas 75225
To the Board of Directors of Toreador Royalty Corporation:
On behalf of Lee Global Energy Fund, L.P., a holder in excess of 10%
of the issued and outstanding shares of Toreador Royalty Corporation (the
"Company"), we are writing to you to express our concerns regarding the
management of the Company and its current course of conduct with respect to the
Company and its assets and operations.
Since September 1997, the Company has retained Dain Rauscher
Corporation (or its predecessor) as an advisor to consider strategic
alternatives available to the Company. In various filings since such date, the
Company has disclosed this continued engagement and, in fact, on April 1, 1998,
again issued a press release stating that ". . . it [the Company] continues to
consider a variety of strategic alternatives resulting from its initial effort
to develop a plan to maximize value for all Toreador shareholders." As of the
date hereof, we are not yet clear as to what exactly these alternatives might
be and when exactly the Company will advise its stockholders with respect to
what these alternatives might be.
In this regard, we have previously addressed our concerns (see our
letter of July 31, 1997) that the Board of Directors may not be considering all
alternatives that may be available and may instead be embarking on a single
course of action or no definitive course of action which might not be
consistent with the Board of Director's fiduciary duties or in the best
interests of the Company and its stockholders. In order to gather more
information regarding the meaning of this disclosure and the Company and its
Board of Director's current intention, we previously requested additional
information regarding these matters. Unfortunately, our legitimate requests to
meet with management and discuss the alternatives being considered were not
satisfied.
<PAGE> 2
We can only surmise that the Company is considering a potential sale.
As we detailed in our letter to you on July 31, 1997, given the Company's
recent management of its assets and operations and given the current market
conditions for oil and gas assets, we do not believe it is an appropriate time
to effectuate a sale of the Company and to narrow the Company's focus on only
one alternative. Instead, we believe a number of different alternatives should
be considered. We would like the opportunity to discuss these alternatives
with the Company and its management. We would like each of them (and you) to
consider what the best interests of the stockholders might be. A sale of the
Company at a time when oil prices are at their lowest point in nine years does
not seem consistent with what the stockholders would want. We would request
that the Board of Directors not make a hasty decision to alleviate the need to
hire someone capable of providing effective day-to-day management for the
Company. We do not believe that part-time management is capable of effectively
managing the corporate assets. In addition, we do not see, and management has
not presented any, downside that could result from exploring all alternatives.
We would note that management of the Company (including the existing
Board of Directors) prevailed in a proxy contest in 1995 as a result of
statements suggesting that the Company would actively manage its mineral
interests to increase reserves. No such increase has occurred. It was also
suggested at such time that the Company would take action to maximize
stockholder value. No significant increase in market value has resulted to the
stockholders. The Committee to Maximize Stockholder Value suggested that the
Company implement a share repurchase program. Although management suggested in
1995 that this was unwarranted, it recently implemented such a program. While
we do not disagree, given asset values, available cash and stock prices, that
stock repurchases are appropriate, we do not believe management's vacillation
on this issue demonstrates a clear vision for the Company.
We will file Amendment No. 2 to Schedule 13D with the Securities and
Exchange Commission tomorrow, which will detail our current plans and proposals
with respect to our investment and the Company. We would like the opportunity
to avoid any potential "show down" with the Board of Directors and management.
As a result, we would request the opportunity to discuss these matters with the
Board of Directors or its representatives as soon as possible. In particular,
we would like the Board of Directors to consider appointing our designated
representatives to the Board of Directors as soon as possible and, in any
event, in connection with the next annual meeting of stockholders. We think a
similar opportunity should be available to other significant stockholders.
We believe a continued ignoring of our legitimate concerns is neither
in your best interests nor in the best interests of the Company and its
stockholders. Certainly, we do not believe that it is consistent with making
informed business judgments. We believe the failure to actively manage the
trust that the stockholders have given you can not continue.
<PAGE> 3
We would request your prompt response regarding this critical issue to
all stockholders of the Company.
Yours very truly,
LEE GLOBAL ENERGY FUND, L.P.
By: Gralee Partners, L.P., its general
partner
By: Gralee Capital Corp., its
general partner
By: /s/ G. THOMAS GRAVES, III
---------------------------
Name: G. Thomas Graves, III
Title: President
<PAGE> 1
[GRALEE CAPITAL CORP. LETTERHEAD]
April 9, 1998
VIA HAND DELIVERY AND CERTIFIED MAIL,
RETURN REQUEST NO. P-912-875-119
Toreador Royalty Corporation
530 Preston Commons West
8117 Preston Road
Dallas, Texas 75225
Attention: Corporate Secretary
Re: Demand for Stock List and Books and Records
Dear Sirs:
Pursuant to Section 220 of the Delaware General Corporation Law, the
undersigned hereby demands the right after five business days from the date
hereof, during the usual hours of business, to inspect the following items
contained in the books and records of Toreador Royalty Corporation (the
"Company"), and to make copies or extracts therefrom:
1. A complete record or list of stockholders of the Company,
certified by its transfer agent, and a computer disk in a specified word
processing format containing the same list, in each case showing the name and
address (including the zip code) of each stockholder and the number of shares
of stock registered in the name of each stockholder, as of a recent date and,
to the extent now or subsequently available, as of the record date for the
Company's next annual meeting of stockholders (the "Annual Meeting").
2. All transfer sheets in the possession of the Company or its
transfer agent showing changes in the list of stockholders of the Company
referred to above since the date of that list and all participant listings of
any depositary or nominee since the date of that list.
