UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the Registrant [x] Filed by a Party other than Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
The Deltona Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[x] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
Common Stock, $1.00 Par Value
2) Aggregate number of securities to which transaction applies:
4,044,277
1
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
$200,000.00
4) Proposed maximum aggregate value of transaction:
$1,617,711
5) Total fee paid:
$323.54
* The price per unit is the product of the pre-reverse split price of
$0.40 per share to be paid for fractional shares and the reverse split
ratio of 500,000 ($0.40 x 500,000 = $200,000.00).
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
2
THE DELTONA CORPORATION
8014 S.W. 135TH STREET ROAD
OCALA, FL 34470
(352) 307-8100
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 2002
As a shareholder of The Deltona Corporation (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy a Special
Meeting of Shareholders of the Company to be held at The Deltona Corporation,
Corporate Headquarters, 8014 S.W. 135th Street Road, Ocala, Florida, on
February 14, 2002, at 10:00 AM, local time, for the following purposes:
1. To consider and act upon a Reverse Stock Split of the
Company's common stock that would result in
(a) the shareholders receiving one share of our common stock
for every 500,000 shares of our common stock that they
currently own, and
(b) an amendment to the Company's Articles of Incorporation to
reduce the Company's authorized common stock from 15,000,000
shares to 30 authorized shares, which is in proportion to the
Reverse Stock Split. The Reverse Stock Split and related cash
Purchase by the Company of fractional shares resulting from
the reverse stock split is proposed to take the Company
private.
2. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on January 7, 2002,
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at such meeting and any adjournment thereof.
Only shareholders at the close of business on the Record Date are entitled to
Notice of and to vote at such meeting. The transfer books will not be closed.
You are cordially invited to attend the meeting. HOWEVER, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE THE MAXIMUM
REPRESENTATION AT THE MEETING AND RESPECTFULLY REQUESTS THAT YOU DATE, EXECUTE
AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH
NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. A proxy may be
revoked by a shareholder by notifying the Secretary of the Company in writing at
any time prior to its use, by executing and delivering a subsequent proxy or by
personally appearing at the Special Meeting and casting your vote, each as
specified in the enclosed proxy statement.
By order of the Board of Directors
/s/ Sharon J. Hummerhielm
Executive Vice President and
Corporate Secretary
Ocala, Florida
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YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED.
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THE DELTONA CORPORATION
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 2002
TO OUR SHAREHOLDERS:
This Proxy Statement is furnished to the shareholders of The Deltona
Corporation (the "Company") for use at a Special Meeting of Shareholders on
February 14, 2002, or at any adjournment or adjournments thereof, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. The enclosed proxy is solicited on behalf of the Board of
Directors of the Company and can be revoked at any time prior to the voting of
the proxy (as provided herein). Unless a contrary choice is indicated, all duly
executed proxies received by the Company will be voted as follows:
1. FOR the approval of a reverse stock split (the "Reverse Stock Split") of the
Company's common stock whereby each outstanding share of common stock of the
Company, $1.00 par value (the "Existing Common Stock"), will be reclassified
Into 0.000002 of a share of new common stock of the Company, $500,000 par value
(the "New Common Stock"). As a result of the Reverse Stock Split, the Company's
Articles of Incorporation will be amended to reduce the number of the Company's
authorized shares of common stock from 15,000,000 shares to 30 authorized
shares, which is in proportion to the Reverse Stock Split. The Reverse Stock
Split and purchase of fractional shares resulting is proposed to take the
Company private.
2. The proxies will be voted in accordance with the recommendation of management
as to any other matters which may properly come before the Special Meeting.
The record of shareholders entitled to vote at the Special Meeting was taken at
the close of business on January 7, 2002 (the "Record Date"). The approximate
date on which this Proxy Statement and the enclosed proxy are first being sent
to shareholders is January 14, 2002. The principal executive offices of the
Company are located at 8014 S.W. 135th Street Road, Ocala, Florida.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT OR RELATED SCHEDULE 13E-3, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
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SUMMARY TERM SHEET
This summary highlights selected information from this Proxy Statement and may
not contain all of the information that is important to you. To better
understand the terms and conditions of the Reverse Stock Split, as well as
the consequent amendments to our Articles of Incorporation, you should carefully
read this entire document, its attachments and the other documents to which we
refer.
WHY IS THE COMPANY PROPOSING A REVERSE STOCK SPLIT?
The 500,000 for one Reverse Stock Split and purchase of fractional shares
Resulting has been unanimously approved by our Board of Directors and is
proposed to take us private by reducing the number of shareholders of record to
less than 300, thereby: (i) relieving us of the costs of filing public documents
and (ii) allowing us more flexibility to explore strategic alternatives. As a
private company, we will no longer be able to sell shares of common stock which
are freely tradable.
The reasons for the Reverse Stock Split are discussed below under the caption
"PROPOSAL ONE - Purpose and Reasons for the Reverse Stock Split."
WHAT WILL I RECEIVE IF THE REVERSE STOCK SPLIT IS APPROVED?
If the Reverse Stock Split is approved by the shareholders and implemented:
o Each share of existing common stock will be exchanged for
0.000002 of a share of new common stock.
