FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CHEMFIX TECHNOLOGIES, INC.
CENTRAL INDEX KEY:
STANDARD INDUSTRIAL CLASSIFICATION:
IRS NUMBER: 72-0845259
STATE OF INCORPORATION: DELAWARE
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: PRE14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 0-12258
FILM NUMBER:
BUSINESS ADDRESS:
STREET 1: 3500 N CAUSEWAY BLVD., SUITE 1280
CITY: METAIRIE
STATE: LA
ZIP: 70002
BUSINESS PHONE: 504-831-3600
MAIL ADDRESS:
STREET 1: 3500 N CAUSEWAY BLVD., SUITE 1280
CITY: METAIRIE
STATE: LA
ZIP: 70002
FORMER COMPANY:
FORMER CONFORMED NAME:
DATE OF NAME CHANGE:
FORMER COMPANY:
FORMER CONFORMED NAME:
DATE OF NAME CHANGE:
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
CHEMFIX TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other
than Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
The filing fee of $100.00 was calculated based on a
$500,000.00 purchase price for the sale of assets. This
price was determined based upon the Company's estimate of the
amount of the Deferred Portion of the Purchase Price for the
Assets will be on ____________________, 1999.
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously by written preliminary materials.
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / 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 Registration Statement No.: 14A (Prelim.
Proxy Statement) -------------------
3) Filing Party: -------------------------------
4) Date Filed: ----------------------------------
CHEMFIX TECHNOLOGIES, INC.
3500 N. Causeway Blvd., Suite 1280
Metairie, Louisiana 70002
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NOTICE OF 1998 SPECIAL MEETING OF SHAREHOLDERS
--------------
Dear Shareholder:
The Special Meeting of Shareholders (the "Meeting") of Chemfix
Technologies, Inc. (the "Company") will be held at the Company's
offices at 3500 N. Causeway Blvd., Suite 1280, Metairie, Louisiana on
June 9, 1998, at 10:00 A.M., to:
(1) approve the sale of substantially all of the assets of the
Company through the sale of the business and certain assets
(the "Sale of Assets") of Atlantic Petroleum Technologies
of Louisiana, Inc. ("Atlantic Petroleum"), a Louisiana
Corporation and a wholly-owned subsidiary of the Company;
and
(2) act upon such other matters as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on May 6,
1998 as the record date for determining shareholders of the Company
entitled to notice of and to vote at the Meeting.
By Order of the Board
of Directors
Steven N. Siegler
Secretary
May 25, 1998
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Meeting, please sign and
return the accompanying proxy card.
CHEMFIX TECHNOLOGIES, INC.
3500 N. Causeway Blvd., Suite 1280
Metairie, Louisiana 70002
(504) 831-3600
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PROXY STATEMENT
FOR
1998 SPECIAL MEETING OF SHAREHOLDERS
--------------
GENERAL INFORMATION
Proxies in the form enclosed are solicited by the Board of
Directors (the "Board of Directors") of Chemfix Technologies, Inc. (the
"Company") for use at the 1998 Special Meeting of Shareholders (the
"Meeting") scheduled to be held on June 9, 1998 at 10:00 A.M., and at
any adjournments or postponements thereof. At the Meeting,
shareholders will be asked to approve the sale of the business and
certain assets of the Company's sole operating subsidiary, Atlantic
Petroleum Technologies of Louisiana, Inc., a Louisiana corporation
("Atlantic Petroleum"), to APTL, L.L.C. a Louisiana limited liability
company ("APTL"), pursuant to the terms and conditions of the Asset
Purchase Agreement between the Company and APTL dated as of April 24,
1998 (the "Asset Purchase Agreement") a copy of which is attached as
Annex A hereto (the "Proposed Transaction").
All properly executed proxies received prior to or at the Meeting
will be voted. If a proxy specifies how it is to be voted, it will be
so voted. If no specification is made, it will be voted to approve the
Proposed Transaction, and, if other matters properly come before the
Meeting, in the discretion of either of the persons named in the proxy.
All information contained in this Proxy Statement has been
supplied by the Company, except for certain information contained in
this Proxy Statement concerning APTL, which has been supplied by APTL.
No persons have been authorized to give any information or to make
any representation other than those contained in this Proxy Statement
in connection with the solicitations of proxies hereby and, if given or
made, such information or representation must not be relied upon as
having been authorized by the Company or any other person.
Shares Entitled to Vote
Holders of record of all of the outstanding shares of Common Stock
of the Company (the "Common Stock") at the close of business on May 6,
1998 (the "Record Date") are entitled to notice of and to vote at the
Meeting. On the Record Date, there were 6,825,855 shares of Common
Stock, $.01 par value per share, outstanding, each entitled to one
vote. The Notice of Meeting, this Proxy Statement and the accompanying
proxy card are being mailed on or about May 25, 1998 to all holders of
Common Stock on the Record Date.
Atlantic Petroleum has pledged 2,112,500 shares of Common Stock to
Ally Capital Corporation ("Ally") pursuant to a loan and collateral
pledge of $100,000.00 in April, 1997. Atlantic Petroleum has executed
a stock power granting to Ally the right to vote such shares in the
event of a default by Atlantic Petroleum under such loan agreement. If
Ally provides Atlantic Petroleum with a notice of default, such shares
will then be deemed to be outstanding Common Stock and may increase the
total outstanding shares of Common Stock outstanding as of the Record
Date to 8,938,355.
Shareholder Vote Required for Proposals
A majority of the outstanding shares of Common Stock entitled to
vote, represented in person or by proxy, is required for a quorum at
the Meeting. The approval of the Sale of Assets requires the
affirmative vote of a majority of the outstanding shares of Common
Stock of the Company entitled to vote thereon.
Proxies and Revocation of Proxies
Execution and delivery of a proxy card will not affect a
shareholder's right to attend the Meeting and vote in person. A
shareholder in whose name shares of Common Stock are registered as of
the Record Date and who has given a proxy may revoke it at any time
before it is voted by executing and delivering a written revocation to
the Secretary of the Company, by presentation of a later dated proxy or
by attending the Meeting and voting by ballot (which has the effect of
revoking the prior proxy). Attendance at the Meeting, however, will
not in and of itself revoke a proxy.
A shareholder who is a beneficial owner, but not a registered
owner, of Common Stock as of the Record Date, cannot vote his or her
shares of Common Stock except by the shareholder's broker, bank or
nominee in whose name the shares are registered executing and
delivering a proxy on such shareholder's behalf or such shareholder
attending the Meeting with a proxy or other authorization to vote from
the registered owner and voting.
Cost of Solicitation
Brokers, banks, and other nominees will be reimbursed for
out-of-pocket and other reasonable clerical expenses incurred in
obtaining instructions from beneficial owners of the Common Stock. In
addition to the solicitation by mail, solicitation of proxies may, in
certain instances, be made personally or by telephone by directors,
officers and a few regular employees of the Company. It is expected
that the expense of such special solicitation will be nominal. All
expenses incurred in connection with this solicitation will be borne by
the Company.