3. All information in the Company's possession or control or
which can reasonably be obtained from any central certificate depository
system, as of the date of the list referred to above, concerning the number and
identity of the actual beneficial owners of the Company common stock, including
a breakdown of any holdings in the name of Cede & Co. and other similar
nominees, including depositories, banks and brokers.
<PAGE> 2
4. All omnibus proxies signed by depositaries and nominees
relating to shares of common stock to be voted.
5. All engagement letters or other agreements or arrangements
entered into by the Company with any investment banker, investment banking firm
or any other individual or entity performing similar functions during the last
three years, including without limitation Dain Rauscher Corporation, including
a description of the services to be performed.
6. A copy of any materials prepared in connection with the
engagement or advice contemplated by number 5 above, including any bidding
rules or any other instructions or guidelines with respect thereto.
7. A copy of any schedule of events or tasks prepared in
connection with the engagement or advice contemplated by number 5 above.
8. Minutes of the meetings of the Company's Board of Directors or
any committee of the Board of Directors (or any reports in lieu of minutes) for
the last three years.
9. Minutes of all meetings of stockholders for the last three
years.
10. All evidence of communications (including letters, reports,
proposals or other documents) received by the Company, management or its Board
of Directors or members thereof, from the Company's stockholders within the
last three years.
11. All documents, reports or proposals (including reports
prepared for submission to the Board of Directors by any investment banker,
investment banking firms or any other individual or entity performing similar
functions) relating to any proposed or contemplated (i) equity investment in
the Company, (ii) acquisition of the Company or any assets thereof, (iii)
financing arrangements for the Company, and (iv) disposition or liquidation of
the Company, including a list of all persons involved, directly or indirectly,
in such transactions for the last three years.
12. A list of the Company's executive officers and directors for
each of the last three years, together with a schedule of all direct and
indirect compensation or other benefits and prerequisites, including car
allowances, club memberships and reimbursements paid to or on behalf of such
persons.
13. All employment or similar contracts between any of the persons
specified in number 12 above for the periods indicated.
14. All documents or agreements to which the Company is a party
that may contain provisions regarding a change of control of the Company or
accelerated payments in the event of a change of control of the Company.
<PAGE> 3
15. Any reports, opinions or appraisals of any of the Company's
assets or business or any segment thereof prepared internally or externally
during the last three years.
16. Any documents prepared during the last three years containing
or describing any of the Company's long or short term business plans.
17. All documents, reports or proposals prepared during the last
three years containing or describing any of the Company's reasons or rationales
for the sale of the Company.
18. Any proposals or inquiries (whether formal or informal)
received by the Company or any member of the Board of Directors with respect to
the equity investment in the Company or purchase of any of its businesses or
assets during the last three years.
19. Any document setting forth the terms or describing any
transaction, or series of similar transactions, during the last three years, or
any currently proposed transaction or series of similar transactions, to which
the Company or any of its subsidiaries was or is a party, in which the amount
involved exceeds $5,000 and in which any director or officer of the Company
had, or will have, a direct or indirect interest.
20. Copies of all stock option plans of the Company.
21. Copies of all director and officer insurance policies.
22. A copy of the Certificate of Incorporation, as amended, of the
Company.
23. A complete copy of the bylaws of the Company, including all
amendments thereto.
The undersigned further requests the Company to furnish the following
information:
1. The record date of the next Annual Meeting of the
stockholders;
2 The date of the next Annual Meeting of the stockholders, and
the dates of any anticipated or scheduled special meeting of
the stockholders;
3 The number of directors to be elected at the next Annual
Meeting, and the names and addresses of any nominees or
proposed nominees for these directorships; and
4. A list of all other matters to be acted on at the next Annual
Meeting.
<PAGE> 4
The undersigned will bear the reasonable costs incurred in connection
with the inspection and with the production of the requested information.
The undersigned affirms under penalty of perjury that the purpose of
this demand for the information is to permit the undersigned to communicate
with other stockholders of the Company on matters relating to their interest as
stockholders, including possibly soliciting proxies from the stockholders to be
voted at the Company's next Annual Meeting for the election of directors to be
nominated by the undersigned and for all other proposals presented at such
meeting.
To the extent any of the information to be rendered to the undersigned
may be defined confidential, the undersigned would request that such
information be designated as such.
The undersigned hereby authorizes Haynes and Boone, LLP, its partners
and employees, and any other persons to be designated by them or by the
undersigned, acting singly or in combination, to conduct, as the undersigned's
agents, the inspection and copying herein requested.
Unless the undersigned is otherwise notified in writing, at 9 a.m. on
April 16, 1998, the undersigned will visit the Company's principal office in
Dallas, Texas during the usual hours of business to inspect the stock list,
books and records requested in this demand. If, within five business days
after the date hereof, the Company has not responded to this demand in a manner
satisfactory to the undersigned or made such information available in
accordance with the preceding sentence, the undersigned will conclude that this
demand has been refused, and other proper steps will be taken to exercise the
right to conduct the requested inspection and to obtain the requested
information.
Please acknowledge receipt of this letter by signing the enclosed copy
of this letter in the place indicated below and returning it to the person
delivering this letter.
Very truly yours,
LEE GLOBAL ENERGY FUND, L.P.
By: Gralee Partners, L.P., its general partner
By: Gralee Capital Corp., its general partner
By: /s/ G. THOMAS GRAVES, III
------------------------------------------
Name: G. Thomas Graves, III
Title: President
Receipt of a signed and notarized letter
is hereby acknowledged on behalf of
Toreador Royalty Corporation.
By:
--------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
