0001226380-14-000002.txt : 20140109 0001226380-14-000002.hdr.sgml : 20140109 20140109095948 ACCESSION NUMBER: 0001226380-14-000002 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20140108 DATE AS OF CHANGE: 20140109 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: China Power Equipment, Inc. CENTRAL INDEX KEY: 0001418134 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-87598 FILM NUMBER: 14517790 BUSINESS ADDRESS: STREET 1: 168 KECHUANG RD. , BLOCK B STREET 2: 6TH FL., #602 CITY: HI-TECH ZONE, XI?AN, SHAANXI STATE: F4 ZIP: 710065 BUSINESS PHONE: 1-646-623-6999 MAIL ADDRESS: STREET 1: 168 KECHUANG RD. , BLOCK B STREET 2: 6TH FL., #602 CITY: HI-TECH ZONE, XI?AN, SHAANXI STATE: F4 ZIP: 710065 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FITZGERALD ROBERT E CENTRAL INDEX KEY: 0001226380 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: 2204 VAQUERO ESTATES BLVD CITY: WESTLAKE STATE: TX ZIP: 76262 SC 13D 1 cpqq13d010814.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) China Power Equipment, Inc. ----------------------------------------------------------------------------- (Name of Issuer) Common Stock ----------------------------------------------------------------------------- (Title of Class of Securities) 0001418134 ------------------------------------- (CUSIP Number) Robert Fitzgerald 101 SE 25th Ave. Mineral Wells, Texas 76067 (940)445-2325 ----------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 3, 2014 ------------------------------------- (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 that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 5 Pages) (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. 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 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. 001-51379 13D PAGE 2 OF 5 ----------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Robert Fitzgerald ###-##-##### ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [X] (B) [ ] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* 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 ----------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 1,408,013 SHARES ------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH ------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 1,408,013 WITH ------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,408,013 12 CHECK BOX 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* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 811-08387 Page 3 of 5 ORIGINAL REPORT ON SCHEDULE 13D ITEM 1. SECURITY AND ISSUER This statement relates to the Common Stock, par value $0.01 per share (the Shares) of China Power Equipment (the Company). The Company has its principal executive offices at Yongle Industry Zone, Jingyang Concentration Area Shaanxi, P.R. China 713702. ITEM 2. IDENTITY AND BACKGROUND This statement is filed by Robert Fitzgerald (Reporting Person) to reflect shares held by himself and Concorde Equity II, LLC, a Delaware limited liability company owned by the Reporting Person and his minor children. Reporting Person's principal business address is 101 SE 25th Ave, Mineral Wells, Texas 76067. Reporting Person's principal Occupation is investing assets held by or on behalf of his family. During the past five years, reporting Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors)and has not been a party to civil proceedings of a judicial or administrative body of competent jurisdiction as a result of which Reporting Person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Reporting Person is a United States citizen. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS The Shares were purchased from Reporting Persons personnel funds. ITEM 4. PURPOSE OF THE TRANSACTION On January 3, 2014, 2013, the Reporting Person submitted a non-binding term sheet to the Issuer to purchase all of the shares of Issuer not held by the Reporting Person for $0.50 per share. Although it is the Reporting Persons current intent to acquire all of the shares of the Issuer, the Reporting Person will continuously evaluate its ownership of Common Stock and the Issuer's business and industry. Depending on market conditions and other factors that the Reporting Person may deem material to their investment decision, including the availability of other investment opportunities, the Reporting Person may from time to time acquire additional shares of Common Stock in the open market or in privately negotiated transactions or dispose of all or a portion of the shares of Common Stock that such Reporting Person now owns or may hereafter acquire. Without limitation of the foregoing (and consistent with their investment purpose), the Reporting Person will continue to consider alternative courses of action and will in the future take such actions with respect to their investment in the Issuer as they deem appropriate in light of the circumstances existing from time to time. Such actions may include requesting meetings with management, making recommendations to members of management concerning various business strategies, acquisitions, policies, seeking to acquire control of the Issuer through a merger, proxy solicitation, tender offer, significant equity investment, exchange offer or otherwise, or such other actions as the Reporting Person may deem appropriate. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) Reporting Person may be deemed to beneficially own 1,408,013 Shares (7.2% of the outstanding Shares), based on 19,602,557 Shares outstanding as of November 1, 2013 pursuant to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. (b) Reporting Person may be deemed to have sole voting and dispositive power for all such Shares. (c) The following transactions were effective by the Reporting Person during the 60 days preceding the date of filing of this Schedule 13D: Trade Date Buy/Sell Number of Shares Price Per Share 1/3/14 Buy 20000 0.40 1/2/14 Buy 1800 0.35 12/31/13 Buy 20000 0.36 12/20/13 Buy 20000 0.35 11/29/13 Buy 200 0.43 11/27/13 Buy 700 0.42 11/21/13 Buy 14376 0.38 11/21/13 Buy 11000 0.44 11/20/13 Buy 1000 0.42 (d) No person other than Reporting Person (and Concorde under the control of the Reporting Person) has the right to receive and the power to direct the receipt of dividends from, or the proceeds from the sale of, the reported securities. (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Not Applicable. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS: Not Applicable. 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. Dated: January 8, 2014 By: /s/ Robert Fitzgerald ------------------------------- Robert Fitzgerald EX-1 2 attachcpqq010714.txt QAR, LLC 101 S. E. 25th Avenue Mineral Wells, Texas 76067 940-445-2325 January 3, 2014 Board of Directors China Power Equipment, Inc. Yongle Industry Zone Jingyang Concentration Area Shaanxi, P.R. China 713702 Dear Board of Directors: QAR, LLC and its affiliates, (collectively Investors, we, us or our), are writing to express our interest in acquiring all of the outstanding common stock of China Power Equipment, Inc. (the Company) not already owned by us for $0.50 per share in cash, on the terms and subject to the conditions set forth in the attached non-binding term sheet. This proposal represents a premium of 25% over the Thursday, January 2, 2014 Nasdaq Market closing price of the Companys stock of $0.39 per share. We believe that this offer is in the best interest of the shareholders of the Company as it provides them with a cash payment which exceeds the most recent closing price and the 30 day moving average of the Companys common stock by a premium of over 25%. In our capacity as a shareholder, we have repeatedly suggested that the Company utilize its excess cash by engaging in a substantial share buyback program. Since the Company has steadfastly refused to engage in any type of share buyback, even at prices significantly below what we are offering, we see this as strong evidence that our offer is in the best interest of shareholders. As you know, we believe in the prospects of the Company and we beneficially own approximately 7% of the Companys outstanding common stock. We plan to file an amendment to our Schedule 13D to reflect the delivery of this proposal. We are prepared to move and close quickly. This letter does not constitute a legally binding obligation and, of course, neither we nor the Company shall be subject to any binding obligation with respect to any transaction unless and until a definitive agreement satisfactory to all parties, including appropriate due diligence requirements, is executed and delivered. While we appreciate and respect the Boards need to conduct an appropriate process in evaluating our proposal, your prompt consideration to this proposal is requested. Accordingly, please advise us by 5:00 PM Thursday, January 9, 2014 (Xi an, China local time and date) as to your response. Best regards, /s/ Robert Fitzgerald Robert Fitzgerald President CONFIDENTIAL Term Sheet for the Acquisition Of China Power Equipment, Inc. The purpose of this document is to set forth the indicative terms pursuant to which, subject to certain conditions set forth herein, the Investors (as defined below) would acquire for cash all of the outstanding shares of the common stock of China Power Equipment, Inc. (the Company) not already owned by the Investors (the Transaction). The terms and conditions set forth herein are non-binding and are subject to change and this document does not constitute an offer, however, the Binding Terms section of the document are binding. The execution of binding definitive agreements for the contemplated transaction are subject to completion of due diligence to the Investors' satisfaction and the preparation of definitive documentation to effect this transaction that is mutually satisfactory to each party. Company: China Power Equipment, Inc. (NASDAQ: CPQQ) Investors: QAR, LLC and affiliated persons and entities (collectively, the Investors). Purchase Price: The consideration for the Transaction will be $0.50 per share in cash for all