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 |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d(2)) |
| x | Definitive Information Statement |
Banyan Rail Services Inc.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
| x | No fee required |
| ¨ | Fee computed on table below per Exchange Act Rules 14c-f(g) 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 Registrations Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
2255 Glades Road
Suite 111-E
Boca Raton, Florida 33431
August 21, 2013
Dear Fellow Stockholders:
Our board of directors and the holders of a majority of our outstanding shares have approved amendments to Banyan Rail’s certificate of incorporation to effectuate a one-for-five reverse stock split of Banyan’s common stock. Our board believes that the reverse split is in the best interests of Banyan and our stockholders. We believe the increased per share market price of our common stock resulting from the reverse stock split may increase the marketability and liquidity of our common stock.
The attached information statement contains a more detailed description of the amendment to our certificate of incorporation and I encourage you to read it thoroughly.
Sincerely,
Gary O. Marino
Chairman and Chief Executive Officer
Banyan Rail Services Inc.
Information Statement
Important Notice Regarding the Availability of this Information Statement
This information statement is available on the Internet at http://banyan.investorroom.com.
General information
This information statement is being furnished to our stockholders for informational purposes only pursuant to Section 14(c) of the Securities Exchange Act of 1934 (Exchange Act), and the related rules and regulations. Our board of directors and the holders of a majority of our outstanding shares of common stock have approved amendments to our certificate of incorporation to effectuate a one-for-five reverse stock split of our common stock. Accordingly, your consent is not required and is not being solicited in connection with this action.We are not asking you for a proxy and you are requested not to send us a proxy.
Our board of directors has fixed the close of business on August 16, 2013 as the record date for the determination of stockholders who are entitled to receive this information statement. There were 4,430,724 shares of our common stock issued and outstanding on the record date. We anticipate that this information statement will be mailed on or about August 21, 2013 to all stockholders of record as of the record date.
Amendments to Our Certificate of Incorporation
Our board of directors and the holders of a majority of our outstanding shares have approved an amendment to our certificate of incorporation to effectuate a one-for-five reverse stock split of our common stock by amending Article Third of our certificate of incorporation to add a new subsection (e) as follows:
| (e)Reverse Stock Split. Each outstanding share of Common Stock as of (the “Split Date”) shall be exchanged for 1/5 of a share of Common Stock. Each certificate that prior to the Split Date represented shares of Common Stock shall then represent the number of shares of Common Stock into which such shares are split hereby; provided, however, that each person holding of record a stock certificate or certificates that prior to the Split Date represented shares of Common Stock shall receive, upon surrender of each such certificate or certificates, a new certificate or certificates representing the number of shares of Common Stock to which such person is entitled. No new certificates representing fractional shares will be issued. Instead, each share of stock that would otherwise be converted into fractional shares as a result of the stock split will be rounded to the nearest whole share. |
| 1 |
The Stock Split
After the stock split, the per share market price of our common stock will likely increase and the public float of our common stock will decrease. This increased per share market price may increase the attractiveness of our common stock to potential investors and the financial community. Of course we cannot guarantee that our stock price will increase in proportion to the split (or at all).
The number of Banyan’s authorized shares of common stock will not be affected by the stock split. Thus, the ability of the board of directors to issue authorized and unissued shares of common stock without further stockholder action will significantly increase. Our board of directors believes the availability of additional authorized but unissued shares of common stock will provide Banyan with the flexibility to issue stock for a variety of corporate purposes, including corporate financing, public or private offerings of our stock and future acquisitions. We currently intend to issue shares of common stock to raise capital to meet the company’s financial obligations, and our officers and directors may elect to participate in any capital raise. Other than for funding possible acquisitions and raising capital, our board has no plans, proposals, agreements or understandings, written or otherwise, for any transaction that would require the issuance of additional shares of common stock.
The stock split may not have any of the desired consequences described above. The liquidity of our common stock could be affected adversely by the reduced number of shares outstanding after the stock split. Although our board believes that a higher stock price may help generate investor interest, there is no guarantee that the stock split will result in a per share price that is attractive to investors. Further, the decreased liquidity that may result from having fewer shares outstanding may not be offset by increased investor interest in our common stock. In addition, the issuance in the future of additional shares may have the effect of diluting the earnings per share and the book value per share, as well as the stock ownership and voting rights of currently outstanding shares of common stock.
Effect of the Stock Split
After the stock split, each stockholder will own a reduced number of shares of Banyan’s common stock. Without taking into account any fractional shares that will be rounded to the nearest whole share as described below, based on the number of shares outstanding as of the record date, there will be approximately 886,145 shares of common stock issued and outstanding after the stock split. The stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership in the company, except for adjustments that may result from the treatment of fractional shares. The proportionate voting rights and other rights and preferences of our stockholders will not be affected by the stock split (other than rounding in lieu of fractional shares).
