SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 3)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GULF EXPLORATION CONSULTANTS, 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 the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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
(Set forth the amount on which the filing fee is calculated
and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ X ] 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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GULF EXPLORATION CONSULTANTS, INC.
_______________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE __, 1996
To the Stockholders of Gulf Exploration Consultants, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of Gulf Exploration Consultants, Inc., a Delaware corporation
(the "Company"), will be held at the offices of Reid & Priest LLP, 40 West
57th Street, New York, New York on Monday, June 17, 1996 at 10:00 A.M.,
local time, for the following purposes:
1. To elect the following persons as directors of the Company:
Jeremy Metcalfe, Michael H. Nolan and L. George Rieger.
2. To approve the transactions contemplated by the Subscription
Agreement and Option, dated December 7, 1995, among the Company, Minmet
plc, Micron Ltd., and Emerging Money Limited ("Emerging Money"), a wholly-
owned subsidiary of the Company, and related corporate restructuring,
including the exchange of the Company's interest in Emerging Money
(collectively, the "Micron Transaction").
3. To approve amendments to the Company's Certificate of
Incorporation to effect a recapitalization whereby (i) the number of
outstanding shares of the Company's Common Stock, $.01 par value (the
"Common Stock"), would be reduced through a reverse-stock-split in which
one new share will be exchanged for every fifty shares of Common Stock
presently issued and outstanding, and (ii) the number of authorized shares
of Common Stock would be reduced from 100,000,000 to 10,000,000 shares.
4. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record of the Common Stock of the Company at the
close of business on May 3, 1996 shall be entitled to receive notice of,
and to vote at, the Meeting, and at any adjournment or adjournments
thereof. A Proxy and a Proxy Statement for the Meeting are enclosed
herewith.
All stockholders are cordially invited to attend the Meeting. If you
do not expect to be present, you are requested to fill in, date and sign
the enclosed Proxy, which is solicited by the Board of Directors of the
Company, and to mail it promptly in the enclosed envelope to
make sure that your shares are represented at the Meeting. In the event
you decide to attend the Meeting in person, you may, if you desire, revoke
your Proxy and vote your shares in person.
By Order of the Board of Directors
Michael H. Nolan
Secretary
New York, New York
Date: June 5, 1996
IMPORTANT
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THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
GULF EXPLORATION CONSULTANTS, INC.
10 ROCKEFELLER PLAZA
SUITE 1012
NEW YORK, NEW YORK 10020
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PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
JUNE 17, 1996
____________________
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Gulf Exploration Consultants, Inc.,
a Delaware corporation (the "Company"), to be voted at a Special Meeting of
Stockholders of the Company (the "Meeting"), and any adjournments thereof.
The Meeting will be held at the place and time, and for the purposes set
forth in the accompanying Notice of Special Meeting of Stockholders.
VOTING SECURITIES
Stockholders of record as of the close of business on May 3, 1996 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting
or any adjournments thereof. On the Record Date, 93,552,625 shares of the
Company's Common Stock, $.01 par value (the "Common Stock"), were
outstanding. Each record holder of Common Stock is entitled to one vote
for each share held, respectively. The Company has authorized 5,000,000
shares of Preferred Stock, $1.00 par value (the "Preferred Stock"), none of
which is outstanding.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with
the instructions contained therein and, in the absence of specific
instructions, will be voted as recommended by the Board of Directors of the
Company. The Proxy will also be voted in accordance with the judgment of
the person or persons voting the proxies on any other matter that may be
properly brought before the Meeting. Each such Proxy granted may be
revoked at any time thereafter by writing to the Secretary of the Company
prior to the Meeting, or by execution and delivery of a subsequent proxy or
by attendance and voting in person at the Meeting, except as to any matter
or matters upon which, prior to such revocation, a vote shall have been
cast pursuant to the authority conferred by such Proxy.
A majority of the outstanding shares of Common Stock represented at
the Meeting, in person or by proxy, will constitute a quorum. Under
Delaware law, a plurality of the quorum is necessary for election of
directors, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to approve the amendments to
the Company's Certificate of Incorporation, and the affirmative vote of a
majority of the votes cast at the Meeting is required to approve the Micron
Transaction. Minmet plc, which owns more than a majority of the
outstanding shares of the Company's Common Stock, has indicated that it
intends to vote its shares in favor of the proposals, thereby assuring
their adoption. There is no requirement for approval of the proposals by
the minority stockholders of the Company.
