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CUSIP No 264142100
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Page 2 of 10 Pages
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1
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NAME OF REPORTING PERSON
Strongbow Capital, Ltd.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
None
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
¨
(b)
x
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
WC
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
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¨
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands, British West Indies
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Number of
Shares
Beneficially
Owned By
Each
Reporting
Person
With
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7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
543,517
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9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
543,517
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
543,517
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12
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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¨
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3%
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14
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TYPE OF REPORTING PERSON
CO
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CUSIP No 264142100
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Page 3 of 10 Pages
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1
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NAME OF REPORTING PERSON
Strongbow Capital Management, Ltd.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
None
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
¨
(b)
x
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
AF
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
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¨
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands, British West Indies
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
543,517
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9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
543,517
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
543,517
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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¨
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3%
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14
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TYPE OF REPORTING PERSON
CO
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CUSIP No 264142100
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Page 4 of 10 Pages
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1
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NAME OF REPORTING PERSON
Raymond A. D. French
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
¨
(b)
x
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
00
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
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¨
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Republic of Ireland
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
543,517
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9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
543,517
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
543,517
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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¨
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3%
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14
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TYPE OF REPORTING PERSON
IN
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CUSIP No 264142100
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Page 5 of 10 Pages
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This Amendment No. 7 to the Schedule 13D (the Schedule 13D), dated November 20,
2007, is filed with the U.S. Securities and Exchange Commission (the SEC) by Strongbow Capital, Ltd., Strongbow Capital Management, Ltd. and Raymond A. D. French.
Item 1.
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Security and Issuer
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This Schedule 13D is filed
with respect to the common stock $.0001 par value (Common Stock) of Duckwall-ALCO Stores, Inc., a Kansas corporation (Duckwall or the Company). The principal offices of Duckwall are located 401 Cottage Street,
Abiline, KS 67410.
Item 2.
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Identity and Background
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This Statement is filed on
behalf of Strongbow Capital, Ltd., Strongbow Capital Management, Ltd. and Raymond A. D. French, who are referred to as the Filing Parties.
Items 2(a)-(c), (f)
I. Filing Parties
1. Strongbow Capital, Ltd. (Strongbow) is a limited liability company organized under the laws of the Cayman Islands, British West Indies
with its principal office and business at Queensgate House, South Church Street, P.O. Box 1234GT, Cayman Islands, British West Indies. Strongbow is an investor in equity securities. Strongbow is managed by its Board of Directors.
2. Strongbow Capital Management, Ltd. (SCM) is a limited liability company organized under the laws of the Cayman Islands, British West
Indies with its principal office and business at Queensgate House, South Church Street, P.O. Box 1234GT, Cayman Islands, British West Indies. SCM acts as an investment manager to Strongbow. SCM is the sole owner of the voting shares of Strongbow and
is the controlling entity of Strongbow.
3. Raymond A. D. French is a citizen of the Republic of Ireland whose address is Bayroc, Unit
#404, Box CB 13043, Nassau, Bahamas. Mr. French is a company director. Mr. French is Chairman of SCM and is the controlling person of SCM. Mr. Frenchs email address is: rayfrench@strongbow-capital.com
II. Executive Officers and Directors.
Strongbow has no executive officers. The names, present principal occupations and business addresses of the directors of Strongbow are set forth below.
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Name
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Occupation
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Address
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Citizenship
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Raymond A. D. French
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Company Director
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Bayroc, Unit #404
Box CB 13043
Nassau, Bahamas
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Irish
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CUSIP No 264142100
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Page 6 of 10 Pages
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Raymond J. R. French
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Company Director
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Ballacoyne
Cammall
Kirk Michael
Isle of Man IM6 1AU British Isles.
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Irish
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SCM has no executive officers. The names, present principal occupations and business addresses of
the directors of SCM are set forth below.
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Name
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Occupation
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Address
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Citizenship
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Raymond A. D. French
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Company Director
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Bayroc, Unit #404
Box CB 13043
Nassau, Bahamas
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Irish
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Raymond J. R. French
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Company Director
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Ballacoyne
Cammall
Kirk Michael
Isle of Man IM6 1AU British Isles.
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Irish
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Items 2(d). Criminal Proceedings
During the last five years, neither the Filing Parties (or a controlling entity thereof) nor any executive officer or director of the Filing Parties (or
a controlling entity thereof) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
Item 2(e) Civil Securities Law Proceedings
During the last five years, neither the Filing Parties (or a controlling entity
thereof) nor any executive officer or director of any of the Filing Parties (or a controlling entity thereof) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
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CUSIP No 264142100
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Page 7 of 10 Pages
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Item 3.
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Source and Amount of Funds or Other Consideration.
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No change from prior filing.
Item 4.
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Purpose of Transaction.
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Item 4 is hereby amended
and restated as follows:
In a telephone conversation with Warren H. Gfeller, the Companys Chairman, on September 26, 2007, Raymond
A.D. French, one of the Filing Parties, proposed that the Board take the following actions:
1. Expand the size of the Board by one member
and appoint Royce Winsten to fill the newly created Board position. The Filing Parties believe that Mr. Winsten is an astute financial analyst, who is knowledgeable about the Company and its business. Mr. Winsten is the managing director of Shore
Capital Management, LLC, which is the principal executing broker for Strongbow Capital, Ltd., one of the Filing Parties.
