[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Notices]
[Pages 18159-18160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9460]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 22603; 811-5764]
Tri-Magna Corporation; Notice of Application
April 7, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Deregistration under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANT: Tri-Magna Corporation.
RELEVANT SECTION OF ACT: Order requested under section 8(f).
SUMMARY OF APPLICATION: Applicant seeks an order declaring that it has
ceased to be an investment company.
FILING DATES: The application was filed on August 27, 1996, and amended
on February 20, 1997.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on May 2, 1997, and
should be accompanied by proof of service on the applicant, in the form
of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicant, 205 East 42nd Street, Suite 2020, New York, NY 10017.
FOR FURTHER INFORMATION CONTACT:
H.R. Hallock, Jr., Special Counsel, at (202) 942-0564, or Mercer E.
Bullard, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The summary includes information from a prior application
by applicant and certain affiliates that was granted on May 21, 1996
and has been incorporated in the application by reference.\1\ The
complete application and prior application incorporated by reference
may be obtained for a fee at the SEC's Public Reference Branch.
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\1\ Medallion Financial Corp., Investment Company Act Release
Nos. 21915 (April 24, 1996) (notice) and 21969 (May 12, 1996)
(order).
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Applicant's Representations
1. Applicant is a closed-end management investment company. It was
organized as a Delaware corporation in 1989 for the purpose of
acquiring all the outstanding voting capital stock of Medallion Funding
Corp. (``MFC''), a New York corporation registered under the Act since
1981 as a closed-end investment company and licensed by the Small
Business Administration (``SBA'') as a Specialized Small Business
Investment Company.
2. On February 3, 1989, Applicant registered under section 8(a) of
the Act by filing a Form N-8A. On the same date, applicant filed a
registration statement on Form N-14 under the Securities Act of 1933 to
register 665,900 shares of common stock. Such registration statement
became effective and applicant commenced an initial public offering of
its shares on April 21, 1989.
3. Applicant's business consisted primarily of making loans through
MFC and another wholly-owned subsidiary, Medallion Taxi Media, Inc.
(``Media''), to finance the purchase of taxicab medallions, taxicabs
and related assets by persons defined by the SBA as socially or
economically disadvantaged. After 1992, several trends affecting the
finance industry in general and applicant in particular had combined to
produce lower yields on applicant's loan portfolio and corresponding
smaller shareholder returns.
4. Applicant's management pursued several alternatives to resolve
these ongoing problems. Management first considered raising additional
capital through an offering of applicant's common stock. Then, after
receiving a uniformly negative response to any such offering in
meetings with investment bankers, the board of directors directed
management to pursue efforts to sell applicant. Management did not
succeed, however, in obtaining any offer to buy applicant at any price.
5. Subsequently, in January 1995, management began to consider a
purchase of applicant and, in May 1995, submitted a proposal to
applicant's board that involved the acquisition of applicant and
certain other similar companies by Medallion Financial Corp.
(``Medallion''). Medallion, a business development company under the
Act, was organized in 1995 for the purpose of acquiring applicant and
such other companies. Medallion proposed to acquire all of applicant's
outstanding shares in a cash merger at a price of $20 per share.
6. In August 1995, an independent committee of applicant's board
engaged Gruntal & Co., Inc. (``Gruntal''), to evaluate the fairness of
Medallion's proposal. Gruntal provided its opinion, by letter dated
October 11, 1995, that the terms of the proposed merger were fair to
applicant and its shareholders. Using discounted cash flow and other
analyses, Gruntal valued applicant's shares at between $19.57 and
$27.79, before applying a discount of up to 30% to account for the
limited trading market for applicant's common stock and other items.
7. Based on their review of Gruntal's opinion, the independent
directors recommended that applicant's board approve an Agreement of
Merger (the ``Agreement'') with Medallion. At a meeting on October 18,
1995, applicant's full board approved the Agreement, which was executed
on December 21, 1995.
8. As of March 31, 1996, applicant had 668,900 shares of common
stock outstanding and a net asset value of $17,505,681, or $26.17 per
share. Applicant states that such valuation omits the effect of an
arrangement with the SBA under which applicant in 1995 had repurchased
its preferred stock owned by the SBA at a substantial discount. Under
this arrangement, the SBA retained a liquidating interest based on the
amount of the discount, which initially amounted to more than $6
million, or approximately $9.00 per share. Applicant treated the full
amount of the discount, which was amortizable over a five year period,
as an increase in capital. In connection with the merger, Medallion
agreed to assume liability for any payment due on the liquidating
interest. Accordingly, when the liquidating interest is considered,
applicant asserts that the $20 per share merger price for its shares is
greater than its net asset value per share.
9. In April 1996, the board renegotiated the Agreement to permit
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applicant's payment of an additional dividend of $0.50 per share to its
shareholders plus the accumulated earnings, if any, of Media.
Consummation of the merger was conditioned on, among other things,
approval by a majority of applicant's shareholders and by certain
governmental agencies and other third parties, including the SEC and
SBA.
10. On May 21, 1996, Medallion, MFC, applicant and two individual
affiliates of both Medallion and applicant obtained an SEC order under
sections 6(c), 17(b) and 57(c) of the Act granting exemptions from
various provisions of the Act and permitting certain joint transactions
in connection with the proposed merger. Proxy materials concerning the
merger were filed with the SEC and distributed to applicant's
shareholders. At a meeting on May 22, 1996, by resolution adopted by
80% of shareholders, applicant's shareholders approved the merger with
Medallion.
11. On May 29, 1996, pursuant to the terms of the Agreement,
applicant merged with and into Medallion. In connection with the
merger, applicant distributed to shareholders an amount from current
earnings sufficient to preserve its tax status and transferred to
Medallion its only assets, consisting of the securities of MFC and
Media. In exchange, applicant's shareholders received $20 per share in
cash and the right to receive the two additional dividend distributions
provided for under the Agreement. These dividents were paid on July 8
and August 22, 1996, respectively, in the amounts of $0.50 and $0.31
per share.
12. Applicant and Medallion each bore their respective costs and
expenses incurred in negotiating and entering into the Agreement and
thereafter consummating the merger. The Agreement required applicant to
pay or reimburse Medallion for up to the lesser of $200,000 or one-
third of the aggregate amount of certain ``joint'' expenses, such as
legal, accounting and filing fees, incurred in connection with the
merger. It was estimated before the merger that these expenses would
exceed $600,000, and they in fact exceeded $1 million. Accordingly,
applicant reimbursed Medallion for the full $200,000.
13. On May 29, 1996, a certificate of merger was filed with the
Secretary of State of Delaware, pursuant to which applicant was merged
with and into Medallion, with Medallion being the surviving
corporation.
14. Applicant has no assets, or any debts or other liabilities.
There are no shareholders of applicant to whom distributions in
complete liquidation of their interests have not been made, and
applicant has no remaining shareholders. Applicant is not a party to
any litigation or administrative proceeding.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-9460 Filed 4-11-97; 8:45 am]
BILLING CODE 8010-01-M
