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As filed with the Securities and Exchange Commission on June 1, 2001
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VECTOR GROUP LTD.
(Exact Name of Registrant as Specified in its Charter)
Delaware 65-0949535
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
100 S.E. Second Street
Miami, Florida 33131
(305) 579-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Richard J. Lampen
Executive Vice President
Vector Group Ltd.
100 S.E. Second Street
Miami, Florida 33131
(305) 579-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Mark L. Weissler, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
(212) 530-5000
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Approximate date of commencement of proposed sale to the public: From time to
time following the effective date of the Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [ ]
If this form is post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
================================================================================
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Shares to Be Amount to Be Offering Price per Aggregate Offering Amount of
Registered Registered Unit Price Registration Fee
--------------------- ------------ ------------------ ------------------ ----------------
Common Stock, 1,639,344 $32.74(1) $53,672,122 $13,418
$.10 par value
================================================================================
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) based on average high and low prices for
Vector's common stock on the New York Stock Exchange consolidated reporting
system on May 25, 2001.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall hereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
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LEGEND FOR RED HERRING
[The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.]
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PROSPECTUS SUBJECT TO COMPLETION
DATED June 1, 2001
1,639,344 SHARES
VECTOR GROUP LTD.
COMMON STOCK
---------------------------------------------------
These shares may be sold by the selling stockholder
listed on page 12. Vector will not receive any proceeds from
the sale of these shares.
Vector's common stock is listed on The New York Stock
Exchange under the symbol "VGR". The last reported sale price
of the common stock on The New York Stock Exchange on May 31,
2001 was $34.02.
The common stock may be sold in transactions on The
New York Stock Exchange at market prices then prevailing, in
negotiated transactions or otherwise. See "Plan of Distribution."
THIS OFFERING INVOLVES MATERIAL RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED THE SECURITIES TO BE ISSUED UNDER THIS PROSPECTUS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------------------
June ___, 2001
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WHERE YOU CAN FIND MORE INFORMATION
Vector files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information Vector files at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Vector's SEC filings are also available to the public from commercial document
retrieval services and at the Website maintained by the SEC at www.sec.gov.
Vector has filed a registration statement to register with the SEC the Vector
common stock listed in this prospectus. This prospectus is part of that
registration statement. As allowed by SEC rules, this prospectus does not
contain all of the information you can find in the registration statement or the
exhibits to the registration statement.
Some of the important business and financial information that you may
want to consider is not included in this prospectus, but rather is "incorporated
by reference" to other documents that have been filed by Vector with the SEC.
The information that is incorporated by reference consists of:
o Vector's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed with the SEC on April 2, 2001;
o Vector's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001, filed with the SEC on May 14, 2001;
o Vector's Current Report on Form 8-K, filed with the SEC on May 17,
2001;
o The description of Vector's common stock contained in its Current
Report on Form 8-K, filed with the SEC on April 3, 2000; and
o All documents filed by Vector under the Securities Exchange Act of
1934 after the date of this prospectus and before the termination
of this offering.
If there is any contrary information in a previously filed document
that is incorporated by reference, then you should rely on the information in
this prospectus.
You can obtain any of the documents incorporated by reference through
Vector or the SEC. Documents incorporated by reference are available from Vector
without charge. You may obtain documents incorporated by reference in this
prospectus by requesting them in writing to the following address or by
telephone:
Vector Group Ltd.
Attention: Investor Relations
100 S.E. Second Street, 32nd Floor
Miami, Florida 33131
(305) 579-8000
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PROSPECTUS SUMMARY
BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL INFORMATION WHICH MAY
BE IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS, INCLUDING THE
INFORMATION INCORPORATED BY REFERENCE, BEFORE YOU DECIDE WHETHER TO INVEST IN
VECTOR'S COMMON STOCK. YOU SHOULD PAY SPECIAL ATTENTION TO THE RISKS OF
INVESTING IN VECTOR'S COMMON STOCK AS DISCUSSED UNDER "RISK FACTOR."
THE COMPANY
Vector is a holding company for a number of businesses. Vector holds
these businesses through its wholly-owned subsidiary BGLS Inc. Vector is engaged
principally in:
o the manufacture and sale of cigarettes in the United States through
its subsidiary Liggett Group Inc.,
o the development of new, less hazardous cigarette products through
its Vector Tobacco subsidiaries, and
o the investment banking and brokerage business in the United States
and the real estate business in Russia through its majority-owned
subsidiary New Valley Corporation.
Vector is controlled by Bennett S. LeBow, the Chairman of Vector, BGLS
and New Valley, who beneficially owns approximately 39% of Vector's common
stock.
The mailing address of the principal executive offices of Vector is 100
S.E. Second Street, Miami, Florida 33131. Vector's telephone number at that
address is (305) 579-8000.