2. Create an
executive committee of the Board, which would be authorized to exercise all the powers and authority of the Board in the management of the business and affairs of the Company, to the extent permitted by the Companys Charter and Bylaws and
applicable law. In particular, the executive committee would be charged with overseeing efforts by management to achieve the following three important objectives:
Reduce average inventory levels. The Company has estimated that there is an opportunity to reduce average inventory per selling square foot by approximately 15% as a result of the more efficient inventory management
and logistics resulting from the Companys IT initiative. The achievement of this reduction in average inventory levels would release a large amount of capital that could be used to finance new stores or for other purposes.
Reduce SG&A expense. Because of the Companys very high operating leverage, a small percentage reduction in SG&A expenses would have a major
impact on the bottom line. The Filing Parties have been disappointed with managements record at controlling SG&A expense and would expect the executive committee to play a major role in achieving this objective.
Reduce losses from shrinkage (i.e., pilferage).
Mr. French
recommended that Lolan C. Mackey be appointed chairman of the executive committee and that Mr. Winsten be one of the members of the committee.
Following the telephone conversation, the Board carried out Mr. Frenchs suggestion to expand the size of the Board by one member and appoint Royce Winsten to fill the newly created Board position. To the knowledge of the Filing
Parties, the Board has not carried out Mr. Frenchs proposal to create an executive committee of the Board with specific oversight over the three problem areas cited.
On November 20, 2007, Mr. French sent a letter to the Board expressing dissatisfaction with the results to date of the three-year turn around program
which was intended to bring the Companys percentage return on equity (ROE) to the mid teens. The letter discussed in detail the grounds for the Filing Parties belief that management had done an inadequate job at controlling SG&A
expenses and reducing average inventory levels. The letter also communicated Mr. Frenchs belief that if management and the Board do not promptly remedy these problems, a change in management or a sale of the Company will be the only ways for
shareholders to achieve a reasonable return on their investment. Mr. French stated that if the Filing Parties do not see satisfactory concrete progress in the problem areas they have identified and an acceptable improvement in the Companys
twelve-month run-rate ROE by the end of the third quarter of this fiscal year, they may nominate a slate of directors for election to the Board and make other proposals at the 2008 annual meeting. Between now and the 2008 annual meeting, the Filing
Parties may take preliminary steps toward soliciting proxies at the annual meeting and identifying potential candidates to be elected to the Board and may communicate with and may engage in conversations with investment banks, prospective purchasers
and others regarding a possible sale of the Company, while continuing to communicate with management, the Board and other shareholders regarding matters related to the Company.
The Filing Parties acquired the Common Stock beneficially owned by them for investment purposes. The Filing Parties intend to review their position with
respect to the Company periodically, and depending upon their evaluation of all relevant factors, the Reporting Parties may determine to acquire or dispose of Common Stock on the open market or in private transactions on such terms and at such times
as the Filing Parties find desirable.
Except as set forth above, no Filing Party has any present or proposed plan which would relate to or
result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D.
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CUSIP No 264142100
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Page 8 of 10 Pages
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Item 5.
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Interest in Securities of the Issuer.
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(a) The
following table sets forth information with respect to the Common Stock beneficially owned by each Reporting Person as of the close of business on November 19, 2007:
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Name
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Number
of Shares
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Approximate
Percentage
of
Outstanding
Shares
2
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Strongbow
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543,517
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14.3
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%
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SCM
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543,517
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14.3
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%
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Raymond A. D. French
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543,517
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14.3
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%
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(b) Strongbow has shared power to dispose or direct the disposition of 543,517 shares of Common
Stock.
SCM has shared power to dispose or direct the disposition of 543,517 shares of Common Stock.
Raymond A. D. French has shared power to dispose or to direct the disposition of 543,517 shares of Common Stock.
(c) There have been no transactions with respect to the Shares during the past 60 days by the Filing Persons.
(d) In certain circumstances, SCM may have the right to receive a portion of the proceeds of the sale by Strongbow of greater than five percent of the
shares of the class of Common Stock.
Item 6.
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Contracts, Arrangements, Understanding or Relationships with Respect to Securities of the Issuer.
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Except as described in Item 4 above, there are no contracts, arrangements, understandings, or relationships between the Filing Parties, on the one
hand, and any persons, on the other hand, with respect to any securities of the Company.
Item 7.
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Material to be filed as Exhibits.
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Exhibit
99.1 Letter, dated November 20, 2007, from Mr. French to the Board of Directors of the Company.
2
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Computed on the basis of 3,809,341 shares of Common Stock outstanding as of
July 29, 2007 as specified in the Quarterly Report on Form 10-Q of the Company, filed with the SEC on 09/06/2007.
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CUSIP No 264142100
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Page 9 of 10 Pages
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SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: November 20, 2007
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STRONGBOW CAPITAL, LTD.
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By:
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/s/ Raymond A. D. French
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Raymond A. D. French
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Director
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STRONGBOW CAPITAL MANAGEMENT, LTD.
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By:
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/s/ Raymond A. D. French
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Raymond A. D. French
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Director
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RAYMOND A. D. FRENCH
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By:
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/s/ Raymond A. D. French
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CUSIP No 264142100
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Page 10 of 10 Pages
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Exhibit Index
Exhibit 99.1
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Letter, dated November 20, 2007, from Raymond A.D. French to the Board of Directors of Duckwall-ALCO Stores, Inc.
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