The reverse stock split will reduce the number of shares of common stock issuable upon conversion of our preferred stock and upon exercise of our outstanding stock options in proportion to the exchange ratio of one-for-five and will affect a proportionate increase in the exercise price of the outstanding stock options. The number of shares of common stock issuable upon exercise of outstanding stock options will be rounded up or down to the nearest whole share and no cash payment will be made for any fractional shares resulting from the stock split.
| 2 |
The conversion of the shares of our common stock under the stock split will occur on the effective date of the stock split, or split date, at a rate of one new share for every five existing shares of our common stock.
Fractional Shares
No fractional shares will be issued as a result of the stock split. Instead, we will round each one-half share or greater resulting from the split up to the nearest whole share. Any less than one-half share of common stock resulting from the stock split will be rounded down to the nearest whole share.
Important Federal Income Tax Consequences of the Stock Split
The following description of the federal income tax consequences of the reverse stock split is based on existing U.S. federal income tax law, which may change, even retroactively. Our analysis is not binding on the Internal Revenue Service, or IRS, and we cannot guarantee that the IRS or the courts will not adopt a position that is contrary to the statements contained in this information statement. This disclosure does not discuss all aspects of federal income taxation which may be important to you in light of your individual circumstances, and many stockholders may be subject to special tax rules. In addition, this information statement does not discuss any state, local, foreign, or other tax considerations. You should consult your tax advisor as to the particular federal, state, local, foreign, and other tax consequences, in light of your specific circumstances.
Our analysis also assumes that you are one of the following: (1) a citizen or resident of the United States; (2) a corporation or other entity taxable as a corporation created or organized under U.S. law (federal or state); (3) an estate the income of which is subject to U.S. federal income taxation regardless of its sources; (4) a trust if a U.S. court is able to exercise primary supervision over administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust; or (5) any other person whose worldwide income and gain is otherwise subject to U.S. federal income taxation. Our conclusions also assume that you have held and will continue to hold your shares as capital assets for investment purposes under the tax code.
We believe that the reverse stock split should be treated as a tax-free “recapitalization” for federal income tax purposes. This should result in no material federal income tax consequences to Banyan. If you continue to hold new shares after the stock split, you should not recognize any gain or loss in the split, and you should have the same adjusted tax basis and holding period in your new stock as you had in your stock immediately prior to the stock split.
As stockholders are not receiving cash in lieu of any fractional share interest, but instead fractional shares are being rounded up or down to the nearest whole share, it is unlikely that stockholders would be treated as if Banyan had redeemed any fractional share interest. It is therefore unlikely that rounding up fractional shares would result in any gain or loss as a result of the reverse stock split. Banyan should not recognize gain or loss as a result of the stock split.
| 3 |
Timing of the Reverse Stock Split
The reverse stock split will become effective on the day of filing the certificate of amendment to our certificate of incorporation with the Delaware Secretary of State. Pursuant to Rule 14c-2 under the Exchange Act, the proposed amendment to our certificate of incorporation may not be filed until twenty calendar days after the mailing of this information statement to our stockholders. We anticipate filing the amendment immediately following the expiration of the twenty-day waiting period. However, our board of directors retains discretion under Delaware law not to implement the amendments. If our board exercises this discretion, the reverse stock split will not be affected.
Approval of the Amendments to Our Certificate
On August 5, 2013, our board of directors, believing it to be in the best interests of Banyan and our stockholders, approved the proposed amendment to our certificate of incorporation and recommended adoption of the amendment to our stockholders. Delaware law permits the holders of a majority of our outstanding shares to approve the amendment by written consent without holding a meeting. To avoid the significant costs and delays associated with holding a meeting, our board elected to seek approval of the amendment by written consent. On August 5, 2013, the holders of an aggregate of 2,359,876 shares of our common stock, which represented approximately 53.3% of the shares entitled vote on the amendment to the certificate, consented in writing without a meeting to the amendments. As a result, no further votes are required.
Stock Certificates
Stockholders will not be required to exchange their certificates as a result of the stock split. However, stockholders may exchange certificates if they so choose. Stockholders desiring new certificates representing the shares of the company to which they are entitled after the stock split may submit their existing stock certificates to our transfer agent, Computershare Trust Company, 250 Royall Street, Canton, Massachusetts 02021. Any stock certificates existing before the split date and not exchanged will automatically represent the number of shares to which the stockholder is entitled after the split date.