THE OFFERING
Securities offered by the
selling stockholder.................. 1,639,344 shares of common stock
Common Stock outstanding............. 27,900,546 shares of common stock
NYSE symbol.......................... Common Stock: VGR
USE OF PROCEEDS
The net proceeds from the sale of the shares will be received by the
selling stockholder. None of the proceeds from any sales by the selling
stockholder will be received by Vector.
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RISK FACTORS
BEFORE YOU INVEST IN VECTOR'S SECURITIES, YOU SHOULD BE AWARE THAT
VECTOR IS SUBJECT TO VARIOUS RISKS, INCLUDING THE ONES LISTED BELOW, THE
OCCURRENCE OF ANY OF WHICH COULD MATERIALLY ADVERSELY AFFECT VECTOR'S BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS AS WELL AS THE OTHER INFORMATION INCLUDED AND INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN EVALUATING AN INVESTMENT IN VECTOR'S COMMON
STOCK.
VECTOR IS A HOLDING COMPANY AND DEPENDS ON CASH PAYMENTS FROM SUBSIDIARIES WHICH
ARE SUBJECT TO RESTRICTIONS
Vector is a holding company and has no operations of its own. Vector
holds its interests in its various businesses through its wholly-owned
subsidiary BGLS Inc. In addition to Vector's own cash resources, Vector's
ability to pay dividends on its common stock depends on the ability of BGLS to
make cash available to Vector. The purchase agreement for the BGLS senior
secured notes contains covenants which limit the ability of BGLS to make
distributions to Vector to 50% of BGLS' net income, unless BGLS holds cash of
$50 million after giving effect to the payment of the distribution. BGLS'
ability to pay dividends to Vector depends primarily on the ability of Liggett
and New Valley, in which Vector indirectly holds an approximately 56% interest,
to generate cash and make it available to BGLS. Liggett's revolving credit
agreement prohibits Liggett from paying cash dividends to BGLS unless Liggett's
adjusted net worth and borrowing availability exceed specified levels.
As the controlling New Valley stockholder, Vector must deal fairly with
New Valley, which may limit its ability to enter into transactions with New
Valley that result in the receipt of cash from New Valley and to influence New
Valley's dividend policy. In addition, since Vector owns only approximately 56%
of the common shares of New Valley, a significant portion of any cash and other
assets distributed by New Valley will be received by persons other than Vector
and its subsidiaries.
Vector's receipt of cash payments, as dividends or otherwise, from its
subsidiaries is an important source of its liquidity and capital resources. If
Vector does not have sufficient cash resources of its own and does not receive
payments from its subsidiaries in an amount sufficient to repay its debts, it
must obtain additional funds from other sources. There is a risk that Vector
will not be able to obtain additional funds at all or on terms acceptable to
Vector. Vector's inability to service these obligations would significantly harm
Vector and the value of its common stock.
LIGGETT FACES INTENSE COMPETITION IN THE DOMESTIC TOBACCO INDUSTRY
Liggett is considerably smaller and has fewer resources than all its
major competitors and has a more limited ability to respond to market
developments. Published industry sources indicate that the three largest
manufacturers control approximately 85.2% of the United States cigarette market.
Philip Morris Companies Inc. is the largest and most profitable manufacturer in
the market, and its profits are derived principally from its sale of premium
cigarettes. Based on published industry sources, Liggett's management believes
that Philip Morris had more than 60.7% of the premium segment and more than
50.5% of the total domestic market during 2000. Philip Morris and RJR, the two
largest cigarette manufacturers, have historically, because of their dominant
market share, been able to determine cigarette prices for the various pricing
tiers within the industry. The other cigarette manufacturers historically have
brought their prices into line with the levels established by the two major
manufacturers.
LIGGETT'S BUSINESS IS HIGHLY DEPENDENT ON THE DISCOUNT SEGMENT
Liggett depends more on sales in the discount segment of the market,
relative to the full-price premium segment, than its major competitors.
Approximately 89% of Liggett's net sales in 2000 were generated in the discount
segment. The discount segment is highly competitive with consumers having less
brand loyalty and placing greater emphasis on price. While the four major
manufacturers all compete with Liggett in the discount segment of the market,
the strongest competition for market share has recently come from a group of
small manufacturers, most of which are producing low quality, deep discount
cigarettes. While Liggett's share of the discount market increased from 3.9% in
1999 to 5.3% in 2000, published industry sources indicate that these smaller
manufacturers' total market share
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increased from 8.8% to 13.8% due to their increased competitive discounting. If
the discount market pricing continues to be impacted by these smaller
manufacturers, margins in Liggett's largest market segment could be negatively
affected, which in turn could negatively affect the value of Vector's common
stock.
LIGGETT'S MARKET SHARE HAS DECLINED IN RECENT PERIODS
Liggett has suffered a substantial decline in unit sales and
associated market share in recent years, although Liggett's unit sales and
market share increased during 2000. This market share erosion resulted in part
from its highly leveraged capital structure that existed until December 1998 and
Liggett's limited ability to match other competitors' wholesale and retail trade
programs, obtain retail shelf space for its products and advertise its brands.