The procedure for this exchange is described below under the
caption "PROPOSAL ONE--Exchange of Certificates and Payment of
Fractional Shares".
o No new certificates representing fractional shares will be
issued. Instead, fractional shares will be purchased from holders
at a rate of $200,000.00 per whole share of new common stock.
This transaction will not involve commissions or other
Transaction fees that would be charged if you sold shares on the
open market. We estimate that up to an aggregate of approximately
$1,617,711 will be paid to approximately 1,763 of our
shareholders for their resulting fractional shares.
The payment of cash in lieu of fractional shares is described
below under the caption "PROPOSAL ONE--Exchange of Certificates
and Payment of Fractional Shares".
HOW WILL THE ARTICLES OF INCORPORATION BE AMENDED?
o Our Articles of Incorporation will be amended to reduce the
number of authorized shares of our common stock in the same
500,000 for one ratio, from 15,000,000 shares to 30 authorized
shares, which is in proportion to the Reverse Stock Split.
The reduction in the number of authorized common shares is
described below under the caption "PROPOSAL ONE--Reverse Stock
Split and Proposed Amendment to the Company's Articles of
Incorporation".
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WHAT DOES "GOING PRIVATE" MEAN?
There will then be two record shareholders remaining, less than
300 shareholders of record of our common stock and registration
of our common stock under the Securities Exchange Act of 1934, as
amended, will be terminated, resulting in the delisting for our
common stock from the OTC Bulletin Board.
Going private is described below under the caption "PROPOSAL
ONE--Reverse Stock Split and Proposed Amendment to the Company's
Articles of Incorporation".
o If the Reverse Stock Split is approved, we would not have to
provide our shareholders with information that we currently
provide, such as annual, quarterly and other reports required to
be filed by us with the Securities and Exchange Commission (the
"SEC").
o Our common stock will no longer be listed on the OTC Bulletin
Board, and there may be no public market for the new common
stock.
The delisting of our common stock is described below under the
caption "PROPOSAL ONE--Reverse Stock Split and Proposed Amendment
to the Company's Articles of Incorporation."
DO I HAVE APPRAISAL OR DISSENTER'S RIGHTS?
o Under Delaware law, the law governing the Reverse Stock Split, you
do not have the right to demand the appraised value of your shares
(dissenter's rights) if you vote against the proposed transaction.
Your rights are described under "PROPOSAL ONE--Appraisal Rights and
Dissenter's Rights."
FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements. Additional written or
oral forward-looking statements may be made by us from time to time in filings
with the SEC or otherwise. The words "believe," "expect," "anticipate,"
"estimate," "project," and similar expressions identify forward-looking
statements, which speak only as of the date the statement was made.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified. Further events and actual
results could differ materially than those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this Proxy Statement
describe factors that could contribute to or cause such differences.
We caution you not to place undo reliance on any forward-looking statements made
by, or on behalf of, the Company in this Proxy Statement or in any of our
filings with the SEC or otherwise. Additional information with respect to
factors that may cause the results to differ materially from those contemplated
by forward-looking statements is included in our current and subsequent filings
with the SEC. See "Available Information."
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GENERAL INFORMATION
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The only shareholders entitled to vote at the Special Meeting are the holders of
record at the close of business on the Record Date. On the Record Date there
were 13,544,277 outstanding shares of Existing Common Stock. Each outstanding
share of Existing Common Stock is entitled to one vote on each matter to come
before the Special Meeting.
The accompanying proxy card is designed to permit each shareholder of record on
the Record Date to vote on the proposals described in this Proxy Statement. The
proxy card provides space for a shareholder to: (a) vote for or against any
proposal to be considered at the Special Meeting; or (b) abstain from voting on
any proposal if the shareholder chooses to do so. The Reverse Stock Split and
the Amendment to the Company's Articles of Incorporation requires the
affirmative vote of holders of a majority of the outstanding shares of Existing
Common Stock as of the Record Date.
The holders of a majority of the outstanding shares of Existing Common Stock
present, in person or by proxy, and entitled to vote at the Special Meeting will
constitute a quorum for the transaction of business at the Special Meeting. If a
quorum should not be present, the Special Meeting may be adjourned from time to
time until a quorum is obtained. Abstentions and broker nonvotes are considered
for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions and broker nonvotes will have the effect of
a vote against the Reverse Stock Split and the related Amendment to the
Company's Articles of Incorporation. Shareholders are urged to sign the
accompanying form of proxy and return it promptly.
When a signed proxy card is returned with choices specified with respect to
voting matters, the shares represented are voted by proxies designated on the
proxy card in accordance with the shareholder's instructions. The designated
proxy for the shareholders is Sharon Hummerhielm. A shareholder
desiring to name another person as his or her proxy may do so by crossing out
the names of the designated proxies and inserting the name of such other person
to act as his or her proxy. In that case, it will be necessary for the
shareholder to sign the proxy card and deliver it to the person named as his or
her proxy and for the person so named to be present and vote at the Special
Meeting. Proxy cards so marked should not be mailed to the Company.
If a signed proxy card is returned and the shareholder has made no
specifications with respect to voting matters, the shares will be voted in favor
of all the proposals described in this Proxy Statement and, at the discretion of
the designated proxies, on any other matter that may properly come before the
Special Meeting or any adjournment. The Company does not know of any business
that will be presented for consideration at the Special Meeting other than the
Reverse Stock Split and related Amendment.
