UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION
STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section
14(c)
of the Securities Exchange Act of 1934
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Preliminary information statement
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Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2))
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Definitive information statement
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EQUUS TOTAL RETURN, INC.
(Name of Registrant as Specified in Its Charter)
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Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
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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):
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EQUUUS TOTAL
RETURN, INC.
700 Louisiana Street, 48
th
Floor
Houston, Texas 77002
DEFINITIVE INFORMATION STATEMENT
NO VOTE OR OTHER ACTION OF THE COMPANY’S
STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
INTRODUCTION
This notice and information statement (“Information
Statement”) is being furnished to the stockholders of Equus Total Return, Inc., a Delaware corporation (“Equus”
or the “Company”), in connection with an action taken by holders of a majority of our voting shares to authorize the
Equus Board of Directors (sometimes referred to hereinafter as the “Board”) in its discretion, to undertake on or before
July 31, 2019, the withdrawal of the Company’s election to be regulated as a business development company (“BDC”)
under the Investment Company Act of 1940 (hereafter, the “1940 Act”).
The Board was previously given similar authorizations
by the Equus shareholders to withdraw the Company’s BDC election in 2017 and 2018, all of which have since expired (collectively,
the “Prior Authorizations”).
The Prior Authorizations, as well as the action
recently taken by holders of a majority of our shares to authorize our Board to withdraw our BDC election, are a consequence of
the Company’s Plan of Reorganization announced on May 15, 2014 (sometimes also referred to herein as the “Plan”).
In our announcement of the Plan of Reorganization, we stated that Equus intended to implement the Plan, which entailed: (i) the
restructuring of the Company by way of an acquisition of, or merger with, an operating company (referred to in the Plan as a “Consolidation”),
and (ii) a withdrawal of the Company’s election to be classified as a BDC. Although we have again been authorized to withdraw
and terminate the Company’s BDC election under the 1940 Act, we will not submit any such withdrawal unless and until Equus
has entered into a definitive agreement to acquire or merge with an operating company.
In connection with the first of the Prior Authorizations,
on April 24, 2017, Equus entered into an agreement to acquire U.S. Gas & Electric, Inc. (“USG&E”), a retail
and commercial energy services provider. This agreement was terminated on May 30, 2017 by USG&E when it notified Equus that
the USG&E board had received an acquisition offer from a third party that was deemed by USG&E to constitute a “Superior
Proposal” to the terms and conditions offered to the USG&E shareholders by the Company. Notwithstanding the termination
of the Company’s agreement to acquire USG&E, Equus is presently evaluating other suitable target companies which the
Company may acquire or with which Equus or a special purpose subsidiary may merge into to accomplish a Consolidation. The present
authorization given by holders of a majority of our voting shares (the “Present Authorization”) will enable the Company
to continue its efforts to effect a Consolidation and explore other alternatives in this regard.
Pursuant to Section 14(c) of the Securities
Exchange Act of 1934, as amended (“Exchange Act”), and Regulation 14C and Schedule C thereunder, this Information Statement
will be mailed out on or about January 30, 2019 (the “Mailing Date”) to the Company’s shareholders of record,
as of January 23, 2019 (the “Record Date”). As of the Record Date, we had outstanding 13,518,146 shares of common stock.
We have no other shares of voting stock outstanding.
This Information Statement is being circulated
to advise the shareholders of the Present Authorization given to the Board to terminate the Company’s BDC election on or
before July 31, 2019. Nevertheless, pursuant to Rule 14c-2 of the Exchange Act, the Present Authorization will not be effective
until 20 days after the Mailing Date. We anticipate that the Present Authorization will become effective on or about February 19,
2019 (the “Effective Date”).
RECORD DATE, VOTE REQUIRED AND RELATED INFORMATION
Section 54(c) of the 1940 Act permits a BDC
to voluntarily withdraw its election to be classified as such by filing a notice of withdrawal of election with the U.S. Securities
and Exchange Commission (“SEC”). Our Certificate of Incorporation provides that an affirmative vote of holders of a
majority of the Company’s voting shares may authorize the Board to effect the withdrawal. This action by our stockholders
could either be taken at a special meeting of the stockholders or through written consent from the holders of a majority of our
issued and outstanding voting securities.