The decline in recent years also resulted from adverse developments in the
tobacco industry, intense competition and changes in consumer preferences. Based
on published industry sources, Liggett's management believes that Liggett's
overall market share during 2000 was 1.5%, compared with 1.2% for 1999 and 1.3%
for 1998. Based on published industry sources, Liggett's management believes
that Liggett's share of the premium segment during 2000 was .2%, down from .3%
in 1999 and .5% in 1998, and its share of the discount segment during 2000 was
5.3%, up from 3.9% in 1999 and 3.5% for 1998. As adjusted for the Philip Morris
brand transaction, Liggett's share of the premium segment during 1998 was .2%.
If Liggett's market share declines, Liggett's sales volume, operating income and
cash flows could be negatively affected, which in turn could negatively affect
the value of Vector's common stock.
THE DOMESTIC CIGARETTE INDUSTRY HAS EXPERIENCED DECLINING UNIT SALES IN RECENT
PERIODS
Industry-wide shipments of cigarettes in the United States have been
steadily declining for a number of years, although published industry sources
estimate that domestic industry-wide shipments increased by approximately .1% in
2000. Published industry sources estimate that domestic industry-wide shipments
decreased by approximately 9.0% in 1999 compared to 1998. While Liggett's
domestic shipments increased 24.0% in 2000, Liggett's unit sales volume in 1999
decreased more significantly (11.3%) than the overall domestic market without
giving effect to the Philip Morris transaction. Liggett's management believes
that industry-wide shipments of cigarettes in the United States will continue to
decline as a result of numerous factors. These factors include health
considerations, diminishing social acceptance of smoking and legislative
limitations on smoking in public places, federal and state excise tax increases
and settlement-related expense which have contributed to large cigarette price
increases. If this decline in industry shipments continues and Liggett is unable
to capture market share from its competitors, or if the industry is unable to
offset the decline in unit sales with price increases, Liggett's sales volume,
operating income and cash flows could be negatively affected, which in turn
could negatively affect the value of Vector's common stock.
LITIGATION AND REGULATION WILL CONTINUE TO HARM THE TOBACCO INDUSTRY
The cigarette industry continues to be challenged on numerous fronts.
New cases continue to be commenced against Liggett and other cigarette
manufacturers. As of March 31, 2001, there were approximately 314 individual
suits, 43 purported class actions and 104 governmental and other third-party
payor health care reimbursement actions pending in the United States in which
Liggett was a named defendant. In addition to these cases, during 2000, an
action against cigarette manufacturers involving approximately 1,200 named
individual plaintiffs was consolidated before a single West Virginia state
court. Liggett is a defendant in most of the cases pending in West Virginia.
Approximately 38 other purported class action complaints have been filed against
the cigarette manufacturers for alleged antitrust violations. As new cases are
commenced, the costs associated with defending these cases and the risks
relating to the inherent unpredictability of litigation continue to increase.
An unfavorable verdict was returned in the first phase of the ENGLE
smoking and health class action trial pending in Florida. In July 2000, the jury
awarded $790 million in punitive damages against Liggett in the second phase of
the trial, and the court entered an order of final judgment. Liggett intends to
pursue all available post-trial and appellate remedies. If this verdict is not
eventually reversed on appeal, or substantially reduced by the court, it could
have a material adverse effect on Vector. Liggett has filed the $3.45 million
bond required under recent Florida legislation which limits the size of any bond
required, pending appeal, to stay execution of a punitive damages verdict. On
May 7, 2001, Liggett reached an agreement with the class in the ENGLE case,
which will provide assurance to Liggett that the stay of execution, currently in
effect under the Florida bonding statute, will not be lifted or limited at any
point until completion of all appeals, including to the United States Supreme
Court. As required by the agreement, Liggett paid $6.27 million into an escrow
account to be held for the benefit of the ENGLE
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class, and released, along with Liggett's existing $3.45 million statutory bond,
to the court for the benefit of the class upon completion of the appeals
process. It is possible that additional cases could be decided unfavorably and
that there could be further adverse developments in the ENGLE case. Management
cannot predict the cash requirements related to any future settlements and
judgments, including cash required to bond any appeals, and there is a risk that
those requirements will not be able to be met.
In recent years, there have been a number of restrictive regulatory
actions from various Federal administrative bodies, including the United States
Environmental Protection Agency and the Food and Drug Administration. There have
also been adverse political decisions and other unfavorable developments
concerning cigarette smoking and the tobacco industry, including the
commencement and certification of class actions and the commencement of
third-party payor actions. These developments generally receive widespread media
attention. Vector is not able to evaluate the effect of these developing matters
on pending litigation or the possible commencement of additional litigation, but
Vector's consolidated financial position, results of operations or cash flows
could be materially adversely affected by an unfavorable outcome in any
smoking-related litigation.