Abstentions will have the effect of a negative vote. A broker non-
vote will have the effect of a negative vote with respect to the amendment
to the Company's Certificate of Incorporation, but will have no effect on
the outcome of any of the other proposals.
As of the Record Date, 93,552,625 shares of the Company's Common Stock
were issued and outstanding.
SECURITY OWNERSHIP
The following table sets forth certain information regarding the
ownership of the Common Stock by each person who is known to the management
of the Company to have been the beneficial owner of more than 5% of the
outstanding shares of Common Stock as of the Record Date:
Amount and Nature of Percent of
Name and Address Beneficial Ownership(1) Ownership
---------------- -------------------- ---------
Minmet plc 52,735,246 shs. 56.4%
Grand Canal House Direct
1 Upper Grand Canal Street
Dublin 4 Ireland
The following table sets forth certain information regarding the
ownership of Common Stock by each director, and by all directors and
officers of the Company as a group, as of the Record Date:
Amount and Nature of Percent of
Name Beneficial Ownership(1) Ownership
---- ---------------------- ----------
L. George Rieger -0- --
Michael H. Nolan 52,735,246 (2) 56.4%
Jeremy Metcalfe 52,735,246 (2) 56.4%
All officers and directors 52,735,246 (2) 56.4%
as a group (3 persons)
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(1) All persons named have sole voting and investment power, except as
otherwise stated.
(2) Includes 52,735,246 shares owned by Minmet plc, of which Messrs. Nolan
and Metcalfe serve as officers and directors.
BUSINESS
The Company was incorporated under the laws of the State of Delaware
on October 2, 1987. See PROPOSAL 2 - "THE MICRON TRANSACTION" and PROPOSAL
3 - "CHARTER AMENDMENTS" for a description of the Company's business.
PROPERTIES
The Company having ceased to operate its oil and gas business had no
continuing interest in any properties at December 31, 1995. The Company
operates from leased premises in New York, New York, with some
administrative functions carried on from an office in Dublin, Ireland.
These premises are held on a week to week rent-free basis arrangement with
the lessors. The lessor in New York is George Rieger, an officer and
director of the Company, and the lessor in Dublin is Minmet.
MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Company is traded in the over-the-counter
market and the trading is inactive. Currently, there is no established
public trading market for the Company's Common Stock. The Common Stock was
deleted from the automated quotation system NASD on July 6, 1989 because
there were no longer any active market makers registered to trade the
securities.
As of December 31, 1995, there were approximately 1,424 stockholders
of record of the Company's Common Stock.
The Company paid no dividends on the Common Stock in the fiscal years
ended December 31, 1995, 1994 and 1993 and future dividend payments are
dependent upon management's ability to acquire a profitable business into
the Company. No dividend payments are expected in 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
The Company had a net loss in 1995 of $712,694 compared to net loss in
1994 of $106,562. Of the loss of $712,694, $128,957 was incurred by the
Company and $583,737 was incurred by Emerging Money. The Company incurred
the loss due to professional fees that were incurred in maintaining the
Company and the cost of a full-time executive in the United States during
the six-month period to June 30, 1995. Emerging Money's losses were
incurred in developing its financial information on-line business.
Technical, general and administrative costs increased from $110,588 in
1994 to $700,672 in 1995 with the inclusion of the development stage costs
of Emerging Money.
Interest income amounted to $322 in 1995 compared to $948 in 1994 as
the cash balances of the Company were reduced.
YEARS ENDED DECEMBER 31, 1994 AND 1993
The Company had a net loss in 1994 of $106,562 compared to net income
in 1993 of $121,294. The Company incurred the loss due to the high cost of
professional fees that were necessarily incurred in maintaining the Company
and preparing it for the acquisition of Emerging Money. The professional
fees were incurred at a time when the level of activity in the Company was
functioning at a low level.
Technical, general and administrative costs increased from $78,553 in
1993 to $110,588 as a result of the high level of professional fees.
Interest income amounted to $948 in 1994 compared to $2,374 in 1993 as
the cash balances of the Company were reduced.
LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN ASSUMPTIONS
Based on the financial position of the Company at December 31, 1995
significant doubt exists about the Company's ability to continue as a going
concern as the Company has, exclusive of extraordinary items, suffered
recurring losses over the past years and has sold all of its oil and gas
revenue producing assets in order to retire certain debt on which it had
defaulted. The Company was successful in eliminating all of its debt, at a
substantial discount, in 1991, 1992 and 1993. The Company has also been
successful in eliminating all of the liquidation preference associated with
its preferred stock by repurchasing such stock. The elimination of this
liquidation preference has allowed management the opportunity to seek out
new business opportunities which culminated in 1994 with the acquisition of
Emerging Money. Following the acquisition of Emerging Money the management
team had been seeking to raise monies through debt or equity placements to
fund the Company's present operations and future expansion.
However the planned fund raising raised $200,000, $300,000 less than
the targeted figure of $500,000. Emerging Money incurred significant
losses in 1995 which forced management to seek outside funding to rescue
Emerging Money. Negotiations to that end have been concluded and
management has described below the arrangements being proposed to refinance
Emerging Money and to reorganize the Company. See PROPOSAL 2 - "THE MICRON
TRANSACTION" and PROPOSAL 3 - "CHARTER AMENDMENTS."
Due to the limited capital resources, management of the Company has
been forced to liquidate certain subsidiaries of the Company. Management
believes that the liquidation of these subsidiaries will not have an effect
on its parent or affiliate companies. However, no assurance can be given
that the parent or affiliate companies will not assume a contingent
liability for the amount of subsidiary debt not fully extinguished in
liquidation.
No assurance can be given that following the approval of the Micron
Transaction and any reorganization that a new acquisition will be quickly
effected, or, if effected, that the terms will be favorable or
substantially non-dilutive to the stockholders of the Company, or that an
active trading market would be created for the Common Stock.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company changed independent accountants from Arthur Andersen LLP
to Berry Dunn McNeil and Parker in March 1995. Arthur Andersen had
represented the Company through its Houston, Texas office to service more
efficiently the Company's previous oil and gas business and continued as
accountant after such business activities were terminated and the Company
was inactive and had relocated its administrative base to New York. There
were no disagreements with Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope
or procedure.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting three persons will be elected directors to serve until
the next Annual Meeting and until their successors are elected and
qualified. Management's nominees for director to be elected at the Meeting
are L. George Rieger, Jeremy Metcalfe and Michael H. Nolan. They serve as
the current Board of Directors.
Unless otherwise indicated, all proxies received will be voted in
favor of the three nominees named above. Should a nominee not remain a
candidate for election at the date of the Meeting (which contingency is not
now contemplated or foreseen by the Board of Directors), proxies solicited
hereby will be voted in favor of the nominees who do remain as candidates
and may be voted for a substitute nominee selected by the Board of
Directors.
The following table sets forth the names of the directors and
nominees, their ages, their current positions with the Company and the year
that they were first elected or appointed as directors of the Company.
Year First Elected or
Appointed to the
Name Age Position Board
---- --- -------- ---------------------
L. George Rieger 56 President, 1988
Chairman and
Director
Michael H. Nolan 33 Chief Financial 1995
Officer, Secretary
and Director
Jeremy Metcalfe 56 Director 1995
L. George Rieger has served as director of the Company since June
1988. Mr. Rieger was appointed President of the Company effective January
1, 1993. In 1984, Mr. Rieger founded Rieger Robinson & Harrington, which
is engaged in funds management in New York, N.Y., and has served as its
Chairman of the Board since such time.
Michael H. Nolan, a chartered accountant, has been the Chief Financial
Officer of the Company since May 1994. Since April 1994, he has also
served as Finance Director of Minmet plc, a Republic of Ireland corporation
("Minmet"), which is engaged in mining and horticulture. From 1989 through
1994, Mr. Nolan was an associate director of Equity and Corporate Finance
plc, a London based investment company.
Jeremy Metcalfe has served as the Chairman of the Board of Directors
of Minmet since September 1995 and is also on the Board of Directors of
several Minmet subsidiaries. Mr. Metcalfe has also served as a director of
City Venture Properties Limited, a real estate brokerage firm since 1989
and he has been a senior partner in JP Metcalfe Associates, a corporate
finance firm in Kent, England specializing in the venture capital industry,
since 1980.
BOARD OF DIRECTORS AND COMMITTEES
---------------------------------
The Board of Directors of the Company held three meetings during the
1995 fiscal year.
The Company does not have any standing audit, nominating or
compensation committees of the Board of Directors or committees performing
similar functions.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
None of the executive officers or Directors of the Company received
any compensation during the 1995 fiscal year, and no compensation is
expected to be paid to such persons in fiscal 1996.