The authority of our stockholders to take action
by written consent, in lieu of a meeting, is provided by Section 228 of the General Corporation Law of Delaware and Section 2.8
of the Equus Bylaws, which provides that any action required to be taken at any annual or special meeting of stockholders of the
Company, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were present and voted. If the Present Authorization was not adopted by
majority written consent pursuant to Section 228, such action would have been required to be considered by our stockholders at
a special stockholders’ meeting convened for the specific purpose of approving the Present Authorization.
The Company has authorized capital stock consisting
of 50,000,000 shares of common stock. As of the date of this Information Statement, the Company had 13,518,146 shares of its common
stock issued and outstanding. On January 21, 2019, the Secretary of the Company received the written consent of shareholders collectively
holding 7,400,090 shares, or 54.74% of our issued and outstanding common stock, approving the Present Authorization. No further
vote of our stockholders is required to effect the Present Authorization, which is expected to become effective on or about February
19, 2019.
The transfer agent for our common stock is American
Stock Transfer & Trust Co., LLC, 6201 15th Avenue, 3rd Floor, Brooklyn, New York 11219.
NO MEETING OF STOCKHOLDERS REQUIRED
We are not soliciting any votes in connection
with the Present Authorization. The shareholders that have consented to the Present Authorization collectively hold a majority
of the Company’s outstanding common stock and, accordingly, such shareholders have sufficient voting rights to approve the
Present Authorization.
Under Delaware law, the Effective Date of the
Present Authorization is twenty (20) days following the giving of notice of the Present Authorization to all other stockholders.
This Information Statement constitutes the required notice under Delaware law.
REASONS FOR OBTAINING AUTHORIZATION TO WITHDRAW OUR
BDC ELECTION
Plan of Reorganization
Announcement
. On May 15, 2014, we announced
that, via a unanimous vote of our Board, the Company intended to effect a Plan of Reorganization within the meaning of Section
2(a)(33) of the 1940 Act. We further stated that, in furtherance of the Plan, we intended to pursue an acquisition or merger with
an operating company to (i) be restructured into a publicly-traded operating company, and (ii) terminate the Company’s election
to be classified as a BDC. Notwithstanding the termination of our agreement to acquire USG&E, we are presently evaluating other
suitable target operating companies which we may acquire or with which we, or a special purpose subsidiary, may merge with or into
to effect a Consolidation.
Intention to Maintain Exchange Act Reporting
Status and NYSE Listing
. Currently, Equus and other BDCs are subject to various provisions of both the 1940 Act as well as
the Exchange Act. If, as a result of a Consolidation, Equus is transformed into an operating company instead of a closed-end fund,
the Company will no longer be subject to the 1940 Act but will still be subject to the reporting requirements of the Exchange Act.
This means, for example, that Equus will continue, following a Consolidation, to file annual, quarterly, and period reports with
the SEC on Forms 10-K, 10-Q, and 8-K, respectively. Further, we intend to ensure that Equus satisfies the continued listing criteria
for operating companies pursuant to applicable rules of the New York Stock Exchange. To this end, we intend to seek potential Consolidation
candidates with sufficient revenue, earnings, and market capitalization that, when combined with Equus, would enable the Company
to meet these listing standards. However, we cannot guarantee that every candidate with which we may conclude Consolidation will
enable us to meet these listing standards, and we may have to list our securities on a different exchange if we are unable to satisfy
such listing requirements following a Consolidation.