LIGGETT HAS SIGNIFICANT SALES TO A SINGLE CUSTOMER
In 2000, 33.8% of Liggett's net sales, 38.1% of Liggett's net sales in
the discount segment and 24.6% of Vector's consolidated revenues were to
Liggett's largest customer. If this customer were to discontinue its
relationship with Liggett or experience financial difficulties, Liggett's
results of operations could be adversely affected.
EXCISE TAX INCREASES MAY ADVERSELY AFFECT CIGARETTE SALES
As part of the 1997 budget agreement approved by Congress, federal
excise taxes on a pack of cigarettes, which are currently 34 cents, were
increased at the beginning of 2000 and will rise five cents more in the year
2002. In general, excise taxes and other taxes on cigarettes have been
increasing. These taxes vary considerably and, when combined with sales taxes
and the current federal excise tax, may be as high as $1.88 per pack in a given
locality in the United States. Congress has considered significant increases in
the federal excise tax or other payments from tobacco manufacturers, and
increases in excise and other cigarette-related taxes have been proposed at the
state and local levels. A substantial federal or state excise tax increase could
accelerate the trend away from smoking and could have an unfavorable effect on
Liggett's sales and profitability.
VECTOR TOBACCO IS SUBJECT TO RISKS INHERENT IN NEW PRODUCT DEVELOPMENT
INITIATIVES
Vector plans to make significant investments in Vector Tobacco's
development projects in the tobacco industry. Vector Tobacco is currently
involved with the development of new cigarette products designed to both reduce
cancer causing agents in cigarettes to below the level that initiates carcinomas
in mouse skin-painting tests and to be virtually free of nicotine. These
initiatives are subject to a high level of risks, uncertainties and
contingencies, including the challenges inherent in new product development.
There is a risk that investments in Vector Tobacco will harm Vector's
profitability (if any) or liquidity or cash flow.
The substantial risks facing Vector Tobacco include:
RISKS OF MARKET ACCEPTANCE OF THE NEW PRODUCTS. Vector Tobacco has
conducted limited testing of cigarettes produced from tobacco genetically
modified to produce a virtually nicotine-free and TSNA-free cigarette. Virtually
nicotine-free and TSNA-free or low PAH cigarettes may not be accepted ultimately
by adult smokers. Adult smokers may decide not to purchase cigarettes made with
virtually nicotine-free and TSNA-free or low PAH tobaccos due to taste or other
preferences, or due to the use of genetically modified tobacco or the virtual
absence of nicotine.
COMPETITION FROM OTHER CIGARETTE MANUFACTURERS WITH GREATER RESOURCES.
The cigarette industry is highly competitive. Vector Tobacco's competitors
generally have substantially greater resources than Vector Tobacco has,
including financial, marketing and personnel resources. Other major tobacco
companies have stated that they are working on reduced risk, "safer" cigarette
products and have made publicly available only limited additional information
concerning their activities at this time. There is a substantial likelihood that
other major tobacco
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companies will introduce products that are designed to compete directly with
Vector Tobacco's virtually nicotine-free and TSNA-free and low PAH products.
POTENTIAL DISPUTES CONCERNING INTELLECTUAL PROPERTY. Vector Tobacco's
ability to commercially exploit its proprietary technology for its virtually
nicotine-free and TSNA-free and low PAH products depends in large part on its
ability to defend issued patents, to obtain further patent protection for the
technology in the United States and other jurisdictions, and to operate without
infringing on the patents and proprietary rights of others. Additionally, it
must be able to obtain appropriate licenses to patents or proprietary rights
held by third parties if infringement would otherwise occur, both in the United
States and in foreign counties.
Intellectual property rights, including Vector Tobacco's patents (owned
or licensed), involve complex legal and factual issues. Any conflicts resulting
from third party patent applications and patents could significantly limit
Vector Tobacco's ability to obtain meaningful patent protection or to
commercialize its technology. If necessary patents currently exist or are issued
to other companies that contain competitive or conflicting claims, Vector
Tobacco may be required to obtain licenses to these patents or to develop or
obtain alternative technology. Licensing agreements, if required, may be
unavailable on acceptable terms or at all. If licenses are not obtained, Vector
Tobacco could be delayed in or prevented from pursuing the development or
commercialization of its new cigarette products. Any alternative technology, if
feasible, could take several years to develop.
Litigation which could result in substantial cost may also be necessary
to enforce any patents to which Vector Tobacco has rights, or to determine the
scope, validity and unenforceability of other parties' proprietary rights which
may affect its rights. Vector Tobacco may also have to participate in
interference proceedings declared by the U.S. Patent and Trademark Office to
determine the priority of an invention, which could result in substantial costs.
