0001162893-13-000003.txt : 20130524
0001162893-13-000003.hdr.sgml : 20130524
20130524115907
ACCESSION NUMBER: 0001162893-13-000003
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20130524
DATE AS OF CHANGE: 20130524
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: STABOSZ TIMOTHY J
CENTRAL INDEX KEY: 0001162893
FILING VALUES:
FORM TYPE: SC 13D/A
MAIL ADDRESS:
STREET 1: 1307 MONROE STREET
CITY: LA PORTE
STATE: IN
ZIP: 46350
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: SCOTTS LIQUID GOLD INC
CENTRAL INDEX KEY: 0000088000
STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844]
IRS NUMBER: 840920811
STATE OF INCORPORATION: CO
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-10347
FILM NUMBER: 13870828
BUSINESS ADDRESS:
STREET 1: 4880 HAVANA ST
CITY: DENVER
STATE: CO
ZIP: 80239
BUSINESS PHONE: 3033734860
MAIL ADDRESS:
STREET 1: PO BOX 39S
CITY: DENVER
STATE: CO
ZIP: 80219-0019
SC 13D/A
1
slgd13d6.txt
SCHEDULE 13D AMENDMENT NUMBER 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 4)
Under the Securities Exchange Act of 1934
SCOTT'S LIQUID GOLD-INC.
-------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK
-------------------------------------------------------------------------------
(Title of class of securities)
810-202101
--------------------------------------------------------
(CUSIP number)
TIMOTHY J. STABOSZ, 1307 MONROE STREET, LAPORTE, IN 46350 (219) 324-5087
-------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive notices and
communications)
MAY 23, 2013
--------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [_]
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 810-202101
--------------------------------------------------------------------------------
1. Name of Reporting Person
TIMOTHY JOHN STABOSZ
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_]
NOT APPLICABLE (b) [_]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions) PF
--------------------------------------------------------------------------------
5. Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization UNITED STATES
--------------------------------------------------------------------------------
Number of (7) Sole Voting Power 806,662
Shares ____________________________________________
Beneficially (8) Shared Voting Power 0
Owned by ____________________________________________
Each (9) Sole Dispositive Power 806,662
Reporting ____________________________________________
Person With (10) Shared Dispositive Power 0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned 806,662
by each Reporting Person
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes [_]
Certain Shares
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 7.2%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions) IN
--------------------------------------------------------------------------------
ITEM 1. Security and Issuer
Common stock of Scott's Liquid Gold-Inc. ("the company"), 4880 Havana
Street, Denver, CO 80239.
ITEM 2. Identity and Background
The reporting person, Timothy J. Stabosz, 1307 Monroe Street, LaPorte, IN
46350, a natural person and United States citizen, is engaged as a private
investor. He has not been convicted in a criminal proceeding (excluding
traffic violations or other similar misdemeanors) in the last 5 years, and has
not been a party to any proceedings, or subject to any judgements, enjoinments,
decrees, et al., related to violations of state or federal securities laws, in
his lifetime.
ITEM 3. Source and Amount of Funds or Other Consideration
Personal funds in the aggregate amount of $184,855.34 have been used to
effect the purchases. No part of the purchase price represents borrowed funds.
ITEM 4. Purpose of Transaction
The reporting person is the largest unaffiliated shareholder of Scott's
Liquid Gold. He has acquired the shares for investment purposes.
Notwithstanding CEO Mark Goldstein's atrocious record of value
destruction, including losing money for all 10 of the last 10 years, the
reporting person believes that the core "Liquid Gold" brand, in particular,
retains substantial brand equity, and is ripe for a sale, that would unlock
considerable value for shareholders.
The reporting person submitted a letter to the board of directors, dated
May 23, 2013 (see Exhibit #1). In the letter, the reporting person accuses
the CEO, Mark Goldstein, of "pocketing" bids and expressions of interest to
purchase the company, over many years, with a Goldstein "stacked" board
impudently and brazenly "turning its head the other way." (The reporting
person gives three specific examples of how bonafide M&A players, seriously
interested in the company, were "shown the door" or "ignored" by Mr.
Goldstein, with no evidence of independent board involvement whatsoever.)
