SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-5(d)(2))
[ ] Definitive Information Statement
EUROTELECOM COMMUNICATIONS, INC.
................................................
(Name of Registrant as Specified in its Charter)
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EUROTELECOM COMMUNICATIONS, INC.
Britannia House, British Fields
Ollerton Road, Tuxford
Nottinghamshire NG22 OPQ
UNITED KINGDOM
011-44-1708-590899
INFORMATION STATEMENT
Action by Consent of Majority Stockholders
to be effective February 28, 2000
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is furnished in connection with the consent
of the holders of 54% (the "majority holders") of the issued and outstanding
shares of common stock, $.01 par value ("Common Stock") of Eurotelecom
Communications, Inc., a Delaware corporation (the "Company") to the adoption of
certain amendments to its Certificate of Incorporation as discussed below. This
Information Statement is being provided pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, to inform holders of Common Stock,
entitled to vote or give an authorization or consent in regard to the action
authorized by the written consent, of the action being taken. These matters will
be effective February 28, 2000.
This Information Statement is being mailed on or about February 8, 2000
to all shareholders of record at the close of business on December 31, 1999. As
of that date, there were 17,946,222 shares of Common Stock outstanding, each
entitled to one vote on each matter of business put to a shareholder vote.
The amendments to the Certificate of Incorporation are as follows:
1. The number of shares of Common Stock, $.01 par value the
Company is authorized to issue will be increased from 20,000,000 to 50,000,000.
The Company is currently authorized to issue only 20,000,000 shares of Common
Stock and 10,000,000 shares of Preferred Stock. Since 17,946,222 shares of
Common Stock are currently outstanding, the Company is unable to issue any
substantial number of new shares. The Company is in a fragmented niche market,
and there are many potential acquisitions in the same or related lines of
business that management intends to pursue. These acquisitions are expected to
be accomplished through a combination of share issuance and other consideration,
however, there are no plans, arrangements or understandings for such
acquisitions. The additional authorization is required to give it the ability to
locate, negotiate and complete the proposed acquisitions. The Company may also
seek, from time to time, to raise additional capital through the issuance of
additional shares of Common Stock. In addition, and in order to attract and
maintain employees experienced in the Company's business, the Company is
considering the adoption of an employee stock option or purchase plan, and may
use a portion of the additional shares of Common Stock for that purpose.
Although the Company has not entered into any agreements, and has no plans,
arrangements or understandings to such effect, the Company may cause such
authorized but unissued shares to be issued to raise capital, engage in
corporate acquisitions or implement a stock option or purchase plan, as
described above, or for any other lawful purpose, and in so doing may cause
dilution of existing shareholders.
2. The Company also proposes to amend its Certificate of
Incorporation to add a new class of stock, to be known as Class A Common Stock,
and to authorize the Company to issue 50,000,000 shares of Class A Common Stock.
The Class A Common Stock will have such powers, preferences, rights,
qualifications and restrictions, and shall be issued in one or more series, as
are determined, from time to time, by the Company's Board of Directors. The
Company and a United Kingdom placement agent have been discussing the
possibility of an issue of stock to be sold to non-U.S. Persons under Regulation
S. If the placement of shares is completed, the Company would want the shares to
be listed in the Alternative Investment Market ("AIM"), which is a recognized
investment exchange which operates under the auspices of the London Stock
Exchange.
It is possible that in the future the Company will want to issue
additional shares in the United Kingdom to raise additional capital or as
consideration for acquisitions. In addition, the Company is considering the
adoption of an employee stock option or purchase plan. The Company currently
expects such plan to be available for U.K. employees, and possibly for its U.S.
employees as well. The Company would use a portion of proposed Class A Common
Stock in such a plan for its U.K. employees. Management believes that a listing
on AIM will facilitate the Company's ability to raise capital and engage in
acquisitions and other transactions with non-U.S. persons. The placement agent
has advised the Company that listing of any such subsequent Regulation S shares
on AIM would be difficult, since AIM would treat each subsequent Regulation S
issuance as a separate series, to be separately quoted, because each issuance
would bear resale restrictions that terminated at a different time from prior
issuances. This could, at least in theory, create a different trading price for
each series of Regulation S stock traded on the AIM, and the possibility of
substantial confusion.