However, if any other business should come before the Special Meeting, it is the
intention of the designated proxies to vote on any such business in accordance
with the recommendation of management.
Any shareholder of the Company has the unconditional right to revoke his or her
proxy at any time prior to the voting thereof by (i) notifying the Secretary of
the Company in writing at the Company's principal executive office, (ii)
executing and delivering a subsequent proxy or (iii) personally appearing at the
Special Meeting and casting a contrary vote. However, no revocation shall be
effective unless and until notice of such revocation has been received by the
Company at or prior to the Special Meeting.
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PROPOSAL -- REVERSE STOCK SPLIT AND RELATED AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION
PURPOSE AND REASONS FOR THE REVERSE STOCK SPLIT
The reason for the Reverse Stock Split is to relieve the Company of the costs
and detriments of remaining a public company. The Board of Directors believes
that because of the Company's continuing losses, the Existing Common Stock
has remained very thinly traded and has provided
little liquidity for the Company's shareholders, particularly those shareholders
with larger equity positions in the Company. In addition, because of the low
trading volume and illiquidity of the Existing Common Stock, the Company has not
been able to utilize the shares as a source of financing for its capital needs.
For these reasons the Company has not been able to realize the principal
benefits of public ownership and the Company's management expects no change in
the situation regarding the Existing Common Stock for the foreseeable future.
The Board of Directors also believes that there are considerable costs and
detriments to the Company in remaining a public reporting company. As part of
its registration under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company incurs direct and indirect costs associated with
compliance with the filing and reporting requirements imposed on public
companies. Examples of direct costs savings from termination of registration of
common shares include lower printing and mailing costs; less complicated
disclosure due to the company's private status; reduction in direct expenses
such as word processing, EDGARizing, telephone and telefax charges associated
with Securities and Exchange Commission filings; and elimination of the charges
of brokers and transfer agents in forwarding materials to beneficial owners. The
Company also believes that there will be a reduction in audit fees.
The Company also incurs substantial indirect costs as a result of executive time
expended to prepare and review such Exchange Act filings. Ceasing registration
of the common stock will reduce or eliminate these costs.
Based on its experience in prior years, the Company's direct costs, which
include a portion of the fees and expenses of independent auditors, printing,
mailing and SEC filing fees are estimated at approximately $95,000
annually. This amount, however, is just an estimate, and the actual savings
to be realized may be higher or lower than such estimate. It is expected that
any savings will not be realized until the fiscal year ending December 31, 2003.
However, the Company cannot guarantee that the benefits of going private will be
accomplished as rapidly as currently expected, or at all.
If the Reverse Stock Split is approved and implemented, the Company believes
that the number of shareholders of record of the Company's common shares will be
fewer than 300. The Company intends to terminate the registration of the common
stock under the Exchange Act pursuant to Section 12(g)(4) of the Exchange Act.
The decision by the Company to terminate Exchange Act registration upon
implementation of the Reverse Stock Split does not require shareholder approval
and will not be voted on at the Special Meeting. The Company's duty to file
periodic reports with the SEC, such as quarterly and annual reports, will end
once the Company's securities are no longer registered under the Exchange Act,
and the Company's common stock will no longer be listed on the OTC Bulletin
Board, where it currently is traded.
The Company's Existing Common Stock was traded on the New York and Pacific Stock
Exchanges under the symbol DLT until April 6, 1994, when the Company's stock
was formally suspended from trading. The stock was subsequently delisted from
both exchanges. Since August 31, 1994, the Company's existing common stock
was traded on a limited basis in the over-the-counter markets.
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The 1994 delisting of the Existing Common Stock resulted in progressively less
trading activity in the Company's Existing Common Stock, less liquidity
for its shareholders and diminished opportunities for future equity
financing of the Company's capital requirements. While a relisting of the
Existing Common Stock on the NASDAQ SmallCap Market System or the NASDAQ
National Market System would be desirable, such a relisting with either market
system would require the Company's compliance with much more stringent market
price and market value criteria that the Company currently does not meet.
The Company's management does not expect the Existing Common Stock to meet the
relisting criteria of either market system in the foreseeable future.
With delisting from the OTC Bulletin Board, the Company will become a private
company and there will likely be no public market for the Company's securities.
In consideration of the aforementioned reasons, the Company's Board of Directors
on December 13, 2002, approved, subject to approval by the Company's
shareholders,a proposal to effect the Reverse Stock Split and the Amendment.
