UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Under
Section 14(d) (4) of the Securities Exchange Act of 1934
Landmark Financial Corp.
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(Name of Subject Company)
Landmark Financial Corp.
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(Name of Person Filing Statement)
Common Stock, Par Value $.10 per share
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(Title of Class of Securities)
514914100
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(CUSIP Number of Class of Securities)
Gordon E. Coleman
President and Chief Executive Officer
Landmark Financial Corp.
211 Erie Boulevard
Canajoharie, New York 13317
(518) 673-2012
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(Name, Address and Telephone Numbers of Person Authorized to Receive Notices
and Communications on behalf of the person filing this statement)
Copy to:
Alan Schick, Esq.
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
(202) 274-2000
[ ] Check this box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Item 1. Subject Company Information
The subject company to which this report relates is Landmark Financial
Corp., a Delaware corporation. The address of its main office is 211 Erie
Boulevard, Canajoharie, New York 13317. Its telephone number is (518) 673-2012.
The class of securities to which the report relates is common stock, par value
$.10 per share. At the date of this report 154,508 shares of common stock were
issued and outstanding.
Item 2. Identity and Background of Filing Person
The filing person and the subject company is Landmark Financial Corp. Its
address is 211 Erie Boulevard, Canajoharie, New York 13317. Its telephone number
is (518) 673-2012.
This report relates to a tender offer that has been made by Investors &
Lenders, LLC, a subsidiary of Private Mortgage Investors Services
("Investors/PMIS"). Investors/PMIS address as stated in their Tender Offer
Statement on Schedule 14D-1, dated May 10, 2000 (the "Tender Offer Statement")
is 154 Lake Avenue, P.O. Box 588, Saratoga Springs, New York 12866. The
Investors/PMIS offer as disclosed in its Tender Offer Statement states that the
tender offer is for a minimum of 100,000 shares, or 65% of the outstanding
shares of Landmark common stock at a price of $25.00 net to the Seller in cash
and without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 10, 2000 and in the related Letter of
Transmittal.
Item 3. Past Contracts, Transactions, Negotiations and Agreements
There are no agreements, arrangements or understandings between Landmark or
its affiliates and its executive officers, directors or affiliates; or Landmark
and Investors/PMIS or its officers, directors or affiliates.
Agreement and Plan of Merger between TrustCo Bank NY, Landmark Acquisition
Co and Landmark
TrustCo Bank NY ("TrustCo"), Landmark Acquisition Co., a Delaware
corporation and wholly-owned subsidiary of TrustCo ("AcquisitionCo"), and
Landmark are parties to an Agreement and Plan of Merger, dated as of February
21, 2000 (the "Merger Agreement"). The Merger Agreement provides for
AcquisitionCo to merge with and into Landmark, with Landmark being the surviving
corporation (the "Merger"). At the effective time of the Merger, each
outstanding share of Landmark common stock (other than shares held by
shareholder duly exercising dissenters' rights and shares held by any direct or
indirect subsidiary of Landmark) will be converted into the right to receive a
cash payment of $21.00, and each share of AcquisitionCo common stock will be
converted into one share of Landmark common stock.
In the Merger Agreement, TrustCo has agreed to cause Landmark Community
Bank, a wholly owned subsidiary of Landmark, to enter into an employment
agreement with Gordon E. Coleman, Landmark's President and Chief Executive
Officer, pursuant to which Mr. Coleman will serve as President and Chief
Executive Officer of Landmark Community Bank for a three-year term at annual
salary of $125,000, plus use of a car.
TrustCo has also agreed to cause Landmark Community Bank immediately
following the effective time of the Merger to establish and advisory board of
directors comprised of not more than eight directors of Landmark to serve as
advisory directors of Landmark Community Bank for a three year term. In
addition, TrustCo agreed to provide Landmark's directors and officers with the
full economic benefits of their stock option grants and restricted stock awards
as if these grants and awards were fully-vested.
The Merger Agreement is attached hereto as Exhibit E(1) and it is
incorporated herein by reference.
