[Federal Register Volume 62, Number 147 (Thursday, July 31, 1997)]
[Notices]
[Pages 41116-41118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20172]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22764; 811-3879]
Seilon, Inc.; Notice of Application
July 25, 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: Seilon, Inc. (``Seilon'').
RELEVANT ACT SECTION: Section 8(f).
SUMMARY OF APPLICATION: Applicant seeks an order declaring that it has
ceased to be an investment company.
FILING DATE: The application was filed on March 18, 1997, and amended
on July 9, 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 August 19, 1997,
and should be accompanied by proof of service on 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 5th Street, NW., Washington, DC 20549.
Applicant, P.O. Box 411, 212 West Main Street, Smithville, Missouri
64089.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Staff Attorney, at (202) 942-0574, 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 complete application may be obtained for a fee at the
SEC's Public Reference Branch.
[[Page 41117]]
Applicant's Representations
1. Seilon is a registered closed-end management investment company
organized as a Delaware corporation. In October 1984, Seilon registered
under the Act by filing a notification of registration on Form N-8A.
Seilon has made no public offering of securities since its registration
under the Act. Seilon has not filed any securities registration
statements pursuant to the Securities Act of 1993. Any sales of
securities of Seilon have been effected through private placements
pursuant to applicable federal and state exemptions. Seilon has
approximately 2,300 stockholders. Seilon states that it is not a party
to any litigation or administrative proceeding, and that it is not in
the process of liquidating or winding up its affairs and has no
intention of liquidating its assets. Seilon requests an order declaring
that it has ceased to be an investment company because it does not meet
the definition of an investment company under section 3(a)(1) of the
Act.
2. Seilon was incorporated in November, 1921, as the Sciberling
Rubber Company, with its principal offices located in Akron, Ohio.
Originally, Seilon was primarily engaged in the business of
manufacturing tires, but in the early 1960's, Seilon's stock price
began to deteriorate. As a result, Mr. Edward Lamb, an attorney in
Toledo, Ohio, acquired voting control over the company in order to
diversify its business activities.
3. As part of Seilon's plan to diversify its business activities,
it changed its name from the Sciberling Rubber Company to Seilon, Inc.
During the 1960's, Seilon acquired Thomas International (sugar cane
harvesting equipment), Lockport (central pivot irrigation systems), and
Air-Way Sanitizer (vacuum cleaner systems), among others. All of these
companies were operating companies that did not hold investment
securities. In 1969, Seilon acquired a controlling interest in First
Bancorporation, a registered bank holding company in Reno, Nevada.
Consequently, Seilon was required to become a registered bank holding
company and to divest itself of certain non-banking businesses. In
1976, Seilon changed the name of First Bancorporation to Nevada
National Bancorporation (``Nevada Bancorp''). In 1982, Seilon sold
Nevada Bancorp and thereafter, Seilon sold Thomson International, the
remaining asset of Seilon, to facilitate the retirement of Seilon's
outstanding debt.
4. After selling Nevada Bancorp and Thomas International, Seilon's
only assets were cash and other short-term liquid assets, which it
intended to utilize for the acquisition of another operating company.
Because Seilon was unable to purchase another operating company, it
registered under the Act.
5. Around 1989, Seilon acquired College Transitions, Inc., a
corporation headquartered in Conyers, Georgia, and changed its name to
Diversified Merchandise and Service Corporation (``Diversified'').
Diversified was engaged in the wholesale distribution of college-
identified expendable merchandise to convenience stores in the
Southeast United States. In 1991, Diversified filed for bankruptcy
under Chapter 7 of the U.S. Bankruptcy Code and liquidated its assets.
Since Diversified's liquidation, Seilon has not owned any other
operating subsidiaries and essentially has remained inactive. After the
liquidation, Seilon's only assets were cash, cash equivalents, and
other liquid assets.
6. In 1996, in order to infuse additional capital into the company,
Seilon undertook a private placement of its common stock with a group
related to the Mayfield International, Inc. in Minneapolis, Minnesota.
