-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V9cPPBdBbGKgFCuPq6x7veXO7R3h1dSNYVfRrOIY8wssAtAByS5FcjOi2ceb2KAJ Lpij9Fx45o8mTcrfmTcy6w== 0001068800-06-001687.txt : 20061212 0001068800-06-001687.hdr.sgml : 20061212 20061212145217 ACCESSION NUMBER: 0001068800-06-001687 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20061212 DATE AS OF CHANGE: 20061212 GROUP MEMBERS: CHADWICK CAPITAL MANAGEMENT LLC GROUP MEMBERS: NADEL AND GUSSMAN COMBINED FUNDS LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COST U LESS INC CENTRAL INDEX KEY: 0000851368 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 911615590 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-55977 FILM NUMBER: 061271289 BUSINESS ADDRESS: STREET 1: 3633 136TH PLACE SE, SUITE 110 CITY: BELLEVUE STATE: WA ZIP: 98006 BUSINESS PHONE: 425-945-0213 MAIL ADDRESS: STREET 1: 3633 136TH PLACE SE, SUITE 110 CITY: BELLEVUE STATE: WA ZIP: 98006 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Monarch Activist Partners LP CENTRAL INDEX KEY: 0001356548 IRS NUMBER: 203788656 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 4510 EXECUTIVE DRIVE, SUITE 200 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 858-480-2840 MAIL ADDRESS: STREET 1: 4510 EXECUTIVE DRIVE, SUITE 200 CITY: SAN DIEGO STATE: CA ZIP: 92121 SC 13D/A 1 mon13da.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* COST-U-LESS, INC. - ------------------------------------------------------------------------------- (Name of Issuer) Common Stock, Par Value $0.001 Per Share - ------------------------------------------------------------------------------- (Title of Class of Securities) 221492 10 1 - ------------------------------------------------------------------------------- (CUSIP Number) James M. Chadwick Chadwick Capital Management, LLC 4510 Executive Drive Suite 200 San Diego, California 92121 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 6, 2006 - ------------------------------------------------------------------------------- (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), (f) or (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(b) for other parties to whom copies are being sent. *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 ("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. 221492 10 1 =============================================================================== NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Monarch Activist Partners LP =============================================================================== CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X] 2 (b)[ ] =============================================================================== SEC USE ONLY 3 =============================================================================== SOURCE OF FUNDS (See Instructions) 4 OO =============================================================================== CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(d) or 2(e) [ ] =============================================================================== CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware =============================================================================== SOLE VOTING POWER 7 0 =========================================================== NUMBER OF SHARED VOTING POWER SHARES 8 250,046 BENEFICIALLY OWNED BY =========================================================== EACH SOLE DISPOSITIVE POWER REPORTING 9 0 PERSON WITH =========================================================== SHARED DISPOSITIVE POWER 10 250,046 =============================================================================== AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 257,246 =============================================================================== CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN 12 SHARES [ ] =============================================================================== PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.4%(1) =============================================================================== TYPE OF REPORTING PERSON 14 OO =============================================================================== - -------------------------------- (1) Based upon 4,023,530 shares of Cost-U-Less, Inc. common stock issued and outstanding as of November 8, 2006, as reported on Cost-U-Less, Inc.'s Form 10-Q filed on November 13, 2006. - 2 - CUSIP No. 221492 10 1 =============================================================================== NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Chadwick Capital Management LLC =============================================================================== CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X] 2 (b)[ ] =============================================================================== SEC USE ONLY 3 =============================================================================== SOURCE OF FUNDS (See Instructions) 4 OO =============================================================================== CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(d) or 2(e) [ ] =============================================================================== CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware =============================================================================== SOLE VOTING POWER 7 0 =========================================================== NUMBER OF SHARED VOTING POWER SHARES 8 250,046 BENEFICIALLY OWNED BY =========================================================== EACH SOLE DISPOSITIVE POWER REPORTING 9 7,200 PERSON WITH =========================================================== SHARED DISPOSITIVE POWER 10 250,046 =============================================================================== AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 257,246 =============================================================================== CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN 12 SHARES [ ] =============================================================================== PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.4%(1) =============================================================================== TYPE OF REPORTING PERSON 14 OO =============================================================================== - -------------------------------- (1) Based upon 4,023,530 shares of Cost-U-Less, Inc. common stock issued and outstanding as of November 8, 2006, as reported on Cost-U-Less, Inc.'s Form 10-Q filed on November 13, 2006. - 3 - CUSIP No. 221492 10 1 =============================================================================== NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nadel and Gussman Combined Funds LLC =============================================================================== CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X] 2 (b)[ ] =============================================================================== SEC USE ONLY 3 =============================================================================== SOURCE OF FUNDS (See Instructions) 4 OO =============================================================================== CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(d) or 2(e) [ ] =============================================================================== CITIZENSHIP OR PLACE OF ORGANIZATION 6 Oklahoma =============================================================================== SOLE VOTING POWER 7 7,200 =========================================================== NUMBER OF SHARED VOTING POWER SHARES 8 0 BENEFICIALLY OWNED BY =========================================================== EACH SOLE DISPOSITIVE POWER REPORTING 9 0 PERSON WITH =========================================================== SHARED DISPOSITIVE POWER 10 0 =============================================================================== AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 257,246 =============================================================================== CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN 12 SHARES [ ] =============================================================================== PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.4%(1) =============================================================================== TYPE OF REPORTING PERSON 14 OO =============================================================================== - -------------------------------- (1) Based upon 4,023,530 shares of Cost-U-Less, Inc. common stock issued and outstanding as of November 8, 2006, as reported on Cost-U-Less, Inc.'s Form 10-Q filed on November 13, 2006. - 4 - SCHEDULE 13D ITEM 1. SECURITY AND ISSUER: This Schedule 13D relates to the common shares of Cost-U-Less, Inc. ("CULS"). The principal executive offices of CULS are located at 3633 136th Place SE, Suite 110, Bellevue, Washington 98006. ITEM 2. IDENTITY AND BACKGROUND: (a) This statement on Schedule 13D is filed by Chadwick Capital Management LLC ("CCM"), Monarch Activist Partners LP ("Monarch") and Nadel and Gussman Combined Funds LLC ("NGCF"). The managers of CCM are James M. Chadwick and Sohail Malad. CCM is the General Partner of Monarch and has sole voting and dispositive authority over Monarch's accounts. CCM manages the NGCF account that holds CULS shares and has sole trading discretion over such account. The managing member of NGCF is Stephen Heyman. (b) The business address for CCM, Monarch and Mr. Chadwick is 4510 Executive Drive, Suite 200, San Diego, California 92121. The business address for NGCF and Mr. Heyman is 15 East 5th Street, 32nd Floor, Tulsa, Oklahoma 74103. (c) CCM's principal business is to provide asset management services to private investment funds. Mr. Chadwick manages CCM's business. NGCF is a private investment fund. Mr. Heyman manages NGCF's business. (d)-(e) During the last five years, none of CCM, Mr. Chadwick, Monarch, NGCF or Mr. Heyman has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgement, 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. (f) CCM is a limited liability company organized under the laws of the State of Delaware. Mr. Chadwick is a citizen of the United States of America. Monarch is a limited partnership organized under the laws of the State of Delaware. NGCF is a limited liability company organized under the laws of the State of Oklahoma. Mr. Heyman is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION: The source of funds for the purchases of the 250,046 shares beneficially owned by Monarch was the working capital of Monarch. Monarch directly purchased those shares at the direction of CCM. The total purchase price for those shares was $2,055,364.69. The source of funds for the purchases of the 7,200 shares beneficially owned by NGCF was the working capital of NGCF. NGCF directly purchased those shares at the direction of CCM. The total purchase price for those shares was $61,040.00. - 5 - ITEM 4. PURPOSE OF TRANSACTION: The filing persons believe that CULS' stock price is significantly undervalued and intend to communicate with management in order to explore measures to enhance shareholder value. These measures include share repurchases, evaluating the benefits of a going-private transaction, and hiring an investment banker to explore strategic alternatives, in particular the sale of the company. The filing persons may acquire additional shares either individually or jointly. Except as set forth above, the reporting persons have no present plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the issuer, or the disposition of securities of the issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the issuer or of any of its subsidiaries; (d) Any change in the present board of directors or management of the issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the issuer; (f) Any other material change in the issuer's business or corporate structure, including but not limited to, if the issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940; (g) Changes in the issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person; (h) Causing a class of securities of the issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or - 6 - (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER: (a) This statement relates to 250,046 shares hold by Monarch and 7,200 shares held by NGCF. Based on CULS's Form 10-Q filed on November 13, 2006, 4,023,530 shares were outstanding as of November 8, 2006. Therefore, the 257,246 shares reported on this Schedule 13D represent 6.4% of CULS's outstanding shares. (b) CCM and Monarch share voting and dispositive power over the 250,046 shares held by Monarch. CCM has sole dispositive power over the 7,200 shares held by NGCF. NGCF has sole voting power over the 7,200 held by it. Mr. Heyman acts on behalf of NGCF as managing member. (c) During the past 60 days, Monarch acquired shares in the transactions set forth below. All such purchases were effected in open market transactions. DATE OF ACQUISITION NO. OF SHARES ACQUIRED PRICE PER SHARE ------------------- ---------------------- --------------- 10/13/2006 100 8.7100 10/17/2006 600 8.6050 11/8/2006 1,600 8.5860 11/9/2006 2,900 8.4852 11/10/2006 1,600 8.4125 11/14/2006 8,335 8.2060 11/15/2006 5,314 8.1517 11/16/2006 10,300 8.1706 11/21/2006 500 8.2420 11/27/2006 200 8.3400 11/28/2006 300 8.3600 11/29/2006 1,700 8.3024 12/4/2006 1,500 8.2980 12/6/2006 1,500 8.2367 12/7/2006 200 8.1800 12/8/2006 1,000 8.1200 TOTAL 37,649 (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER: CCM is the General Partner of Monarch under Monarch's Limited Partnership Agreement. This agreement provides, among other things, the authority to buy, invest in, hold - 7 - for investment, own, assign, and transfer, sell and otherwise deal in securities on behalf of Monarch. The 249,046 shares reported as held by Monarch in this Schedule 13D are subject to CCM's management. CCM and NGCF have entered into an account management agreement pursuant to which CCM renders investment management services and manages a NGCF securities investment account. The agreement provides CCM, among other things, the authority to buy, invest in, hold for investment, own, assign, transfer, sell and otherwise deal in securities for such account. The 7,200 shares reported as held by NGCF in this Schedule 13D are in the account and subject to CCM's management. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS: Exhibit Number Description -------------- ----------- 1 Letter from Managing Partner of Monarch Activist Partners LP to Chief Executive Officer of Cost-U-Less, Inc. dated December 11, 2006 - 8 - SIGNATURE 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 as of December 12, 2006 CHADWICK CAPITAL MANAGEMENT LLC By: /s/ James M. Chadwick --------------------------------------- James M. Chadwick, Manager MONARCH ACTIVIST PARTNERS LP By: Chadwick Capital Management LLC, its General Partner By: /s/ James M. Chadwick --------------------------------------- James M. Chadwick, Manager NADEL AND GUSSMAN COMBINED FUNDS LLC By: /s/ Stephen Heyman --------------------------------------- Stephen Heyman, Managing Member - 9 - EX-1 2 ex1.txt Exhibit 1 [MONARCH logo] December 11, 2006 Mr. J. Jeffrey Meder Chief Executive Office, Cost-U-Less 3633-136th Place SE Bellevue, WA 98006 By Facsimile - ------------ Dear Mr. Meder: I am writing this letter on behalf of Monarch Activist Partners LP ("Monarch") which is currently the beneficial owner of approximately 6% of Cost-U-Less ("CULS"). The purpose of this letter is to reiterate what Monarch has verbally stated on multiple telephone calls over the last few months with yourself and Mr. Martin Moore, which is: we strongly urge you to explore the sale of the ----------------------------------------------- company immediately. As mutually acknowledged, we are not alone is this - ------------------- request, as other shareholders of size have asked for the same. While we appreciate your desire to grow the business organically, it is apparent that the market refuses to assess fair value to the company in its current form. A quick review of your peer group clearly states this point. Currently, Pricesmart (PSMT), your self-acknowledged closest competitor, trades at an Enterprise Value to EBITDA multiple of close to 16 times, whereas CULS trades at approximately a 4.5 multiple. Taking a very conservative valuation approach by applying a 40% discount to the median EBITDA multiple of your industry peer group, CULS is worth at least $12 a share. Compounding matters, the business, according to your latest earnings release, is dealing with a 9% increase in operating expenses which is largely attributed to rising utility expenses, an issue that does not lend itself to a quick resolution. Outside of operating expenses, the cost of being public with Sarbanes Oxley expenses and other regulatory costs makes the rationale of "going it alone" far less viable. We fail to see how even the most ambitious growth plan will resolve the deep multiple discount the market attributes to CULS. Not to mention, given the capital required to open each new store combined with all the site specific requirements, rapid expansion appears highly improbable. In light of the issues raised in this letter and as a significant shareholder we ask you and the Board to engage the services of an investment banker to facilitate the sale of the company. While you have stated that the Board continues to look at all options and keeps an open mind to any potential offer, it is time for the company to take a far more proactive stance. Should the company fail to act on our recommendation, we reserve all of our options, including seeking board representation if necessary. I look forward to your response. Very truly yours, Sohail Malad Managing Partner 4510 Executive Drive Suite 200 San Diego, CA 92121 858.480.2840 OFFICE 858.480.2849 FAX -----END PRIVACY-ENHANCED MESSAGE-----