validly issued and outstanding shares of the common stock,$0.01 par value per share (Common Shares) of the Company, except for those shares already owned by the Investors and except for any shares with respect to which the holders have perfected appraisal rights under the Maryland General Corporation Law, as applicable. The per share consideration will be net to the seller in cash, without interest and subject to any required withholding of taxes. Each exercisable option to acquire Common Shares will be canceled in exchange for a cash payment equal to the amount, if any, by which the purchase price exceeds the exercise price for such option. As of the date of this Term Sheet, the Investors beneficially own 1,388,013 Common Shares, representing approximately 7.1% of the Common Shares outstanding, based on the 19,602,557 Common Shares outstanding as of November 1, 2013 as reported on the cover of the Companys Form 10-Q for the quarter ended September 30, 2013. Structure: Pursuant to an Agreement and Plan of Merger (Merger Agreement) to be negotiated by the parties, the Transaction will be structured as a merger of the Company with a to-be-formed entity wholly owned by the Investors (Acquisition Entity). A special meeting of the Companys stockholders (the Special Meeting) to approve the Merger Agreement will be called as soon as practicable following the execution of the Merger Agreement. The parties shall undertake the drafting of the Companys proxy statement for the Special Meeting, which shall be filed by the Company with the Securities and Exchange Commission no later than ten (10) days from the execution of the Merger Agreement. It is contemplated that the closing will take place in the second calendar quarter of 2014. Conditions: Conditions to closing of the Transaction will include the following: (i) approval by the Companys stockholders of the Merger Agreement, (ii) receipt of any and all required regulatory approvals and third party consents, (iii) completion of due diligence investigation with no material adverse changes in the Companys business, assets, results of operations, properties, condition (financial or otherwise) or prospects, (iv) no order, ruling, suit or investigation prohibiting or seeking to prohibit the Transactions, (v) the accuracy of the Companys representations and warranties, (vi) the performance of the Companys covenants and other obligations under the Merger Agreement in all material respects, and (vii) the Merger Agreement not having been terminated. Governing Law: The Merger Agreement and other definitive documentation will be governed by Maryland law. Due Diligence: Prior to signing the Merger Agreement and other definitive documentation, the Investors will undertake and complete to their satisfaction operational, financial, tax, intellectual property, technical, contractual, accounting and legal due diligence. No Financing Contingency: Consummation of the Transaction will not be subject to any financing conditions. Customary Reps and Warranties: The Merger Agreement will contain representations and warranties Made by the Company customary for a transaction of this nature. Interim Covenants: The Merger Agreement will contain covenants and other obligations of the Company customary for a transaction of this nature. Termination: Negotiations pertaining to this proposal may be terminated by the Investors or the Company at any time without cost or liability. The Merger Agreement will contain a customary non-solicitation covenant pertaining to the Company, with a right to consider an unsolicited superior proposal and allowing its board of directors to change its recommendation of the Transaction subject to the Company and its board of directors adhering to specified customary procedures including a limited fiduciary out for the Companys board of directors to accept an unsolicited superior proposal upon payment of a termination fee to Acquisition Entity equal to 5% of the transaction value plus reimbursement of the Investors transaction expenses. Binding Terms: Exclusivity: The Company will not solicit or accept competing term sheets until 90 days following the date hereof. Expense Reimbursement: Each party shall pay its own expenses incurred in relation to the Transaction (including all legal expenses) regardless of whether the Transaction is consummated or not. Counterparts: This Term Sheet may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original. This term sheet will be considered void if it is not executed by the Company prior to the close of business on January 9, 2014 (Xi an, China local time and date). By executing this term sheet, the Company represents and warrants that it has obtained the necessary Board of Directors and/or other approvals to cause this term sheet to be duly authorized, executed and delivered. Agreed and accepted this_________ day of January, 2014 by CHINA POWER EQUIPMENT, INC. By: Name: Title: Agreed and accepted this 3rd day of January, 2014 by QAR, LLC By: /s/ Robert Fitzgerald Robert Fitzgerald President