In the same letter, the reporting person announced his intention to
present a shareholder proposal (see Exhibit #2) "off the floor" at the June
14, 2013 annual meeting, calling for the company to form a Special Committee,
and to formally put itself up for sale. The reporting person states that there
are interested parties he has spoken to, that he believes would be willing to
offer a substantial premium to the current stock price, in a buyout, and that
any offer of 50 cents or more for the company (as a result of a robust
"shopping" process), should be accepted by the board. The reporting person
noted that if the company received credible offer(s) to be bought, and the
board failed in its duty to form a Special Committee to examine such offers
(arms length from the CEO Mark Goldstein), that the reporting person intends
to sue the board for breach of fiduciary responsibility.
The reporting person stated also, in the letter, that if Mr. Goldstein
wants to continue to "run" the company, he should be forced to take it private
at a fair price, or the company should engage in a tender offer, at 50 cents
per share, to take out those holders who want to separate from the failed
manager that Goldstein has evidenced himself to be.
The reporting person believes the board continues to evidence that its
primary imperative is the protection of CEO Mark Goldstein's and his wife's
sinecures with the company, and that the board has no interest in maximizing
value for ALL stockholders. Consequentially, the reporting person believes
the board continues to dissemble, hiding behind the "business judgement rule,"
and facilitating the maintenance of Mr. Goldstein's outrageous 22 year record
of wanton value destruction, incompetence, and self-entrenchment as CEO.
Separately, the reporting person announces his voting intentions for the
aforementioned annual shareholder meeting. He intends to vote to WITHHOLD the
entire board of directors, to vote AGAINST the executive pay ("say on pay"),
to vote for ONE YEAR "say on pay" in the future, and to vote FOR Proposal #4,
the shareholder proposal calling on the company to adopt cumulative voting.
The reporting person intends to review his investment in the company on a
continual basis and engage in discussions with management and the Board of
Directors concerning the governance, business, operations, and future plans of
the company. Depending on various factors, including, without limitation, the
company's financial position and investment strategy, the price levels of the
common stock, conditions in the securities markets, and general economic and
industry conditions, the reporting person may, in the future, take such
actions with respect to his investment in the company as he deems appropriate
including, without limitation, communicating with other stockholders, seeking
Board representation, making proposals to the company concerning the
capitalization and operations of the issuer, purchasing additional shares of
common stock or selling some or all of his shares, or changing his intention
with respect to any and all matters referred to in Item 4.
Other than as indicated in this and previous 13D filings, the reporting
person has no plans or proposals which relate to, or could result in, any
matters referred to in subsections (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
As of the close of business on May 23, 2013, the reporting person has sole
voting and dispositive power over 806,662 shares of Scott's Liquid Gold, Inc.'s
common stock. According to the company's 1st quarter 2013 Form 10-Q, as of May
13, 2013 there were 11,201,622 common shares outstanding. The reporting person
is therefore deemed to own 7.2% of the company's common stock. Transactions
effected by the reporting person, in the last 60 days, were performed in
ordinary brokerage transactions, and are indicated as follows:
04/03/13 bought 10,000 shares @ $.266
04/04/13 bought 500 shares @ $.261
04/05/13 bought 2200 shares @ $.261
04/08/13 bought 2300 shares @ $.261
04/25/13 bought 5000 shares @ $.25
05/10/13 bought 5000 shares @ $.221
05/13/13 bought 10,000 shares @ $.24
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
None
ITEM 7. Material to be Filed as Exhibits
Exhibit #1: Letter to the SLGD board dated May 23, 2013.
Exhibit #2: Shareholder proposal calling for the Scott's Liquid Gold board to
put the company up for sale, to be introduced "off the floor" at the Annual
Meeting on June 14, 2013.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date 05/23/13
Signature Timothy J. Stabosz
Name/Title Timothy J. Stabosz, Private Investor
EX-1
2
slg.txt
LETTER TO THE SLGD BOARD DATED 5/23/13
Timothy J. Stabosz
1307 Monroe Street
LaPorte, IN 46350
Board of Directors
Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, CO 80239
Gerald J. Laber
Philip A. Neri
Jeffrey R. Hinkle
Jeffry B. Johnson
Dennis H. Field
May 23, 2013
Gentlemen:
As you know, I own 7.2% of Scott's Liquid Gold-Inc. ("SLGD," or "the
company"). I also happen to be the company's largest individual
shareholder, after Chairman and CEO Mark Goldstein.
