0001104659-05-025433.txt : 20050611 0001104659-05-025433.hdr.sgml : 20050611 20050525193846 ACCESSION NUMBER: 0001104659-05-025433 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050526 DATE AS OF CHANGE: 20050525 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CELLSTAR CORP CENTRAL INDEX KEY: 0000913590 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 752479727 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42959 FILM NUMBER: 05857997 BUSINESS ADDRESS: STREET 1: 1730 BRIERCROFT DR CITY: CARROLLTON STATE: TX ZIP: 75006 BUSINESS PHONE: 972-466-5000 MAIL ADDRESS: STREET 1: 1730 BRIERCROFT DRIVE STREET 2: LEGAL DEPT. CITY: CARROLLTON STATE: TX ZIP: 75006 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDFIELD ALAN H CENTRAL INDEX KEY: 0000946529 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1730 BRIERCROFT CT STREET 2: LEGAL DEPT CITY: CARROLLTON STATE: TX ZIP: 75006 BUSINESS PHONE: 2144665021 MAIL ADDRESS: STREET 1: 1730 BRIERROFT COURT STREET 2: LEGAL DEPT CITY: CARROLLTON STATE: TX ZIP: 75006 SC 13D/A 1 a05-9977_1sc13da.htm SC 13D/A

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 9)*

CellStar Corporation

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

150925105

(CUSIP Number)

Alan J. Perkins, Gardere Wynne Sewell LLP, 1601 Elm Street, Suite 3000, Dallas, Texas 75201, (214) 999 3000

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

May 16, 2005

(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 §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be 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. 150925105

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Alan H. Goldfield

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			ý

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 2,720,214

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 2,720,214

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,780,214

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 13.6%

	14.	Type of Reporting Person (See Instructions) IN

Item 1.	Security and Issuer
Not amended.

Item 2.	Identity and Background
The second and third sentences of Item 2 are hereby amended to read as follows:
The address of Mr. Goldfield is 1851 Turbeville Road, Denton, Texas 76205. Mr. Goldfield is retired.

Item 3.	Source and Amount of Funds or Other Consideration
Item 3 is hereby amended to add the following disclosure: On February 22, 2002, the Company effected a one-for-five reverse Common Stock split. As a result, Mr. Goldfield’s beneficial ownership has correspondingly decreased, and the exercise prices of Mr. Goldfield’s stock options have correspondingly increased.

Item 4.	Purpose of Transaction
Item 4 is hereby amended to add the following disclosure:
Mr. Goldfield has recently had discussions with Stanford Financial Group Company (“Stanford”) about a possible investment by Stanford in the Company.
By letter dated May 16, 2005, from Stanford to the Company’s Board of Directors (the “Board”), Stanford proposed to purchase from the Company (i) convertible debentures issued by the Company in the original principal amount of $25,000,000 (the “Debentures”) and (ii) shares of the Company’s Series A Preferred Stock, par value $0.01 per share (“Preferred Stock”), for a purchase price of $1,000 (the “Stanford Proposal”). In connection with the Company’s issuance of the Debentures, Stanford proposed that the Company would also grant to Stanford warrants to purchase 3,000,000 shares of Common Stock (the “Warrants”) at an exercise price of $0.001 per share, exercisable by Stanford at any time within five years of the issuance of the Debentures. Under the terms of the Stanford Proposal, Mr. Goldfield would guarantee the Company’s obligations under the Debentures with recourse only to certain natural gas-producing properties directly or indirectly owned or controlled by Mr. Goldfield (the “Goldfield Properties”), and the Goldfield Properties would be required to have proven reserves valued at not less than 200% of the original principal amount of the Debentures. Although not stated in the Stanford Proposal, Mr. Goldfield believes that if the transactions contemplated by the Stanford Proposal were consummated, he would be elected Chief Executive Officer of the Company.
The Stanford Proposal stated that the interest rate under the Debentures would be 8% per annum, payable semi-annually in arrears, and the Debentures could be converted into shares of Common Stock at any time at Stanford’s sole option at a per share conversion price of $4.00. The Stanford Proposal provided that Stanford would pay to the Company 20% of the purchase price for the Debentures, or $5,000,000, at the closing of the purchase and the remaining 80%, or $20,000,000, in four equal installments on the 30th, 60th, 90th and 120th days after the closing. Under the Stanford Proposal, the Debentures would be subordinate to all indebtedness under the Company’s existing credit facility and outstanding 12% Senior Subordinated Notes.
The Preferred Stock to be issued to Stanford under the Stanford Proposal would entitle Stanford to receive 8% cumulative dividends per annum and to elect a majority of the members of the Board. The Stanford Proposal stated that the Preferred Stock would not be redeemable by Stanford unless the per share trading price of the Common Stock exceeded $12.00 for 30 consecutive trading days.
In addition to other typical closing conditions, the Stanford Proposal was contingent upon (i) the reduction of all severance obligations of the Company’s current officers to levels acceptable to Stanford, (ii) Stanford’s approval of the Company’s proposed uses of the proceeds received from the Debentures, (iii) the Company having a