There is a risk that its licensed patents would not be held valid by a court or
administrative body or that an alleged infringer would not be found to be
infringing. The mere uncertainty resulting from the institution and continuation
of any technology-related litigation or interference proceeding could have a
material and adverse effect on Vector Tobacco's business, operating results and
prospects.
Vector Tobacco may also rely on unpatented trade secrets and know-how
to maintain its competitive position, which it seeks to protect, in part, by
confidentiality agreements with employees, consultants, suppliers and others.
There is a risk that these agreements will be breached or terminated, that
Vector Tobacco will not have adequate remedies for any breach, or that its trade
secrets will otherwise become known or be independently discovered by
competitors.
DEPENDENCE ON KEY SCIENTIFIC PERSONNEL. Vector Tobacco's business
depends for its continued development and growth on the continued services of
key scientific personnel. The loss of Dr. Robert Bereman, Vice President of
Chemical Research, or Dr. Mark A. Conkling, Vice President of Genetic Research,
could have a serious negative impact upon Vector Tobacco's business, operating
results and prospects.
ABILITY TO RAISE CAPITAL AND MANAGE GROWTH OF BUSINESS. If Vector
Tobacco succeeds in introducing to market and increasing consumer acceptance for
its new cigarette products, Vector Tobacco will be required to obtain
significant amounts of additional capital and manage substantial volume from its
customers. There is a risk that adequate amounts of additional capital will not
be available to Vector Tobacco to fund the growth of its business. To
accommodate growth and compete effectively, Vector Tobacco will also be required
to attract, integrate, motivate and retain additional highly skilled sales,
technical and other employees. Vector Tobacco will face competition for these
people. Its ability to manage volume also will depend on its ability to scale up
its tobacco processing, production and distribution operations. There is a risk
that it will not succeed in scaling its processing, production and distribution
operations and that its personnel, systems, procedures and controls will not be
adequate to support its future operations.
POTENTIAL DELAYS IN OBTAINING ANY NECESSARY GOVERNMENT APPROVALS.
Vector Tobacco's business may become subject to extensive domestic and
international government regulation. Various proposals have been made for
federal, state and international legislation to regulate cigarette
manufacturers. The ultimate outcome of these proposals cannot be predicted. It
is possible that laws and regulations may be adopted covering issues like the
manufacture, sale, distribution and labeling of tobacco products as well as any
health claims associated with new less hazardous cigarette products and the use
of genetically modified tobacco. A system of regulation by agencies like the
Food and Drug Administration,
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the Federal Trade Commission or the United States Department of Agriculture may
be established. Any new laws or regulations of this type could significantly
delay Vector Tobacco's introduction of its new products to market or may require
it to incur significant expense in complying with any new regulation or in
obtaining any necessary government approvals.
POTENTIAL DELAYS IN OBTAINING TOBACCO, OTHER RAW MATERIALS AND ANY
TECHNOLOGY NEEDED TO PRODUCE NEW PRODUCTS. Vector Tobacco is dependant on third
parties to produce tobacco and other raw materials that Vector Tobacco will
require to manufacture its new products. Additionally, the growing of new
tobacco and new seeds is subject to adverse weather conditions. Vector Tobacco
may also need to obtain licenses to technology subject to patents or proprietary
rights of third parties to produce its products. The failure by such third
parties to supply Vector Tobacco with tobacco, other raw materials and
technology on commercially reasonable terms, or at all, in the absence of
readily available alternative sources, would have a serious negative impact on
Vector Tobacco's business, operating results and prospects. There is also a risk
that interruptions in the supply of these materials and technology may occur in
the future. Any interruption in their supply could have a serious negative
impact on Vector Tobacco.
NEW VALLEY IS SUBJECT TO RISKS RELATING TO THE INDUSTRIES IN WHICH IT OPERATES
THE SECURITIES INDUSTRY. As a broker-dealer, Ladenburg is subject to
uncertainties endemic to the securities industry. These uncertainties include
the volatility of domestic and international financial, bond and stock markets,
as demonstrated by recent disruptions in the financial markets, extensive
governmental regulation, litigation, intense competition and substantial
fluctuations in the volume and price level of securities. Ladenburg also depends
on the solvency of various counterparties. As a result, revenues and earnings
may vary significantly from quarter to quarter and from year to year. In periods
of low volume, profitability is impaired because expenses remain relatively
fixed. The securities industry has experienced significant consolidation in
recent years among industry participants. Many of Ladenburg's competitors are
substantially larger than Ladenburg in terms of capital, employees and
distribution and marketing resources.
RISKS OF REAL ESTATE DEVELOPMENT PROJECTS. New Valley is engaged in a
variety of real estate development projects in Russia. Development projects are
subject to special risks including potential increase in costs, inability to
meet deadlines which may delay the timely completion of projects, reliance on
contractors who may be unable to perform and the need to obtain various
governmental and third party consents.