You will notice that I specifically excluded Mark Goldstein from the inside
address of this letter. There is a reason for my excluding him. Besides
proving himself to be an atrociously incompetent CEO, and a master destroyer
of shareholder value over the last 15 years, it is clear to me that Mr.
Goldstein has acted in a dishonest and corrupt fashion as a fiduciary.
Outrageously, with your blessing, Scott's Liquid Gold continues to be
operated primarily as a Goldstein family piggy bank, with the board allowing
Goldstein to maintain an attitude of contempt, dismissal, and derision
towards the rightful concerns of the outside shareholder base.
You have stood by as a board, and, year after year, countenanced Mr.
Goldstein's defiled relationship with this company, allowing him to take out
upwards of $400,000 in compensation annually, and maintain his spouse on the
payroll, exclusively because he is the SLGD family scion, and because you
"feel sorry for him"...despite his abject lack of any qualifications to run
this company, his causing the company to lose money for, astonishingly, ALL
TEN OF THE LAST TEN YEARS (and 14 out of the last 15 years), and his causing
the company's annual sales to shrink nearly 70% over that same 15 year time
period.
As a result, Scott's Liquid Gold, the company, and the board, has become a
laughingstock in the annals of the corporate governance space, and has
caused extreme pain, angst, and resentment of Goldstein and this derelict
board, amongst its outside shareholder base. In exchange for giving
Goldstein what he wants, you each take home your measly $13,500 in base
board pay...making yourselves look "for sale" (to this shareholder) at the
very lowest of prices. In so doing, you enable a man who relates to this
company, in my view, in an avaricious, covetous, possessive, and
narcissistically entitled fashion, lacking any sense of personal propriety,
accountability, or shame. YOU recklessly provide a "safe world" for Mr.
Goldstein, and a mechanism of personal denial for his failings, his
cowardice, his incompetence, his pretense, his hubris...and, worst of all, his
delusions.
The proof of a corrupt CEO, and a do-nothing board, lies clearly in the way
you have handled expressions of interest in purchasing the company over the
years. In this regard, the evidence is quite damning. As the largest
outside shareholder, I have spoken with NUMEROUS parties that have had an
interest in purchasing this company over the years, at substantial premiums
to the common stock's trading price. In all cases, I was told that
Goldstein essentially "blew them off," with no one ever being able to get
beyond the "Goldstein portcullis." Let me note 3 specific examples:
1) At the 2011 shareholder meeting, a highly respected money manager, and
major shareholder, reported to the board how, in 1999, he presented (flying
out to meet Goldstein in Denver multiple times) a proposal by a major
consumer products firm, to buy the company for $3 a share, a sizable premium
to the then current trading price in the $1's. Incredulously (apparently, in
order to "kill" the possibility of any deal), Goldstein countered back with
a "fantasy" price of $12. This money manager again approached the
company in 2000, after Goldstein's father Jerome died (the ostensible
reason why Goldstein couldn't sell the company). With Goldstein
ultimately refusing to entertain bonafide offers for the company, the money
manager got sick and tired of wasting his time, and threw up his hands,
realizing that Goldstein simply didn't want to sell the company for anything
other than an "Alice in Wonderland" price. Said money manager stated that
he also had retained a series of emails, extensively documenting his
contacts with Goldstein in this matter. This written documentation
notwithstanding, Goldstein initially claimed that the multiple contacts
NEVER HAPPENED, but then backed down and said that he didn't "remember"
them. None of the board members at this meeting (including those on the
board at the time in 1999-2001) admitted to being informed or aware of the
expressions of interest in the company, suggesting that Goldstein, in
violation of his fiduciary duty, kept this substantive process "secret" from
the board.
