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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
(Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934)
WEDGESTONE FINANCIAL
(Name of the Issuer)
WEDGESTONE FINANCIAL
(Name of Person(s) Filing Statement)
SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE PER SHARE
(Title of Class of Securities)
948900 10 5
(CUSIP Number of Class of Securities)
David L. Sharp
President
Wedgestone Financial
5200 N. Irwindale Avenue, Suite 168
Irwindale, California 91706
818-338-3555
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications Behalf of Person(s) Filing Statement)
WITH COPIES TO:
Kevin L. Crudden
Robins, Kaplan, Miller & Ciresi L.L.P.
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, Minnesota 55402
The Exhibit Index is located on Page 8.
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Wedgestone Financial (the "Company").
The address of the principle executive offices of the Company is 5200 N.
Irwindale Avenue, Suite 168, Irwindale, California 91706. The title of the
class of equity securities to which this Statement relates is the Company's
shares of beneficial interest, $1.00 par value per share (the "Shares").
ITEM 2. TENDER OFFER OF THE COMPANY.
This Statement relates to the tender offer by the Company to purchase all
of the Shares held by the Company's shareholders other than those shares
held by the Remaining Shareholders (JCS Management Co., Inc., PFG Corp.,
RAB Management Corp., JMS Holdings, Co., Inc., Stockwood LLC) (such
shareholders, the "Public Shareholders" and such Shares, the "Publicly Held
Shares"), at $0.67 per Share, net to the seller in cash, without interest
thereon (the "Offer Price") upon the terms and subject to the conditions
set forth in the Offer to Purchase dated February__, 1998 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together with
the Offer to Purchase constitute the "Offer"), copies of which are filed
respectively as Exhibits 1 and 2 hereto and are incorporated herein by
reference. The Offer is disclosed in a Rule 13e-4 Transaction Statement on
Schedule 13E-4 dated February __, 1998 (the "Schedule 13E-4"), and in a
Rule 13e-3 Transaction Statement on Schedule 13E-3 dated February __, 1998
(the "Schedule 13E-3"), both of which are filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules promulgated by
the Commission thereunder on the date hereof. The address of the principal
executive offices of the Company is 5200 N. Irwindale Avenue, Suite 168,
Irwindale, California 91706.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing
this Statement, is set forth in Items 1 and 2 above.
(b) Except as described herein, and in the Exhibits attached hereto,
to the knowledge of the Company, as of the date hereof there are
no material contracts, agreements, arrangements or
understandings, or any potential or actual conflicts of interest
between the Company and its executive officers, trustees or
affiliates.
(i) The Remaining Shareholders. JCS Management Co., Inc.,
PFG Corp., RAB Management Corp., JMS Holdings, Co., Inc.
and Stockwood LLC (the
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"Remaining Shareholders") own approximately 62.4% of the
Shares. Mr. Shaw is the Chief Executive Officer and a
trustee of the Company. The Remaining Shareholders have
informed the Company that they do not intend to tender any
Shares owned by them pursuant to the Offer; therefore,
assuming the completion of the Offer (and possible merger
described therein), the Company will become a private
company which will be owned 100% by the Remaining
Shareholders. Certain information contained in the
Company's Form 10-K Annual Report for the fiscal year
ended December 31, 1997 (the "10-K Annual Report") with
respect to the compensation paid to the Remaining
Shareholders and the other trustees by the Company for
their services as executive officers and/or trustees or
financial consultants to the Company is set forth in
Exhibit 8 hereto and incorporated herein by reference.
(ii) Interests of Certain Persons in the Offer. Pursuant to the
Offer to Purchase, the Public Shareholders, including
certain trustees and employees of the Company, will be
entitled to receive the Offer Price for each share
currently held which is tendered in the Offer and accepted
for payment in accordance with its terms. Please see
"Offer to Purchase -- Special Factors -- Beneficial
Ownership of Shares," attached as Exhibit 1 hereto and
hereby incorporated herein by reference.