Available Information
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by the Company
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Office
at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material also can be obtained from the Public Reference Section
of the Commission, Washington, D.C. 20549 at prescribed rates.
Incorporation of Certain Materials
The Company's Annual Report on Form 10-K for the year ended August
31, 1997, and the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1997, previously filed with the Commission
(Commission File No. 0-12258), are hereby included in this Proxy
Statement. The Company has filed with the Commission as exhibits to
this Proxy Statement, the Asset Purchase Agreement and the Employment
Agreements of certain officers and employees of Atlantic Petroleum, and
such documents are hereby included in this Proxy Statement.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Proxy Statement and prior to the date of the Meeting shall be deemed
incorporated by reference into this Proxy Statement and to be a part
hereof from the respective dates of filing of such documents with the
Commission. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as modified or superseded, to constitute part of this
Proxy Statement.
This Proxy Statement incorporates documents by reference that are
not presented herein or delivered herewith. Such documents (other than
exhibits to such documents, unless such exhibits are specifically
incorporated by reference), including the Asset Purchase Agreement and
the Employment Agreements, are available to any person, including any
beneficial owner of Common Stock, to whom this Proxy Statement is
delivered, on written or oral request to: Chemfix Technologies, Inc.,
3500 N. Causeway Blvd., Suite 1280, Metairie, Louisiana, 70002 Attn:
Chief Executive Officer.
SUMMARY
Certain significant matters discussed in this Proxy Statement are
summarized below. This summary is not intended to be a complete
discussion of the matters contained herein, and is qualified in all
respects by the detailed information appearing elsewhere in this Proxy
Statement. Shareholders are urged to review carefully this Proxy
Statement. Cross references used in this summary are to captions in
this Proxy Statement.
The Special Meeting
The Special Meeting of Shareholders (the "Meeting") of Chemfix
Technologies, Inc. (the "Company") will be held at the Company's
offices at 3500 N. Causeway Blvd., Suite 1280, Metairie, Louisiana on
June 9, 1998 at 10:00 A.M.
Record Date
Only holders of record of the Company's Common Stock at the close
of business on May 6, 1998 (the "Record Date") are entitled to notice
of and to vote at the Meeting. On the Record Date, there were
6,825,855 shares of Common Stock outstanding (or 8,906,400; if Ally
Capital Corporation places Atlantic Petroleum in default under certain
loan documents (see General Information Shares Entitled to Vote)),
each entitled to one vote.
Matters to be Voted Upon
Item 1 - Approval of the Sale of Assets
Item 2 - Any other matters that may properly come
before the Meeting.
All shares of Common Stock represented at the Meeting by properly
executed proxies received prior or at the Meeting, unless the proxies
have previously been revoked, will be voted in accordance with the
instructions on such proxies. If no instructions are given, proxies
will be voted FOR the proposal to approve the Sale of Assets.
Quorum; Required Vote
A majority of the outstanding shares of Common Stock entitled to
vote, represented in person or by proxy, is required for a quorum at
the Meeting. The affirmative vote of a majority of the outstanding
shares of Common Stock of the Company entitled to vote thereon is
required to approve the Sale of Assets.
Approval of Sale of Assets
Shareholders will be asked to approve the sale of substantially
all of the assets of the Company through the sale of the business and
certain assets of the Company's sole operating subsidiary, Atlantic
Petroleum (the "Proposed Transaction"), to APTL pursuant to the terms
and conditions of the Asset Purchase Agreement, a copy of which has
been filed with the Commission as an exhibit to this Proxy statement.
The Asset Purchase Agreement will be provided to any person, including
any beneficial owner of Common Stock, to whom this Proxy Statement is
delivered.
The Proposed Transaction with APTL. The Proposed Transaction
pursuant to the Asset Purchase Agreement provides for the sale by
Atlantic Petroleum to APTL of Written Contracts, Fixed Assets,
Intellectual Property Rights and other Intangible Assets. The Purchase
Price to be paid by APTL in cash is expected to be $100,000.00 (the
"Cash Portion"), plus a deferred amount (the "Deferred Portion"). The
Cash Portion of the sale is payable in two equal installments of
$50,000.00, with the first installment payable 90 days from the Closing
Date and the final installment on the first anniversary of the Closing
Date. Atlantic Petroleum has directed APTL to pay $20,000.00 of the
first installment to Primary Systems, L.L.C., an affiliate of APTL, in
repayment of a loan by Primary Systems, L.L.C. to Atlantic Petroleum to
facilitate the closing of the Proposed Transaction. The Deferred
Portion is valued based upon the first 12 months of operation of APTL
after the Closing Date and may only be paid to the Company upon an
extraordinary transaction involving APTL. See "Summary of the Asset
Purchase Agreement Consideration.
Effect of Sale of Assets on the Company. The Company anticipates
that Atlantic Petroleum will assign to Ally at the closing all of its
rights to receive the Cash Portion and the Deferred Portion in return
for Ally granting to Atlantic Petroleum a release of its security
interests in the Assets to be sold to APTL. Accordingly, neither the
Company, Atlantic Petroleum nor any of their creditors (other than
Ally) will receive any consideration for the Sale of Assets.
After the Closing of the Sale of Assets, the Company will have no
operating assets and consequently no ability to generate revenue or
income. All of the assets of the Company are encumbered and the
Company's secured creditors are currently foreclosing on the Company's
assets to satisfy their secured obligations. The Company has
insufficient assets to pay its liabilities to its existing creditors.
Moreover, the consideration for the Sale of Assets is insufficient to
satisfy the Company's existing indebtedness. Accordingly, the Sale of
Assets will not provide any funds for the operation of the Company
after the Closing or for dividends of distributions to the Company's
Shareholders. The Company does not know at this time what actions the
Company's creditors will take subsequent to the Closing.
As the Proposed Transaction involves the sale of assets of the
Company's sole operating subsidiary for cash, the shareholders of the
Company will retain their equity interests in the Company following the
consummation of the Proposed Transaction. The future of the Company
will depend upon what actions, if any, that the Company's creditors and
shareholders take after the Closing. It is anticipated that certain of
the Company's officers and directors will resign after the Closing.
Background of Sale of Assets; Fairness of Transaction;
Recommendation of Board of Directors. The Board of Directors agreed to
enter into the Asset Purchase Agreement principally because of (i) the
lack of working capital to fund existing operations and (ii) the
Company's inability to generate sufficient revenue to satisfy existing
indebtedness, either through current operations or through a purchase,
sale or merger transaction. As a result, the Company faced the
likelihood of the cessation of operations without any consideration for
the assets of Atlantic Petroleum. See "Approval of the Sale of Assets
- - Background of the Sale of Assets" for a description of the process
followed in connection with the Sale of Assets.
The Board of Directors believes that the Proposed Transaction is
fair to, and in the best interests of, the Company and its
shareholders. The Board has unanimously approved the Proposed
Transaction pursuant to the Asset Purchase Agreement. See "Approval of
the Sale of Assets - Conflicts of Interest" for a description of the
interests of certain officers and directors in the Proposed
Transaction.