I was in attendance at the 2011 shareholder meeting, and witnessed the money
manager's testimony. Days later, I demanded, in a private phone
conversation with Director Bud Laber, that the independent board members
begin a formal investigation of Goldstein. Unsurprisingly, nothing ever
happened. Laber refused to follow up with me on my request...and the board
stuck its head in the sand, maintaining its primary loyalty to Goldstein,
and ignoring its duty of loyalty and due care to the entire shareholder
base.
2) In the last year or two, I've had conversations with the CEO of a 20 year
old private equity firm out of San Diego. The CEO, whose namesake firm has
completed $3 billion in transactions over the years, made a number of calls
to Goldstein, expressing interest in buying the company. Instead of talking
to the private equity firm, Goldstein kept "putting them off." When the CEO
of the firm kept calling, instead of handing him off to an INDEPENDENT board
member, Goldstein told the CEO he had "no interest." When the CEO of this
private equity firm sought a meeting with company management, Goldstein
stopped returning his phone calls and ignored him.
3) Recently, I had a conversation with the president of a diversified New
York City based investor and operator in the consumer products space. This
individual told me, despite a willingness to pay a substantial premium over
the current trading price of SLGD common stock, that "Goldstein has been
ignoring me for 8 years," and was never willing to discuss any proposals, or
entertain any offers.
IN ALL CASES, DESPITE NUMEROUS PEOPLE TALKING TO GOLDSTEIN OVER THE YEARS, I
AM NOT AWARE, EVEN ONCE, OF GOLDSTEIN PASSING THESE INDIVIDUALS ON TO AN
INDEPENDENT COMMITTEE OR BOARD MEMBER. SUCH ACTIONS ON THE PART OF
GOLDSTEIN ARE UTTERLY SELF-SERVING, DISLOYAL, AND A BLATANT VIOLATION OF HIS
FIDUCIARY OBLIGATIONS TO THE OUTSIDE SHAREHOLDER BASE. THE BOARD'S
COUNTENANCING OF SUCH BEHAVIOR IS REPUGNANT, AND A BETRAYAL OF THE COMPANY'S
SHAREHOLDERS, AS WELL. THIS IS ESPECIALLY TRUE, CONSIDERING THE FACT THAT I
HAVE BEEN TELLING DIRECTOR BUD LABER FOR TWO YEARS ABOUT GOLDSTEIN'S
"BLOWING OFF" OF INTERESTED PARTIES, AND PLEADING WITH HIM TO STOP ALLOWING
GOLDSTEIN TO BE THE EXCLUSIVE "GATEKEEPER" FOR BONAFIDE M&A OPPORTUNITIES.
I tell you all of this because, as you are well aware, the recent sale of
the company's Denver real estate now has SLGD in a position where it has $3
million in cash on the balance sheet, and no debt. Yet, reflecting Wall
Street's utter lack of faith in Goldstein to grow the business, the common
stock barely trades at a premium to this $3 million in cash! With this in
mind, the board is now in an enviable position to maximize value for
shareholders, by engaging in a formal process of putting the company up for
sale. As you know, I will be introducing a shareholder proposal, from the
floor, at the June 14th annual meeting, that calls for the company to
establish a Special Committee, charged with formally "shopping" the company,
with the goal of finding a buyer for the company in whole or in part.
Personally, I believe any bid for the entire company, that meets or exceeds
50 cents per share, should be accepted by the board...as long as a full, fair,
and robust process is engaged in.
Over the years, I have talked to a number of parties interested in bidding
for the company, and they all tell me the same thing: despite Mr.
Goldstein's breathtaking failures, the core Liquid Gold brand, in
particular, retains substantial brand equity. Since my most recent stock
purchase, I have talked to a handful of people, who have told me that they
are prepared to buy the company for a substantial premium to recent stock
trading prices, because they are convinced they can reinvigorate the
company's brands. With this in mind, the notion of continuing to let Mr.
Goldstein fumble around, helplessly trying to turn this thing around, and
burning through all the cash, would be the height of insanity. And I can
only think of one reason why this board would endorse that: YOU ARE
BEHOLDEN TO GOLDSTEIN.