RISKS RELATING TO RUSSIAN REAL ESTATE OPERATIONS. New Valley has
significant real estate development operations in Russia. These operations are
subject to a high level of risk.
In its on-going transition from a centrally-controlled economy under
communist rule, Russia has experienced dramatic political, social and economic
upheaval. There is a risk that further reforms necessary to complete this
transition will not occur. In August 1998, the economy of the Russian Federation
entered a period of even greater economic instability which has continued since
that time. The country's currency continues to devalue. There is continued
volatility in the debt and equity markets, and hyperinflation persists.
Confidence in the banking sector has yet to be restored, and there continues to
be a general lack of liquidity in the economy. In addition, New Valley may be
harmed by regulatory, political and legal developments beyond the control of
companies operating in the Russian Federation, including:
o diplomatic developments,
o decisions of international lending organizations,
o regional tensions,
o currency repatriation restrictions,
o foreign exchange fluctuations,
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o an undeveloped system of commercial laws, including laws on real
estate titles and mortgages, and a relatively untested judicial
system,
o an evolving taxation system subject to constant changes which may
be applied retroactively and subject to varying interpretations by
tax authorities which may not coincide with that of management and
can result in assessments of additional taxes, penalties and
interest, which can be significant, and
o other legal developments and, in particular, the risks of
expropriation, nationalization and confiscation of assets and
changes in legislation relating to foreign ownership.
As a result of the recent economic difficulties in the Russian economy,
New Valley took a charge of $11.6 million in 1999 for a permanent impairment in
the value of the site for the proposed Ducat Place III office building and
related goodwill. The uncertainties in Russia may also impair New Valley's
ability to complete planned financing and investing activities. The development
of the Russian properties will require significant amounts of debt and other
financing. In acquiring its interest in the Kremlin sites, New Valley agreed
with the City of Moscow to invest an additional $22 million by May 2000 in the
development of the property. In April 2000, Western Realty Repin arranged
short-term financing to fund the investment. Under the terms of the investment,
New Valley is required to use this financing amount to make construction
expenditures on the site by June 2002. Failure to make the expenditures could
result in the forfeiture of a 34.8% interest in one of the sites. New Valley is
considering potential financing alternatives on behalf of the joint ventures.
However, given the recent economic turmoil in Russia, there is a risk that
financing will not be available on acceptable terms. Failure to obtain
sufficient capital for the projects would force the joint ventures to curtail or
delay their projects.
NEW VALLEY'S POTENTIAL INVESTMENTS ARE UNIDENTIFIED AND MAY NOT SUCCEED
New Valley currently holds a significant amount of marketable
securities and cash not committed to any specific investments. This subjects you
to increased risk and uncertainty because you will not be able to evaluate how
this cash will be invested and the economic merits of particular investments.
There may be substantial delay in locating suitable investment opportunities. In
addition, New Valley may lack relevant management experience in the areas in
which New Valley may invest. There is a risk that New Valley will fail in
targeting, consummating or effectively managing any of these investments.
VECTOR DEPENDS ON ITS KEY PERSONNEL
Vector depends on the efforts of its executive officers and other key
personnel. While Vector believes that it could find replacements for these key
personnel, the loss of their services could have a significant adverse effect on
Vector's operations. Vector does not maintain key-man life insurance for any of
its personnel.
VECTOR AND NEW VALLEY HAVE MANY POTENTIALLY DILUTIVE SECURITIES OUTSTANDING
Vector has outstanding warrants expiring in 2003 to purchase 1,889,016
shares of Vector's common stock, at a price of $4.54 per share. In 1998, Vector
granted options expiring in 2003 for shares of Vector's common stock, at a price
of $5.45 per share, to a law firm that represents Vector, Liggett and New
Valley, of which options for 1,063,125 shares are currently outstanding and
exercisable. At March 31, 2001, Vector had outstanding options granted to
employees to purchase 9,973,503 shares of its common stock, at prices ranging
from $.91 to $21.36 per share, of which options for 4,409,115 shares are
exercisable during 2001. The issuance of these shares will cause dilution which
may adversely affect the market price of Vector's common stock. The availability
for sale of significant quantities of Vector's common stock could adversely
affect the prevailing market price of the stock.
As part of New Valley's recapitalization, a total of 17,898,629
warrants to purchase common shares were issued to New Valley's stockholders. The
potential issuance of common shares on exercise of the warrants would increase
the number of New Valley's common shares outstanding by more than 80%.
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VECTOR'S STOCK PRICE HAS BEEN VOLATILE
The trading price of Vector's common stock has fluctuated widely,
ranging between $10.30 and $38.27 per share over the past 52 weeks. The overall
market and the price of its common stock may continue to fluctuate greatly. The
trading price of its common stock may be significantly affected by various
factors, including:
o the depth and liquidity of the trading market for Vector's common
stock,
o quarterly variations in its actual or anticipated operating
results,
o changes in investors' and analysts' perceptions of the business and
legal risks facing Vector and the tobacco industry,
o changes in estimates of its earnings by investors and analysts, and
o announcements or activities by its competitors.