consolidated tangible net worth of at least $110,000,000, and (iv) the Company’s consent to Stanford’s assignment of 20% of the Warrants to Mr. Goldfield. If the Company accepted the Stanford Proposal but subsequently determined not to proceed with the contemplated transactions, the Company would pay to Stanford a fee equal to $1,250,000.

Mr. Goldfield supported and agreed to the Stanford Proposal because he believes that the Stanford Proposal was fair to, and in the best interests of, the Company and its stockholders and represented an opportunity for the Company to receive necessary additional working capital. Based on that belief and in an effort to entice interest in an investment in the Company, Mr. Goldfield advised Stanford that he would personally guarantee the Debentures and pledge the Goldfield Properties as collateral because he believes that without additional working capital and a change in the Board and the Company’s management, the Company is very unlikely to be able to continue its operations. However, rather than seriously consider the Stanford Proposal and enter into meaningful negotiations with Stanford, the Board has refused to meet with representatives of Stanford or to allow Stanford to commence its due diligence examination of the Company. Because the Company failed to respond to the Stanford Proposal by May 19, 2005, the Stanford Proposal has now expired. Stanford had indicated to Mr. Goldfield, however, that it would reinstitute the Stanford Proposal if the Company indicated an interest in pursuing the transactions contemplated by the Stanford Proposal.

Mr. Goldfield believes that the Company’s recent decline in operating results is a direct result of continued mismanagement by the Board and the Company’s management. In the last eighteen months, both the Company’s results of operations and the trading price of the Common Stock have steadily declined. The Company’s recent press releases reflect a deterioration in its performance in virtually all of its operating regions, a significant increase in the Company’s debt and a corresponding negative impact on the Company’s liquidity. As further evidence of mismanagement, the Company has been unable to generate accurate financial information, leading to its failure to file its Form 10-K for the year ended November 30, 2004 and its Form 10-Q for the first quarter of its 2005 fiscal year, which, in turn, has resulted in NASDAQ threatening to delist the Company.

Mr. Goldfield believes that the Board’s apparent failure to seriously and timely consider the Stanford Proposal represents yet another example of mismanagement by the Board and the Company’s management and their determination to place their personal interests ahead of those of the stockholders. Mr. Goldfield believes that only if new directors are elected and management is replaced will the Company be able to obtain the additional capital necessary for the Company to survive in its current form. If, at the expense of the Company and its stockholders, the Board fails to act in connection with the Stanford Proposal, Mr. Goldfield intends to consider all legal rights and remedies, including litigation, to enable him to aggressively protect the interests of all stockholders and to hold the Board and the Company’s management accountable for their actions.

Item 5.

Interest in Securities of the Issuer

Item 5 is hereby amended in its entirety to read as follows:

(a) Mr. Goldfield beneficially owns an aggregate of 2,780,214 shares of Common Stock, which constitutes approximately 13.6% of the issued and outstanding Common Stock and reflects a three-for-two stock split effected in June 1997, a two-for-one stock split effected in June 1998 and a one-for-five reverse stock split effected in February 2002. Mr. Goldfield beneficially owns 60,000 of such shares through his ownership of employee stock options issued under the CellStar Corporation 1993 Amended and Restated Long-Term Incentive Plan.