Stock Option Agreement
Landmark and TrustCo have also entered into a Stock Option Agreement, dated
as of February 21, 2000. Pursuant to the Stock Option Agreement, Landmark
granted TrustCo an option to purchase up to 19.9% of the number of shares of
Landmark Common Stock outstanding as of February 21, 2000, at a price of $14.00
per share, subject to adjustment, upon the occurrence of certain events.
The Stock Option Agreement is attached as an exhibit to the Merger
Agreement, which is attached as Exhibit E(1) hereto, and is incorporated herein
by reference.
Other
Officers and directors of Landmark have received stock option grants under
the Landmark Financial Corp. 1998 Stock Option Plan, and restricted stock awards
under the Landmark Financial Corp. 1998 Recognition and Retention Plan. These
awards have been described in Landmark's definitive proxy materials dated July
2, 1999, which are filed as Exhibit E(2) and are incorporated by reference.
Item 4. The Solicitation or Recommendation
The Board of Directors of Landmark unanimously recommends that shareholders
not tender their shares to Investors/PMIS. The reasons for the Board of
Director's recommendation are set forth in greater detail in its disclosure
document filed as Exhibit A. To Landmark's knowledge, none of its directors,
officers of affiliates has, or intends to tender their shares to Investors/PMIS.
Item 5. Person/Assets, Retained, Employed, Compensated or Used
Landmark has retained Georgeson Shareholder Communications Services, Inc.
("Georgeson") to act as Information Agent. Georgeson will be paid a fee of
$5,000, plus expenses.
Item 6. Interest in Securities of the Subject Company
There have been no transactions by Landmark or any of its directors,
executive officers or affiliates in Landmark's securities in the last sixty
days.
Item 7. Purposes of the Transaction and Plans or Proposals
The subject company is not currently undertaking or engaging in
negotiations with Investors/PMIS or any other person in response to
Investors/PMIS tender offer. Landmark is currently a party to an Agreement and
Plan of Merger (the "Agreement") whereby it would be acquired by TrustCo Bank
N.Y. Pursuant to Section 4.1.5. of the Agreement, Landmark and its subsidiaries
shall not, and shall not authorize or permit any of their respective officers,
directors, employees or agents to, on or before the earlier of the Closing Date
or the date of termination of this Agreement, directly or indirectly solicit,
initiate or encourage or (subject to the fiduciary duties of its directors as
advised by counsel) hold discussions or negotiations with or provide any
information to any person in connection with any proposal from any person for
the acquisition of all or any substantial portion of the business, assets,
shares of Landmark common stock or other securities of Landmark or its
subsidiaries. Additional information regarding the agreement with TrustCo is set
forth in the disclosure document set forth at Exhibit A. The Agreement is filed
as Exhibit E(1).
Item 8. Additional Information
See the information set forth in the disclosure document set forth at
Exhibit A.
Item 9. Exhibits
(A) Disclosure document dated May 23, 2000
(E)(1) Agreement and Plan of Merger (incorporated by reference to
Current Report on Form 8-K, filed via EDGAR on March 3, 2000.
Landmark's Commission File Number is 0-22951.)
(E)(2) Definitive Proxy Statement for Annual Meeting of Stockholders
(incorporated by reference and filed via EDGAR on June 11,
1999).
Signature. After due 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.
/s/ Gordon E. Coleman
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Signature
Gordon E. Coleman, President and Chief Executive Officer
May 22, 2000
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Date
EXHIBIT A
LANDMARK FINANCIAL CORP.
IMPORTANT ANNOUNCEMENT TO OUR STOCKHOLDERS
RECOMMENDATION STATEMENT
OF THE BOARD OF DIRECTORS
To our Stockholders:
Investors and Lenders, LLC ("Investors"), a subsidiary of Private Mortgage
Investment Services, Inc. ("PMIS"), has announced an unsolicited and conditional
tender offer for at least 100,000 shares, or 65% of the outstanding shares of
Landmark common stock at a price of $25 per share.
After careful consideration of the Investors/PMIS tender offer, your Board
of Directors has unanimously determined that the offer as presently structured
is inadequate and is not in the best interests of all of Landmark's
stockholders. Consequently, we recommend that you REJECT THE INVESTORS/PMIS
TENDER OFFER.