BACKGROUND
The Company had 13,544,277 shares of common stock issued on the Record Date. If
the Reverse Stock Split is approved and implemented, each share of Existing
Common Stock will automatically be reclassified into 0.000002 of a fully paid
And non-assessable share of New Common Stock without any further action on the
Part of the shareholders. Assuming no change in the number of outstanding shares
From the Record Date if the Reverse Stock Split is approved, the currently
outstanding shares of Existing Common Stock will be converted into
approximately 112 shares of New Common Stock. The Company estimates that
approximately two shareholders will hold fractional shares after the Reverse
Stock Split, which fractional shares will be purchased at a total cost of
approximately $1,380,820.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock was traded on the New York and Pacific Stock
Exchanges under the ticker symbol DLT. On April 6, 1994, both the New York and
Pacific Stock Exchanges suspended the Company's Common Stock from trading and
instituted procedures to delist the Company's Common Stock. On June 16, 1994,
the Company's Common Stock was formally removed from listing and registration on
the New York Stock Exchange. As of August 31, 1994, the Company's Common Stock
was traded on a limited basis in the over-the-counter markets (on the bulletin
board) under the symbol DLTA. The weighted average price at which the stock was
traded for the last completed eight calendar quarters is as follows:
March 31, 2000 $ .250
June 30, 2000 $ .232
September 30, 2000 $ .402
December 31, 2000 $ .331
March 31, 2001 $ .432
June 30, 2001 $ .463
September 30, 2001 $ .403
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The Company has never paid cash dividends on its Common Stock.
The Company's loan agreements contain certain restrictions which currently
prohibit the Company from paying dividends on its Common Stock.
A Reverse Stock Split of 500,000 for 1 is estimated to reduce the number of
shareholders of record to two, based on December 2001 records.
See "Fairness of the Reverse Stock Split Proposal" below for a discussion of the
determination of a fair price for fractional shares.
At the Board of Directors' May 8, 2001 meeting, management expressed its view
that the Company and its shareholders are deriving little benefit from the
Company's being a public company. The Company is incurring considerable costs to
maintain this status.
The Board considered the advantages and disadvantages of being a private company
and unanimously directed management to conduct a preliminary cost and
feasibility study of going private, including a determination of the rights of
dissenting shareholders.
Subsequently Company management met with outside legal counsel to
discuss a Reverse Stock Split as well as other options for taking the Company
private. After discussion with legal counsel and other advisors of the options
available, management determined that a Reverse Stock Split was the most
feasible in the Company's current situation. By direction of the Board of
Directors, management engaged legal counsel and financial advisor to assist the
Company in pursuing the proposed Reverse Stock Split.
At the Board of Directors' December 13, 2001, meeting, management reported that
Taking the Company private could be accomplished through the process of going
private through a Reverse Stock Split, with cash being paid for fractional
shares that result. The Board reconfirmed unanimously its agreement that it
would be in the Company's best interest to go private, and directed management
to identify the issues involved in a Reverse Stock Split. Management reported
that a 500,000:1 Reverse Stock Split to take the number of shareholders of
record below 300 had been evaluated, and that in management's opinion the
500,000:1 ratio was preferable.
In consideration of management's evaluation, the Board authorized a 500,000:1
Reverse Stock Split, subject to the approval of the Company's shareholders.
The board reviewed the Board the duties of directors under Delaware law in
Evaluating a reverse stock split and discussed the preparation of documents to
be filed with the SEC in this regard. Also at this meeting, the board considered
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the fairness opinion of the Miller Advisory Group wherein a price of $200,000.00
per share to be paid for fractional shares resulting from a 500,000:1 Reverse
Stock Split was determined to be fair to those shareholders receiving such
payment for fractional shares.
The Board then discussed the fairness of the Reverse Stock Split to the
shareholders who will receive New Common Stock. Because of the cost savings
associated with no longer being a public company and the perceived greater
prospects going forward for expanded strategic alternatives, the Board concluded
that a reverse stock split would be fair to such shareholders. The Board
considered that during the preceding thirty-six month period, the Company had
not received any bona fide offers from any person for (i) the merger or
consolidation of the Company into or with any person, (ii) the sale or other
transfer of all or any substantial part of the assets of the Company, or (iii)
securities of the Company which would enable the holder thereof to exercise
control of the Company. The Company during this period did not solicit any third
party offers to merge or acquire the Company,nor did it authorize any member of
the Board of Directors or unaffiliated party to do so. After the completion of
the presentations and discussions, the Board approved a 500,000:1 Reverse Stock
Split with $200,000.00 per share being paid for all Fractional Shares resulting,
and all corporate actions necessary in connection with these undertakings, was
approved unanimously to be placed for a vote before the Company's shareholders
at a Special Meeting.
The Company and its Board of Directors is proposing the Reverse Stock Split at
this time because:
o The Company incurred an operating loss for the years 1998, 1999 and
2000; and
o The cost of remaining a public company continues to grow while no
corresponding benefit to the Company and its shareholders is
expected in the foreseeable future.
o The market for the Company's shares is extremely limited.
Failure to approve the Reverse Stock Split will sustain the Company's costs
of being a public company without corresponding benefit.
FAIRNESS OF THE REVERSE STOCK SPLIT PROPOSAL
The Board of Directors believes that the Reverse Stock Split proposal, taken as
a whole, is fair to and in the best interests of the Company and its
shareholders. In determining the fairness of the Reverse Stock Split, the Board
of Directors considered a number of factors prior to approval of the proposed
transaction.
The Board of Directors recognized the concerns of shareholders owning limited
shares of Existing Common Stock, whose liquidity is reduced because typical
transaction costs for public sale of their shares in most cases represents a
large percentage of the value of their holdings at current stock pricing trends.
The Reverse Stock Split will allow such shareholders to liquidate their holdings
at a fair value without these transaction costs by receiving cash for their
small Fractional Shares.