The Company has not granted stock options or other compensatory awards
to any officer or director during fiscal 1995 and no such options or awards
are intended to be granted in fiscal 1996.
PROPOSAL 2
THE MICRON TRANSACTION
As a result of the inability of Minmet to continue funding Emerging
Money and in order to discharge the Notes (as hereinafter defined) and to
settle the loans advanced by Minmet to Emerging Money and the Company, the
Board of Directors of the Company has unanimously adopted a resolution
approving and recommending to the Company's stockholders for their approval
the transactions contemplated on behalf of the Company under (i) the
Subscription Agreement and Option, dated December 7, 1995 (the "Micron
Subscription"), among the Company, Minmet, Micron Ltd., a Republic of
Ireland corporation ("Micron") and Emerging Money Limited, a Republic of
Ireland corporation and wholly-owned subsidiary of the Company ("Emerging
Money") and (ii) the Letter Agreement, dated December 22, 1995 (the "Letter
Agreement"), among the Company, Minmet, DRM&S, Inc., now known as Osprey
Investments Inc. ("DRM&S") and Dennis Mensch ("Mensch"). (The transactions
contemplated on behalf of the Company under the Micron Subscription and the
Letter Agreement are collectively referred to herein as the "Micron
Transaction").
Enclosed with this Proxy Statement is the Company's Annual Report for
1995 and the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 which contain background information regarding the
Company and audited financial information for the fiscal year ended
December 31, 1995 and unaudited financial information for the fiscal
quarter ended March 31, 1996.
OPERATING HISTORY AND CEASING OF OPERATIONS
-------------------------------------------
The Company was incorporated under the laws of the State of Delaware
on October 2, 1987. On September 15, 1988, the Company effected a roll-up
transaction pursuant to which its wholly-owned subsidiaries Bengal Oil &
Gas Corporation, a Colorado corporation, Gopher Exploration, Inc., a Texas
corporation, GEC Texas, Inc. (formerly Gulf Exploration Consultants, Inc.),
a Texas corporation, Dornoch Exploration, Inc., a Texas corporation and
Vanderbilt Petroleum, Inc., a Delaware corporation, were rolled-up into the
Company.
In 1988 and 1989, the Company incurred losses in the amount of $4.3
million and $4.1 million, respectively. These substantial losses eroded
the Company's capital base and made it more difficult to obtain additional
capital through borrowing or equity offerings. In addition, the Company
had already incurred a substantial amount of debt. In 1990, in order to
repay such debt the Company was forced to dispose of certain of its major
oil and gas interests.
As of July 6, 1989, the National Association of Securities Dealers,
Inc. ("NASD") delisted the Company's Common Stock from the Nasdaq Small-Cap
Market because of the lack of active market makers registered to trade in
the Company's securities. There is no active market for the Company's
Common Stock.
An additional barrier to the Company's ability to obtain sufficient
financing to fund its operations was the presence of a class of Preferred
Stock of the Company which had a liquidation preference over the Company's
Common Stock. Management determined that it would not be able to
successfully obtain capital through the issuance of equity securities until
it redeemed all of the Preferred Stock. Thus, over the period from 1990
through 1994, the Company redeemed all of the outstanding Preferred Stock.
The Preferred Stock redemption, however, resulted in the Company disposing
of all of its remaining significant oil and gas assets. Subsequent to the
redemption the Company did not have any active business or operations.
EMERGING MONEY
--------------
In December 1994, after engaging in negotiations with several other
parties in an attempt to acquire a viable business opportunity for the
Company, the Company issued 37,942,269 shares of its Common Stock in
connection with the acquisition of a 100% interest in Emerging Money from
Minmet. Efforts were made to raise capital for developmental purposes and
to have the Company's shares included for trading on the Nasdaq Small-Cap
Market; however, the Company was not able to raise sufficient capital for
such purposes and accordingly, no request was made for inclusion on the
Nasdaq System. As a result of the Company's inability to raise sufficient
capital, Minmet continued to fund Emerging Money's operations.
Minmet had formed Emerging Money in June 1994 to hold investments in
companies which provide electronically distributed market information on
the world's emerging capital markets. In December 1994, Minmet contributed
its interest in Emerging Money to the Company in exchange for 37,942,269
shares of the Company's Common Stock. Emerging Money's principal operating
subsidiary was Russiamoney Limited ("Russiamoney"), of which it held a 50%
interest with the Investment & Analytical Centre of Moscow (the "IAC")
owning the remaining 50% interest. The IAC is a Moscow-based economic
consultancy. In November 1995, the IAC terminated the arrangement as to
Russiamoney because of non-payment by Emerging Money.