Summary of Efforts to Achieve a Consolidation
The Company’s Board, together with management,
regularly reviews and evaluates the Company’s performance, prospects and long-term strategic plans in light of the Company’s
business and the industries in which it invests. These reviews have included periodic consideration of potential strategic transactions
to maximize value to shareholders. Commencing in September 2012, management of the Company began to explore various strategic options
to maximize shareholder value that could, if effected, result in the acquisition of the Company by another corporation or a change
the Company’s structure from a BDC into an operating company. These efforts culminated in the Plan of Reorganization adopted
in May 2014. Since the adoption of the Plan, Company management has examined a number of potential transactions and strategic alternatives
to effect a Consolidation under the Plan. As described in more detail above, in April 2017, the Company signed an agreement to
acquire USG&E, which agreement was terminated on May 30, 2017. Since the termination of the agreement to acquire USG&E,
the Company has again examined a number of potential transactions in a variety of industries, including energy, natural resources,
containers and packaging, real estate, technology, and telecommunications. While we are endeavoring to achieve a Consolidation
and are presently evaluating various opportunities that could enable us to do so, we cannot assure you that we will be able to
do so before the expiration of the Present Authorization or at all. Moreover, we cannot assure you that the terms of any such transaction
that would embody a Consolidation would be acceptable to us or our stockholders.
Shareholder Approvals Required to Implement
the Plan
Authorization to Withdraw
. Even though
the Equus Board has approved the Plan, we require authorization from our shareholders to withdraw the Company’s BDC election
before we are able to enter into an agreement that would result in a Consolidation. We are sending you this Information Statement
because we have already received the necessary consents from a majority of the holders of the Company’s outstanding shares
who have provided the Present Authorization for the withdrawal on or before July 31, 2019. The Present Authorization does not,
however, guarantee that the withdrawal of our BDC election will actually occur. We intend to file Form N-54C – "Notification
of Withdrawal of Election to be Subject to Sections 55 Through 65 of the Investment Company Act of 1940" with the SEC (hereafter,
a “Notice of Withdrawal”) only if we are reasonably satisfied that the Consolidation will be completed within a short
time after the filing.
Approval of Consolidation
. Once we have
entered into an agreement that would result in a Consolidation, we cannot close the transactions contemplated by such an agreement
unless and until a majority of the holders of our outstanding shares approve the Consolidation. The Equus Board has not, at this
time, either reviewed or approved any proposed Consolidation and we cannot guarantee that, given such Board approval, the Equus
shareholders will in turn approve the same. Consequently, we cannot guarantee you that we will submit a Notice of Withdrawal or
that Equus will otherwise complete the Consolidation and become an operating company not subject to the 1940 Act.
Advantages of an Operating Company Structure
When considering the relatively small size of
our Company, the regulatory compliance restraints placed upon BDCs, and opportunities that Equus may have to expand via a Consolidation,
organic growth, and retained earnings, we believe that Equus should pursue a Consolidation and be transformed into an operating
company for the benefit of its stockholders. In particular, we believe an operating company structure, in lieu of a closed-end
fund structure, could be advantageous to the Company in a variety of ways, such as the following:
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Growth and Development Opportunities
. If we are able to fully implement the Plan of Reorganization
and become an operating company, we expect to capitalize on growth opportunities through growth and development of our core operating
business, as well as by acquisition. Further, we would expect that Equus will be valued by the investing public based on traditional
criteria applicable to operating companies, such as revenue, gross profit, and net earnings instead of NAV and the Company’s
portfolio investments.
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Lower Proportional Compliance Costs
. Given the relatively small size of our Company at
present, should Equus effect a Consolidation and transform itself into a much larger operating company, we anticipate lowering
our overall compliance-related costs as a percentage of our assets, particularly with the expected elimination of costs associated
with compliance with the 1940 Act.
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Increased Flexibility in the Issuance of Common Equity
. Under the 1940 Act, absent stockholder
approval, we may not issue new shares of our common stock at a per share price less than our then net asset value per share (“NAV”).
The market prices for shares of BDCs such as Equus are generally lower, often substantially lower, than their NAVs, making it much
more difficult for BDCs to raise equity capital than for operating companies. In the case of the Company, because our stock price
has been below our NAV for several years, we have generally been unable to access the equity capital markets to take advantage
of opportunities during this period that could, in our view, have generated higher returns than the cost of equity capital. While
the restriction against issuing shares below NAV provides our stockholders an appropriate and meaningful protection against dilution
of their indirect investment interest in our portfolio securities, this can also be a significant impediment to our ability to
moderately expand or make small acquisitions using our shares. If Equus did not have this restriction, we would have increased
flexibility to issue our common stock, but would nevertheless remain subject to NYSE rules which require stockholder approval for
an issuance of common stock that represents more than 20% of our outstanding shares.