In closing, I want to put you on notice that the "business judgement rule"
does not allow the board to cavalierly ignore its responsibilities to
shareholders, and let the CEO "pocket" legitimate offers for, or expressions
of interest in, the company. If this board should continue to subjugate its
self-respect to Mr. Goldstein's will, facilitating the CEO in having his
sordid way with this company, and burying its head in the sand, without
establishing a Special Committee to vet offers, rest assured that this
shareholder will not hesitate to avail himself of the remedy of hauling this
derelict board into court, and suing you for breach of fiduciary
responsibility. (The fact that Goldstein cronies Jeffry Johnson, Jeffrey
Hinkle, and Dennis Field, are stepping down from the board...a long overdue
event...does not absolve them from responsibility for their willful and
wanton blindness over the years, and handing over all M&A responsibilities
to their patron, the CEO.)
If Goldstein wants to keep running this thing, and sucking it dry, the board
should force him to use the company's cash to make a bid...or do a 50 cent
tender offer to everyone who wants to get out. This "stacked" board has
served as a rubber stamp to Goldstein from time immemorial. It's high time
for you to stop treating the outside shareholders like roadkill, stop
continuing to kowtow to your master...and start acting responsibly, about
maximizing this company's value for its ENTIRE shareholder base.
The world is watching, and your reputations are at stake, now more than
ever. Can we finally count on you to do the right thing, defend your honor
as a board, and hold Mark Goldstein accountable?
Very truly yours,
Timothy J. Stabosz
197:
EX-2
3
slgdprop.txt
STOCKHOLDER PROPOSAL TO PUT SLGD UP FOR SALE
RESOLVED:
That the shareholders of Scott's Liquid Gold call on the board of directors
to establish a Special Committee, for the express purpose of "shopping" the
company, soliciting bids to sell the company in whole or in part, and
otherwise seeking to maximize shareholder value.
SHAREHOLDER SUPPORTING STATEMENT:
As the company's largest outside shareholder, I have been deeply troubled at
the board's willingness to defer, in a most impudent of fashions, to the
wishes of CEO and family scion Mark Goldstein. As a result of the board's
craven oversight, a CEO is still in place, who has caused the company to
lose money for 14 out of the last 15 years. In addition, based on evidence
provided at the 2011 shareholder meeting by a major institutional
shareholder, and others I have spoken to, I have reason to believe that,
over the years, Mr. Goldstein has "pocketed" bids, and credible expressions
of interest to buy the company, in which he simply never informed the board,
or didn't return phone calls to the interested parties.
Now, with the sale of company real estate bringing an influx of cash, it is
imperative that the board face the facts:
1) Mark Goldstein is a failure as an executive, and has destroyed a
staggering amount of value over his 22 year tenure as CEO. See Denver Post
story, available at the following web link:
www.denverpost.com/business/ci_22359215
2) Scott's Liquid Gold is too small of a company, at this point, and too
undercapitalized, for internal growth to be a viable option. The best
strategic choice for the company, that minimizes risk, and maximizes reward,
is to put the company up for sale. I am firmly convinced that, in an
orderly sale process, the company could realize proceeds that are
significantly higher than the current trading price of the stock (as of
January 15, 2013).
3) If the board allows Mr. Goldstein to "reinvest" the real estate
transaction proceeds, the most likely outcome, by far, based on his history,
is more desultory actions, more excuses, more denial...and more transfer of
wealth from the outside shareholders to Mr. Goldstein. A continuation of
the longstanding "cannibalization from within," of a once great company, can
no longer be tolerated by the board. I believe Scott's is a company whose
brands have enormous value to outsiders...outsiders who have the actual
skills to reinvigorate them.
As the largest outside shareholder of the company, my interest is directly
linked with the interest of all shareholders. Unfortunately, the negligible
ownership of stock by board members means that they have no interest in us.
I, therefore, urge you to support my proposal, in order to send a message to
the board that we are tired of the continued destruction of value under their
watch, and we are tired of being "taken for a ride" by a "stacked" board of
directors that consists of 4 of 6 members that are either employees, or
former employees of the company.
I firmly believe that Scott's Liquid Gold needs to be put up for sale,
immediately upon the closing of the real estate transaction, in order for
the board to properly fulfill its fiduciary responsibilities to
shareholders, rather than maintaining, as its primary focus, the Goldstein
family's personal and financial needs.