Emerging Money has formed India Money Limited and South Africa Money
Limited as subsidiaries; however, neither became actively engaged in
business.
Russiamoney is an information services company specializing in
background analysis of financial, political and economic events in Russia's
developing capital markets. Russiamoney obtains information from the IAC,
which it translates, formats, edits and data processes. The processed
information is then provided to Bloomberg Financial Markets system for
worldwide transmission to the financial community.
In January and February of 1995, Emerging Money hired two executives
to oversee and develop Emerging Money's U.S. sales and marketing presence
and to develop new products. Despite the retention of such persons,
Emerging Money incurred substantial losses.
The Company believes that the development of Emerging Money was
curtailed for three reasons. First, Emerging Money was unable to meet its
capital raising plan. It planned to raise $500,000 by January 1995, but
was only able to raise $200,000 by March 1995. Second, sales of the
existing Russiamoney services failed to grow at a significant level.
Third, the retention of personnel placed further strains on Emerging
Money's cash resources.
By September 1995, year to date losses had reached more than $600,000
and Minmet, which had already provided Emerging Money with more than
$350,000 in funding, was unable to continue providing financial support.
MICRON SUBSCRIPTION
-------------------
The Micron Subscription relates to the acquisition by Micron of
3,954,545 newly issued shares of the common stock of Emerging Money. The
acquisition would result in Micron owning 72.5% of the then outstanding
shares of Emerging Money and the Company's ownership interest in Emerging
Money would be reduced to 27.5% of Emerging Money shares then to be
outstanding. In consideration for such Emerging Money shares, Micron has
paid the Company 39,546 Irish Pounds (US$ 63,293 equivalent as of December
31, 1995), and has paid on behalf of Emerging Money approximately US$
80,000 which enabled Emerging Money to discharge certain agreed creditors.
In addition, pending the closing, Micron is to pay or advance additional
funds to creditors of Emerging Money to pay off certain liabilities and
Micron shall have the right to control the management and finances of
Emerging Money on a daily basis and to request Emerging Money to provide to
Micron exclusive editing and administration services upon a fee basis.
Furthermore, pursuant to the Micron Subscription, Micron controls marketing
for Emerging Money's services and collects and is entitled to use in its
sole discretion all revenues obtained from new subscribers. Revenues
obtained from Russiamoney subscribers as of November 30, 1995 have been
used by Emerging Money for working capital purposes. Micron has also been
given the right to use all names, trademarks and copyrights used in
connection with the business of Emerging Money or its subsidiaries on an
exclusive basis. As of the entry into the Micron Subscription, neither the
Company nor Emerging Money had sufficient capital to maintain the
continuing operations of Emerging Money. In December 1995, Micron made a
separate arrangement with the IAC as to the former operations of
Russiamoney. Accordingly, Micron is essentially conducting the business of
Emerging Money. Prior to the Micron Subscription, Micron had no
relationship with the Company or Minmet.
The Micron Subscription had provided that the closing of the
transactions contemplated thereby must occur by June 1, 1996. The parties
to the Micron Subscription, however, have agreed to extend the time by
which the closing must occur to June 17, 1996. Therefore, all conditions
precedent to the closing must occur by June 17, 1996.
CORPORATE RESTRUCTURING
-----------------------
The Letter Agreement relates to the payment of certain outstanding
liabilities and future expenses of the Company. Pursuant to the Letter
Agreement, Minmet will assume 25.4% of the Company's outstanding
liabilities, or $10,804 for legal and accounting services, and upon the
completion of the Micron Transaction, DRM&S and Mensch will lend to the
Company such funds as necessary to settle 74.6% of the total liabilities of
the Company or $31,732, as of December 1995. In addition, Minmet has
agreed to bear all expenses to be incurred by the Company in connection
with (i) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995, (ii) the Company's Annual Report on Form 10-K for
the fiscal year ending December 31, 1995, (iii) this Proxy Statement and
related documents and related expenses, (iv) the negotiation of the Micron
Subscription, (v) the retention of Casey, McGrath & Associates, Dublin,
Ireland in connection with the rendering of the evaluation opinion, and
(vi) related legal, accounting and other fees.