In order to avoid this difficulty, the placement agent has proposed
that a new class of shares be established (the Class A Common Stock), similar to
and ranking PARI PASSU with Common Stock in all respects except that there would
be restrictions in the certificate of designation of the Class A Common Stock
which track the Regulation S requirements. The restrictions, however, would be
permanent. In this way, all Class A Common Stock, issued now or in the future,
would have the same restrictions, and the Company believes that an orderly
market could be maintained in the shares regardless of when the Regulation S
restrictions would otherwise fall away. The proposed restrictions would be no
more or less onerous than those imposed by Regulation S, except that they would
last for an indefinite period. The Company is of the opinion that the benefits
of listing on AIM and the more orderly market the restrictions will encourage
will far outweigh the detriment created by the restrictions. Of course, the
ultimate determination of the powers, preferences, rights, qualifications and
restrictions of such shares will be determined by the Board of Directors, and
may be different than those proposed by the placement agent.
Although the Company has not entered into any agreements, plans,
arrangements, or understandings to such effect, other than the discussions with
the United Kingdom placement agent discussed above, the Company may cause such
authorized but unissued shares to be issued to raise capital, engage in
corporate acquisitions, implement a stock option plan or for any other lawful
purpose, and in so doing may cause dilution of existing shareholders.
The proposed increase in the Company's authorization to issue Common
Stock, and the proposed authority to issue Class A Common Stock, could have the
effect of permitting the dilution of shareholders, and could have a substantial
anti-takeover effect. For example, the Board of Directors of the Company could
issue a substantial number of shares of Common Stock or Class A Common Stock at
disadvantageous prices, which could dilute the percentage holding and/or value
of the existing shareholders, and could be used to fend off a hostile take-over
offer. In addition, the Board of Directors is currently empowered, without
stockholder approval, to issue Preferred Stock, and upon approval of the
proposed amendment, would be empowered to issue Class A Common Stock, with
dividend, liquidation, conversion, voting or other rights which could adversely
effect the voting power or other rights of the holders of the Company's Common
Stock. Upon any such issuance, the Preferred Stock or Class A Common Stock could
be utilized as a method of discouraging, delaying or preventing a change in
control of the Company that might be considered desirable by shareholders.
Although the Company has no current intention of issuing Preferred Stock or
Class A Common Stock for any such purpose, there can be no assurance that the
Company will not do so in the future. It should be noted that the restrictions
on transfer described above to be placed in the certificate of designation of
the Class A Common Stock are not expected to apply if a tender offer is made to
all shareholders. However, the exact details of the restrictions applicable to
the new class have not been determined, and thus the proposed amendment would
allow the Board the authority to fill in those details.
The Delaware General Corporation Law requires the approval of
stockholders who hold at least a majority of the voting power of the Company's
Common Stock present at a meeting at which a quorum is present to amend its
Certificate of Incorporation. The Delaware General Corporation Law also permits
actions that would otherwise require a vote at a meeting of stockholders to be
taken by written consent of the holders of at least the number of shares that
would be necessary to authorize such actions at a meeting.
On January 16, 2000, the proposed amendments were approved and
recommended to the shareholders by the Board of Directors of the Company, and on
or about January 16, 2000, written consent approving the amendments was signed
by the beneficial owners of 9,681,820 shares of Common Stock which represented
approximately 54% of all of the issued and outstanding Common Stock at that
date. As a result, the amendments to the Certificate of Incorporation were
approved by the holders of a majority of the issued and outstanding shares of
Common Stock and no further votes will be needed. The written consent will
become effective on or about February 28, 2000, but in no event less than 20
days after the Company has first mailed this Information Statement to its
shareholders.
