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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1__ )*
THE STEPHAN CO.
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(Name of Issuer)
COMMON SHARES
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(Title of Class of Securities)
858603 10 3
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(CUSIP Number)
ANCORA CAPITAL INC
ATTN: RICHARD BARONE
ONE CHAGRIN HIGHLANDS
2000 AUBURN DRIVE, SUITE 420
CLEVELAND, OHIO 44122
(216) 825-4000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications)
August 13, 2004
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(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 Rule 13d-1(b)(3) or (4), check the following box |__|.
Check the following box if a fee is being paid with the statement |___|.
SCHEDULE 13D
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CUSIP NO. 858603 10 3
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
ANCORA CAPITAL, INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Ohio, U.S.A.
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7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
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14 TYPE OF REPORTING PERSON*
HC
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SCHEDULE 13D
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CUSIP NO. 858603 10 3
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
ANCORA SECURITIES, INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Nevada, U.S.A.
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7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 23700
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
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10 SHARED DISPOSITIVE POWER
23700
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
23700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.54
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14 TYPE OF REPORTING PERSON*
BD
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SCHEDULE 13D
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CUSIP NO. 858603 10 3
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
ANCORA ADVISORS, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Nevada, U.S.A.
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7 SOLE VOTING POWER
NUMBER OF 129901
SHARES
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 114000
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 129901
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10 SHARED DISPOSITIVE POWER
114000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
243901
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.53
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14 TYPE OF REPORTING PERSON*
IA
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Item 1. Security and Issuer
This Statement relates to the shares of Common Stock (the "Shares") of The
Stephan Co., a Florida corporation (the "Issuer" or the "Company"). The
address of Issuer's principal offices is 1850 West McNab Road, Fort Lauderdale,
Florida 33309.
Item 2. Identity and Background
This Statement is filed on behalf of all persons and entities and
participants of Ancora Capital, Inc., an entity incorporated under the laws of
the State of Ohio and Ancora Advisors, LLC, an entity incorporated under the
laws of the State of Nevada.
Ancora Capital Inc. ("Ancora Capital"), whose main subsidiary is Ancora
Securities Inc. ("Ancora Securities") is a Nevada corporation, registered as a
broker/dealer with the Securities and Exchange Commission ("SEC") and the
National Association of Securities Dealers ("NASD"). Ancora Capital and Ancora
Securities share a place of business at One Chagrin Highlands, 2000 Auburn
Drive, Suite 420, Cleveland, Ohio 44122.
Ancora Advisors LLC ("Ancora Advisors") is an investment advisor registered
with the SEC. Ancora Advisors has the power to dispose of the shares owned by
the investment clients for which they act as advisors, including the Ancora
Mutual Funds, which include the Ancora Income Fund, Ancora Equity Fund, Ancora
Special Opportunity Fund, and Ancora Bancshares ("Ancora Mutual Funds"), all of
which are registered under the Investment Company Act of 1940. Ancora Advisors
also has the power to dispose of the shares owned by Merlin Partners, L.P. a
Delaware limited partnership formed to engage in the business of acquiring,
holding and disposing of investments in various companies, for which Ancora
Advisors acts as its General Partner. Ancora Advisors' principal place of
business is One Chagrin Highlands, 2000 Auburn Drive, Suite 430, Cleveland,
Ohio 44122.
Mr. Barone is the controlling shareholder of Ancora Capital and Ancora
Advisors; principally employed as Chairman of Ancora Capital and Ancora
Advisors; Chairman of the Ancora Mutual Funds. Mr. Barone is the Portfolio
Manager for the separate accounts managed by Ancora Advisors and is the
Portfolio Manager of the Ancora Mutual Funds.
The aforementioned person and entities are collectively referred to herein
as the "Filing Persons".
Ancora Capital and the other entities named herein each disclaim membership
in a Group as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 and the Rules and Regulations promulgated thereunder.
During the last five years none of the reporting persons have been convicted
in a criminal proceeding, nor been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction, as a result of which they
were or are 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.
Mr. Barone is a U.S. citizen.
Item 3. Source and Amount of Funds or Other Consideration
Ancora Securities owns no Shares directly but Ancora Securities may be
deemed to own (within the meaning of Rule 13(d)(3) of the Securities Exchange
Act of 1934) shares purchased for or transferred to the accounts of investment
clients. Ancora Securities disclaims beneficial ownership of such Shares.
Ancora Advisors owns no Shares directly but Ancora Advisors may be deemed to
own (within the meaning of Rule 13(d)(3) of the Securities Exchange Act of
1934) shares purchased for or transferred to the accounts of investment
management clients. Ancora Advisors disclaims beneficial ownership of such
Shares. Ancora Advisors has sole voting power over shares owned by the Ancora
Mutual Funds and Merlin Partners L.P. of which Ancora Advisors is the General
Partner. Ancora Advisors has shared voting power with respect to certain
investment management client shares.
Item 4. Purpose of Transaction
The Filing Persons ("Ancora") acquired shares to establish investment
positions in the Issuer ("Stephan" or the "Company"). Subject to market
conditions and other factors, Ancora may purchase additional shares, maintain
their present ownership of shares or sell some or all of the shares.
We believe the proposed management-led buyout at $4.60 per share severely
undervalues the shares of the Company. We believe the fairness opinion
published by SunTrust Robinson Humphrey Capital Markets does not reflect the
true value of the Company. We intend to take whatever action is necessary to
realize a fair value for our shares.