In March 1995, DRM&S and Mensch each invested $100,000 in the Company
as part of a proposed "bridge" financing by the Company and were issued
Promissory Notes (the "Notes"), payable on June 30, 1995 together with
interest at the rate of 9% per annum. The bridge financing was never
completed and a proposed private equity placement was never commenced by
the Company.
Upon the closing of the Micron Subscription, (i) each of DRM&S and
Mensch will exchange its Notes for Common Stock of the Company amounting to
22% of the Common Stock then outstanding, (ii) the Company will transfer
its 27.5% interest in Emerging Money to Minmet in exchange for shares of
the Company's Common Stock presently owned by Minmet which would reduce
Minmet's holding of the Company's Common Stock from 56.4% to 15% of the
shares then to be outstanding (subject to adjustment if the valuation of
the Emerging Money shares would exceed the valuation of the Common Stock to
be exchanged), (iii) the existing public stockholders of the Company will
own the balance of the outstanding shares of Common Stock and (iv) the
Company would have no interest in Emerging Money nor any obligation for any
liabilities of Emerging Money.
On April 30, 1996, Casey, McGrath & Associates rendered an opinion
that the transaction between the Company and Minmet as part of the
corporate restructuring is fair from a financial point of view to the
Company, as of the date thereof.
Until the Micron Transaction is consummated DRM&S and Mensch will
remain creditors of the Company under the Notes and Minmet will remain the
majority stockholder of the Company. If the Micron Transaction is not
consummated, Minmet will reimburse DRM&S and Mensch for all payments made
by each of them pursuant to the Letter Agreement.
After the Micron Transaction, the Company will have no business
activity; however its management will seek business opportunities for the
Company. The intention is to identify and enter into an arrangement for a
business which would present growth prospects to stockholders. The
arrangement would be subject to approval by stockholders. Management plans
to review possible acquisition prospects, but will not enter into any
binding arrangement prior to the closing of the Micron Transaction. The
Micron Subscription contains a non-competition covenant which restricts the
Company from competing directly or indirectly in any business activities of
the type carried on by Emerging Money and any of its subsidiaries at the
closing of the Micron Transaction for a period of two years following such
closing. Management has no plans to seek a business opportunity in the
field of dissemination of financial information on emerging markets.
REASONS FOR THE PROPOSAL
------------------------
The Board of Directors believes that the Micron Transaction is
desirable for the following reasons:
1. Financial Condition.
-------------------
As of the entry into the Micron Subscription, neither the Company nor
Emerging Money had sufficient capital to maintain the continuing operations
of Emerging Money or to conduct any operations. In addition, the Company
has been unable to obtain financing for the operations of Emerging Money.
The Micron Transaction provides the Company with the opportunity to dispose
of its interest in Emerging Money without any contingent exposure for
Emerging Money's liabilities and for satisfaction of certain of the
Corporation's liabilities which will permit it to find prospective new
business opportunities. The alternative is to cease all activity. The
Company does not have sufficient assets to bear the costs of a liquidation.
2. Lack of Financing.
-----------------
The Company has experienced difficulties in obtaining bank financings
and effecting equity placements. Banks and other financial institutions
have refused to finance the Company's activities because of past negative
financial results and the Company's small overall capital and liquidity
structure. Management has spent considerable time trying to attract
capital, but for several reasons, including the low market price which
would result in substantial dilution to stockholders and lack of a trading
market, these efforts were not successful. The Company believes that as a
result of its inability to obtain adequate financing, it would not be able
to successfully develop and grow Emerging Money.
Under applicable Delaware law, stockholders are not entitled to
dissenters' rights of appraisal with respect to the proposed Micron
Transaction.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE MICRON
TRANSACTION.
PROPOSAL 3
CHARTER AMENDMENTS
GENERAL
-------
The Board of Directors of the Company has unanimously adopted a
resolution approving and recommending to the Company's stockholders for
their approval amendments (the "Charter Amendments") to Article Fourth of
the Company's Certificate of Incorporation which would (i) effect a 1-for-
50 reverse split of the presently issued and outstanding shares of the
Company's Common Stock (the "Reverse Split") and (ii) reduce the number of
authorized shares of Common Stock to 10,000,000 shares from 100,000,000
shares. The Charter Amendments would not effect the authorized shares of
Preferred Stock.
