UNITED
STATES
SECURITIES
AND EXCHANGE
COMMISSION
Washington,
D.C.
20549
SCHEDULE
13D
(Rule
13d-101)
INFORMATION
TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO
§ 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)
(Amendment
No. 2)1
Capital
Southwest
Corporation
(Name
of
Issuer)
Common
Stock, $1 Par
Value
(Title
of
Class of Securities)
140501107
(CUSIP
Number)
STEVEN
WOLOSKY, ESQ.
OLSHAN
GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
Park
Avenue Tower
65
East
55th Street
New
York,
New York 10022
(212)
451-2300
(Name,
Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
February
1,
2008
(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 x.
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.
_______________
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
(“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. 140501107
|
1
|
NAME
OF REPORTING PERSON
NED SHERWOOD
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
OO
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
U.S.A.
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE
VOTING POWER
49,938
|
|
|
8
|
SHARED
VOTING POWER
198,919
|
||
|
9
|
SOLE
DISPOSITIVE POWER
73,938
|
||
|
10
|
SHARED
DISPOSITIVE POWER
198,919
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
272,857
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
|
||
|
14
|
TYPE
OF REPORTING PERSON
IN
|
||
2
CUSIP
NO. 140501107
|
1
|
NAME
OF REPORTING PERSON
ZS CROSSOVER II GP, L.L.C.
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
OO
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
DELAWARE
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE
VOTING POWER
-0-
|
|
|
8
|
SHARED
VOTING POWER
188,697
|
||
|
9
|
SOLE
DISPOSITIVE POWER
-0-
|
||
|
10
|
SHARED
DISPOSITIVE POWER
188,697
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
188,697
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.9%
|
||
|
14
|
TYPE
OF REPORTING PERSON
PN
|
||
3
CUSIP
NO. 140501107
|
1
|
NAME
OF REPORTING PERSON
ZS CROSSOVER II LP
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
WC
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
DELAWARE
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE
VOTING POWER
-0-
|
|
|
8
|
SHARED
VOTING POWER
106,342
|
||
|
9
|
SOLE
DISPOSITIVE POWER
-0-
|
||
|
10
|
SHARED
DISPOSITIVE POWER
106,342
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
106,342
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.7%
|
||
|
14
|
TYPE
OF REPORTING PERSON
PN
|
||
4
CUSIP
NO. 140501107
|
1
|
NAME
OF REPORTING PERSON
ZS SPECIAL I L.P.
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
WC
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
DELAWARE
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
|
7
|
SOLE
VOTING POWER
-0-
|
|
|
8
|
SHARED
VOTING POWER
82,355
|
||
|
9
|
SOLE
DISPOSITIVE POWER
-0-
|
||
|
10
|
SHARED
DISPOSITIVE POWER
82,355
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
82,355
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.1%
|
||
|
14
|
TYPE
OF REPORTING PERSON
PN
|
||
5
CUSIP
NO. 140501107
|
1
|
NAME
OF REPORTING PERSON
MRMP TRUST
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
OO
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
SOUTH
DAKOTA.
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE
VOTING POWER
49,938
|
|
|
8
|
SHARED
VOTING POWER
-0-
|
||
|
9
|
SOLE
DISPOSITIVE POWER
49,938
|
||
|
10
|
SHARED
DISPOSITIVE POWER
-0-
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
49,938
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
|
||
|
14
|
TYPE
OF REPORTING PERSON
OO
|
||
6
CUSIP
NO. 140501107
|
1
|
NAME
OF REPORTING PERSON
THE NED AND EMILY SHERWOOD FOUNDATION
|
||
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) x
|
|
|
3
|
SEC
USE ONLY
|
||
|
4
|
SOURCE
OF FUNDS
OO
|
||
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d)
OR 2(e)
|
¨
|
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
DELAWARE.
|
||
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE
VOTING POWER
-0-
|
|
|
8
|
SHARED
VOTING POWER
10,222
|
||
|
9
|
SOLE
DISPOSITIVE POWER
-0-
|
||
|
10
|
SHARED
DISPOSITIVE POWER
10,222
|
||
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,222
|
||
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|
¨
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
LESS
THAN
1%
|
||
|
14
|
TYPE
OF REPORTING PERSON
OO
|
||
7
CUSIP
NO. 140501107
The
following constitutes Amendment
No. 2 to the Schedule 13D filed by the undersigned (the “Schedule
13D”). This Amendment No. 2 amends the Schedule 13D as
specifically set forth.
