Equus Announces Annual Meeting of Shareholders to Be Held on June 10, 2011
May 11 2011 - 6:12PM
Marketwired
Equus Total Return, Inc. (NYSE: EQS) ("Equus" or the "Fund")
announced that the annual meeting of the Fund's shareholders will
be held on Friday, June 10, 2011 at 10:00 am Eastern Daylight Time,
at the offices of Goodwin Procter LLP, The New York Times Building,
26th Floor, 620 Eighth Avenue, New York, NY 10018.
The Fund has filed a proxy statement with the Securities and
Exchange Commission, which is being mailed, together with the
Fund's annual report on Form 10-K, to all Equus shareholders of
record on May 10, 2011. The proxy statement also includes a letter
to the Fund's shareholders from John A. Hardy, the Fund's Executive
Chairman. The text of this letter is set forth in its entirety
below.
Shareholders requiring assistance with voting in connection with
the meeting or seeking additional copies of the Fund's proxy
materials, may call The Altman Group, Inc. toll-free at
1-800-330-8705, or email equus@altmangroup.com. Shareholders also
can find additional materials on the annual meeting and how to vote
on the Fund's website at www.equuscap.com.
The following is the text of the letter from
Mr. Hardy to the Equus Shareholders:
Dear Equus Shareholders:
Equus Total Return, Inc. ("Equus" or the "Fund") has experienced
significant changes in the past year. In May 2010 the Fund added
four new members to its board of directors. These new directors
included individuals who have sound finance and investment banking
backgrounds. I was appointed as the Fund's Executive Chairman in
June 2010.
At the time of my appointment in June, the Fund faced
considerable challenges. The Fund had not made a new investment
since August 2008, and in the previous twelve months, the net asset
value of the portfolio we inherited had declined by $35.1 million.
Without new investments, the Fund would remain stagnant, yet the
ability of the Fund to make new investments was restricted by a
lack of capital.
In June 2010, the Fund had net cash of approximately $5.6
million with a run rate of approximately $3.6 million per year in
expenses. Most of the Fund's investments were continuing to
underperform and many were structured in a manner which restricted
the Fund's alternatives.
We needed to immediately improve the liquidity position of the
Fund. A number of the loans we inherited had defaulted, which
required us to position the Fund to protect capital for the
Shareholders. We embarked on an aggressive program to extract value
from the inherited portfolio, which was in freefall prior to our
arrival.
Some of the specific initiatives we undertook in this regard
included:
- Collection of Trulite Loan. In January
2010, Trulite, Inc. had defaulted on a $2.3 million loan from
Equus. We commenced litigation against Trulite and collected $2.6
million, which included interest and costs of collection, at the
end of June 2010.
- Sale of Underperforming Investment
Interests. Investments in 1848 Capital Partners, Big Apple
Entertainment, London Bridge Entertainment and Riptide, encountered
difficulty during the year. In July 2010 the Fund loaned London
Bridge $575,000 to directly fund a past due rent payment, which
allowed them to maintain uninterrupted operations. Shortly
thereafter London Bridge defaulted on the loans, requiring the Fund
to commence legal action to protect its interest. In October 2010
Big Apple defaulted on its loan, and we commenced similar legal
proceedings against the company. As a result of our positioning of
the Fund in relation to these investments, we were able to work
with the Guarantors to negotiate a sale of these assets for $10
million in cash, in January 2011.
- Other Collections and Realizations. In
June 2010, we mandated a distribution of $1.0 million from Equus
Media Development Company, Inc. as a return of principal. In
October 2010, we negotiated for and received a principal payment of
$0.5 million from Sovereign Business Forms. In January 2011 we
decided not to extend our investment in RP&C International
Investments, liquidating our remaining holding therein for $0.8
million.
As a result of these initiatives, the Fund's net cash position
has increased three-fold from approximately $5.6 million to $17.2
million as at March 31, 2011.
Another of our objectives includes the implementation of prudent
strategies to increase the size of the Fund. We believe that a
larger asset base may, not only improve the Fund's visibility in
respect of capital markets and institutional investors, but also
may qualitatively improve the range of investments available to it,
as the Fund may participate in new investments at a higher and more
meaningful level. Accordingly, in November 2010, we submitted a
preliminary registration statement with respect to an offering of
subscription rights to our shareholders. This step will enable
Equus to increase the scale of its initial investments, become a
more significant participant in the private equity market, and
compete more effectively for institutional shareholder
interest.
In addition to the rights offering, we looked for ways to invest
the Fund's assets and also increase the size of the Fund without
adversely impacting our shareholders. An important step in this
regard included our recent transaction involving the purchase by
the Fund of Orco Germany S.A. 4% bonds. Orco Germany is a large
commercial and multi-family residential real estate holding
company, with a diversified property portfolio of EUR 867.0
million, consisting of 856,000 square meters of rentable space. We
were able to exchange Equus shares at net asset value ($4.29) in
exchange for these Orco Germany bonds, which were purchased at EUR
446.16 each, a 34% discount from their par value of EUR 676.00.
They are redeemable at maturity for 125% of par, or EUR 845.00 per
bond. The purchase of these bonds enabled the Fund's aggregate net
asset value to increase. By structuring the transaction in this
fashion, we preserved the fund's capital for other investment
opportunities.
Our investment objective is to acquire income-producing
investments, which will improve the Fund's earnings and ultimately
enable us to resume the Fund's managed distribution policy of
paying regular dividends to our shareholders in the future. We
believe we now have the building blocks in place for such future
growth.
We appreciate your continuing support of our efforts to
stabilize and grow the Fund during this transition period.
Sincerely,
John A. Hardy Executive Chairman
Cautionary Note Regarding Forward-Looking
Statements This press release may contain certain
forward-looking statements regarding future circumstances. These
forward-looking statements are based upon the Fund's current
expectations and assumptions and are subject to various risks and
uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements,
including, in particular, the risks and uncertainties described in
the Fund's filings with the Securities and Exchange Commission.
Actual results, events, and performance may differ. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as to the date hereof. The Fund
undertakes no obligation to release publicly any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The inclusion of any statement in this letter
does not constitute an admission by the Fund or any other person
that the events or circumstances described in such statements are
material.
Important Information The Fund filed a
definitive proxy statement concerning the 2011 Annual Meeting of
Stockholders with the United States Securities and Exchange
Commission ("SEC") on May 2, 2011. The Fund advises stockholders to
read the definitive proxy statement, as well as the other relevant
documents filed with the SEC, because they contain important
information about the election of directors and any other matters
to be presented at the 2011 Annual Meeting of Stockholders.
Stockholders may obtain free copies of the definitive proxy
statement and the other documents the Fund files with the SEC at
the SEC's website at www.sec.gov. They may also access a copy of
the Fund's definitive proxy statement by accessing
www.equuscap.com. In addition, stockholders may obtain a free copy
of the definitive proxy statement and other related documents by
contacting The Altman Group, Inc. by telephone toll-free at
800-330-8705, or by email at equus@altmangroup.com.
The Fund, its directors, some of its executive officers and
certain other of its employees are participants in the solicitation
of proxies in respect of the matters to be considered at the 2011
Annual Meeting of Stockholders. Information about the participants
is set forth in the definitive proxy statement. Information about
the participants' direct or indirect interests in the matters to be
considered at the annual meeting is also contained in the proxy
statement referred to above.
Contacts: Patricia Baronowski Pristine Advisers, LLC
(631) 756-2486
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