It is hard for us to understand how the shareholders have been served in recent
years. We have observed the following events/activities that we believe need to
be addressed:
- We are concerned that management and certain Board members have
proposed a low-ball bid to buy the entire company that can be financed
almost entirely using cash on the balance sheet. We believe stockholders
would receive substantially more value with a sizable dividend of $2.50-
$4.00 per share rather than except this offer.
- We believe compensation of top management is in excess of what is
reasonable for a company this size. A more appropriate level of
compensation would substantially enhance shareholder value.
- We believe the current employment agreement with the Chief Executive
Officer creates a windfall to him upon a sale of the Company to a third
party. Our understanding is that the CEO's employment agreement was
negotiated by members of the compensation committee who are now part of
the group attempting to acquire the business. We are concerned that
members of the Board of Directors have negotiated a golden parachute with
the current CEO that creates an effective block to any other prospective
buyer of the Company, allowing the insider bidding group to secure a
great deal for themselves.
- Failure to hold an annual shareholder meeting in four years.
In short, it is hard for us to understand how the shareholder's interests are
being best served considering all of the above. We are prepared to take the
following action to protect our investment in Stephan:
Merlin Partners L.P., a private investment partnership managed by Ancora
Advisors as its General Partner, plans to nominate five members to the Board of
Directors of the Stephan Co. (the "Board") at the next annual meeting of the
shareholders. We will be soliciting proxies to vote at the meeting and intend
to vote those proxies in favor of this slate. Additionally, we intend to vote
any proxies in favor of re-electing the current Chairman and Chief Executive
Officer of the Company to the Board of Directors to fill the sixth spot on the
Board.
We expect the newly elected Board to consider some or all of the following
means to realize shareholder value, including, but not limited to: (i) payment
of a sizable cash distribution to shareholders; (ii) an increase in the
quarterly dividend rate;(iii) repurchase of the Company's common stock in the
open market; (iv) a tender offer by the Company to acquire common stock at a
premium to the current price; (v) an analysis of all strategic options,
including status quo, sale of certain real estate and/or brands, sale of the
Company and consolidation of operations; and (vi) renegotiation of certain
management contracts on more favorable terms for the Company.
Item 5. Interest in Securities of the Issuer
Set forth below for the Filing Persons, in the aggregate, are the number of
Shares which may be deemed to be beneficially owned as of August 12, 2004 and
the percentage of the Shares outstanding represented by such ownership (based
on 4,411,000 shares outstanding):
Name: No. of Shares Percent of Class
Ancora Securities Inc(1) 23,700 0.54 %
Richard Barone(2) 0 0.00 %
Ancora Mutual Funds(3) 35,500 0.80 %
Ancora Managed Accounts(4) 174,000 3.94 %
Merlin Partners, L.P. (5) 34,401 0.78 %
Total 267,601 6.07 %
(1) These Shares are owned by investment clients of Ancora Securities who
may be deemed to beneficially own these Shares by reason of their power
to dispose of such Shares. Ancora Securities disclaims beneficial
ownership of all such Shares.
(2) Shares owned directly by Mr. Barone as an individual investor and are
held at Ancora Securities.
(3) These Shares are owned by the Ancora Mutual Funds. Ancora Advisors
and Mr. Barone do not own shares directly but, due to Ancora Advisors'
Investment Management Agreement with the Ancora Mutual Funds and by
virtue of Mr. Barone's positions as Portfolio Manager of the Ancora
Income Fund, Ancora Equity Fund, Ancora Special Opportunity Fund and
Ancora Bancshares, all of which are registered under the Investment
Company Act of 1940, Ancora Advisors and Mr. Barone may be deemed to
beneficially own 35,500 shares. Ancora Advisors and Mr. Barone disclaim
beneficial ownership of all such Shares.
(4) These Shares are owned by investment clients of Ancora Advisors.
Ancora Advisors and Mr. Barone do not own shares directly but, by virtue
of Ancora Advisors Investment Management Agreement with the investment
clients and Mr. Barone's position as Portfolio Manager of Ancora
Advisors, each may be deemed to beneficially own 174,000 Shares by reason
of their power to dispose of such Shares. Ancora Advisors and Mr. Barone
disclaim beneficial ownership of such Shares.
(5) These Shares are owned by Merlin Partners, L.P. Ancora Advisors and
Mr. Barone do not own shares directly but, due to Ancora Advisors' being
the General Partner of Merlin Partners, L.P. and by virtue of Mr.
Barone's position as Portfolio Manager of Merlin Partners, L.P., Ancora
Advisors and Mr. Barone may be deemed to beneficially own 31,401 shares.
Ancora Advisors and Mr. Barone disclaim beneficial ownership of all such
Shares.
Item 6. Contracts, Arrangements, Understanding or Relationships with
Respect to Securities of the Issuer.
Except as set forth in this Statement, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the Filing
Persons and any of the entities named herein or any other person with respect
to any Shares.
Item 7. Material to be Filed as Exhibits
Exhibit A: "Relevant Transactions in Shares" since last filing.
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, compete and
correct.
Richard Barone
Date: 08/16/04 by: /s/Richard A. Barone
Richard A. Barone
EXHIBIT A
THE STEPHAN CO. (TSC)
SECURITY CROSS REFERENCE (PURCHASES SINCE LAST FILING)
DATE UNIT
BOUGHT QUANTITY COST
7/27/04 300 4.85
7/27/04 300 4.85
8/03/04 4,500 4.89
8/04/04 8,000 4.91
8/04/04 500 4.85
8/05/04 2,500 4.90
8/06/04 1,100 4.86
8/09/04 1,000 4.85
8/11/04 2,000 4.85
8/12/04 901 4.83
8/13/04 3,000 4.80
24,101