(b) Mr. Goldfield possesses sole voting and dispositive power with respect to 2,720,214 shares of Common Stock. Mr. Goldfield does not share voting or dispositive power with respect to any shares of Common Stock.

(c) In market sales on March 27, 2003, March 28, 2003, April 2, 2003, April 9, 2003, April 11, 2003, April 14, 2003, April 15, 2003, April 16, 2003, April 17, 2003, April 22, 2003, April 23, 2003, and April 30, 2003, GoldStar Equity, L.P., a limited partnership wholly owned by Mr. Goldfield or his affiliates (“GoldStar Equity”), sold 30,600, 20,000, 5,000, 10,000, 5,560, 6,000, 3,000, 2,000, 200, 16,830, 4,100, and 7,500 shares of Common Stock, respectively, at prices per share of $6.8591, $7.087, $7.2037, $7.2681, $7.5663, $7.6833, $6.99, $7.015, $7.01, $7.0402, $7.0283, and $6.1612, respectively.

On October 16, 2003, in market sales, GoldStar Equity sold an aggregate of 200,000 shares of Common Stock at prices per share ranging from $10.40 to $13.51.

On January 12, 2004, in market sales, Gold C-Star, L.P., a limited partnership wholly owned by Mr. Goldfield or his affiliates (“Gold C-Star”), sold an aggregate of 114,500 shares of Common Stock at prices per share ranging from $14.50 to $14.29. On January 13, 2004, in market sales, Gold C-Star sold an aggregate of 50,000 shares of Common Stock at prices per share ranging from $13.50 to $13.76. On January 15, 2004, in market sales, Gold C-Star sold an aggregate of 39,900 shares of Common Stock at prices per share ranging from $13.50 to $13.58. On January 16, 2004, in market sales, Gold C-Star sold an aggregate of 3,500 shares of Common Stock at prices per share ranging from $1 3.50 to $13.57. On January 20, 2004, in market sales, Gold C-Star sold an aggregate of 138,930 shares of Common Stock at prices per share ranging from $13.65 to $14.15. On January 21, 2004, in market sales, Gold C-Star sold an aggregate of 12,090 shares of Common Stock at a price per share of $14.10.

On September 16, 2004, in market sales, Gold C-Star sold an aggregate of 53,800 shares of Common Stock at prices per share ranging from $5.50 to $5.90. On September 20, 2004, in market sales, Gold C-Star sold an aggregate of 16,900 shares of Common Stock at prices per share ranging from $5.25 to $5.50. On September 24, 2004, in market sales, Gold C-Star sold an aggregate of 2 7,951 shares of Common Stock at prices per share ranging from $5 to $5.25.

(d) Not applicable.

(e) Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended in its entirety to read as follows:

A.S. Horng previously granted a revocable proxy (the “Horng Proxy”) to Mr. Goldfield with respect to the 474,000 shares of Common Stock owned of record by Mr. Horng. The shares covered by the Horng Proxy include the results of a three-for-two stock split effected in June 1997, a two-for-one stock split effected in June 1998 and a one-for-five reverse stock split effected in February 2002. The Horng Proxy authorized Mr. Goldfield to represent Mr. Horng and to vote his 474,000 shares of Common Stock at any and all meetings of stockholders of the Company and in any consent of stockholders in writing. The Horng Proxy was revoked by Mr. Horng effective February 16, 2005, and is no longer in effect.

Mr. Goldfield has placed his shares of Common Stock with a brokerage firm in connection with securing a margin and a cash account. Such accounts contain standard default provisions.

Item 7.	Material to Be Filed as Exhibits
7.1	Letter, dated May 16, 2005, executed by Stanford Financial Group Company.

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

May 25, 2005	/s/ Alan H. Goldfield
	Alan H. Goldfield

EX-7.1 2 a05-9977_1ex7d1.htm EX-7.1

Exhibit 7.1

[STANFORD FINANCIAL GROUP LETTERHEAD]

May 16, 2005

The Board of Directors

Cellstar Corporation

1730 Briarcroft Court

Carrollton, Tecas 75006

Re: Proposed Investment in Cellstar Corporation (the “Company”)

Gentlemen:

This letter will confirm the proposal of Stanford Financial Group Company directly, or one of its affiliates, (the “Purchaser”) subject to the terms and conditions contained herein and to the execution and deliver of mutually agreeable definitive documents, to purchase $25 million original principal amount of convertible debentures of Cellstar Corporation (the “Debentures”) and the Series A Preferred Stock of Cellstar Corporation (“Series A Preferred Stock”) for a purchase price of $1,000.