REVERSE SPLIT
-------------
The purpose of the Reverse Split is to reduce the number of
outstanding shares of the Company's Common Stock to approximately 1,871,053
shares (or approximately 1,991,092 after the proposed restructuring) from
93,552,625 shares. The Board of Directors believes that the Reverse Split
is desirable for several reasons. The Reverse Split should enhance the
possible acceptability of the Common Stock by the financial community and
investing public as an entity the size and the status of the Company should
not have an outstanding capitalization of 93,552,625 shares. There has not
been any trading market in the Common Stock for the past several years,
which is attributable to the lack of business, revenues, income and also to
the very large capitalization. When the Company acquired Emerging Money,
its plan was to follow the acquisition with a financing and a
recapitalization similar to the Reverse Split. Unfortunately, the Company
was unable to complete the financing so it delayed the recapitalization.
The reduction in the number of issued and outstanding shares of Common
Stock caused by the Reverse Split may permit the commencement of a trading
market for the Common Stock, although there can be no assurance any market
will develop and, if so, what the price for the shares and the activity
would be. In addition, the smaller capitalization should facilitate any
acquisition by the Company as the consideration for any acquisition would
be shares of its Common Stock and/or Preferred Stock. See "Proposal 2 -
The Micron Transaction - Corporate Restructuring."
Assuming consummation of the Micron Transaction and implementation of
the Reverse Split (including Minmet exchanging a portion of its shares of
the Company's Common Stock for the Company's interest in Emerging Money and
the exchange of the Notes for Common Stock), the Company would have
outstanding approximately 1,991,092 shares of Common Stock, of which the
public stockholders would own approximately 816,348 shares, and the balance
of the outstanding shares would be owned as follows:
Holder Number of Shares Percent
------ ---------------- -------
DRM&S 438,040 22%
Mensch 438,040 22%
Minmet 298,664(1) 15%
____________________
(1) Subject to adjustment, see "Proposal 2-The Micron Transaction."
REDUCTION IN AUTHORIZED SHARES OF COMMON STOCK
----------------------------------------------
Management believes that reducing the number of authorized shares to
10,000,000 shares should be sufficient for any future transaction or other
corporate needs. The Company has no present plans to issue any shares of
its Common Stock other than in connection with the Micron Transaction.
Since the amount of the Delaware franchise taxes payable by the
Company is based in part upon the number of shares of capital stock which
are authorized by the Company's Certificate of Incorporation, the reduction
in the number of shares of authorized Common Stock would save the Company
approximately $10,000 per year by a reduction in such franchise taxes.
EFFECT OF REVERSE SPLIT
-----------------------
If the Charter Amendments are approved, upon filing of the
Certificate of Amendment to the Certificate of Incorporation of the Company
with the Secretary of State of the State of Delaware, the Reverse Split
will be effective, and each certificate representing shares of Common Stock
outstanding immediately prior to the Reverse Split (the "Old Shares") will
be deemed automatically without any action on the part of the stockholders
to represent one-fiftieth the number of shares of Common Stock after the
Reverse Split (the "New Shares"); provided, however, that no fractional New
Shares will be issued as a result of the Reverse Split. In lieu of
fractional shares, each stockholder whose Old Shares are not evenly
divisible by fifty will be rounded up or down to the nearest whole share,
except that record holders of 25 or fewer shares will receive one New
Share. After the Reverse Split becomes effective, stockholders will be
asked to surrender certificates representing Old Shares in accordance with
the procedures set forth in a letter of transmittal to be sent to the
stockholders by the Company. Upon such surrender, a certificate
representing the New Shares will be issued and forwarded to the
stockholders.
The Common Stock issued pursuant to the Reverse Split will be fully
paid and nonassessable. The voting and other rights that presently
characterize the Common Stock will not be altered by the Reverse Split.
The receipt of New Shares solely in exchange for Old Shares will not
result in recognition of tax gain or loss to stockholders. The adjusted
tax basis of each stockholders' New Shares will be the same as its adjusted
tax basis in the exchanged Old Shares. The holding period of New Shares
received solely in exchange for Old Shares will include the stockholders'
holding periods in the exchanged Old Shares. No gain or loss will be
recognized by the Company upon the Reverse Split. The foregoing is a
general discussion of certain federal income tax consequences of the
Reverse Split. Stockholders should consult their own tax advisors as to
the tax effects of the Reverse Split in light of their individual
circumstances.