The Board of Directors of the Company unanimously recommends that
shareholders vote for approval of the Sale of Assets.
Conflicts of Interest. In considering the recommendation of the
Proposed Transaction by the Board of Directors, shareholders should be
aware that certain Directors of the Company and certain officers of
Atlantic Petroleum, have an interest in the Proposed Transaction in
addition to the interests of shareholders of the Company generally.
Stephen M. Pickens, a director of the Company, is the Vice President
Portfolio Manager of Ally Capital Management, an affiliate of Ally
Capital Corporation. Ally will receive, by assignment from Atlantic
Petroleum, all consideration from the Sale of Assets. See Approval of
the Sale of Assets Interest of Ally Capital Corporation. Following
consummation of the Proposed Transaction, as provided by the Asset
Purchase Agreement, each of Larry McLaughlin, John Secker and Francis
McLaughlin will be employed by APTL pursuant to their Employment
Agreements with APTL. See "Approval of the Sale of Assets - Conflicts
of Interest".
Conditions to Closing of Proposed Transaction. The obligations of
the Company and APTL to consummate the Proposed Transaction pursuant to
the Asset Purchase Agreement are subject to certain conditions, which
conditions may be waived by the appropriate party, including, among
other things, approval of the Company's shareholders.
Termination. The Asset Purchase Agreement may be terminated and
the Proposed Transaction may be abandoned by (i) mutual consent of the
parties; or (ii) the Company, if its Board of Directors withdraws its
recommendation of the Proposed Transaction in order to approve the
execution of a definitive agreement relating to another Proposed
Transaction after determining that the failure to take such action
would be inconsistent with its fiduciary duties under applicable law.
If the Asset Purchase Agreement is terminated by the Company pursuant
to (ii) above, and the Company closes the transaction contemplated by
such Proposed Transaction within one year, the Company must pay APTL a
termination fee of $150,000.00.
APPROVAL OF SALE OF ASSETS
General
At the Meeting, shareholders of the Company will be asked to
approve the sale of substantially all of the assets of the Company
through the sale of the business and certain assets (the "Sale of
Assets") of the Company's sole operating subsidiary, Atlantic Petroleum
Technologies of Louisiana, Inc., a Louisiana Corporation ("Atlantic
Petroleum"), to APTL, L.L.C., a Louisiana limited liability company
("APTL"), pursuant to the terms and conditions of the Asset Purchase
Agreement between the Company and APTL, dated as of April 24, 1998 (the
"Asset Purchase Agreement"), a copy of which will be provided to any
person, including any beneficial owner of Common Stock, to whom this
Proxy Statement is delivered, on written or oral request to the
Company. A vote in favor of the Sale of Assets does not constitute
authorization by the shareholders of any plan of liquidation. To the
extent required by law, any such plan of liquidation will be submitted
to the shareholders for their approval. The Company has no current
intention to liquidate.
Certain capitalized terms that are used but not defined in this
Proxy Statement have the meanings ascribed to such terms in the Asset
Purchase Agreement.
On February 5, 1998 and May 6, 1998, the Board of Directors of the
Company unanimously approved the Sale of Assets pursuant to the Asset
Purchase Agreement and directed that it be submitted to shareholders of
the Company for their approval. The Board of Directors recommends a
vote for approval of the Sale of Assets. Management of the Company
believes that those members of the Board of Directors, as well as the
executive officers of the Company, who are also shareholders of the
Company and Ally Capital Corporation intend to vote their Common Stock,
representing approximately 59% of the outstanding Common Stock of the
Company as of the Record Date or 69% if Ally Capital Corporation places
Atlantic Petroleum in default under certain loan documents (see
General Information Shares Entitled to Vote), for approval of the
Sale of Assets. Included in such shares of Common Stock is 1,250,000
shares of Common Stock owned by a director and former director of the
Company that agreed to contribute such shares to a voting trust
granting to Ally Capital Corporation the right to vote such shares.
Even though 1,000,000 of such shares have been transferred to Ally, the
voting trust has not been established and Ally has disclaimed
beneficial ownership of such shares. The Sale of Assets requires the
approval of a majority of the Company's outstanding Common Stock.
Brief Synopsis of the Sale of Assets
The Sale of Assets will be consummated pursuant to the Asset
Purchase Agreement between the Company and APTL, subject to certain
conditions to Closing, including APTL's ability to negotiate employment
contracts on terms acceptable to APTL with Larry McLaughlin, a director
of the Company and President of Atlantic Petroleum, John Secker,
Operations Manager of Atlantic Petroleum and Francis McLaughlin, Senior
Estimator of Atlantic Petroleum. See "Conditions to Closing" below.
The Sale of Assets provides for the sale of written Contracts, Fixed
Assets, Intellectual Property and other Intangible Property of Atlantic
Petroleum, the Company's sole operating subsidiary, to APTL (the
"Assets"). APTL has also agreed to assume the lease of Atlantic
Petroleum's offices in Drexel Hill, Pennsylvania. The Company will
retain all assets and liabilities not directly related to Atlantic
Petroleum.
The Purchase Price will be paid by APTL and will be $100,000.00 in
cash (the Cash Portion), plus the Deferred Portion. The Cash Portion
of the Sale of Assets shall be payable in two (2) equal installments of
$50,000.00, with the first installment due ninety (90) days from the
Closing Date and the second installment due on the anniversary of the
Closing Date. Atlantic Petroleum has directed APTL to pay$20,000.00 of
the first installment to Primary Systems, L.L.C., an affiliate of APTL,
in repayment of a loan by Primary Systems, L.L.C. to Atlantic Petroleum
to facilitate the closing of the Sale of Assets. The Deferred Portion
shall be an amount equal to 1.2 times the EBITDA generated from the use
of the Assets during the one (1) year period following the Closing
Date; provided, however, the Deferred Portion shall not be paid unless
APTL generates a minimum of $3,000,000.00 in revenues and $400,000.00
in EBITDA during the 12-month period following the Closing Date. The
Asset Purchase Agreement defines "EBITDA" as earnings before interest,
taxes, depreciation and amortization. The Deferred Portion shall be
payable only upon the consummation of an extraordinary transaction by
APTL including the acquisition of all or substantially all of the
assets of APTL, the merger of APTL with or into another company or the
change of control of APTL in one or a series of related transactions.
The Deferred Portion shall not accrue interest or any other increase in
value and shall be paid in cash, or publicly traded stock if the
transaction is a merger with a publicly traded company. See Summary
of the Asset Purchase Agreement Considerations, below.
Effect of Sale of Assets on Holdings of Shareholders
Because the Sale of Assets in connection with the Proposed
Transaction involves the sale of all or substantially all of the assets
of the Company through the Sale of Assets of Atlantic Petroleum, and
not a sale of an equity interest in the Company, the shareholders of
the Company will retain their equity interests in the Company following
the consummation of the Proposed Transaction. As a result of the
Proposed Transaction, the Company will have no operating assets and no
ability to generate revenues or income. The consideration for the
Proposed Transaction is insufficient to satisfy the Company's existing
indebtedness. Accordingly, the Sale of Assets will not provide any
funds for the operation of the Company after the Closing or for
dividends of distributions to the Company's shareholders. In addition,
it is anticipated that certain officers, directors and employees will
resign from the Company upon closing of the Sale of Assets. If the
Board of Directors determines that the Company should be liquidated, to
the extent required by law, any authorization for a plan of liquidation
will be submitted to shareholders for their approval. See "Post Sale
of Assets Operations of the Company," below.
