SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14A-6(e)(2))
[x] Definitive Information Statement
Maxicare Health Plans, Inc.
(Name of Registrant as Specified In Its Charter)
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[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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:
......................................................................
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: ...........................................
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MAXICARE HEALTH PLANS, INC.
1149 SOUTH BROADWAY STREET
LOS ANGELES, CALIFORNIA 90015
NOTICE OF PROPOSED ACTION BY WRITTEN CONSENT OF STOCKHOLDERS
MARCH 6, 2001
NOTICE IS HEREBY GIVEN that the Maxicare Health Plans, Inc., a Delaware
corporation, will solicit the consent of holders of its common stock, par value
$.01 per share, on or after March 6, 2001, with respect to the following
proposal:
The approval of a one-for-five reverse split of the common stock.
Our board of directors has fixed the close of business on February 2,
2001, as the record date for the determination of stockholders entitled to
consent to the proposal approving the reverse split. A list of stockholders
eligible to consent to the proposal will be available for inspection during
normal business hours for purposes germane to the proposed action during the ten
days prior to March 6, 2001 at the offices of the Company, 1149 South Broadway
Street, Los Angeles, California 90015.
The enclosed information statement contains information pertaining to
the matters to be acted upon..
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
By order of the board of directors
Alan D. Bloom
Secretary
Los Angeles, California
February 12, 2001
MAXICARE HEALTH PLANS, INC.
INFORMATION STATEMENT
PROPOSED ACTION BY WRITTEN CONSENT OF STOCKHOLDERS
GENERAL INFORMATION
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This information statement is being furnished in connection with the
proposed action by written consent of stockholders without a meeting of a
proposal to approve a one-for-five reverse split of our common stock. We are
mailing this information statement to our stockholders on or about February 12,
2001.
The cost of the preparation and mailing of this information statement,
which is estimated at $20,000, will be paid by the Company.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on the record date,
February 2, 2001, are entitled to notice and to execute a consent. As of the
close of business on the record date there were 48,742,193 shares of common
stock outstanding. The holders of the common stock are entitled to one vote for
each share owned of record on the record date.
The consent of the holders of a majority of the outstanding shares of
common stock is required in order to approve the reverse split, which has been
approved by our board of directors.
BENEFICIAL OWNERSHIP OF SECURITIES AND
SECURITY HOLDINGS OF MANAGEMENT
The following table and discussion provides information as to the
shares of common stock beneficially owned on January 15, 2001 by:
each director;
our chief executive officer and the other four most highly
compensated executive officers for the year ended December 31,
2000;
each person owning of record or known by us, based on information
provided to us by the persons named below, to own beneficially
at least 5% of our common stock; and
all officers and directors as a group.
Name Shares Percent
---- ------- -------
Snyder Capital Management, LP 15,320,775 31.4%
Snyder Capital Management, Inc.
350 California Street, Suite 1460
San Francisco, California 94104
Pequot Capital Management, Inc. 3,266,250 6.7%
500 Nyala Farm Road
Westport, Connecticut 06880
Paul R. Dupee, Jr. 1,812,150 3.7%
Alan D. Bloom 346,552 *
John F. Gutfreund 250,000 *
Susan M. Blais 182,600 *
Richard A. Link 80,793 *
Elwood I. Kleaver, Jr. 60,286 *
Robert M. Davies 37,500 *
George H. Bigelow 35,750 *
Simon J. Whitmey 15,000 *
Sanford N. Lewis 384 *
All directors and officers as a group 2,826,195 5.7%
(11 individuals)
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* Less than 1%.
Each of the persons listed has the sole right to vote and dispose of
the shares except as described in the following discussion.
Snyder Capital Management, L.P. is a registered investment adviser.