(iii) Indemnification of Officers and Trustees. The Company's
Declaration of Trust provides that the Company shall
indemnify its trustees and officers, and may purchase and
maintain liability insurance for such persons, as, and to
the full extent, permitted by the Massachusetts Business
Corporation Law (the "MBCL"). Pursuant to the provisions
of the MBCL, the Company has the power to indemnify its
officers, trustees, employees and agents against
judgments, penalties, fines, settlements and reasonable
expenses actually incurred by any such party in connection
with any threatened, pending, or completed action, suit,
or proceeding, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could
lead to such an action, suit, or proceeding, in connection
with any such person's position in the Company. The
Company has such authority to indemnify trustees and
officers only if it is determined that the trustee or
officer conducted himself in good faith and reasonably
believed that his conduct was in or not opposed to the
Company's best interests, and, in the case of criminal
proceedings, had no reasonable cause to believe his
conduct was unlawful. The Company may indemnify a trustee
or officer in an action brought by or in the right of the
corporation only if such director or officer was not found
liable to the corporation, unless or only to the extent
that a court finds him to be fairly and reasonably
entitled to indemnity for such expenses as the court deems
proper.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation.
At the February 9, 1998 board meeting, the board, based in part
upon the unanimous recommendation of the independent committee
(i.e. those directors who are not officers of the Company or
legal counsel to the Company hereinafter, the "Independent
Directors"), by unanimous vote of all directors present and
voting determined that the Offer is fair to and in the best
interests of the Public Shareholders, approved the Offer and
recommended that such shareholders accept the Offer and tender
their Shares pursuant thereto.
Therefore, the board recommends that the Public Shareholders
tender all their Shares pursuant to the Offer.
A copy of a letter to all shareholders of the Company
communicating the recommendations of the members of the Board is
filed as Exhibit 9 hereto and is incorporated herein by
reference.
(b) Background; Reasons for the Recommendation of the Independent
Directors and the Board; Opinion of Commonwealth Associates.
For a description of the background of the Offer, the reasons for
the recommendation of the Independent Directors and the Board,
and the Opinion of Commonwealth Associates, please see "Offer to
Purchase - Special Factors - Purpose and Background of the Offer;
Certain Effects of the Offer; Plans of Company after the Offer;"
"Offer to Purchase - Special Factors -- Recommendation of the
Company's Board; Fairness of the Offer;" and "Offer to Purchase -
Special Factors -- Opinion of Commonwealth Associates " (all of
which information is hereby incorporated by reference, and all
being a part of Exhibit 1 attached hereto).
ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
(a) Commonwealth Associates, pursuant to an Engagement Letter dated
December 24, 1997 (the "Commonwealth Associates Engagement
Letter"), has been retained by the Board, upon the recommendation
of the Independent Directors, to render an opinion to the Board
(including the Independent Directors) concerning the fairness to
the Public Shareholders, from a financial point of view, of the
consideration to be offered to such shareholders in the Offer.
Pursuant to the Commonwealth Associates Engagement Letter, the
Company has paid to Commonwealth Associates a fee of $100,000,
and has agreed to reimburse Commonwealth Associates $5,000 for
reasonable out-of-pocket expenses incurred in connection with the
performance of Commonwealth Associates' services pursuant to the
Commonwealth Associates
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Engagement Letter.
The Company's Independent Directors recommended Commonwealth
Associates to render the opinion referenced to above, and the
Board decided to engage Commonwealth Associates for this purpose
because Commonwealth Associates is a reputable regional
investment banking firm and regularly engages in the valuation of
businesses and their securities. The Independent Directors
requested bids from two other investment banking firms and
decided to recommend Commonwealth Associates to the Board based
on their evaluation of all the bids.
(b) For identification of persons employed, retained or to be
compensated by the Company to make solicitations or
recommendations to the Public Shareholders please see that
portion of Exhibit 1 attached hereto entitled "Offer to Purchase
-- Special Factors -- Fees and Expenses;" and "Offer to Purchase
-- the Tender Offer -- Section 13. Fees and Expenses."