Background of the Sale of Assets
Present management was installed in fiscal 1994 when the Company
recorded a $5,900,000.00 loss and was operating under a $6,500,000.00
working capital deficit. Over the past two and a half years,
management implemented several strategies to reduce debt and restore
viability to the Company. Even though the Company has made significant
progress in strengthening its balance sheet and improving results of
operations, management has been unable to generate sufficient revenue
or income to satisfy its current indebtedness or to provide sufficient
working capital to conduct operations.
Because of the obvious severity of the financial condition of the
Company, management instituted a cost reduction program which included
a reduction in labor and fringe costs and sold all unprofitable
subsidiaries and segments of operations. In addition, the Company
filed a Petition for Relief under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") for its VenVirotek subsidiary
on October 26, 1994. The filing was made in the United States
Bankruptcy Court for the Eastern District of Louisiana, Case No. 94-
13614. On May 15, 1995, VenVirotek's Plan of Reorganization (the
VenVirotek Plan") was confirmed. In accordance with therewith, the
first payments were due and paid on September 18, 1995. Due to the
Company's financial condition, it had been unable to pay any subsequent
payments.
On May 23, 1995, the Company formed Atlantic Petroleum as a
subsidiary of VenVirotek. Atlantic Petroleum was formed to become a
joint venture partner with Atlantic Petroleum Technologies, Inc., a
Delaware corporation (APT). On July 7, 1995, Atlantic Petroleum
acquired the assets of APT, including its interest in the joint
venture, for 450,000 shares of unregistered Common Stock valued at
$.035 per share, $13,500.00 in cash, and an agreement to reimburse APT
up to $134,000.00, for a total purchase price of $163,950.00.
In July 1995, the Company engaged Devonshire Holdings, Inc.
("Devonshire") as its sole and exclusive agent for the purpose of
identifying sale or merger opportunities for the Company. During 1995
and until the present, the Company explored with several private
companies and/or their financial representatives the possibility of a
reverse merger with the Company, pursuant to which the Company would
remain as a public entity. The Company was unable to consummate any
purchase, sale or merger transactions as a result of its engagement of
Devonshire.
On August 11, 1995, the Company filed a Petition for Relief under
Chapter 11 of the Bankruptcy Code. The filing was made in the United
States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-12954. On September 10, 1996, the Company's Plan of Reorganization
was confirmed. Generally, the Company's Plan of Reorganization (the
"Company Plan") involved the recapitalization of the Company, whereby
original shareholders were diluted 90%, with present creditors,
management, and new investors becoming significant equity holders. The
Company Plan converted approximately $6,200,000.00 of debt into
$650,000.00 of long term obligations under capital leases, with the
balance being restructured into equity. The Company recorded
approximately $4,800,000.00 of "Extraordinary Items" in its
Consolidated Statements of Operations for the quarter ended November
30, 1996, as a result of the relinquishment of debt in connection with
the confirmation of the Company Plan. Detailed information regarding
the Company's Plan and Disclosure Statement is available by contacting
the United States Bankruptcy Court for the Eastern District of
Louisiana.
On December 2, 1996, the San Joaquin Valley Unified Air Pollution
Control District filed an Order for Abatement and Permit to Operate
Revocation against the Company's subsidiary, VenVirotek. On December
11, 1996, a hearing was held giving all parties and the public the
opportunity to give testimony or make comment. On May 14, 1997, the
San Joaquin Valley Unified Air Pollution Control District issued a
Notice of Violation to VenVirotek for failure to comply with the Order
of Abatement. These conditions involved removal of all waste from the
site and compliance with all district permit conditions. On February
13, 1997, VenVirotek received a Notice and Order from the Kern County
Environmental Health Services Department requiring, among other things,
the removal of a treated stockpile by April 21, 1997. VenVirotek was
unable to comply with these orders and ceased operations in February,
1997. VenVirotek filed a Petition for Relief under Chapter 7 of the
Bankruptcy Code on February 27, 1998 and will be liquidated under
Bankruptcy Court supervision.
On April 3, 1997, the Company entered into a $100,000.00 Guarantee
and Loan Agreement with Ally Capital Corporation, ("Ally"), whereby
Ally loaned Atlantic Petroleum $50,000.00 for working capital and
pledged an additional $50,000.00 to the ACSTAR Insurance Company to
secure a $300,000.00 bonding line for Atlantic Petroleum. The Company
issued 422,500 shares of Common Stock and Atlantic Petroleum pledged
2,112,500 shares of Common Stock to Ally as security for the loan and
the bone line guarantee. The Company is unable to repay any amounts
under the loan. The 2,112,500 shares of stock pledged to Ally for the
$100,000.00 Guarantee and Loan Agreement will be forfeited to Ally in
the event of default under the Guarantee and Loan Agreement.
In October, 1997 the Company determined that the likelihood of the
Company ever attaining profitable operations was remote. The Company
determined it did not have the financial capability to fund ongoing
operations and faced the very likely consequence that Atlantic
Petroleum's employees would resign, thereby causing the cessation of
the only remaining operations of the Company without any consideration.
Accordingly, the Company believes that the Sale of Assets is the only
remaining option for the Company. The Company also took into account
additional factors in reaching its conclusion as to the Sale of Assets
See "Recommendation for the Sale of Assets - Reasons for the Sale of
Assets", below.
In October, 1997, the Company solicited purchase proposals from
various companies that it believed would be interested in purchasing
the Assets of Atlantic Petroleum. Three companies expressed an
interest in purchasing the Assets of Atlantic Petroleum and agreed to
submit written offers to the Company. The Company received two offers
for the Sale of Assets.
On October 31, 1997, the Board of Directors held a meeting to
discuss clarifications of certain aspects of the two offers it received
for the purchase of the Assets of Atlantic Petroleum. The Board was
additionally advised that Atlantic Petroleum was threatened with the
loss of its key employees because the Company's inability to fund
ongoing projects and was in jeopardy of losing projects awarded to
Atlantic Petroleum because of its lack of working capital and a bond
guarantee. The Board further determined to seek shareholder approval
for any Sale of Assets of Atlantic Petroleum or its assets. On
November 10, 1997, the Board of Directors voted to accept the highest
bid from APTL, an affiliate of Primary Systems, L.L.C.
During November, 1997 there were various meetings between the
management of the Company and APTL to negotiate the terms of a summary
term sheet (the "Summary Term Sheet"), providing for the Sale of
Assets. The parties discussed a lending arrangement necessary to
maintain Atlantic Petroleum's operations prior to the anticipated
Closing Date of the Sale of Assets, the purchase price for the Sale of
Assets and the hiring of the key employees of Atlantic Petroleum.