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Greater Ability to Issue Other Securities
. BDCs are limited or restricted as to the type
of securities other than common stock, such as options, warrants, and preferred stock, which they may issue. In addition, issuances
of senior debt and senior equity securities require that certain "asset coverage" tests and other criteria be satisfied
on a continuing basis. This significantly affects the use of these types of securities. In the case of debt securities, we are
limited in our use of these instruments because asset coverage continuously changes by variations in market prices of the Company's
investment securities. In the case of equity securities, counterparties and financiers in mergers and acquisitions often require
the issuance of preferred equity securities or other equity-linked instruments as an essential component of these transactions.
Operating companies benefit from having maximum flexibility to raise capital and acquire other commercial interests through various
financing structures and a wider array of potential financial instruments that may be issued.
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Related Party Transactions
. The 1940 Act significantly restricts, among other things,
(a) transactions involving transfers of property between a BDC and affiliated persons (including affiliated persons of such affiliated
persons) and (b) joint transactions with a third party involving a BDC and affiliated persons (including affiliated persons of
such affiliated persons). An exemption from these restrictions can be obtained from the SEC, but it is typically a time-consuming
and expensive procedure, regardless of the intrinsic fairness of such transaction or the approval thereof by disinterested directors
of the BDC. We believe that situations may arise in which the Company’s best interests are served by such transactions. Further,
we believe that our stockholders are adequately protected by the fiduciary obligations imposed on the Company's directors under
Delaware corporate governance law, which generally requires that the disinterested members of the Board determine fairness to the
Company of an interested-party transaction (provided full disclosure of all material facts regarding the transaction and the interested
party's relationship with the Company is made), and SEC disclosure rules, which require the Company to include specified disclosure
regarding transactions with related parties in its Exchange Act filings.
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Compensation of Directors and Executive Officers
. The 1940 Act limits the extent to which
and the circumstances under which directors and executive officers of a BDC may be paid compensation other than in the form of
salary payable in cash. For example, the issuance of restricted stock is generally prohibited, absent a lengthy exemptive application
process with the SEC. However, we believe that, by achieving greater flexibility in the structuring of director and employee compensation
packages, we will be able to attract and retain additional talented and qualified personnel and to more fairly reward and more
effectively motivate our personnel.
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Eligible Investments
. BDCs may not acquire any asset other than "qualifying assets"
(i.e. securities issued by privately-held or public microcap U.S. companies in certain industries) unless, at the time of the acquisition
is made, qualifying assets represent at least 70% of the value of the BDC’s total assets. If we are able to fully implement
the Plan of Reorganization and become an operating company, we will not be subject to these restrictions affecting the type or
jurisdiction of assets we may acquire, nor on the composition of our assets, the result of which will be greater flexibility to
acquire enterprises in a broader asset class and invest our financial resources in a wider range of opportunities in more diverse
geographies and industries.
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Risks to Stockholders of a Withdrawal of
BDC Status
If we withdraw the Company’s election
to be treated as a BDC within the next year, Equus will no longer be subject to regulation under the 1940 Act, which is designed
to protect the interests of investors in investment companies. Some of the items listed above that would provide advantages to
Equus as an operating company, would also present certain risks to our shareholders, inasmuch as stockholders would no longer have
the following protections of the 1940 Act:
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Leverage Limits
. We would no longer be subject to the requirement in Section 61 of the
1940 Act that we maintain a ratio of assets to senior securities (such as senior debt or preferred stock) of at least 200% and
we would not be limited by statute or regulation to the amount of leverage we could incur.
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Range of Investments
. We would no longer be prohibited from investing in certain types
of companies, such as brokerage firms, insurance, companies, and investment companies.
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Changes in Financial Reporting
. While the conversion of Equus into an operating company
will enable us to consolidate the financial results of entities we control, a change in our method of accounting could also reduce
the reported value of our investments in controlled privately-held companies by eliminating our ability to report an increase in
the fair value of these holdings.