Snyder Capital Management, Inc. is the sole general partner of Snyder Capital
Management, L.P. Snyder Capital Management, Inc. is wholly-owned by Nvest
Holdings Inc., which is a wholly-owned subsidiary of Nvest Companies, L.P. Nvest
Companies is the sole limited partner of Snyder Capital Management, L.P. The
general partner of Nvest Companies is CDCAM North America, LLC. CDCAM North
America Corporation is the sole limited partner of Nvest Companies. CDCAM North
America Corporation is a wholly-owned susbsidiary of CDC Asset Management S.A.,
which is owned by CNP Assurances, Caisses Nationale des Caisses E'Epargne and
CDC Finance, each of which is owned by Caisse Nationale des Consignations, which
is supervised by the government of France. Snyder Capital Management, Inc. and
Nvest Companies operate under an understanding that all investment and voting
decisions regarding advisory accounts managed by Snyder Capital Management, L.P.
are to be made by Snyder Capital Management, Inc. and Snyder Capital Management,
L.P. and not by Nvest Companies or any entity controlling Nvest Companies.
Accordingly, Snyder Capital Management, Inc. and Snyder Capital Management, L.P.
do not consider Nvest Companies or any entity controlling Nvest Companies to
have any direct or indirect control over the securities held in managed
accounts. Snyder Capital Management, Inc. and Snyder Capital Management, L.P.
have shared voting powers with respect to 13,854,275 shares and shared
dispositive powers with respect to 15,320,775 shares.
Pequot Capital Management, Inc. is a registered investment advisor. The
shares are held in funds managed by Pequot Capital Management, Inc., which has
sole voting and dispositive powers over these shares.
The number of shares owned by our directors and officers shown in the
table includes shares of common stock which are issuable upon exercise of
options and warrants that are exercisable on January 15, 2001 or will become
exercisable within 60 days after that date. Set forth below is the number of
shares issuable upon exercise of those options for those of our directors and
the officers named in foregoing table who hold options and for all officers and
directors as a group.
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Name Shares
---- ------
Paul R. Dupee, Jr. 155,000
Alan D. Bloom 11,767
Susan M. Blais 150,100
Richard A. Link 80,767
Elwood I. Kleaver, Jr. 5,000
Robert M. Davies 5,000
Sanford N. Lewis 100
All officers and directors as a group 412,834
(8 individuals holding options)
APPROVAL OF THE ONE-FOR-FIVE REVERSE SPLIT
Our board of directors has approved, subject to stockholder approval, a
one-for-five reverse split of our common stock. As a result of the reverse
split, each share of common stock outstanding at the effective time of the
reverse split, will, without any action on the part of the holder thereof,
become one-fifth share of common stock. The par value of the common stock will
not be affected by the reverse split. The common stock, as presently
constituted, is referred to as the old common stock, and the common stock
resulting from the reverse split is referred to as the new common stock.
The reverse split will become effective upon the filing of a
certificate of amendment to our certificate of incorporation with the Delaware
Secretary of State. This certificate of amendment will state that, upon the
filing of the certificate of amendment, each share of common stock then issued
and outstanding will automatically become and be converted into one-fifth share
of common stock.
PRINCIPAL EFFECTS OF REVERSE SPLIT
Based upon the 48,742,193 shares of common stock outstanding on the
record date, the reverse split would decrease the outstanding shares of common
stock by 80%, and, once effective, the reverse split would result in
approximately 9,748,438 shares of new common stock outstanding. Similarly, the
aggregate number of shares of common stock reserved for issuance upon exercise
of outstanding warrants and options would decrease from approximately 3,480,800
shares to approximately 696,160 shares. In addition, there are available an
aggregate of 3,909,567 shares of common stock available for grant under our
stock option plans. As a result of the reverse split, this number would be
reduced to 781,914 shares of new common stock.
Each outstanding option or warrant will automatically become an option
or warrant, as the case may be, to purchase 20% of the number of shares subject
to the option or warrant immediately prior to the reverse split at an exercise
price which is five times the exercise price of the option or warrant
immediately prior to the reverse split.
We will obtain a new CUSIP number for the common stock effective at the
time of the reverse split. Following the effectiveness of the reverse split, we
will provide each record holder of common stock with information to enable him
or her to obtain new stock certificates.