Item
4 is
hereby amended to add the following:
On
February 1, 2008, Crossover II delivered a letter to the Corporate Secretary
of
the Issuer submitting, pursuant to Rule 14a-8 of the Securities Exchange
Act of
1934, as amended (the "1934 Act"), a proposal requesting that the Board
immediately engage a nationally-recognized investment banking firm to evaluate
strategic alternatives that would maximize shareholder value, including,
but not
limited to, the liquidation of certain or all of the Issuer’s underlying
portfolio assets with the subsequent distribution of all proceeds to the
Issuer’s shareholders. A copy of this letter is attached hereto
as Exhibit 99.1 and is incorporated herein by reference.
Item
7 is hereby amended to add the
following exhibit:
Item
7.
Material to be
Filed
as Exhibits.
|
|
99.1.
|
Letter
from Crossover II to the Corporate Secretary of the Issuer, dated
January
30, 2008, submitting a 14a-8 proposal for consideration at the 2008
Annual Meeting.
|
8
CUSIP
NO. 140501107
SIGNATURES
After
reasonable inquiry and to the best of his knowledge and belief, the undersigned
certifies that the information set forth in this statement is true, complete
and
correct.
|
Dated: February
1, 2008
|
ZS
CROSSOVER II LP
|
|
|
By:
|
ZS
Crossover II GP, L.L.C.
|
|
|
Its
General Partner
|
||
|
By:
|
/s/
Ned Sherwood
|
|
|
Name:
Ned Sherwood
|
||
|
Title:
Management Committee Member
|
||
|
ZS
SPECIAL I L.P.
|
||
|
By:
|
ZS
Crossover II GP, L.L.C.
|
|
|
Its
General Partner
|
||
|
By:
|
/s/
Ned Sherwood
|
|
|
Name:
Ned Sherwood
|
||
|
Title:
Management Committee Member
|
||
|
ZS
CROSSOVER II GP, L.L.C.
|
||
|
By:
|
/s/
Ned Sherwood
|
|
|
Name:
Ned Sherwood
|
||
|
Title:
Management Committee Member
|
||
|
MRMP
TRUST
|
||
|
By:
|
/s/
Ned Sherwood
|
|
|
Name:
Ned Sherwood
|
||
|
Title:
Trustee
|
||
|
THE
NED AND EMILY SHERWOOD FOUNDATION
|
||
|
By:
|
/s/
Ned Sherwood
|
|
|
Name:
Ned Sherwood
|
||
|
Title:
Director
|
||
|
/s/
Ned Sherwood
|
|
|
NED
SHERWOOD
|
9
CUSIP
NO. 140501107
EXHIBIT
INDEX
|
Exhibit
|
Exhibit
Number
|
|
| 1. |
Letter
from
Crossover II to the Corporate Secretary of the Issuer, dated January
30,
2008, submitting a 14a-8 proposal for consideration at the 2008
Annual Meeting.
|
99.1
|
10
Exhibit
99.1
ZS
CROSSOVER II L.P.
1133
Avenue of the Americas
27th
Floor
New
York,
NY 10036
(212)
398-6200; (212) 398-1808 (fax)
January
30, 2008
BY
E-MAIL, FACSIMILE AND
EXPRESS MAIL
Capital
Southwest Corporation
12900
Preston Road, Suite 700
Dallas,
Texas 75230
Attention:
Jeffrey G. Peterson, Secretary
Dear
Sir:
ZS
Crossover II L.P. (“ZS Crossover”) is submitting the attached resolution and
supporting statement for inclusion in the proxy statement of Capital Southwest
Corporation (the “Company”) for the next annual meeting of shareholders of the
Company. The resolution and supporting statement attached hereto as
Exhibit A
requests that the Board of Directors immediately engage the services of a
nationally-recognized investment banking firm to evaluate strategic alternatives
to maximize shareholder value, including, but not limited to, the adoption
of a
formal plan of liquidation of certain or all of the Company’s portfolio assets
and subsequent distribution of proceeds to the Company’s
shareholders.