Shareholders receiving New Common Stock will benefit from the reduction of
direct and indirect costs borne by the Company to maintain its public company
status. The Board of Directors also believes that these shareholders can benefit
from expanded strategic alternatives available as a private company that could
strengthen the Company's financial position.
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The Board of Directors of the Company by unanimous vote on December 13, 2001,
With no member of the Board of Directors dissenting or abstaining from such
approval, adopted a resolution declaring the terms and conditions of the Reserve
Stock Split to be advisable, and directing that a proposed amendment to the
Articles of Incorporation of the Company to reduce the Company's authorized
capital be submitted to shareholders of the Company for consideration. All
material factors considered by the Board of Directors are presented herein.
The executive officers of the Company were charged with the responsibility of
recommending to the Board of Directors a fair price to be paid for the
fractional shares resulting from the Reverse Stock Split. In fulfilling their
responsibility, the executive officers considered four factors relating to the
fair value of the Company's Existing Common Stock:
o The historic market value of the Existing Common Stock, which
ranged between a high of $0.687 and a low of $0.062 for the
58-month period January 1997 to October 2001;
o The current market value of the Existing Common Stock, which was
$.30 on October 11, 2001;
o The absence of a meaningful market for the Company's shares
as reflected in the fact that only 500 shares traded during
the month of October, 2001.
o The December 31, 2000, book value per share of Existing Common
Stock; and
o The liquidation value of the Company's assets.
Because the book value per share was negative, the executive officers concluded
That book value per share would not be an appropriate valuation measure for the
Company as a going concern.
The executive officers determined that the Company had no liquidation value.
The executive officers concluded that liquidation value also would not be
an appropriate valuation measure for the Company as a going concern.
In reaching its decision to recommend $0.40 as the purchase price for a share of
Existing Common Stock, the executive officers gave consideration to the average
$0.31 per share market value of the Existing Common Stock for the 58-month
period January 1997 to October 2001, based on the monthly high and low prices
for the Company's stock during that period, and the market value of $.30
as of October 11, 2001.
In determining whether the price to be paid to the Company's shareholders for
fractional shares was fair, the Board of Directors received a fairness report
from an independent financial adviser. See "Report of Miller Advisory Group"
below. In determining the fairness to shareholders who will receive New Common
Stock, the Board of Directors considered the extremely limited market for the
Company's stock the cost savings associated with no longer being a public
company, the perceived greater prospects going forward with respect to
strategic alternatives and the removal of the competitive disadvantage of
publicly filing material contracts.
To the Company's knowledge, each executive officer and director of the Company
will vote all shares of Existing Common Stock those persons have proxy authority
for, for the proposed Reverse Stock Split and related Amendment to the Company's
Articles of Incorporation. These shares represent approximately 75.80% of the
voting power on the Record Date.
12
REPORT OF MILLER ADVISORY GROUP
On September 5, 2001, the Board of Directors retained Miller Advisory Group
("Miller") to act as its financial advisor and to render an opinion with respect
to fairness, from a financial point of view to the company shareholders of the
proposed purchase price for fractional shares ("Opinion"). In requesting
Miller's fairness opinion, the Board of Directors did not give any special
Instructions to Miller or impose any limitations upon the scope of the
investigations that Miller deemed necessary to enable it to deliver its Opinion.
The Board of Directors engaged Miller as its financial advisor because Miller
Has expertise in providing financial advisory services and was familiar
with the Company having previously provided financial advisory services.
Prior to this engagement, Miller had performed financial services for the
Company.
On December 12, 2001, Miller delivered to the Board of Directors its written
Opinion that the purchase price of $0.40 per share for fractional shares of the
Company's Common stock is fair from a financial point of view to the holders of
Common stock of the Company.
In rendering its opinion, Miller reviewed, analyzed and relied upon, among other
things: (i) drafts of the Proxy Statement, (ii) annual reports for the two
years ended December 31, 1999, December 31, 2000, and certain interim financial
reports, (iii) historical charts of the Company's stock performance and
activity; (iv) other financial information concerning the business and
operations of the Company including certain internal financial analyses and
forecasts, and such other analyses as Miller deemed appropriate. In addition,
Miller had discussions with senior management of the Company concerning its past
and current operations, financial condition and prospects.
A copy of the opinion is attached as Exhibit 1 and should be read in its
entirety by the Company's shareholders.
EXCHANGE OF CERTIFICATES AND PAYMENT OF FRACTIONAL SHARES
If the shareholders approve the Reverse Stock Split, the Company will file the
Amendment with the Secretary of State of the State of Delaware. The Reverse
Stock Split will become effective on the date the Certificate of Amendment is
Issued by the Secretary of State of the State of Delaware (the "Effective
Date").
As soon as practicable after the Effective Date, each holder of an outstanding
certificate theretofore representing Existing Common Stock will receive from
American Stock Transfer & Trust Company as the exchange agent (the "Exchange
Agent") instructions for the surrender of such certificate to the Exchange
Agent. The instructions will include a Letter of Transmittal to be completed and
Returned to the Exchange Agent with such certificate. As soon as practicable
after the surrender to the Exchange Agent of any certificate which represented
shares of Existing Common Stock, together with a duly executed Letter of
Transmittal and any other documents the Exchange Agent may specify, the Exchange
Agent shall deliver to the person in whose name such certificates have been
issued, (i) certificates registered in the name of such person representing the
number of full shares of New Common Stock into which the shares of Existing
Common Stock represented by the surrendered certificate shall have been
13
reclassified,and/or (ii) cash for fractional shares. Until surrendered as
contemplated by the preceding sentence, each certificate which represented
shares of Existing Common Stock shall be deemed at and after the Effective Date
to represent the number of full shares of New Common Stock contemplated by the
preceding sentence.