The proposed terms of the Debentures and the Series A Preferred Stock are set forth on the Term Sheet attached to this letter.

Our proposals are subject to, among other conditions to be set forth in the definitive documents, each of the following:

1. Our satisfaction with the financial position, business and prospects of the Company following a due diligence examination of the Company and its subsidiaries, and with the Goldfield Properties, as defined below;

2. The execution and delivery of an intercreditor agreement with the existing senior lenders that will provide for: (a) the subordination of the Debentures to the existing bank financing, and the outstanding 12% Senior Notes of the Company, (b) provide the Debenture holders the rights to cure monetary defaults by purchasing additional series of Debentures from the Company as set forth in the Term Sheet, and (c) provide waivers of non-monetary defaults as requested by the Debenture holders, so that all senior debt is in good standing at the time of the Closing.

3. The election of a majority of the Board of Directors of the Company by the holders of the Series A Preferred Stock.

4. The filing of all periodic filings due as of July 15, 2005, including but not limited to the Form 10-K for the fiscal year ended November 30, 2004 and the Form 10-Q for both fiscal quarters thereafter.

5. The reduction of all severance obligations of the existing officers of the Company to levels acceptable to Stanford following the completion of the due diligence examination.

6. The approval of the permitted uses of the proceeds of the Debentures.

7. Approval of the transactions by the Board of Directors and, as necessary, by the stockholders of the Company.

8. Minimum consolidated tangible net worth of the Company at the time of closing of the transactions of $110 million.

9. No material adverse changes in the business since November 30, 2004.

10. The Debentures shall be guaranteed by Alan H. Goldfield with recourse only to all natural gas properties owned or controlled by him, directly or indirectly (the “Goldfield Assets”). The Goldfield Assets shall have proven reserves not less than 200% of the original principal amount of the Debentures. Alan H. Goldfield and the entities that own the Goldfield Assets shall have entered into pledges of the Goldfield Assets in form and content satisfactory to the Purchaser.

11. The issuance of the warrants described in the Term Sheet and the approval by the Company of the assignment by the Purchaser to Alan H. Goldfield of 20% of such warrants.

12. The delivery to the Purchaser of opinions of counsel addressed to the Purchaser in form and content acceptable to the Purchaser.

It is understood that the decision to proceed with, and the final terms of, the definitive agreements will depend on satisfactory results of the Purchaser’s due diligence investigation (including reviews of legal, accounting and operational issues) of the Company’s continuing business prospects and the prevailing securities market conditions at the time of the Closing. It is anticipated that the due diligence examination will commence immediately and that the closing will be held, or the definitive agreements terminated, on or before July 15, 2005 (the “Closing Date”) unless extended by mutual agreement of the Purchaser and the Company.

The Company hereby represents and warrants that all information furnished to the Purchaser by the Company concerning the Company (excluding forward-looking information, which will be prepared using such reasonable assumptions as are appropriate) shall be true, complete and correct in all material respects when furnished.

Neither the Company, nor any officers, director, employee or agent thereof, will initiate any discussions concerning the sale of the Company’s securities with any person or entity except to the Purchaser prior to July 31, 2005. In the event the Company, or any officer, director, employee or agent thereof receives an inquiry from any person or entity concerning a possible sale of the Company’s securities, they will promptly inform the Purchaser of such inquiry.

In the event that the Company accepts this proposal but hereafter withdraws from the transaction contemplated hereby, it will pay to the purchaser a break-up fee equal to $1,250,000 upon its determination not to proceed.