There were also meetings and telephone conferences between the
managements of the Company and APTL as to the terms and structure of
the transaction, the necessity for approval of the Sale of Assets by
the Shareholders of the Company and due diligence matters.
In connection with the Summary Term Sheet, APTL entered into a
factoring line of credit based upon 75% of approved accounts receivable
subject to the maximum outstanding at any one time of $500,000.00.
Atlantic Petroleum pays to APTL a factor fee of 2% per month on the
face amount of each outstanding invoice computed daily. The term of
the factoring line of credit terminated on March 7, 1998 and has been
extended on an as needed basis since such date.
As part of the Sale of Assets, APTL required Atlantic Petroleum's
key employees to execute employment agreements with APTL as a condition
to the Closing of the Sale of Assets. Under the Employment Agreements,
Messrs McLaughlin, Secker and McLaughlin will be entitled to receive
annual compensation of $85,000.00, $55,000.00 and $55,000.00,
respectively. Additionally, Messrs McLaughlin, Secker and McLaughlin
will be entitled to a cash bonus of 4%, 2% and 2%, respectively, of
EBITDA during the period commencing of the Closing Date through
December 31, 1998; provided, however, EBITDA is in excess of
$400,000.00 for such period.
In addition to the salary and other provision of Employment
Agreements, Messrs McLaughlin, Secker and McLaughlin will be able to
earn a 4%, 2% and 2%, ownership interest in APTL, if such individuals
are employees of APTL on January 15, 1999. APTL is requiring
noncompetition agreements to be entered into by Messrs McLaughlin,
Secker and McLaughlin to take advantage of this incentive option.
On November 10, 1997, the Board of Directors held a meeting to
review the terms and conditions of the proposed term sheet, including
the terms of the proposed Employment Agreements. Mr. Pickens did not
attend the meeting. David L. Donaldson advised the Board that the
Company had been requested by APTL to sign the Summary Term Sheet
setting forth the terms and conditions of the Sale of Assets. The
summary term sheet is conditioned upon the completion of due diligence
and the execution of mutually agreeable purchase and sale documentation
containing customary representation, warranties and covenants. The
Summary Term Sheet also provided that APTL had the exclusive right to
negotiate a Definitive Purchase Agreement during the term of the
lending arrangement entered into on such date and discussed above.
On February 5, 1998, the Board of Directors held a meeting to
review an outline of the terms of the Sale of Assets. All of the
directors, were present, in person or by conference telephone. A draft
of the Asset Purchase Agreement was distributed to all members of the
Board of Directors. After a lengthy discussion regarding the financial
prospects of the Company, the Board voted to authorize management to
negotiate a definitive Asset Purchase Agreement with APTL.
During March and April, 1998, management negotiated the terms and
conditions of the Asset Purchase with APTL and Ally, its major
creditor, for the release by Ally of certain security interests in the
Assets. As a result of such negotiations, Atlantic Petroleum has
agreed to assign to Ally at the Closing all of the consideration
payable by APTL under the Asset Purchase Agreement, including the Cash
Portion and the Deferred Portion. On April 24, 1998, Atlantic
Petroleum and APTL executed the Asset Purchase Agreement.
Recommendation of the Board of Directors; Reasons for the Sale of
Assets
The Board of Directors believes that the Sale of Assets is fair
to, and in the best interests of, the Company and its shareholders.
The Board of Directors has unanimously approved the Sale of Assets.
The Board of Directors recommends to the Company's shareholders
that they vote for the Sale of Assets. See "Background of the Sale of
Assets" for a description of attendance of directors and actions taken
at the October 28, 1997, October 31, 1997, November 10, 1997, December
10, 1998, February 5, 1998, March 16, 1998 and May 6, 1998 meetings of
the Board of Directors. See also "Conflicts of Interest" below for a
description of the interests of certain officers and directors in the
Sale of Assets.
In reaching its conclusions as to the Sale of Assets, the
principal factor considered by the Board of Directors was the Board's
belief that the Company's financial condition was such that the Company
has no ability to continue operations, both because of the lack of
working capital to fund existing operations and the resulting
likelihood that Atlantic Petroleum's key employees would resign and
seek employment elsewhere. Such a result would cause the cessation of
all Company operations without receiving any consideration therefor.
The Board believes the Sale of Assets is the only alternative available
to the Company that will provide any funds to pay Company indebtedness.
The Board of Directors also took into account the following
additional factors in reaching its conclusion as to the Sale of Assets:
1. On December 11, 1996, the Company was issued an Abatement Order by
the local air pollution control district at its west coast
facility, thereby causing the cessation of operations in
February, 1997. In addition, all employees at the west coast
facility were terminated. The Company does not have the
financial capability to comply with the various orders of the
various regulatory agencies governing the west coast facility and
will not be able restart operations and generate revenue
therefrom.
2. The Company has tried for the past three years without success to
engage in a purchase, sale or merger transaction with another
entity providing it with the revenues necessary to achieve
profitable operations. The Company believes that the possibility
that such a transaction will occur in the near future is remote.
3. The Company's operating loses have continued to grow. The Company
believes that the possibility of it ever becoming profitable is
remote.
4. The Company lacks the working capital and the availability of
financing necessary to commence and complete contracts awarded
to its sole operating subsidiary, Atlantic Petroleum, and does
not foresee the ability to commence and complete such contracts
in the future. As a result, the Company faces the likelihood
that the key employees of its sole operating subsidiary will
resign to seek employment elsewhere.
5. All Assets of the Company encumbered and the Company's secured
creditors are currently foreclosing on such Assets to satisfy
their secured obligations. The Company believes it has
insufficient Assets to satisfy its existing liabilities and does
not believe that it has the financial capability to generate
sufficient revenue to satisfy such liabilities.
Based on the foregoing, the Board of Directors believes that the
Proposed Transaction through the Sale of the Assets of Atlantic
Petroleum at this time would be fair to and in the best interests of
the Company and its shareholders.
In view of the wide variety of factors considered in connection
with its evaluation of the Sale of Assets, the Board of Directors did
not find it practicable to, and did not, quantify or otherwise attempt
to assign relative weights to the specific factors considered in
reaching its determination.
Conflicts of Interest
In considering the recommendation of the Sale of Assets by the
Board of Directors, shareholders should be aware that certain officers
and directors of the Company and Atlantic Petroleum have an interest in
the Proposed Transaction that is in addition to the interest of the
Shareholders of the Company generally. As noted under "-Recommendation
of the Board of Directors" and "-Reasons for the Sale of Assets,"
above, the Board of Directors was aware of these interests and
considered them, among other matters, in approving the Asset Purchase
Agreement and the transactions contemplated thereby.
Specifically, following consummation of the Proposed Transaction,
as provided in the Asset Purchase Agreement, each of Larry McLaughlin,
John Secker and Francis McLaughlin will also become APTL's employees
following the Closing pursuant to Employment Agreements proposed to be
entered into by such individuals and APTL. Larry McLaughlin is a
director of the Company and President of Atlantic Petroleum. Mr.