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FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains
"forward-looking statements" within the meaning of the federal securities law.
Forward-looking statements include information relating to Vector's intent,
belief or current expectations, primarily with respect to, but not limited to:
o economic outlook,
o capital expenditures,
o cost reduction,
o cash flows,
o operating performance,
o litigation, and
o related industry developments (including trends affecting Vector's
business, financial condition and results of operations).
Vector identifies forward-looking statements in this prospectus by
using words or phrases such as "anticipate", "believe", "estimate", "expect",
"intend", "may be", "objective", "plan", "predict", "project" and "will be" and
similar words or phrases or their negatives.
The forward-looking information involves important risks and
uncertainties that could cause Vector's actual results, performance or
achievements to differ materially from its anticipated results, performance or
achievements expressed or implied by the forward-looking statements. These risks
and uncertainties include the risk factors discussed above.
Although Vector believes the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there is a risk
that these expectations will not be attained and that any deviations will be
material. Vector disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained in this
prospectus to reflect any changes in its expectations or any change in events,
conditions or circumstances on which any statement is based.
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SELLING STOCKHOLDER
The shares registered under the registration statement of which this
prospectus is a part are being offered for the account of High River Limited
Partnership, a Delaware limited partnership, or its transferees selling after
May 31, 2002, pledgees or donees. High River acquired the 1,639,344 shares of
Vector's common stock offered in this prospectus from Vector under a stock
purchase agreement between Vector and High River dated May 16, 2001, which has
been incorporated by reference into the registration statement. The closing
price per share of Vector's common stock on The New York Stock Exchange on May
16, 2001 was $33.60 per share. The consideration received by Vector from High
River from the sale of the 1,639,344 shares under the agreement was $50 million
in the aggregate, or $30.50 per share. High River has agreed on behalf of
itself, its affiliates and its donees not to sell these shares in the public
market for a period of a year from the closing of the purchase. This lock-up
period will terminate earlier if either the chairman or the president of
Vector, or their affiliates or donees, sell more than 300,000 shares of
Vector's common stock in the public market after the closing date. Vector must
pay High River liquidated damages if the registration statement has not been
declared effective by the date of termination of the lock-up period. The
liquidated damages would be payable monthly at a rate per share equal to the
amount obtained by dividing $30.50 by the number of days between the earlier of
the termination date of the lock-up period, or the six month anniversary of the
closing date, and the date the shares may be resold by High River without
registration under Rule 144(k) under the Securities Act. The amount of
aggregate liquidated damages may not exceed the purchase price.
As of May 16, 2001, High River beneficially owned 1,990,934 shares
(7.66%) of Vector's common stock, in addition to the shares acquired under the
stock purchase agreement. High River will beneficially own 1,990,934 shares
after the offering assuming the sale of all shares covered by this prospectus
and no other purchases or sales of shares by High River.
High River is an investment entity owned by Carl C. Icahn. Until May
1999, Tortoise Corp., also owned by Mr. Icahn, held $97.6 million principal
amount of BGLS' senior secured notes. On May 25, 1999, BGLS repurchased the
notes for 99% of the principal amount plus accrued interest.
PLAN OF DISTRIBUTION
Any distribution of the shares by the selling stockholder, or by the
selling stockholder's transferees selling after May 31, 2002, pledgees or
donees, may be effected from time to time in one or more of the following
transactions:
o to underwriters who will acquire the shares for their own account
and resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers
may be changed from time to time),
o through brokers, acting as principal or agent, in transactions
(which may include block transactions) on The New York Stock
Exchange, in special offerings, exchange distributions under the
rules of the applicable exchanges or in the over-the-counter
market, or otherwise, at market prices prevailing at the time of
sale, at prices related to prevailing market prices, at negotiated
prices or at fixed prices, or
o directly or through brokers or agents in private sales at
negotiated prices, or by any other legally available means.
Unless otherwise disclosed in any prospectus supplement, the obligations of any
underwriter to purchase shares will be subject to conditions precedent and the
underwriters will be obligated to purchase all of the shares, if any are
purchased, and any agent will be acting on a best efforts basis during its
appointment.
The selling stockholder and these underwriters, brokers, dealers or
agents may be considered "underwriters" as that term is defined by the
Securities Act.
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15
Underwriters participating in any offering made pursuant to this
prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, and discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents participating in
transactions may receive brokerage or agent's commissions or fees.
At the time a particular offering of shares is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
amount of shares being offered and the terms of the offering, including the
purchase price or public offering price, the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for shares
purchased from the selling stockholders, any discounts, commissions and other
items constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
To comply with the securities laws of some states, if applicable, the
shares will be sold in those jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the shares may not be sold
unless the shares have been registered or qualified for sale in that state or an
exemption from registration and qualification is available and complied with.
