More on the topic of the GE sale...
Here's some of the text from today's SEC filing. Note that GE Capital needs to maintain ownership of at least 20% of MSGI's outstanding stock to retain one seat on the MSGI board of directors. It appears that since the forced conversion to common shares they may be selling shares over that 20% number. Since their interest payments have ceased, this may be an understandable move, IMHO, since they do maintain a substantial common stock position in this company.
I am preparing a fax to the company's investor relation department to ask if they can shed light on this relationship (they're on the opposite coast from me so I won't have time to call). If anyone has an e-mail address for MSGI IR department that would be helpful.
excerpt from filing...
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Since the filing of Amendment No. 1 to the Schedule 13D, the
Company has exercised its contractual right to convert GE Capital's 50,000 shares of Convertible Preferred Stock into 4,811,320 shares of Common Stock (the "Conversion").
Since the Conversion, GE Capital has sold an aggregate of 100,000 shares of Common Stock pursuant to Rule 144 under the Securities Act of 1933, as amended. The foregoing transactions result in the beneficial ownership by GE Capital of an aggregate of 4,711,220 shares of Common Stock which represents approximately 24.26% of the issued and outstanding shares of Common Stock.
ITEM 4. PURPOSE OF TRANSACTION.
As a result of the Conversion, GE Capital has lost all of its
rights as a preferred shareholder, including, without limitation, its rights to quarterly dividends, to require the Company to comply with certain financial covenants, to approve certain acquisitions and to elect representatives to the Company's board of directors. Consequently, all of GE Capital's appointees to the Company's board of directors have resigned. On March 9, 1999, however, the
Company and GE Capital entered into a letter agreement (the "Letter Agreement") pursuant to which the Company has agreed to use its best efforts to cause one person designated by GE Capital to be nominated and elected to the Company's board of directors so long as GE Capital owns at least 20% of the shares of Common Stock issued to it as a result of the Conversion. A copy of the Letter Agreement is attached hereto as Exhibit 7.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date of this statement, the aggregate number and
percentage of shares of Common Stock beneficially owned by GE Capital are 4,711,220 and approximately 24.26%, respectively. Except as disclosed in this Item 5(a) and in Item 3 above, none of GE Capital, GECS, GE, nor, to the best of their knowledge, any of their
executive officers and directors, beneficially owns any securities of the Company or presently has a right to acquire any securities of the Company.
(b) GE Capital has the sole power to vote or direct the vote
of all 4,711,220 shares of Common Stock that it beneficially owns and the sole power to dispose or to direct the disposition of such shares.
Except as disclosed in this Item 5(b), none of GECS, GE, nor,
to the best of their knowledge, any of their executive officers or directors presently has the power to vote or to direct the vote or to dispose of or direct the disposition of any of the securities which they may be deemed to beneficially own.
(c) Except as set forth above, neither GE Capital, GECS, GE,
nor, to the best of their knowledge, any of their executive officers or directors, has effected any transaction in any securities of the Company during the past 60 days.
(d) No person except for GE Capital is known to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, securities covered by this statement.
(e) Not applicable.
Neither the filing of this Amendment No. 2 nor anything
contained herein is intended as, or should be construed as, an admission that GECS or GE is the "beneficial owner" of any shares of Common Stock or Warrants.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the Letter Agreement, the Company agreed to use
its best efforts to cause one person designated by GE Capital to be nominated and elected to the Company's board of directors so long as GE Capital owns at least 20% of the shares of Common Stock issued to it as a result of the Conversion. |