For the purpose of determining ownership of Existing Common Stock at the
Effective Date, shares will be considered to be held by the person in whose name
those shares are registered in the stock records of the Company, regardless of
the beneficial ownership of those shares. No service charges, brokerage
commissions or transfer taxes shall be payable by any holder of any certificate
which prior to the approval of the Reverse Stock Split represented any shares of
Existing Common Stock, except that if any certificates for New Common Stock are
to be issued in a name other than that in which the certificates for shares of
Existing Common Stock surrendered are registered, it shall be a condition of
such issuance that (i) the person requesting such issuance pay to the Company
any transfer taxes payable by reason thereof (or prior transfer of such
surrendered certificate, if any) or establish to the satisfaction of the Company
that such taxes have been paid or are not payable, and (ii) such surrendered
certificate shall be properly endorsed and otherwise be in proper form for
transfer.
No certificates or scrip representing fractional shares of New Common Stock
shall be issued in connection with the Reverse Stock Split. Instead,
shareholders holding a number of shares of Existing Common Stock not evenly
divisible by one hundred, and shareholders holding less than one hundred shares
of Existing Common Stock, upon surrender of their old certificates, will receive
cash in lieu of fractional shares of New Common Stock. The price payable by the
Company for fractional shares will be determined by multiplying the fraction of
a share of New Common Stock by $200,000.00.
Approval of the Reverse Stock Split will require approval by a majority of the
shares of Existing Common Stock that were outstanding on the Record Date.
Accordingly, the Reverse Stock Split will be approved if at least 6,766,025
shares of Existing Common Stock are voted in favor of the Reverse Stock Split.
CERTAIN EFFECTS OF REVERSE STOCK SPLIT PROPOSAL ON THE COMPANY'S SHAREHOLDERS
1. Rights, Preferences and Limitations. There are no differences
between the respective rights, preferences or limitations of the Existing Common
Stock and the New Common Stock. If the Reverse Stock Split is approved and
implemented, each shareholder's percentage interest will be the same as it was
prior to the approval of the proposal, except for the effect of the elimination
of fractional shares. There will be no differences with respect to dividend,
voting, liquidation or other rights associated with the Company's common stock
before or after the Reverse Stock Split.
If the Reverse Stock Split is approved, the Company's Articles of Incorporation
will be amended to change the authorized common stock from the currently
authorized 15,000,000 shares to 30 authorized shares. The Company will then
have approximately 19 shares issued and outstanding, 11 shares authorized
but unissued.
No commitments, plans, understandings or agreements have been
made by the Board of Directors or the officers of the Company for use of the
authorized but unissued stock.
14
If the Board of Directors issues additional shares of New Common Stock in the
future, current shareholders may suffer dilution of their present interests in
the Company, to the extent such future issuances do not involve the current
shareholders of the Company.
2. Financial Effect. The Reverse Stock Split and expenses
related to the transaction will not have a material effect on the Company's
Balance Sheet, Income Statement or Cash Flow.
The Reverse Stock Split will require a restatement of the Company's earnings per
share and book value.
The total number of fractional shares to be purchased is estimated to be
approximately 4,044,277 at a cost of approximately $1,617,711. The cost of the
Reverse Stock Split transaction will come from the Company's available cash
Balances and from loans to be made by entities controlled by Mr. Antony Gram.
The term of the loan or loans and any plans or arrangements to repay the loan or
loans have not been made.
3. Effect on Market for Shares. The Company estimates that the number
of shares of New Common Stock outstanding after the Reverse Stock Split, if
effected, 19 shares in the hands of two shareholders. As a result, there will be
no market for the Company's shares.
The Company has no current plans to issue additional shares of stock,
but the Company reserves the right to do so at any time and from time to time at
such prices and on such terms as the Board determines to be in the best
interests of the Company and its then shareholders. Persons who continue as
shareholders following implementation of the Reverse Stock Split proposal will
not have any preemptive or other preferential rights to purchase any of the
Company's stock that may be issued by the Company in the future, unless such
rights are currently specifically granted to such shareholder.
4. Termination of Exchange Act Registration of New Common Stock. The
Reverse Stock Split proposal will affect the public registration of the New
Common Stock with the SEC under the Exchange Act, as the Company intends to
terminate this registration as soon as practicable after approval of the Reverse
Stock Split proposal by the shareholders. The Company may terminate registration
under the Exchange Act if the New Common Stock is no longer held by 300 or more
shareholders of record. Termination of registration of the New Common Stock
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholder and to the SEC and would make
certain provisions of the Exchange Act, such as proxy statement disclosure in
connection with shareholder meetings and the related requirement of an annual
report to shareholders, no longer applicable to the Company.