McLaughlin is also the beneficial owner of 396,388 shares of Common
Stock. John Secker and Francis McLaughlin are key employees of
Atlantic Petroleum.
Michael E. McGoey resigned as an officer and director of the
Company in February, 1997. Prior to such time, Mr. McGoey was a member
of the Board of Directors, Corporate Secretary and Chief Financial
Officer. Mr. McGoey is President of Gulf South, L.L.C., a Louisiana
limited liability company, and an affiliate of APTL.
Stephen M. Pickens is a Director of the Company. Mr. Pickens is
currently a Vice President-Portfolio Manager of Ally Capital
Management, an affiliate of Ally. Ally is a major shareholder of the
Company and its largest secured creditor. Atlantic Petroleum has
assigned all consideration payable by APTL pursuant to the Asset
Purchase Agreement to Ally. The Company is indebted to Ally in the
principal amount of $860,000.00 plus accrued and unpaid interest. In
addition, Ally controls the voting power of approximately 2,112,667
shares of the outstanding common stock of the Company. See "-Interest
of Ally Capital Corporation," below.
Interest of Ally Capital Corporation
Pursuant to the Company Plan, approximately $1,200,000.00 of long
term capital leases in favor of Ally was restructured, resulting in
$650,000.00 of leases payable secured by substantially all of the
Company's assets. As a result of this restructuring, Ally was issued
1,690,000 shares of the Company outstanding Common Stock. This
creditor holds a security interest in substantially all of the
Company's Assets, including the issued and outstanding common stock of
Atlantic Petroleum. In addition, as a result of the Company Plan, Ally
is entitled to receive voting control of 1,000,000 shares of stock
owned by a director and 250,000 shares owned by a former director.
Ally has not taken any action to exercise voting control of these
shares and disclaims beneficial ownership of these shares.
On April 3, 1997, the Company entered into a $100,000.00 Guarantee
and Loan Agreement with Ally, whereby Ally loaned the Company
$50,000.00 for working capital and pledged an additional $50,000.00 to
secure a bonding line for the Company. In August, 1997, Ally loaned
the Company $60,000.00 for working capital. As a result of the above
financings, the Company issued to Ally 422,500 shares of Common Stock
and Atlantic Petroleum pledged 2,112,500 shares of the Company's Common
Stock to Ally. Although Atlantic Petroleum is unable to repay any
amounts under this loan to Ally, Ally has not put Atlantic Petroleum in
default and disclaims beneficial ownership of such claims.
If Ally exercises its right to vote all shares of Common Stock
pledged to Ally, pursuant to its Loan and Guarantee Agreement with
Atlantic Petroleum and exercises its right to vote 1,250,000 shares
owned by a director and a former director, the total outstanding shares
of common stock would be 8,906,400 shares and Ally would have the power
to vote 5,475,000 shares, or approximately 69%, and will have the power
to approve the Sale of Assets at the Special Meeting of Shareholders
without the vote of any other shareholder. If Ally declines to
exercise its right to vote such shares, Ally would have the power to
vote 2,112,667 shares of Common Stock, or approximately 47% of the
issued and outstanding Common Stock. Ally has agreed to vote 2,112,667
shares of Common Stock in favor of the Sale of Assets.
Post Sale of Assets Operations of the Company
After the Closing of the Sale of Assets, the Company will have no
operating assets and consequently no ability to generate revenue or
income. All of the Assets of the Company are encumbered and the
Company's secured creditors are currently foreclosing on the Company's
assets to satisfy their secured obligations. The Company has
insufficient assets to pay its liabilities to its existing creditors.
Moreover, the consideration for the Sale of Assets is insufficient to
satisfy the Company's existing indebtedness. Accordingly, the Sale of
Assets will not provide any funds for the operation of the Company
after the Closing or for dividends of distributions to the Company's
Shareholders. The Company does not know at this time what actions the
Company's creditors will take subsequent to the Closing.
Summary of the Asset Purchase Agreement
Introduction
The following is a summary of the terms of the Asset Purchase
Agreement, a copy of which will be provided to any person, including
any beneficial owner of Common Stock, to whom this Proxy Statement is
delivered, on written or oral request to the Company as Annex A to this
Proxy Statement and is incorporated herein by reference. This summary
is qualified in its entirety by reference to the Asset Purchase
Agreement. Capitalized terms that are used but not defined in this
Proxy Statement have the meanings ascribed to such terms in the Asset
Purchase Agreement.
Assets To Be Sold
The Asset Purchase Agreement provides for the sale of all of the
assets relating to Atlantic Petroleum, the sole operating subsidiary of
the Company. The Assets generally include the Company's right, title
and interest in and to the following assets relating to Atlantic
Petroleum: (i) Written Contracts; (ii) Fixed Assets; (iii) Intellectual
Property Rights; and (iv) Other Tangible Assets. The Assets generally
exclude all assets unrelated to Atlantic Petroleum, which will be
retained by the Company following the consummation of the Asset
Purchase Agreement. In addition, APTL will assume the lease of office
space in Drexel Hill, Pennsylvania, the corporate offices of Atlantic
Petroleum.
Consideration
In consideration for the Assets, APTL has agreed to pay to the
Company $100,000.00 (the "Cash Portion"), together with a deferred
amount (the "Deferred Portion"). The Cash Portion of the Sale of
Assets shall be payable in two equal installments of $50,000.00, with
the first installment due ninety days from the Closing Date and the
final installment due on the one year anniversary of the Closing Date.
Atlantic Petroleum has directed APTL to pay $20,000.00 of the first
installment to Primary Systems, L.L.C. in repayment of a loan by
Primary Systems, L.L.C. to Atlantic Petroleum to facilitate the Closing
of the Sale of Assets. The Deferred Portion shall be valued on the one
year anniversary of the Closing Date and shall equal the product of 1.2
times the EBITDA amount derived from the utilization of the Assets
during the twelve months following the Closing Date. The Deferred
Portion is payable only in the event that APTL generates a minimum of
$3,000,000.00 in revenues and $400,000.00 of EBITDA during such twelve-
month period. The Asset Purchase Agreement defines EBITDA as earnings
before interest, taxes, depreciation and amortization.
The Deferred Portion shall not accrue interest nor shall it vest
any ownership or equity interest of the Company in APTL. The Deferred
Portion will not grant to the Company any right to vote on or consent
to any action taken by APTL, including the sale of all or substantially
all of its assets, the acquisition of any other entity or assets or the
merger with or into any other entity or the liquidation of APTL. The
Deferred Portion shall be payable upon the sale of all or substantially
all of the assets of APTL, or the merger with or into any other entity.
The Assumed Liabilities generally consists of the following: (i)
post-closing obligations of Atlantic Petroleum under executory
contracts and leases and (ii) other liabilities arising from or in
connection with Atlantic Petroleum after the Closing Date. APTL will
not assume any liabilities of the Company other than the Assumed
Liabilities. Thus, the Company will remain liable for the obligations
or liabilities of the Company and Atlantic Petroleum arising prior to
the Closing Date.