The reverse split will not affect the number of authorized shares of
preferred stock or common stock or the par value of the common stock. Subject to
the provisions for elimination of fractional shares, as described below,
consummation of the reverse split will not result in a change in the relative
equity position or voting power of the holders of common stock.
Assuming the reverse split is approved and implemented, the certificate
of amendment amending our certificate of incorporation will be filed with the
Secretary of State of Delaware as promptly as practicable thereafter. The
reverse split would become effective as of the close of business on the date we
file the certificate of amendment.
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PURPOSES OF THE REVERSE SPLIT
The reverse split would decrease the number of shares of common stock
outstanding and presumably increase the per share market price for the new
common stock. Theoretically, the number of shares outstanding should not, by
itself, affect the marketability of the stock, the type of investor who acquires
it or our reputation in the financial community, but, in practice, this is not
necessarily the case, as many investors look upon a stock trading in the range
of $1.00 per share as speculative in nature and, as a matter of policy, avoid
investment in such stocks. Furthermore, stocks that trade for less than $5.00
are subject to restrictions relating to the stock's marginability, and these
restrictions tend to adversely impact the stock's marketability and,
consequently, the stock's price. We do not anticipate that, even with the
reverse split, the new common stock will trade at a level at which it will be
marginable, and we cannot give you any assurance that the common stock will ever
be marginable.
Moreover, many leading brokerage firms are reluctant to recommend
lower-priced securities to their clients and a variety of brokerage house
policies and practices currently tend to discourage individual brokers within
firms from dealing in lower-priced stocks. Some of those policies and practices
pertain to the payment of brokers' commissions and to time-consuming procedures
that make the handling of lower priced stocks unattractive to brokers from an
economic standpoint. In addition, brokerage commissions on a sale of a lower
priced stock generally represents a higher percentage of the sales price than
the commissions on a higher priced stocks.
Our common stock is presently listed on the Nasdaq National Market
System. However, as result of the stock price, we do not meet the listing
requirements for continued listing on the Nasdaq National Market System. Under
Nasdaq's requirements for continued listing, common stock is subject to
delisting if it trades below $1.00 for 30 consecutive trading days. Since our
common stock traded below $1.00 for 30 consecutive trading days, Nasdaq has
advised us that we have until April 11, 2001 to regain compliance with this
rule. In order to comply with the rule, the bid price for our common stock must
be at least $1.00 for a minimum of ten consecutive trading days ending on or
before April 11, 2001. Although we anticipate that the effect of the reverse
split will enable us to comply with the Nasdaq requirement, we cannot assure you
that we will be successful.
If we are unable to satisfy Nasdaq's requirements for continued
listing, trading of the Common Stock would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or Nasdaq's OTC Bulletin
Board. Consequently, the liquidity of our common stock could be impaired, not
only in the number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in security analysts'
and the news media's coverage of us, and lower prices for our common stock than
might otherwise be attained. If our common stock were delisted from Nasdaq, it
may become subject to Rule 15g-9 under the Securities Exchange Act of 1934,
which imposes additional sales practice requirements on broker-dealers which
sell such securities to persons other than established customers and
institutional accredited investors. For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the rule may affect the ability and willingness of
broker-dealers to sell our common stock.
Our board of directors believes that the reverse split is in our best
interest and the best interest of our stockholders. The price of the common
stock during the last quarter of 2001 and the first quarter of 2001, through
February 5, 2001, ranged from a low closing price of $.37 to a high closing
price of $1.31. On February 5, 2001, the closing price of our common stock was
$.59.
EXCHANGE OF CERTIFICATE AND ELIMINATION OF FRACTIONAL SHARE INTERESTS
On the effective date, each five shares of old common stock will
automatically be combined and changed into one share of new common stock. No
additional action by us or by you will be required in order to effect the
reverse split. After the reverse split has become effective, we will give you
notice requesting that you exchange you certificates representing shares of old
common stock for new certificates representing shares of the new common stock
issued as a result of the reverse split. We will furnish you with the necessary
materials and
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instructions to effect such exchange promptly after the effective date.