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Protection of Directors and Officers
. We would no longer be prohibited from protecting
any director or officer against any liability to the Company or our stockholders arising from willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of that person’s office, although there are similar
limitations under Delaware law, our Certificate of Incorporation, and our Bylaws that would still apply.
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Fidelity Bond
. We would no longer be required to provide and maintain an investment company
blanket bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.
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Director Independence
. We would no longer be required to ensure that a majority of our
directors are persons who are not “interested persons,” as that term is defined in the 1940 Act, and certain persons,
such as investment bankers, that would be prevented from serving on our Board if we were a BDC. However, assuming we can comply
with the NYSE’s listing standards for operating companies, we will remain subject to NYSE listing standards that require
the majority of directors of a listed company and all members of its compensation, audit and nominating committees to be “independent”
as defined under NYSE rules.
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Affiliate Transactions
. We would no longer be subject to provisions of the 1940 Act regulating
transactions between BDCs and certain affiliates, although we would still be subject to conflict of interest rules and governance
procedures that exist under Delaware law and NYSE rules.
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Share Issuances
. We would no longer be subject to provisions of the 1940 Act restricting
our ability to issue shares below NAV or in exchange for services, nor would we be restricted in issuing more than one class of
equity securities or instruments that could be converted into other classes of equity securities.
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Share Repurchases
. We would no longer be restricted under the 1940 Act in our ability
to repurchase shares from our stockholders, and would instead be subject only to NYSE rules and Delaware corporate law requirements
for such repurchases.
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Change of Business
. We would be able to change the nature of our business and fundamental
investment policies without having to obtain the approval of our stockholders.
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Director and Officer Incentives
. We would no longer require exemptive relief from the
SEC before implementing incentive compensation plans for our key executives and non-executive directors.
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Effect on Financial Reporting
If we effect the withdrawal of our election
to be treated as a BDC and complete a Consolidation, our accounting methods will undergo substantial changes. As a BDC, our financial
statements are presented and accounted for under the specialized method of accounting applicable to investment companies, which
requires us to recognize our investments, including controlled investments, at fair value. As a BDC, we are precluded from consolidating
the operational results of our controlled and wholly-owned subsidiaries.
As an operating company, we will be required
to account for investments based on the degree of control or influence we can exert over the entity and, therefore, will be required
to consolidate controlled entities and use either the equity method of accounting, fair value option or historical cost method
of accounting for the financial statement presentation and accounting of other securities held. Following a Consolidation, we expect
to consolidate the operational results in entities we control including, for example, our investment in Equus Energy, and elect
the fair value option for our investments in other securities. Accordingly, the change in our accounting method could have a material
impact on the presentation of our financial statements commencing on the day we withdraw our BDC election.
Effect on Tax Reporting
In addition to our BDC election, we currently
qualify as a regulated investment company (“RIC”) for federal income tax purposes and, therefore, are not required
to pay corporate income taxes on any income or gains that we distribute to our stockholders. If we cease to be treated as a BDC
and instead become an operating company, we will not qualify as a RIC. We will then become subject to corporate level federal income
tax on our income (without regard to any distributions we make to our stockholders) pursuant to Subchapter C of the Internal Revenue
Code. As a consequence, any distributions we make to our stockholders will be net of federal income tax owing by the Company, and
our stockholders will further be subject to federal income tax in connection with the receipt of such distributions.
Process and Conditions of Withdrawing our
BDC Election
Assuming that a suitable merger or acquisition
candidate for Equus can be secured and a definitive agreement can be executed, the Present Authorization will permit the Equus
Board to approve a filing with the SEC of a Notice of Withdrawal on or before July 31, 2019. The Notice of Withdrawal, if and when
filed, will immediately terminate the Company's status as a BDC under the 1940 Act. Our intention is to file the Notice of Withdrawal
shortly before we complete a Consolidation, but we will not file the Notice of Withdrawal until we are reasonably certain that
Equus will not be deemed to be an investment company without the protection of its BDC election.