The Delaware General Corporation Law does not provide any dissenters'
rights with respect to amendment of the Company's Certificate of Incorporation
as set forth above. Therefore, no dissenter's rights of appraisal will be given
in connection with these matters.
DESCRIPTION OF SECURITIES
Common Stock
The Company currently is authorized to issue 20,000,000 shares of
Common Stock, $0.01 par value. At January 31, 2000 there were 17,946,222 shares
of Common Stock issued and outstanding. The proposed amendments to the
Certificate of Incorporation will increase the number of shares of Common Stock
the Company is authorized to issue to 50,000,000. Holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors, out of funds legally available, without any preference. Holders of
Common Stock are entitled to one vote per share. Cumulative voting is not
allowed for purposes of the election of directors. Thus, as no shares of any
other class of stock of the Company are issued and outstanding, the holders of
more than 50% of the shares voting for directors can elect all directors. The
holders of the Common Stock of the Company have no preemptive rights to purchase
new issues of the securities of the Company. There are no redemption or
conversion features attached to the Common Stock.
At the present time, the Company does not intend to pay any dividends
on its Common Stock. Upon liquidation or dissolution of the Company, holders of
Common Stock are entitled to receive pro rata, either in cash or in kind, all of
the assets of the Company after payment of debts.
Class A Common Stock
The proposed amendments will authorize the Company to issue 50,000,000
shares of Class A Common Stock. Each share of Class A Common Stock will have
such powers, preferences, rights, qualifications and restrictions, and shall be
issued in one or more series, as are determined, from time to time, by the
Company's Board of Directors.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, $0.01 par value. There are no shares of Preferred Stock issued and
outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The total number of shares of Common Stock of the Company beneficially owned by
each of the officers and directors, and all of such directors and officers as a
group, and their percentage ownership of the outstanding Common Stock of the
Company as of January 31, 2000, are as follows:
PER CENT
MANAGEMENT SHARES BENE- OF COMMON
SHAREHOLDERS (1) FICIALLY OWNED STOCK
- ---------------- -------------- -----
PHILIP SHAUN DERRY.................. 1,971,760 11.00%
Director, President and Chief Executive Officer
of Eurotelecom Communications, Inc.
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
ROBERT IAIN HAY..................... 273,400 1.50%
Director and Chief Executive Officer of
ET Connect, LTD. (subsidiary of the Company)
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
ANDREW KRAWCHUK..................... 176,000 1.00%
Marketing Director of
Eurotelecom Communications, Inc.
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
IAN STUART REAY..................... 110,000 0.61%
Director and Chief Executive Officer of
EZ IP, LTD.(subsidiary of the Company)
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
JOHN SPACKMAN....................... 75,000 0.42%
Chairman of the Board of Directors
Eurotelecom Communications, Inc.
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom S64 9JP
RAY MAY............................. 419,377 2.34%
Director, President and Chief Executive Officer of
RTC, Inc.(subsidiary of the Company)
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
GRAHAM FORD......................... 50,000 0.28%
Director and Company Secretary
Eurotelecom Communications, Inc.
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
DAVID WALTON........................ 110,000 0.61%
Chief Operating Officer
Eurotelecom Communications, Inc.
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
- ----------------
All Directors and Officers as
a group (8 persons) 2,253,717 12.55%
(1) Except as otherwise noted, it is believed by the Company that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the voting
of such security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to acquire
within sixty (60) days, such as options or warrants to purchase the Common Stock
of the Company.
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by each shareholder who beneficially
owns more than five percent (5%) of the Company's Common Stock, the number of
shares beneficially owned by each and the percent of outstanding Common Stock so
owned of record as of January 31, 2000. It is believed by the Company that all
persons listed have sole voting and investment power with respect to their
shares, except as otherwise indicated.