Under applicable Delaware law, stockholders are not entitled to
dissenters' rights of appraisal with respect to the proposed amendments to
the Company's Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE CHARTER
AMENDMENTS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michael H. Nolan, Chief Financial Officer, Secretary, a Director and
nominee for director of the Company, is the Finance Director of Minmet, and
Jeremy Metcalfe, a Director and nominee for director of the Company, is the
Chairman of the Board of Directors of Minmet. Minmet owns a majority of
the Common Stock. Pursuant to the Letter Agreement, Minmet will assume
certain liabilities of the Company and exchange shares of the Company's
Common Stock held by it for the Company's interest in Emerging Money as
part of the Micron Transaction. Messrs. Nolan and Metcalfe have an
indirect interest in the Micron Transaction and the exchange of the
Emerging Money Shares by reason of their executive positions in Minmet.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more
than 10% of the Company's Common Stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). The Company believes that, during the fiscal year
ended December 31, 1995, its executive officers, directors and holders of
more than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements. In making these statements, the Company has relied
upon a review of reports on Forms 3, 4 and 5 furnished to the Company
during, or with respect to, its last fiscal year.
AUDITORS
The Company's independent public auditors are Berry, Dunn, McNeil &
Parker. A representative of Berry, Dunn, McNeil & Parker, will not be
present at the Meeting.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual
meeting of stockholders must be received by the Company by February 6, 1997
in order to be considered for inclusion in proxy materials distributed in
connection with such meeting. All such proposals should be in compliance
with applicable SEC regulations.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before the Meeting.
However, if any other matters not mentioned in the Proxy Statement are
properly brought before the Meeting or any adjournments thereof, the
persons named in the enclosed Proxy or their substitutes will have
discretionary authority to vote proxies given in said form, or otherwise
act, in respect of such matters, in accordance with their best judgment.
All of the costs and expenses in connection with the solicitation of
Proxies with respect to the matters described herein will be borne by the
Company. In addition to solicitation of Proxies by use of the mails,
directors and officers (who will receive no compensation therefor) of the
Company may solicit the return of Proxies by telephone or personal
interview. The Company will request banks, brokerage houses and other
custodians, nominees and fiduciaries to forward copies of the proxy
material to their principals and to request instructions for voting the
Proxies.
The Company's Annual Report on Form 10-K will be provided without
charge to each stockholder as of the Record Date so requesting in writing.
The request should be directed to: Gulf Exploration Consultants, Inc., c/o
Minmet plc, Grand Canal House, 1 Upper Grand Canal Street, Dublin 4,
Ireland, Attention: Corporate Secretary.
It is important that Proxies be returned promptly. Stockholders are,
therefore, urged to fill in, date, sign and return the Proxy immediately.
No postage need be affixed if mailed in the enclosed envelope in the United
States.
By order of the Board of Directors
Michael H. Nolan
Secretary
June 5, 1996
GULF EXPLORATION CONSULTANTS, INC.
SPECIAL MEETING OF STOCKHOLDERS
JUNE __, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of GULF EXPLORATION CONSULTANTS, INC., a
Delaware corporation (the "Company"), acknowledges receipt of the Notice of
Special Meeting of Stockholders and Proxy Statement, dated June 5, 1996,
and hereby constitutes and appoints L. GEORGE RIEGER or MICHAEL H. NOLAN,
or either of them acting singly in the absence of the other, with the power
of substitution in either of them, the proxies of the undersigned to vote
all shares of Common Stock of the Company which the undersigned would be
entitled to vote at the Special Meeting of Stockholders, and at any
adjournment or adjournments thereof, hereby revoking any proxy or proxies
heretofore given and ratifying and confirming all that said proxies may do
or cause to be done by virtue thereof with respect to the following
matters:
1. The election of three directors nominated by the Board of
Directors:
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as indicated) [ ] for all nominees listed below [ ]
Jeremy Metcalfe, Michael H. Nolan and L. George Rieger
(Instruction: To withhold authority to vote for any individual
nominee or nominees write such nominee's or
nominees' name(s) in the space provided below.)
2. The Subscription Agreement and Option with Micron Ltd. and
related restructuring transactions:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The recapitalization involving a reverse split of the Common
Stock and the reduction in the number of authorized shares of
Common Stock:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Other matters as may properly come before the meeting or any
adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR each of the above
proposals.
Dated: ____________________________________, 1996
____________________________________
____________________________________
Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title as it appears hereon. When
signing as joint tenants, all parties in the joint
tenancy must sign. When a proxy is given by a
corporation, it should be signed by an authorized
officer and the corporate seal affixed. No
postage is required if returned in the enclosed
envelope and mailed in the United States.
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY
IN THE ENCLOSED ENVELOPE.