As
of the
date hereof, ZS Crossover is the beneficial owner of 106,342 shares of common
stock of the Company and intends to hold such shares through the date of the
next annual meeting of shareholders. The shares are currently held in
ZS Crossover’s brokerage account with Bank of America Securities (“BofA”), and
were previously held at Fidelity Investments (“Fidelity”) and Morgan
Stanley. Cede & Co., as the nominee of The Depository Trust
Company, is the holder of record of the shares. As of the date
hereof, ZS Crossover has continuously held at least $2,000 in market value
of
the Company’s securities entitled to be voted on the proposal for at least one
year, as evidenced by the letters from BofA, Fidelity, and Morgan Stanley,
which
are attached hereto as Exhibit
B.
A
ZS
Crossover representative will appear in person or by proxy to bring the
resolution before the meeting. Of course, we would be pleased if the
Company would waive this requirement.
This
notice is submitted in accordance with Rule 14a-8 of the Securities Exchange
Act
of 1934, as amended. The attached resolution and supporting statement
are requested to be included in the Company’s proxy material for its next annual
meeting of shareholders. Should you have any questions regarding this
matter, please do not hesitate to contact me at (212) 398-6200.
|
Sincerely,
|
|
|
ZS
CROSSOVER II L.P.
|
|
|
By:
|
ZS
Crossover II GP, L.L.C.
Its
General Partner
|
|
By:
|
/s/ Ned Sherwood |
|
Name:
|
Ned
Sherwood
|
|
Title:
|
Management
Committee Member
|
Exhibit
A
Shareholder
Proposal
RESOLVED,
that the shareholders of Capital Southwest Corporation (“CSWC” or the
“Company”), hereby request that the Board of Directors (the “Board”) immediately
engage a nationally-recognized investment banking firm to evaluate strategic
alternatives that would maximize shareholder value, including, but not limited
to, the liquidation of certain or all of the Company’s underlying portfolio
assets with the subsequent distribution of all proceeds to the Company’s
shareholders.
Supporting
Statement:
This
proposal provides shareholders with the opportunity to advise the Board of
their
significant concern that certain policies and practices of the Company continue
to cause the deterioration of CSWC shareholder value. As a long-term
owner, together with our affiliates, of approximately 7.0% of CSWC’s common
shares outstanding, we believe that in order to maximize shareholder value,
CSWC
should hire a nationally-recognized investment banking firm to evaluate
strategic options with regard to the Company’s publicly-traded portfolio assets,
including its four largest such holdings (WIRE, ALG, PHHM and
HLYS).
We
believe that CSWC is trading at a significant discount to its intrinsic value
because of, among other things, certain policies and practices that the Company
has historically adopted and has indicated it will continue to apply for the
foreseeable future. One such policy has been the Company’s decision
to retain all of its realized gains rather than distribute proceeds to
shareholders. The Company has also chosen not to exercise its
registration rights on its four most significant holdings in public companies
so
such shares can be freely traded as market conditions warrant. We
believe that these policies and practices have resulted in a substantial
reduction of the Company’s net asset value over the past ten years, and will
continue to do so in the absence of change.
In
our
opinion, CSWC’s strength is its growth capital investing. However,
the Company has approximately $240 million of market value locked in its four
major public company holdings and an additional approximate $55 million of
market value invested in various other public companies. We feel this
value should be distributed to shareholders, so that the Company can re-focus
its efforts on its strong suit of growth capital investing. Hiring a
nationally-recognized investment banking firm with expertise in portfolio
strategy will allow CSWC to determine the best strategy to obtain liquidity
in
its public company holdings. Once this has been achieved, the value
of CSWC’s mature public company holdings can be appropriately returned to CSWC
shareholders, either through the direct distribution of stock or through the
Company’s liquidation and subsequent distribution of the resulting cash
proceeds.
Given
the
Board’s fiduciary obligation to maximize shareholder value, we believe it must
evaluate all options for obtaining liquidity in the Company’s public portfolio
companies. While the
adoption of this proposal will not legally bind the Board, we trust that given
their fiduciary responsibilities, the Board will honor their shareholders’
request.
If
you
believe the Company should immediately explore opportunities to maximize the
value of your shares, please vote FOR this
proposal.