New Trading Symbol
Our common stock is currently quoted on the OTC Bulletin Board, or OTCBB, under the symbol “BARA.OB.” After the effective date of the amendment to the certificate of incorporation, we expect that our common stock will continue to be reported on the OTCBB under the same symbol.
| 4 |
Security Ownership of
Management and Significant Stockholders
The following table lists the stock ownership of our directors, executive officers and significant stockholders as of August 16, 2013.
| Name and Address(1) | Common Stock | Stock Options(2) | Preferred Stock(3) | Total | Percentage(4) | |||||||||||||||
Gary O. Marino(5) 2255 Glades Road, Boca Raton, FL 33431 | 1,936,132 | 50,000 | 1,728,667 | 3,714,799 | 59.8 | % | ||||||||||||||
Paul S. Dennis(6) 16330 Vintage Oaks Lane, Delray Beach, FL 33484 | 423,744 | 50,000 | 286,000 | 759,744 | 15.9 | % | ||||||||||||||
| Bennett Marks 2255 Glades Road, Suite 111-E Boca Raton, FL 33431 | — | 50,000 | — | 50,000 | 1.1 | % | ||||||||||||||
| Donald D. Redfearn 2255 Glades Road, Suite 111-E Boca Raton, FL 33431 | — | 25,000 | — | 25,000 | 0.6 | % | ||||||||||||||
Jon Ryan(7) 2255 Glades Road Boca Raton, FL 33431 | — | 25,000 | — | 25,000 | 0.6 | % | ||||||||||||||
Greg Smith(8) 2016 Kingspointe Drive Chesterfield, MO 63005 | 166,667 | — | 100,000 | 266,667 | 5.9 | % | ||||||||||||||
Andy C. Lewis(9) 868 South Allis Rd. Wilmar, AR 71675 | 187,084 | — | 100,000 | 287,084 | 6.3 | % | ||||||||||||||
| All directors, and executive officers as a group | 2,713,627 | 200,000 | 2,214,667 | 5,128,294 | 74.9 | % | ||||||||||||||
Footnotes on next page
| 5 |
(1) Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power over the shares of stock owned.
(2) Shares of common stock the beneficial owners have the right to acquire through stock options that are or will become exercisable within 60 days.
(3) Shares of common stock into which shares of series A, B or C preferred stock held by the beneficial owner are convertible.
(4) Assumes the exercise of options, conversion of series A, B or C preferred stock into common stock by that beneficial owner, but no others.
(5) All shares of common stock and preferred stock are held by Banyan Holdings LLC. Gary O. Marino, the Company’s Chairman and Chief Executive Officer, is the President of Banyan Holdings LLC.
(6) 355,994 shares of common stock and all shares of preferred stock are owned by Paul S. Dennis, Trustee under the Paul S. Dennis Trust Agreement dated August 9, 1983, as modified.
(7) 25,000 options issued on July 26, 2011. The options vest in three equal annual installments beginning July 26, 2012 and expire July 26, 2016.
(8) All shares of common stock and preferred stock are held by the Stephanie G. Smith Trust u/a dated December 20, 1995, as amended, Stephanie G. Smith and Greg Smith, Trustees.
(9) All shares of common stock and preferred stock are held by the Andy C. Lewis and Michelle D. Lewis Revocable Trust.
Other Matters
Cost of this Information Statement
The entire cost of furnishing this information statement will be borne by Banyan. We will request brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this information statement to the beneficial owners of our common stock held of record by them.
Appraisal Rights
There are no appraisal rights for any stockholder who dissents from approval of the amendment to our certificate of incorporation under our governing documents. Also, we have concluded that there are no appraisal rights for any stockholder who dissents from approval of the amendment to our certificate of incorporation under Delaware corporation law. We refer you, however, to §262 of Delaware general corporation law which proscribes the rights of stockholders to dissent. There may be other rights or actions under state law for stockholders who are aggrieved by reverse stock splits generally. Although the nature and extent of these rights or actions are uncertain and may vary depending upon the facts or circumstances, stockholder challenges to corporate action in general are related to the fiduciary responsibilities of corporate officers and directors and to the fairness of corporate transactions.
| 6 |
Interests of Certain Persons in or Opposition to Matters to be Acted Upon
None of our officers or directors or their respective affiliates has any substantial interest in the amendment to our certificate of incorporation. Our directors all support and voted in favor of the amendments.
Where You Can Find More Information
We are subject to the information and reporting requirements of the Exchange Act and in accordance with the Exchange Act, we file periodic reports, such as our annual report, and other information with the SEC relating to our business, financial statements and other matters. You may read and copy any document that we file at the public reference facilities of the SEC in Washington, DC. You may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available on the SEC’s website at www.sec.gov.
By Order of the Board of Directors
Gary O. Marino
Chairman and Chief Executive Officer
| 7 |