PER CENT OF
NAME AND ADDRESS OF TITLE SHARES BENE- OUTSTANDING
BENEFICIAL OWNER OF CLASS FICIALLY OWNED COMMON STOCK
- ---------------- -------- -------------- ------------
PHILIP SHAUN DERRY............. Common Stock 1,971,760 11.00%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
SCRIBE INVESTMENTS SA.......... Common Stock 2,475,000 13.8%
2 Serjeants Inn
London
United Kingdom
WESTBURY INVESTMENTS SA........ Common Stock 2,475,000 13.8%
2 Serjeants Inn
London
United Kingdom
BENCHLEVEL PROPERTIES
LIMITED.................. Common Stock 1,100,000 6.1%
19 Warwick Gardens
London
United Kingdom
- ----------------
(1) Except as otherwise noted, it is believed by the Company that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the voting
of such security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to acquire
within sixty (60) days, such as options or warrants to purchase the Common Stock
of the Company.
Eurotelecom Communications, Inc.
By: /s/ Philip Shaun Derry
-----------------------------
EXHIBIT
1. Proposed Amendment to Certificate of Incorporation.
Exhibit 1
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
EUROTELECOM COMMUNICATIONS, INC.
Under Section 242 of the
General Corporation Law of the State of Delaware
Eurotelecom Communications, Inc (the "Corporation") a corporation
organized and existing under and by virtue of the General Corporation Laws of
the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, by resolution
unanimously adopted by all of the members of the Board of Directors, adopted the
following resolutions proposing and declaring advisable the following amendments
to the Certificate of Incorporation of the Corporation:
Article 4 of the Certificate of Incorporation is hereby amended in its
entirety to read as follows:
"(a) The Corporation is authorized to issue three classes of shares
to be designated, respectively, "Preferred Stock", "Common
Stock" and "Class A Common Stock". The number of shares of
Preferred Stock authorized to be issued is Ten Million
(10,000,000), the number of shares of Common Stock authorized
to be issued is Fifty Million (50,000,000) and the number of
shares of Class A Common Stock authorized to be issued is
Fifty Million (50,000,000). The Preferred Stock , the Common
Stock and the Class A Common Stock shall each have a par value
of $.01 per share. The aggregate par value of all shares of
Preferred Stock is $100,000, the aggregate par value of all
shares of Common Stock is $500,000 and the aggregate par value
of all shares of Class A Common Stock is $500,000.
(b) The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article 4, to
provide for the issuance of the shares of Preferred Stock in
one or more series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from
time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and
rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
(c) The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article 4, to
provide for the issuance of the shares of Class A Common Stock
in one or more series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish
from time to time the number of shares to be included in each
such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
(d) The authority of the Board with respect to each series of
Preferred Stock and with respect to each series of Class A
Common Stock shall include, but not be limited to,
determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so,
from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares
of that series;
(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and,
if so, the terms of such voting rights;
(iv) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such
conversion, including provision for adjustment of the
conversion rate in such events as the Board of
Directors shall determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of
such redemption, including the date or date upon or
after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount
may vary under different conditions and at different
redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(vii) Whether that series will contain any restrictions on
transfer or registration of transfer or any
restriction on the amount of shares that may be owned
by any person or group of persons;
(viii) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution
or winding up of the corporation, and the relative
rights of priority, if any, of payment of shares of
that series;
(ix) Any other relative or participating rights,
preferences and limitations of that series; and
(x) If no shares of any series are outstanding, the
elimination of the designation, powers, preferences,
and rights of such series of shares, in which event
such shares shall return to their status as
authorized but unissued and undesignated Preferred
Stock, or Class A Common Stock, as the case may be."
SECOND: The effective date of the foregoing amendment is , 2000.
THIRD: That the aforesaid amendment to the Certificate of Incorporation
was duly adopted by the shareholders of the Corporation in accordance with
Section 242 of the General corporation Law of the State of Delaware.
FOURTH: Prompt notice of the taking of this corporate action is being
given to all stockholders who did not consent thereto in writing, in accordance
with Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Phillip Derry, its President, and attested by _____________, its
secretary, this day of __ , 2000.
EuroTelecom Communications, Inc.
By: /s/ Phillip Derry
-----------------------------
Phillip Derry, President
ATTEST:
By:
----------------------------
Secretary