In reaching our conclusion and recommending that stockholders reject the
Investors/PMIS offer, the Board of Directors has considered numerous factors,
including those described below:
o There are 13 contingencies to the Investors/PMIS tender offer,
including raising sufficient funds to complete the tender offer and
obtaining regulatory approval to acquire Landmark.
o Investors/PMIS do not presently have the cash or financing necessary to
complete the offer. The Investors/PMIS offer states that they must
raise $2.6 million in order to complete their offer for 65% of the
outstanding shares. Investors/PMIS have not said that the necessary
funds have been raised, nor do they identify the private investors or
institutional lenders who might be willing to provide the funds
necessary to complete their offer. In addition:
-- In an unrelated financing effort, PMIS has raised only $600,000
out of a total of $1.5 million of subordinated debt that they
have attempted to obtain. The subordinated debt is being offered
with an interest rate of 11%. This offering has been ongoing for
the past three months.
-- The $2.6 million that Investors/PMIS must raise in order to
complete their tender offer represents 279.96% of PMIS' earnings
for the twelve months ended June 30, 1999, 110.91% of PMIS'
equity as of June 30, 1999 and 25.62% of PMIS' assets as of June
30, 1999.
-- Based on the Investors/PMIS Tender Offer Statement,
Investors/PMIS wishes to raise $2.6 million through the sale of
debt. Based on the PMIS current debt offering, it can be expected
that such debt would bear interest at a rate of at least 11%. The
resulting interest payment obligation of Investors/PMIS would be
$286,000 on an annual basis. Any principal reduction would be in
addition to this amount. The debt service payments do not appear
supportable based on Investors/PMIS' net income or Landmark's net
income.
o By obtaining 65% of the outstanding shares of Landmark stock, the
Investors/PMIS offer will not treat all stockholders equally, but will:
-- Substantially decrease the liquidity of the remaining shares and
have a detrimental impact on the value of these shares.
-- Eliminate the ability of minority stockholders to have meaningful
voting rights regarding Landmark, including, but not limited to,
such essential rights as election of directors.
-- Provide Investors/PMIS with the ability to squeeze-out minority
stockholders, without providing minority stockholders with full
value.
o Investors/PMIS have not stated how they will treat minority
stockholders holding 35% of the Landmark common stock following the
tender offer.
o Investors/PMIS cannot complete their offer until they receive
regulatory approval from the U.S. Office of Thrift Supervision (the
"OTS"). The Investors/PMIS offering materials state that obtaining OTS
regulatory approval would take between four and six months. Obtaining
OTS approval is not assured.
-- An acquiror such as Investors/PMIS, with no known prior
experience in the areas of banking or savings and loans and which
seeks to finance its acquisition of control exclusively with
debt, may not receive regulatory approval in a timely manner.
-- The ability of Investors/PMIS to obtain regulatory approval is
rendered less likely given that financing is uncertain and
potentially unsupportable.
-- Investors/PMIS has already failed to comply with the OTS
requirement that it obtain regulatory approval prior to making
its offer to acquire Landmark common stock.
-- Investors/PMIS has not provided a business plan detailing how
they would run Landmark.
In making its recommendation, your Board of Directors has also considered
the following:
o Landmark has entered into an agreement to be acquired by TrustCo Bank
Corp. NY ("TrustCo"). Under the terms of the agreement with TrustCo,
all stockholders will receive $21 per share.
o TrustCo is a bank holding company with approximately $2.4 billion in
assets, $2.0 billion in deposits and stockholders' equity of $166.4
million as of March 31, 2000.
o TrustCo has a proven track record in successfully operating banking
facilities in Upstate New York and has stated that it intends to
maintain Landmark's facility.
o TrustCo has received Federal Reserve approval to acquire Landmark and
OTS approval of the merger is likely. Therefore, regulatory approval of
the acquisition of Landmark by TrustCo is highly probable. There are no
financing contingencies. TrustCo has the cash on hand to purchase 100%
of Landmark's common stock.
o Your Board of Directors believes that the acquisition of Landmark by
TrustCo can be completed relatively quickly once stockholder approval
is obtained.
o Your Board of Directors has considered and compared the value of the
Investors/PMIS offer before taking into account the employee stock
options and the stock option granted to TrustCo as part of the
consideration for the merger agreement and after those stock options
are taken into account, and has concluded that the TrustCo offer is
superior because of the significant hurdles presented by the financing
and regulatory approval contingencies contained in the Investors/PMIS
offer.
o Your Board of Directors has asked RP Financial, LC, a firm which
specializes in the valuation of financial institutions, to analyze the
terms of the Investors/PMIS tender offer in comparison with the TrustCo
$21.00 per share merger price. RP Financial's analysis showed:
-- Minority stockholders would experience a substantial reduction in
the value of their shares following the Investors/PMIS tender
offer.