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of the Company, no transactions in the
Shares have been effected during the past 60 business days by the
Company or any of its executive officers, trustees or affiliates.
(b) For a description of the Company's knowledge with respect to the
intent of the executive officers, trustees, and affiliates of the
Company to tender Shares either held of record or beneficially
owned by such persons, please see "Offer to Purchase --
Introduction;" and "Offer to Purchase -- Special Factors --
Interests of Certain Persons in the Offer and the Merger," which
are hereby incorporated by reference and are a part of Exhibit 1
attached hereto.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described in Items 3 and 4 above, and except as set
forth in the Offer to Purchase attached hereto as Exhibit 1 and
incorporated by reference, to the knowledge of the Company no
negotiation is being undertaken or is underway by the Company in
response to the Offer that relates to or would result in (i) any
extraordinary transaction, such as a merger or reorganization,
involving the Company or any affiliate or subsidiary of the
Company, (ii) a purchase, sale or transfer of a material amount
of assets by the Company or any subsidiary of the Company, (iii)
a tender offer for or other acquisition of securities by or of
the Company or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Items 3 and 4 above, and except as set
forth in the Offer to
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Purchase attached hereto as Exhibit 1 and incorporated herein by
reference, there are no transactions, board resolutions,
agreements in principle, or signed contracts in response to the
Offer that relate to or would result in one or more of the
matters referred to in clauses (i) through (iv) of paragraph (a)
of this Item 7. Please see the information set forth under
"Offer to Purchase -- Introduction" and "Offer to Purchase --
Special Factors -- Purpose and Background of the Offer; Certain
Effects of the Offer; Plans of the Company after the Offer,"
which information is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Not Applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Offer to Purchase dated February __, 1998.
Exhibit 2 - Letter of Transmittal.
Exhibit 3 - Form of Notice of Guaranteed Delivery.
Exhibit 4 - Form of Letter from Inisfree M&A Incorporated to Brokers,
Dealers, Commercial Banks, Trust Companies and Nominees to
Clients.
Exhibit 5 - Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
Exhibit 6 - Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Exhibit 7 - Press Release issued by the Company on February 9, 1998.
Exhibit 8 - Item 11 of the Company's 10-K Annual Report relating to
compensation of the Company's trustees and executive
officers.
Exhibit 9 - Letter to Shareholders dated February __, 1998
Communicating the Recommendations of the Members of the
Board.
Exhibit 10 - Clawback Agreement by and among Wedgestone Financial, the
Company and the Remaining Shareholders dated February 9,
1998.
Exhibit 11 - Opinion of Commonwealth Associates dated January 30, 1998.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 24, 1998
WEDGESTONE FINANCIAL
By: /s/ David H. Sharp
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Name: David H. Sharp
Title: President
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EXHIBIT INDEX
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. SYSTEM
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Exhibit 1 - Offer to Purchase dated February __, 1998.
Exhibit 2 - Letter of Transmittal.
Exhibit 3 - Form of Notice of Guaranteed Delivery.
Exhibit 4 - Form of Letter from Inisfree M&A Incorporated to Brokers,
Dealers, Commercial Banks, Trust Companies and Nominees to
Clients.
Exhibit 5 - Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
Exhibit 6 - Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Exhibit 7 - Press Release issued by the Company on February 9, 1998.
Exhibit 8 - Item 11 of the Company's 10-K Annual Report relating to
compensation of the Company's trustees and executive
officers.
Exhibit 9 - Letter to Shareholders dated February __, 1998 Communicating
the Recommendations of the Members of the Board.
Exhibit 10 - Clawback Agreement by and among Wedgestone Financial, the
Company and the Remaining Shareholders dated February 9,
1998.
Exhibit 11 - Opinion of Commonwealth Associates dated January 30, 1998.
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