With respect to the executive officers and directors of the Company, in
the event of the intended termination of registration of the New Common Stock
under the Exchange Act: (a) executive officers, directors and other affiliates
would no longer be subject to many of the reporting requirements and
restrictions of the Exchange Act, including without limitation the reporting and
short-swing profit provisions of Section 16 thereof. Upon
termination of Exchange Act registration, the Company will continue to be
subject to the general anti-fraud provisions of federal and applicable state
securities laws.
15
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION SUMMARIZING CERTAIN FEDERAL TAX CONSEQUENCES IS BASED
ON CURRENT LAW AND IS INCLUDED FOR GENERAL INFORMATION ONLY. SHAREHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
EFFECTS OF THE REVERSE STOCK SPLIT IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES.
The receipt of New Common Stock solely in exchange for Existing Common Stock
will not result in recognition of gain or loss to the shareholder. The adjusted
tax basis of the shareholder's New Common Stock will be the same as the
shareholder's adjusted tax basis in the Existing Common Stock. The holding
period of New Common Stock received solely in exchange for Existing Common Stock
will include the shareholder's holding in the Existing Common Stock. No gain or
loss will be recognized by the Company upon the Reverse Stock Split.
Shareholders who receive cash in lieu of fractional shares of New Common Stock
will be treated as receiving cash as payment in exchange for their fractional
shares of New Common Stock, and they will recognize capital gain or loss in an
amount equal to the difference between the amount of cash received and the
adjusted basis of the fractional shares surrendered for cash.
APPRAISAL RIGHTS AND DISSENTER'S RIGHTS
No appraisal or dissenters' rights are available under the Act to
shareholders who dissent from the Reverse Split. There may exist
other rights or actions under the Act or federal or state securities laws
for shareholders who are aggrieved by the Reverse Split generally.
Although the nature and extent of such rights or actions are uncertain and
may vary depending upon facts or circumstances, shareholder challenges to
corporate action in general are related to the fiduciary responsibilities
of corporate officers and directors and to the fairness of corporate
transactions.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE REVERSE STOCK SPLIT AND THE RELATED AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION.
16
OWNERSHIP OF VOTING SECURITIES OF THE COMPANY
Based upon information furnished to the Company or contained in filings
made with the Commission, the Company believes that the only persons who
beneficially own more than five percent (5%) of the shares of the Common Stock
of the Company are Yasawa (52.41%), Selex (20.82%) and Antony Gram, through his
holdings in Selex and Yasawa (73.23%).
All of the issued and outstanding stock of Selex, Gerrit van den Veenstraat
70, Amsterdam, The Netherlands, is owned by Wilbury a majority of which is, in
turn, owned by Antony Gram. Antony Gram, Chairman of the Board of Directors,
Chief Executive Officer and President of the Company, as the largest shareholder
of Wilbury, holding a majority equity interest in that corporation, is treated
as the beneficial owner of all of the Company's Common Stock held by Selex. In
addition, Mr. Gram beneficially owns Yasawa. Since Yasawa is the direct owner
of 7,098,975 shares of the Common Stock of the Company, Mr. Gram is deemed to
be the beneficial owner of an aggregate of 9,919,041 shares of Common Stock of
the Company (73.23%).
The following table sets forth information, as of December 5, 2001,
concerning the beneficial ownership by all directors and nominees, by each of
the executive officers and by all directors and executive officers as a group.
The number of shares beneficially owned by each director or executive officer
Is determined under the rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose.
Amount and Nature Percent
of Beneficial Ownership(a) of Class
-------------------------- --------
Current Directors:
George W. Fischer.......... 35,000 - Direct *
Antony Gram ............... 9,919,041 - Indirect 73.23%
Rudy Gram.................. 312,266 - Direct 2.31%
Thomas B. McNeill ......... 200 - Direct *
Christel DeWilde........... -0- *
Current Executive Officers named
in Summary Compensation Table:
Antony Gram................ 9,919,041 - Indirect 73.23%
Sharon J. Hummerhielm...... 200 - Direct *
All executive officers and directors
as a group, consisting of 7 persons
(including those listed above).........10,266,707 75.80%
- -------------------
* Represents holdings of less than 1%.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to the use of mail, officers of the Company may
solicit proxies by telephone or telegraph. Upon request, the Company will
reimburse brokers, dealers, banks and trustees or their nominees, for reasonable
expenses incurred by them in forwarding proxy material to beneficial owners of
shares of Existing Common Stock.
17
REVOCABILITY OF PROXY
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any shareholder of the
Company has the unconditional right to revoke a proxy at any time prior to the
voting thereof by (i) notifying the Secretary of the Company with a written
notice thereof addressed to Sharon J. Hummerhielm, Corporate Secretary, The
Deltona Corporation, 8014 S.W. 135th Street Road, Ocala, FL 34470; (ii)
executing and delivering a subsequent proxy; or (iii) personally appearing at
the Special Meeting and casting a contrary vote. However, no revocation shall be
effective unless and until notice of such revocation has been received by the
Company at or prior to the Special Meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action at
the meeting other than the matters set forth herein. Should any other matter
requiring a vote of shareholders arise, the proxies in the enclosed form confer
upon the person or persons entitled to vote the shares represented by such
proxies discretionary authority to vote the same in accordance with their best
judgment in the interest of the Company.