The private placement was for 650,000 shares of common stock of Seilon
at a price of $1.00 per share, and 250,000 shares of preferred stock at
a price of $1.00 per share. With this additional funding, Seilon
acquired ninety percent of the outstanding stock of Peachtree Medical
Equipment, Inc. (``Peachtree'') and Physicians Home Care Services, Inc.
(``Physicians Home Care''), both of which are Georgia corporations,
from David and Paula Court on July 27, 1996, at a price of $900,000.
David and Paula Count each own the remaining ten percent of stock in
Peachtree and Physicians Home Care, respectively. Seilon was unable to
borrow any funds for these acquisitions because of the limitations of
the Act related to the issuance of debt.
7. Seilon states that, if an order pursuant to section 8(f) is
granted by the SEC, it intends to aggressively pursue the acquisition
of several other companies in the health care business, subject to its
ability to obtain financing at a reasonable cost. Currently, due to the
limitations of the Act, such acquisitions will be limited to the extent
that Seilon is unable to issue debt to finance such transactions.
Seilon states that it does not anticipate acquiring investment
securities, nor do Peachtree and Physicians Home Care contemplate
owning investment securities that would subject Seilon to the
requirements of the Act. Thus, the deregistration would allow Seilon
the resumption of its historic posture, similar to that it assumed in
the period from 1921 to 1983, and would further permit the acquisition
of other concerns with the use of seller financing as opposed to
equity.
Applicant's Legal Analysis
1. Section 3(a)(1)(C) of the Act defines an investment company as
any issuer which ``is engaged * * * in the business of investing,
reinvesting, owning, holding, or trading in securities, and owns or
proposes to acquire investment securities having a value exceeding
forty percentum of the value of such issuer's total assets (exclusive
of Government securities and cash items) on an unconsolidated basis.''
\1\ At the time of its initial filing under the Act, Seilon believed
that it met the definition of investment company under section
3(a)(1)(C) of the Act, because its short-term liquid assets were
securities as defined in the Act and accounted for more than 40% of its
total assets. Seilon now believes that it does not meet the definition
of investment company under section 3(a)(1)(C) of the Act.
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\1\ Investment securities are defined in section 3(a)(2) to
include all securities except (A) Government securities, (B)
securities issued by employees' securities companies, and (C)
securities issued by majority owned subsidiaries of the owner which
are not investment companies, and are not relying on the exception
from the definition of investment company in sections 3(c)(1) or
3(c)(7) of the Act.
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2. Seilon states that at the end of 1996, the value of its assets
was $1,144,251. Seilon holds subsidiary promissory notes in the amount
of $900,000. Seilon asserts that the promissory notes are excluded from
the definition of investment securities under section 3(a)(2) of the
Act because the promissory notes are securities of Peachtree and
Physicians Home Care, Seilon's majority-owned subsidiaries. Seilon also
asserts that any remaining cash and cash items held by it are excluded
from the definition of investment securities under section 3(a)(2).
Thus, Seilon contends that it does not own any investment securities
and does not meet the criteria in section 3(a)(1)(C) of the Act to be
deemed an investment company. Further, Seilon asserts that its
subsidiaries do not have any investment securities that can be
attributed to Seilon.
3. Seilon asserts that it has always derived all of its revenues
and income from the business of its operating subsidiaries, rather than
from its incidental holdings of cash and cash
[[Page 41118]]
equivalents. Seilon states that it has not derived any net income from
investment securities for the last twelve years. Seilon states that all
of such subsidiaries have been majority-owned and none of them has ever
been an investment company within the meaning of the Act. In addition,
Seilon asserts that its recent acquisitions have been for the purpose
of operating such businesses. Seilon states that its net income is
derived from the operation of its subsidiaries, which generate income
from the sale of home health services and the sale and rental of
durable medical equipment.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 97-20172 Filed 7-30-97; 8:45 am]
BILLING CODE 8010-01-M