After we file the Notice of Withdrawal with
the SEC, the Company will no longer be subject to the regulatory provisions of the 1940 Act applicable to BDCs, including regulations
related to insurance, custody, composition of our Board of Directors, affiliated transactions and any compensation arrangements.
Anticipated Timeline
As discussed above, we are presently evaluating
various possible merger and acquisition candidates and transaction structures by which we may effect a Consolidation. In order
to enter into a binding agreement that would, if consummated, result in a Consolidation, we have required the Present Authorization
to withdraw our BDC election from our shareholders. Now that the Present Authorization has been provided, we believe that we can
more actively move toward the negotiation, production, and execution of a definitive agreement that embodies a Consolidation. We
expect that any such agreement will be subject to a number of conditions to closing and, therefore, the timing of such closing
is presently uncertain. We will, however, not file the Notice of Withdrawal unless and until we are reasonably certain that the
closing of the Consolidation will occur within a relatively short time after filing.
THE PRESENT AUTHORIZATION GIVEN TO OUR BOARD TO EFFECT A WITHDRAWAL
OF THE COMPANY’S ELECTION TO BE REGULATED AS A BDC UNDER THE 1940 ACT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR
HAS THE SEC PASSED UPON THE FAIRNESS OR MERITS OF THE AUTHORIZATION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PLEASE NOTE THAT THIS IS NEITHER A REQUEST FOR YOUR VOTE NOR A PROXY
STATEMENT, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM YOU ABOUT THE PRESENT AUTHORIZATION AND THE POSSIBLE WITHDRAWAL
OF THE COMPANY’S ELECTION TO BE REGULATED AS A BDC.
FREQUENTLY ASKED QUESTIONS
ABOUT THE PRESENT AUTHORIZATION TO WITHDRAW
THE COMPANY’S ELECTION TO BE CLASSIFIED
AS A BDC
Why did I receive this Information Statement?
Applicable laws require us to provide you information
regarding the Present Authorization even though your vote is neither required nor requested for the Present Authorization to become
effective.
Is this a different Information Statement from the Information
Statements I received in 2017 and 2018? If so, why is another Information Statement necessary?
The Prior Authorizations, which formed the basis
of the Information Statement we sent to stockholders in 2017 and 2018 have all expired. This Information Statement is being sent
to you as a result of a new authorization (the Present Authorization) to our Board to conclude a Consolidation, which expires on
July 31, 2019.
What will I receive when the Present Authorization is effective?
The Present Authorization has already been approved,
and you will not receive anything notifying you that the Present Authorization has become effective.
How does the Present Authorization affect the Company’s
ability to achieve a Consolidation?
The Present Authorization is necessary for the
Company to enter into an agreement that, if consummated, would effect a Consolidation.
When will Equus withdraw its BDC election?
If Equus enters into an agreement that will
result in a Consolidation, we will only withdraw the Company’s BDC election once we are reasonably certain that the Consolidation
will close.
Why am I not being asked to vote?
The holders of a majority of the issued and
outstanding shares of our common stock have already approved the Present Authorization pursuant to a written consent in lieu of
a meeting. Such approval is sufficient under Delaware law, and no further approval by our stockholders is required.
What do I need to do now?
Nothing. This Information Statement is purely
for your information and does not require or request you to do anything.
Whom can I contact with questions?
If you have any questions about any of the actions
to be taken by the Company, please contact us by calling toll free at 1-888-323-4533.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of the
Company’s common stock beneficially owned (unless otherwise indicated) as of January 23, 2019, by (1) any person known
to the Company to be the beneficial owner of more than 5% of the outstanding shares of the Company’s common stock, (2) each
director of the Company, (3) each named executive officer, and (4) all directors and executive officers as a group.
The number of shares beneficially owned by
each entity, person, director, or executive officer is determined under SEC rules and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity
or individual has sole or shared voting power or investment power and also any shares that the entity or individual had the right
to acquire as of January 23, 2019, or within 60 days after January 23, 2019, through the exercise of any stock option or other
right. Unless otherwise indicated, to our knowledge each individual has sole investment and voting power, or shares such powers
with his spouse, with respect to the shares set forth in the table.