FINANCIAL INFORMATION AND INCORPORATION BY REFERENCE
A copy of the Company's Annual Report to Stockholders for fiscal 2000 and the
Company's Form 10-Q for the quarter ended September 30, 2001 (File No. 002-
27157) are incorporated herein by reference. Copies of these reports accompany
this Proxy Statement and are available for review from the Edgar filings
obtained through the SEC's Internet Website (http://www.sec.gov).
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act of
1934, as amended, and in accordance therewith files reports, proxy statements
and other information with the SEC. Such reports, proxy statements and other
information can be inspected and copied at the public reference
facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, DC 20549 and at the regional office of the SEC located at Suite
1400,Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such materials can also be obtained at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, DC 20549. In addition, such reports, proxy
statements and other information are available from the Edgar filings obtained
through the SEC's Internet Website (http://www.sec.gov).
By order of the Board of Directors
/s/ Sharon J. Hummerhielm
Sharon J. Hummerhielm
Executive Vice President and
Corporate Secretary
January 14, 2002
18
Exhibit 1
[LETTERHEAD]
Miller Advisory Corp
2601 Heron Lane North 727,573.6047
Clearwater, Florida 33762 RMiller2601@cs.com
December 12, 2001
Board of Directors
The Deltona Corporation
999 Brickell Avenue, Suite 700
Miami, FL 33131
Members of the Board of Directors:
You have asked Miller Advisory Corp. ("Miller Advisory") to express an opinion
as to whether or not the proposed Reverse Stock Split and Purchase of Fractional
Shares (the "Transaction") involving The Deltona Corporation ("Deltona") and
certain shareholders of Deltona ("Shareholders") is fair from a financial point
of view, solely in their capacity as Shareholders.
In the preparation of this opinion, Miller Advisory has reviewed certain
publicly available financial and non-financial information as well as certain
financial and non-financial information not publicly available relating to
Deltona in general and the Transaction in particular, all of which was supplied
by Deltona. Miller Advisory has assumed this information to be accurate and does
not bear any responsibility for its accuracy. Miller Advisory has not audited,
nor has it been asked to audit, any of the Deltona financial information. Miller
Advisory has discussed with management of Deltona current operations and future
prospects of the Company. In addition, Miller Advisory has, where appropriate,
considered information in published sources believed to be reliable, but of
which it does not guarantee the accuracy. It has also reviewed a trading history
of Deltona shares.
The opinion expressed herein is provided solely for your benefit in connection
with the proposed Transaction.
Based upon and subject to, but not limited to, its review of the above, its
experience, and other factors deemed relevant in its sole discretion, Miller
Advisory's opinion is that as of this date the proposed Transaction is fair from
a financial point of view to the Shareholders solely in their capacity as
shareholders of Deltona.
Yours truly,
MILLER ADVISORY CORP.
/s/ Ronald L. Miller
Ronald L. Miller, President
[LETTERHEAD]
Miller Advisory Corp
2601 Heron Lane North 727,573.6047
Clearwater, Florida 33762 RMiller2601@cs.com
December 12, 2001
Board of Directors
The Deltona Corporation
999 Brickell Avenue, Suite 700
Miami, FL 33131
Members of the Board of Directors:
In support for the Fairness Opinion of this date regarding the proposed Reverse
Stock Split and Purchase of Fractional Shares (the "Transaction") involving The
Deltona Corporation ("Deltona") and certain shareholders of Deltona
("Shareholders"), Miller Advisory Corp. has interviewed the following senior
management of Deltona:
Sharon J. Hummerhelm, Executive Vice President and Corporate Secretary
John R. Battle, Treasurer
and reviewed the following:
A. Reports filed with the Securities and Exchange Commission
1. Form 10-Q for Quarter Ending March 31, 2001
2. Form 10-Q for Quarter Ending June 30, 2001
3. Form 10-Q for Quarter Ending September 30, 2001
4. Form 10-K for year Ending December 31, 2000
5. Form 10-K for year Ending December 31, 1999
6. 2001 Proxy Statement and Annual Meeting Notice
7. 2000 Proxy Statement and Annual Meeting Notice
B. Drafts of Reports to be filed with the Securities and
Exchange Commission
1. Preliminary Proxy Statement for the special Meeting
of Shareholders
C. Historical Charts of Deltona Corporation Stock Performance
and Activity
1. One year ending December 10, 2001
ii. Two years ending December 10, 2001
iii. Three years ending December 10, 2001
iv Four years ending December 10, 2001
v. Five years ending December 10, 2001
D. Insider and Form 144 Filings - Deltona Corp. (DLTA)
August 22, 2000 - August 7, 2001
E. A list of Deltona Corp. Stock Purchases by Rudy Gram
September 30, 1996 - June 6, 2001
F. Consolidating Trial Balance Report
Ten months ending October 31, 2001
G. The Deltona Corporation Financial and Sales Reports
for December 2001 - June 2001
H. The Deltona Corporation Depreciation Expense Report -
December 31, 2000
I. Articles appearing in newspapers, and magazines:
1. St. Petersburg Times, July 25, 2001
I am available to augment or to clarify any of the above information, to answer
any questions, or to generally assist the Board.
Yours truly,
MILLER ADVISORY CORP.
Ronald L. Miller, President