Certificates representing shares of old common stock subsequently presented for
transfer will be transferred after giving effect to the reverse split. You
should not submit any certificates until we request you to do so. In the event
that you do not present the certificate representing shares of old common stock
for exchange upon our request, any dividends that may be declared on our common
stock after the effective date of the reverse split will be paid as if the
certificates had been exchanged.
No fractional shares of new common stock will be issued to any
stockholder. Accordingly, if you are a stockholder of record who would otherwise
be entitled to receive fractional shares of new common stock, you will, upon
surrender of your certificate representing shares of old common stock, receive a
cash payment in lieu thereof equal to the fair value of such fractional share.
If you hold less than five shares of old common stock, as a result of the
reverse stock split you will no longer be a stockholder on the effective date.
The board of directors had determined that the fair value of the common stock
will be based on the closing price of the common stock on Nasdaq on the
effective date or, if there are no reported sales on such date, the average of
the last reported high bid and low asked price on such day shall be used.
If you do not present your certificate for old common stock for
exchange when requested, you will not receive the cash payment in lieu of
fractional shares. The cash payment will not be paid until your certificate has
been properly presented for exchange, at which time we will pay you for the
fractional share, without interest, subject to any obligation we may have to
make such payment to a public official pursuant to relevant abandoned property
laws.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The combination and change of each five shares of the old common stock
into one share of new common stock should be a tax-free transaction, and the
holding period and tax basis of the old common stock will be transferred to the
new common stock received in exchange therefor. Generally, cash received in lieu
of fractional shares will be treated as a sale of the fractional shares
(although in unusual circumstances such cash might possibly be deemed a
dividend), and you will recognize gain or loss base upon the difference between
the amount of cash received and your basis in the surrendered fractional share.
This discussion should not be considered as tax or investment advice,
and the tax consequences of the reverse split may not be the same for all
stockholders. Stockholders should consult their own tax advisors to know their
individual federal, state, local and foreign tax consequences.
FINANCIAL STATEMENTS
Our Form 10-K for the year ended December 31, 1999, which includes our
audited financial statements, and our Form 10-Q for the nine months ended
September 30, 2000, which includes our unaudited financial statements, together
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," are incorporated by reference in this information statement. See
"Incorporation by Reference."
VOTE REQUIRED
The reverse split requires the affirmative vote of the holders of a
majority of the outstanding shares of common stock. We intend to seek the
consent of the holders of at least a majority of the outstanding common stock to
approve the reverse split on or after March 6, 2001. If we do not receive the
written consent of at least a majority of the outstanding common stock, the
reverse split will not become effective.
INCORPORATION BY REFERENCE
The Company incorporates into this information statement the audited
financial statements for the years ended December 31, 1999 and 1998 together
with the related Management's Discussion and Analysis of Financial Condition and
Results of Operations, which are included in our annual report on Form 10-K for
the year ended
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December 31, 1999 and the unaudited financial statements for the nine months
ended September 30, 2000, together with Management's Discussion and Analysis of
Financial Condition and Results of Operations for the nine months ended
September 30, 2000, which are included in our Form 10-Q for the nine months
ended September 30, 2000. Copies of the annual report will be provided by us
without charge upon request. Requests for copies of the annual report should be
made as provided under "Other Matters."
OTHER MATTERS
COPIES OF OUR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND OUR
FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000, WITHOUT EXHIBITS, MAY BE
OBTAINED WITHOUT CHARGE BY WRITING TO MR. ALAN D. BLOOM, SECRETARY, MAXICARE
HEALTH PLANS, INC., 1149 SOUTH BROADWAY STREET, LOS ANGELES, CALIFORNIA 90015.
EXHIBITS WILL BE FURNISHED UPON REQUEST AND UPON PAYMENT OF A HANDLING CHARGE OF
$.25 PER PAGE, WHICH REPRESENTS OUR REASONABLE COST ON FURNISHING SUCH EXHIBITS.
By Order of the board of directors
Alan D. Bloom
Secretary
February 12, 2000
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