-- The Investors/PMIS tender offer requires financing which is
expected to be in the form of high cost debt. In comparison,
TrustCo does not need any financing to complete the acquisition
of Landmark and is able to pay the merger consideration from
available funds.
-- The merger consideration offered by TrustCo for 100% of
Landmark's shares represents 0.15% of TrustCo's balance sheet.
The Investors/PMIS tender offer for just 65% of Landmark's shares
represents 25.62% of PMIS' balance sheet as of June 30, 1999.
-- RP Financial's analysis concluded that the value of the TrustCo
merger consideration is superior to the Investors/PMIS tender
offer when consideration is given to such factors as the likely
devaluation in the value of shares of minority stockholders
following the tender offer and the probability that TrustCo can
conclude the transaction on a more timely basis than
Investors/PMIS. It also confirms that TrustCo's ability to
consummate the merger is superior to Investors/PMIS' ability to
satisfy the financing contingency in its tender offer.
RP Financial on February 21, 2000 rendered its opinion to Landmark's Board
of Directors that the merger consideration offered by TrustCo is fair to
stockholders, from a financial point of view. In conducting its analysis, RP
Financial considered the value of Landmark's federal thrift charter as part of
Landmark's overall value.
To Landmark's knowledge, none of its directors, officers or affiliates has,
or intends to, tender their shares to Investors/PMIS.
FURTHER INFORMATION ON THE INVESTORS/PMIS "SO-CALLED" PRIOR OFFER
In the fall of 1999, management received an unsolicited request from
Charles Cefalu, President of Investors/PMIS, to consider issuing shares to
Investors/PMIS in return for a payment consisting of cash and mortgages having a
total value of $1.9 million. These shares would have been issued directly to
Investors/PMIS by Landmark and would have represented approximately 50% of the
total outstanding shares. Under this proposal, stockholders would not have
received any payment. This proposal would have resulted in Mr. Cefalu obtaining
control of Landmark without paying stockholders a premium for their shares and
would have substantially diluted the ownership interests of existing
stockholders. After consideration of the indication of interest, the board of
directors unanimously decided not to pursue further discussions with
Investors/PMIS. Landmark, through its counsel, indicated to Mr. Cefalu by letter
dated January 13, 2000, that "If Mr. Cefalu wishes to present a different
proposal for consideration by the Board of Directors the Board will act in a
manner consistent with its fiduciary duties." Mr. Cefalu did not make another
offer at that time. Subsequently, TrustCo initiated discussions with Landmark
regarding the possible sale of Landmark. These discussions resulted in Landmark
entering into an agreement with TrustCo whereby all stockholders would receive a
substantial premium for their shares.
This Recommendation Statement contains forward-looking statements
consisting of comments upon or predictions regarding future events,
circumstances and expectations. The forward-looking statements are made based
upon numerous assumptions regarding future circumstances. These include
assumptions regarding future conditions in the stock markets, future interest
rate conditions, economic conditions generally, customer demand, shifting
competitive pressures and changes in Federal Reserve, OTS or other government
policies. Landmark cautions readers not to place undue reliance upon any
forward-looking statements. Forward-looking statements speak only as of the date
made and Landmark assumes no obligation to update or revise any such statements
upon any change in applicable circumstances.
IMPORTANT NOTICE: This Recommendation Statement will be available on the
Securities and Exchange Commission web site at www.sec.gov as part of the EDGAR
database.
Landmark has engaged Georgeson Shareholder Communications, Inc. to act as
information agent in connection with the matters discussed above. The
information agent may be contacted at the address and telephone number set forth
below.
The Information Agent is
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: 1 (800) 223-2064
May 23, 2000