All costs, expenses and fees for the registration of the shares will be
borne by Vector. Commissions and discounts, if any, attributable to the sale of
the shares will be borne by the selling stockholder. The selling stockholder may
agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against liabilities, including
liabilities arising under the Securities Act. Vector and the selling stockholder
have agreed to indemnify each other and various other persons against
liabilities in connection with the offering of the shares, including liabilities
arising under the Securities Act.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 2000 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
VALIDITY OF SHARES
The validity of the shares offered by this prospectus is being passed
on for Vector by Marc N. Bell, Esq. Vice President and General Counsel of
Vector. Mr. Bell holds an option to purchase 73,500 shares of Vector's common
stock at an exercise price of $4.54 per share and an option to purchase 52,500
shares at an exercise price of $14.70.
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We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information.......................... 2
Prospectus Summary........................................... 3
Risk Factors................................................. 4
Forward-Looking Statements................................... 11
Selling Stockholder.......................................... 12
Plan of Distribution......................................... 12
Experts...................................................... 13
Validity of Shares........................................... 13
VECTOR GROUP LTD.
1,639,344 SHARES
OF COMMON STOCK
14
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses, payable by Vector on
behalf of the selling stockholder in connection with the offering. Other than
the SEC registration fee, the amounts set forth below are estimates:
SEC registration fee......................................... $13,418
Legal fees and expenses...................................... 5,000
Accounting fees and expenses................................. 5,000
Miscellaneous................................................ 1,582
-------
Total...................................... $25,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law and Article VI of
Vector's By-Laws provide for indemnification of Vector's directors and officers
in a variety of circumstances, which may include liabilities under the
Securities Act of 1933 (the "Securities Act").
Section 102 of the Delaware General Corporation Law allows a
corporation to eliminate the personal liability of a director of a corporation
to the corporation or to any of its stockholders for monetary damage for a
breach of his fiduciary duty as a director, except in the case where the
director (i) breaches his duly of loyalty, (ii) fails to act in good faith,
engages in intentional misconduct or knowingly violates a law, (iii) authorized
the payment of a dividend or approves a stock repurchase in violation of the
Delaware General Corporation Law or (iv) obtains an improper personal benefit.
Article Eighth of Vector's Amended and Restated Certificate of Incorporation
includes a provision which eliminates directors' personal liability to the full
extent permitted under the Delaware General Corporation Law, as the same exists
or may hereafter be amended.
ITEM 16. EXHIBITS.
The following documents are filed as a part of this registration
statement or incorporated by reference herein:
EXHIBIT
NO. DESCRIPTION
- ------- -----------
5 Opinion of Marc N. Bell, Esq.
10* Stock Purchase Agreement, dated as of May 16, 2001, by and
between Vector Group Ltd. and High River Limited
Partnership (incorporated by reference to Exhibit 10.8 in
Vector's Form 8-K dated May 14, 2001).
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Marc N. Bell, Esq. (included in Exhibit 5).
24.1 Power of Attorney (on signature page).
- --------------------
* Incorporated by reference
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ITEM 17. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low and
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation or Registration
Fee" table in the effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense or any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Miami, and State of Florida, on the
1st day of June, 2001.
VECTOR GROUP LTD.
By: /s/ Joselynn D. Van Siclen
-----------------------------
Joselynn D. Van Siclen
Vice President, Treasurer and
Chief Financial Officer
The registrant and each person whose signature appears below hereby
authorizes Richard J. Lampen, Joselynn D. Van Siclen and Marc N. Bell (the
"Agents"), with full power of substitution and resubstitution, to file one or
more amendments (including post-effective amendments) to the Registration
Statement which amendments may make such changes in the Registration Statement
as such Agent deems appropriate, and the registrant and each such person hereby
appoints each such Agent as attorney-in-fact to execute in the name and on
behalf of the registrant and each such person, individually and in each capacity
stated below, any such amendments to the Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed below by the following
persons in the capacities indicated on June 1, 2001.
/s/ Bennett S. LeBow Chairman of the Board of
- --------------------------- Directors and Chief Executive
Bennett S. LeBow Officer
(Principal Executive Officer)
/s/ Joselynn D. Van Siclen Vice President, Chief Financial
- -------------------------- Officer and Treasurer (Principal
Joselynn D. Van Siclen Financial Officer and Principal
Accounting Officer)
/s/ Robert J. Eide Director
- ---------------------------
Robert J. Eide
/s/ Howard M. Lorber Director
- ---------------------------
Howard M. Lorber
/s/ Jeffrey S. Podell Director
- ---------------------------
Jeffrey S. Podell
/s/ Jean E. Sharpe Director
- ---------------------------
Jean E. Sharpe
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