Whether or not the issuance and sale of the Debentures is effected, the Company and its parents, affiliates, successors and assigns will indemnify and hold harmless the Purchaser and its officers, directors, employees, attorneys, consultants, agents, servants, parents, affiliates, successors and assigns, jointly and severally (hereinafter collectively “Indemnitee”), from and against any and all losses, claims, damages, liabilities, awards, costs and expenses, including but not limited to attorneys’ fees (hereinafter collectively “Claim” or “Claims”) to which Indemnitee may become subject by virtue of, in connection with, resulting from, or arising out of the proposed purchase of the Debentures or the Series A Preferred Stock. Without limitation, but in illustration of the foregoing, Claims shall include legal and other expenses, including the cost of any investigation and preparation, incurred by Indemnitee in connection with any pending or threatened Claim by any person or entity, whether or not it results in a loss, damages, liability or award. Indemnitee shall be indemnified and held harmless by the Company for any and all Claims whether they arise under contract; foreign, federal, state or local law or ordinance; common law; or otherwise.

The foregoing commitment of the Company will survive any termination of the authorization provided by this letter.

You agree to promptly notify the Purchaser of any assertion against the Purchaser, the Company, or other person of any Claim or the commencement of any action or proceeding relating to the proposed purchase of the debentures or the Series A Preferred Stock.

If the foregoing meets with your approval, we would appreciate your signing both enclosed copies of this letter in the space provided below and returning one of them to us. In the event we do not receive a copy of this letter evidencing your acceptance and agreement within by the close of business on May 19, 2005, the terms of this letter shall be null and void and of no further force and effect.

	Very truly yours,


	STANFORD FINANCIAL GROUP COMPANY


	By:	/s/ Daniel Bogar
		Daniel Bogar, Senior Managing Director


Accepted and Agreed:

CELLSTAR CORPORATION


By:
Authorized Officer

Date:

Term Sheet

Convertible Debentures

Amount:		$25,000,000

Instrument:		Convertible Debenture

Term:		3 years

Funding:		20% at closing and 20% at 30, 60, 90 and 120 days from closing

Coupon:		8% per annum – payable semiannually in arrears

Fee:		1% plus reimbursement of out-of-pocket expenses

Conversion price:		$4.00 per share, subject to adjustment

Prepayment Option:		In whole, upon 45 days’ prior written notice that the bona fide closing price of Cellstar common stock exceeded $12.00 per share (adjusted equitably for splits or reverse splits) for each of the 30 consecutive trading days prior to the date of such notice.

Warrants:		Warrants to purchase 3,000,000 shares exercisable at $.001 with a 5-year term.

Registration Rights:		The Common Stock into which the Debentures are convertible will be registered for resale as soon as possible after the Closing Date. The Purchaser and the Company will enter into a Registration Rights Agreement providing, among other things, that the Registration Statement will be filed within 30 days from the Closing Date. The Company shall respond appropriately to all SEC comments within ten calendar days of receipt of said comments, and will use its best efforts to cause the Registration Statement to become effective within 180 days from the Closing Date.

Guarantee:		The debentures shall be guaranteed by Al Goldfield with recourse solely to natural gas properties he owns or controls, directly or indirectly, which shall have proven reserves of at least 200% of the amount of the Debentures.

Future Advances:		In the event of a default under any senior debt, the Purchaser shall have the right, but not the obligation, to purchase additional debentures of the Company in an original principal amount up to the amount necessary to cure such default, with interest to accrue at the maximum lawful rate and which shall be convertible at the

lesser of: (a) 80% of the trailing twenty day average closing price per share; or (b) $1.00. The Purchaser shall be entitled to pay for such securities by transferring the sums required by the lender to cure such default directly to such lender.

Preferred Stock

Serial Designation:		Series A Preferred Stock

Purchase Price:		$1,000

Dividends:		8% per annum, cumulative

Liquidation Preference:		Senior to any other capital stock, in an amount equal to the original purchase price, plus accrued and unpaid dividends, and participating with the common stock.

Redemption:		The preferred stock will not be redeemable, except upon 45 days’ prior written notice that the bona fide closing price of Cellstar common stock exceeding $12.00 per share (adjusted equitably for splits or reverse splits) for each of the 30 consecutive trading days prior to the date of such notice.

Voting:		The holders will be entitled to elect a majority of the Board of Directors.

		The holders will have the right to approve by class vote any transaction not in the ordinary course of business such as a sale of assets, mergers, consolidation, amendment of the Articles or By-laws or other

Under the Securities Exchange Act of 1934 (Amendment No. 9)*