Certain General Covenants
The Company has agreed, among other things, to conduct its
business until the Closing Date in the ordinary and usual manner, to
refrain from authorizing or incurring any additional long-term debt, to
refrain from entering into or terminating material contracts other than
in the ordinary course of business and generally to preserve and
protect the value of the Assets and the goodwill and value of the
business and maintain in force certain insurance policies.
In addition, the Company has agreed to permit APTL to make
investigations of the Assets and books and records of the Company.
Buyer covenants that, on or before March 1, 1998, it will make
application for all licenses and permits as may be required by any
jurisdiction for the operation of Atlantic Petroleum's business by APTL
and cause the issuance of such licenses and permits to APTL.
APTL's Employment Agreements
Upon the consummation of the Sale of Assets, Larry McLaughlin,
John Secker and Larry McLaughlin will enter into separate employment
agreements with APTL (the "Employment Agreements"). The initial terms
of the Employment Agreements with Larry McLaughlin, John Secker and
Larry McLaughlin begin on the Closing Date and end on the third
anniversary of the Closing Date.
As part of the Sale of Assets, APTL required Atlantic Petroleum's
key employees to execute employment agreements with APTL as a condition
to the Closing of the Sale of Assets. Under the Employment Agreements,
Messrs McLaughlin, Secker and McLaughlin will be entitled to receive
annual compensation of $85,000.00, $55,000.00 and $55,000.00,
respectively. If Messrs McLaughlin, Secker and McLaughlin are in the
employ of APTL on the one month anniversary of the Closing Date, such
persons will receive a 4%, 2% and 2% respectively, ownership interest
in APTL. Additionally, Messrs McLaughlin, Secker and McLaughlin will
be entitled to a cash bonus of 4%, 2% and 2%, respectively, of EBITDA
during the period commencing of the Closing Date through December 31,
1998; provided, however, EBITDA is in excess of $400,000.00 for such
period.
In addition to the salary and other provision of Employment
Agreements, Messrs McLaughlin, Secker and McLaughlin will be able to
earn a Management Team Bonus of up to an additional 16% membership
interest in APTL based upon APTLs financial performance. APTL is
requiring noncompetition agreements to be entered into by Messrs
McLaughlin, Secker and McLaughlin to take advantage of this incentive
option.
The Employment Agreements contain customary provisions regarding
termination due to disability, death and for cause. The Employment
Agreements contain a covenant not to compete during the term of such
agreements and covenants not to solicit APTL's customers or employees
during the term of such agreements and for two year periods following
the expiration of such agreements. As executives of APTL, Messrs.
McLaughlin, Secker and McLaughlin may each become entitled to benefits
made available to executives, including group life insurance, group
disability insurance, medical and hospitalization plans, pension and
profit sharing plans and stock options.
Representations and Warranties
The Asset Purchase Agreement contains various and extensive
representations and warranties made by Atlantic Petroleum. These
include, among other things, representations and warranties relating to
(i) the execution and enforceability of the Asset Purchase Agreement;
(ii) the financial statements and other financial and related
information; (iii) the absence of certain undisclosed liabilities; (iv)
the absence of undisclosed material changes relating to the Company
since December 31, 1997; (v) matters regarding real estate, employees
and the Employee Retirement Income Security Act of 1974, intellectual
property, taxes, environmental laws, material contracts, litigations,
insurance and the condition of the Company's equipment, (vi) the
Company's title to the Assets and absence of Liens on the Assets; and
(vii) compliance with law.
APTL makes representations and warranties relating to, among other
things: (i) the due authorization, execution and enforceability of the
Asset Purchase Agreement; and (ii) the conflict of the Asset Purchase
Agreement with Primary System's organizational documents and other
agreements.
Conditions to Closing
The obligations of the Atlantic Petroleum and APTL to consummate
the Sale of Assets are subject to certain conditions, which conditions
can be waived by the appropriate party. As a condition to Atlantic
Petroleum's obligation to close the Asset Purchase Agreement, all Liens
must be removed prior to Closing. In addition, the Atlantic Petroleum
and APTL shall have executed the following ancillary agreements: (i)
promissory notes; (ii) Employment Agreements; (iii) the bill of sale;
and (iv) the assignment. At APTL's request, Larry McLaughlin, John
Secker and Francis McLaughlin have agreed in writing to execute and
deliver the Employment Agreements.
Termination; Termination Fee
The Asset Purchase Agreement may be terminated and the Proposed
Transaction may be abandoned by (i) mutual consent of the parties; or
(ii) the Company, if its Board of Directors withdraws its
recommendation of the Proposed Transaction in order to approve the
execution of a definitive agreement relating to another Proposed
Transaction after determining that the failure to take such action
would be inconsistent with its fiduciary duties under applicable law.
If the Asset Purchase Agreement is terminated by the Company pursuant
to (ii) above, and the Company closes the transaction contemplated by
such Proposed Transaction within one year, the Company must pay APTL a
termination fee of $150,000.00.
Accounting Treatment of the Sale of Assets
The Sale of Assets is to be reflected in the Company's financial
statements as a disposal of a segment of business within the meaning of
Accounting Principles Board Opinion No. 30.
Federal Income Tax Consequences of the Sale of Assets
The Sale of Assets will be a taxable transaction to the Company
resulting in a net gain for tax purposes measured by the difference
between the amount realized on the sale of the assets and the Company's
tax basis in the assets. Such gain should be offset by the Company's
current operating losses and prior year operating loss carryforwards
resulting in little or no tax on the sale. Shareholders of the Company
will experience no direct federal income tax consequences as a result
of the Sale of Assets.
The foregoing constitutes only a general description of the
federal income tax consequences to shareholders as a result of
exercising their appraisal rights. Any shareholder who intends to
exercise appraisal rights is urged to consult his own tax advisor as to
the federal income tax consequences of exercising such rights and also
as to any state, local, or other tax consequences.
Historical Common Stock Prices
The following table shows the range of closing bid prices for the
Common Stock in the over-the-counter market for the fiscal quarters
indicated, as reported by National Association of Securities Dealers
through the NASD OTC Bulletin Board. The quotations represent prices
in the over-the counter market between dealers in securities, do not
include retail markup, markdown, or commission, and do not necessarily
represent actual transactions.
Fiscal Year Ended
August 31, Common Stock
High Bid Low Bid
1997
1st Quarter .04 .02
2nd Quarter .02 .01
3rd Quarter 1/16 1/32
4th Quarter 1/32 1/32
1996
1st Quarter .03 .005
2nd Quarter .03 .01
3rd Quarter .03 .01
4th Quarter .03 .01
The representative closing bid price of the Common Stock reported by NASD
through the NASD OTC Bulletin Board on May 6, 1998 was $.02.
The Company has never paid any cash dividends on its Common Stock and
its Board of Directors presently does not anticipate paying cash dividends
in the foreseeable future. However, the declaration and payment of cash
dividends will be determined by the board of Directors in light of then-
existing conditions, including the Company's earnings, financial condition and
capital requirements.
CHEMFIX TECHNOLOGIES, INC.