Name
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Sole
Voting and Investment Power
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Other
Beneficial
Ownership
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Total
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Percent of
Class
Outstanding
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Fraser Atkinson
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21,389
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—
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21,389
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*
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Kenneth I. Denos
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265,754
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—
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265,754
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1.97
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%
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Henry W. Hankinson
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19,500
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—
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19,500
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*
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John A. Hardy
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500,000
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—
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500,000
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3.70
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%
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L’Sheryl D. Hudson
(1)
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—
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—
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—
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*
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Robert L. Knauss
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92,670
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—
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|
|
92,670
|
|
|
|
*
|
|
MVC Capital, Inc.
(2)
|
|
|
—
|
|
|
|
4,444,644
|
|
|
|
4,444,644
|
|
|
|
32.88
|
%
|
Bertrand des Pallieres
(3) (4)
|
|
|
1,057,017
|
|
|
|
1,142,675
|
|
|
|
2,199,692
|
|
|
|
16.27
|
%
|
All directors and executive officers as a group (6 persons)
|
|
|
899,313
|
|
|
|
—
|
|
|
|
899,313
|
|
|
|
6.65
|
%
|
|
*
|
Indicates less than one percent.
|
|
(1)
|
Ms. Hudson serves as the Company’s Senior Vice President and Chief Financial Officer. Ms. Hudson is not a director of the Company.
|
|
(2)
|
Includes 4,444,644 shares held directly by MVC Capital, Inc. (“MVC”), a business development company managed and directed by The Tokarz Group Advisers, LLC (“TTGA”), an investment adviser registered pursuant to the Investment Advisers Act of 1940. MVC’s and TTGA’s business address is 287 Bowman Avenue, 2
nd
Floor, Purchase, New York 10577.
|
|
(3)
|
Includes 10,000 shares held directly by Mobiquity Investments Limited and indirectly by Mobiquity Investments Corp. and Versatile Systems Inc., of which Mr. des Pallieres serves as a director. Mr. des Pallieres disclaims beneficial ownership of the securities held directly by Mobiquity Investments Limited and Versatile Systems Inc. and nothing herein shall be construed as an admission that such individual is, for the purpose of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, the beneficial owner of any such securities.
|
|
(4)
|
Includes 1,057,017 shares held directly by Mr. des Pallieres. Also includes 145,833 shares held directly by SPQR Capital Holdings S.A., a Luxembourg
societe anonyme
in which Mr. des Pallieres is a minority stockholder and serves as a director. Also includes 986,842 shares held directly by Lansdowne Capital S.A., a Luxembourg
societe anonyme
that is indirectly wholly-owned by Mr. des Pallieres.
|
NO DISSENTER’S RIGHTS
Under the General Corporation Law of Delaware,
stockholders are not entitled to dissenter’s rights of appraisal in connection with the Present Authorization.
PROPOSALS BY SECURITY HOLDERS
No security holder has requested us to include
any additional proposals in this Information Statement.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE
ACTED UPON
No officer or director of the Company has any
substantial interest in the matters acted upon by our shareholders.
ADDITIONAL INFORMATION
We file reports with the SEC, which include
annual and quarterly reports, as well as other information the Company is required to file pursuant to the 1940 Act and the Exchange
Act. You may read and copy materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at
http://www.sec.gov
.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Only one Information Statement is being delivered
to multiple security holders sharing an address unless we received contrary instructions from one or more of the security holders.
We shall deliver promptly, upon written or oral request, a separate copy of the Information Statement to a security holder at a
shared address to which a single copy of the document was delivered. A security holder can notify us that the security holder wishes
to receive a separate copy of the Information Statement by sending a written request to us at 700 Louisiana Street, 48
th
Floor, Houston, Texas 77002, or by calling us toll free at (888) 323-4533. A security holder may utilize the same address and telephone
number to request either separate copies or a single copy for a single address for all future information statements and proxy
statements, if any, and annual reports of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenneth I. Denos
Secretary
January
24, 2019
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