SELECTED HISTORICAL FINANCIAL DATA
The following is a summary of selected historical consolidated financial
information of the Company. The summary has been derived in part from, and
should be read in conjunction with, the selected financial data and
consolidated financial statements of the Company and the related notes thereto
included in the Company's Annual Report on Form 10-K incorporated by
reference herein. Results of interim periods are not necessarily indicative
of results to be expected for the year and are subject to normal audit
adjustments. Historical information for certain periods are derived from
financial statements not included herein.
Historical Financial Information
Historical Financial Information
-------------------------------------------------------------------------
In Thousands Except Per Share Data
--------------------------------------------------------------------------
Quarter Ended November 30, Years Ended August 31,
1997 1997 1996 1995 1994 1993
-------------------------------------------------------------------------------------------------------------
SELECTED STATEMENT OF OPERATIONS DATA
Net sales
Income (loss) from
continuing operations 486,344 2,001,297 2,328,62 1,872,156 4,593,165 13,982,010
Income (loss) from
continuing operations
per common share (.02) .53 (.10) (.02) (.71) (1.05)
SELECTED BALANCE SHEET DATA
Total assets 483,281 653,442 809,707 1,479,419 2,665,604 13,807,331
Long-term debt 110,979 146,907 6,263,276 1,118,624 ------ 2,649,286
Working capital (3,236,282) (2,135,518) (1,583,667) (4,404,073) (6,539,463) (5,118,841)
Stockholders' equity (3,179,682) (2,110,279) (7,431,205) (6,556,232) (6,381,588) (549,634)
Book value per share (.47) (.32) (.84) (.74) (.76) (.06)
Tangible book value
per share (a) (.45) (.30) (.83) (.73) (.76) (.01)
(a) Tangible book value per share was computed by dividing the stockholders'
equity of the Company, net of goodwill and deferred financing costs, by the
total shares of common stock outstanding at the end of the period indicated.
Business of APTL
APTL is a Louisiana limited liability company formed as a wholly-owned
subsidiary of Primary Systems, L.L.C., a privately held Louisiana liability
company, ("Primary Systems"). Primary Systems is in the business of the
transportation, removal and cleaning of hazardous and non-hazardous material.
Through its various subsidiaries, Primary Systems operates 100 waste trans-
portation vehicles and 280 vacuum trucks providing extensive services in a
wide range of facilities, including refineries, chemical plants, construction
sites, waste disposal facilities, power plants and paper facilities.
Atlantic Petroleum's underground and above-ground tank removal and restora-
tion business will be complimentary to the business of Primary Systems.
FILINGS UNDER SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership of such securities with the Securities and Exchange Commission.
Officers, directors and greater than ten percent beneficial owners are
required by applicable regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based on a review of the copies of the Forms furnished to the Company,
the Company believes that all filing requirements applicable to its officers
and directors were complied with in a timely manner during 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of August 31, 1997 with
respect to each person and institution known to the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Company's Common Stock.
Amount and
Nature of Percent of
Beneficial Outstanding
Title of Name and Address Ownership Shares
Class of Beneficial Owner at 1/31/98 at 1/31/98(4)
Common Ally Capital Corp. 2,112,500(1,2,3) 31.7%
Stock 2330 Marinship Way
Sausalito, CA 94965
Common David L. Donaldson 1,002,425(1) 15%
Stock 3500 N. Causeway Blvd.
Metairie, LA 70002
Common William T. Nolan 500,000 7.5%
Stock 107 Clove Road
LaGrangeville, NY 12540
(1) The Company's Chapter 11 Plan of Reorganization states that Ally is
entitled to receive voting control of 1,000,000 shares of stock owned by
David L. Donaldson and 250,000 shares owned by the Company's former Chief
Financial Officer, if certain financial and new cash flow goals are not met by
September 1, 1998.
(2) Atlantic Petroleum has pledged 2,112,667 shares of the Company's stock
to Ally pursuant to a loan and collateral pledge of $100,000.00 received in
April 1997. Atlantic Petroleum has granted a stock power to Ally on these
shares enabling Ally to vote these shares in the event of a loan default.
(3) Should Ally receive the voting rights of the above mentioned shares,
they would have voting control of 5,225,167 shares, or 59% of the outstanding
common stock totaling 8,938,355.
(4) Of the 8,938,355 issued shares, 2,112,500 was issued to the Company's
subsidiary, Atlantic Petroleum. According to GAAP, these shares are not
included in calculating the total outstanding shares. Therefore, for the
purpose of calculating percent ownership, 6,825,855 shares were used.
According to information furnished to the Company by its directors and officers,
the directors, officers, and all directors and officers as a group,
beneficially owned shares of common stock of the Company is shown in the
table below.
Number of
Shares Percent of
Beneficially Outstanding
Owned at Shares at
Beneficial Owner 8/31/97 8/31/97
David L. Donaldson 1,002,425 14.7%
Moon Landrieu 251,209 3.7%
Lawrence McLaughlin 396,388 5.8%
All Officers and Directors as
a Group (3 persons)(1) 1,650,022 24.2%
____________
(1) Does not include shares held by Prudential Bache as Trustee of the
Company's 401(k) Plan. Certain officers of the Company are participants
in this Plan.
A SHAREHOLDER MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED AUGUST 1, 1997, THE
COMPANY QUARTERLY REPORT ON FORM 10-Q FOR ITS FISCAL QUARTER ENDED
NOVEMBER 30, 1997, THE ASSET PURCHASE AGREEMENT AND THE EMPLOYMENT AGREEMENT
BY WRITING TO OR CALLING CHEMFIX TECHNOLOGIES, INC., 3500 N CAUSEWAY BLVD.,
SUITE 1280, METAIRIE, LOUISIANA 70002 ATTN: CHIEF EXECUTIVE OFFICER,
504) 831-3600.
CHEMFIX TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints David L. Donaldson or Steven N.
Siegler, or either of them, attorneys and proxies with full power of
substitution in each of them, in the name, place and stead of the undersigned
to vote as Proxy at the 1998 Special Meeting of Shareholders of Chemfix
Technologies to be held at their offices at 3500 N. Causeway Blvd, Metairie,
Louisiana on June 9, 1998, at 10:00 A.M., or at any adjournments or post-
ponements thereof, according to the number of votes that the undersigned would
be entitled to cast if personally present.
If only one of said attorneys and proxies or substitutes shall be
present at such meeting or at any adjournments or postponements thereof,
then that one shall have all powers granted to such attorneys and proxies.
1. Approve the sale of substantially all of the assets of the Company
through the sale of the business and certain assets of the Company's sole
operating subsidiary, Atlantic Petroleum Technologies, Inc. to APTL, L.L.C.
pursuant to the terms and conditions of the Asset Purchase Agreement
between the Company and APTL, dated April 24, 1998 (the "Sale of Assets").
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Please date and sign on reverse side)
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the proxy
will be voted FOR the proposal to approve the Sale of Assets.
When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please sign exactly as name appears herein.
____________________________________
(Signature)
____________________________________
(Signature, if held jointly)
Dated:______________________, 1998
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE