SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
AMERICAN REALTY INVESTORS, INC.
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(Name of Issuer)
Common Stock, $0.01 par value
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(Title of Class of Securities)
029174-10-9
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(CUSIP Number)
Robert A. Waldman
1800 Valley View Lane, Suite 300
Dallas, Texas 75234
(469) 522-4366
(469) 522-4360 (Facsimile)
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 1, 2003
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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 Rules 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d- 1(a) 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. 029174-10-9
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1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
BASIC CAPITAL MANAGEMENT, INC., FEI NO. 75-2261065
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK 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
NEVADA
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7 SOLE VOTING POWER
NUMBER OF
8,103,953
SHARES --------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY EACH --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
8,103,953
PERSON --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,103,953
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See
Instructions)
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.24%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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CUSIP NO. 029174-10-9
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1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
THE GENE E. PHILLIPS CHILDREN'S TRUST, I.D. NO. 13-6599759
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK 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
TEXAS
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7 SOLE VOTING POWER
NUMBER OF
27,602
SHARES --------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY EACH --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
27,602
PERSON --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
27,602
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See
Instructions)
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
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14 TYPE OF REPORTING PERSON (See Instructions)
OO
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CUSIP NO. 029174-10-9
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1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
TRANSCONTINENTAL REALTY INVESTORS, INC., FEI NO. 94-656582
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
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5 CHECK 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
NEVADA
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7) SOLE VOTING POWER
NUMBER OF
746,972
SHARES --------------------------------------------------------------
8) SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY EACH --------------------------------------------------------------
9) SOLE DISPOSITIVE POWER
REPORTING
746,972
PERSON --------------------------------------------------------------
10) SHARED DISPOSITIVE POWER
WITH
-0-
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
746,972
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
[ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.6%
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14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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ITEM 1. SECURITY AND ISSUER
This Amendment No. 3 to Statement on Schedule 13D (this "Amendment No.
3") relates to shares of Common Stock, par value $0.01 per share (the "Shares")
of American Realty Investors, Inc., a Nevada corporation (the "Issuer" or
"ARL"), and further amends the original Statement on Schedule 13D as amended by
Amendment Nos. 1 and 2 thereto (the "Amended Statement") previously filed with
the Securities and Exchange Commission (the "Commission") by the "Reporting
Persons" described below. The principal executive offices of the Issuer are
located at 1800 Valley View Lane, Suite 300, Dallas, Texas 75234. The CUSIP
number of the Shares is 029174-10-9.
This Amendment No. 3 to Schedule 13D is being filed due to an increase
by more than one percent (1%) in the percentage ownership by Basic Capital
Management, Inc. ("BCM") of Shares during the period from June 28, 2002 through
May 1, 2003, in part as a result in the acquisition as a block of 1,437,209
Shares from another entity.
ITEM 2. IDENTITY AND BACKGROUND
This Amendment No. 3 is filed on behalf of Basic Capital Management,
Inc., a Nevada corporation ("BCM"), the Gene E. Phillips Children's Trust, a
trust formed under the laws of the state of Texas (the "GEP Trust"), and
Transcontinental Realty Investors, Inc., a Nevada corporation ("TCI"), each of
which has its principal executive offices located at 1800 Valley View Lane,
Suite 300, Dallas, Texas 75234. All of BCM, GEP Trust and TCI are collectively
referred to as the "Reporting Persons." The Reporting Persons may be deemed to
constitute a "person" within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, as amended, because BCM is beneficially owned by a trust
established for the benefit of Gene E. Phillips' children and the executive
officers of TCI are also executive officers of BCM. Mr. Phillips' son, Ryan T.
Phillips, serves as a director of BCM and is a beneficiary of the GEP Trust. The
executive officers of ARL are also executive officers of BCM and TCI. BCM also
serves as the contractual advisor to ARL and TCI.
Item 2 of the Amended Statement is hereby further amended as follows:
On September 24, 2002, the Securities and Exchange Commission (the
"SEC") filed a civil complaint, Civil Action No. 1:02CV01872 (D.D.C.), in a
lawsuit styled Securities and Exchange Commission v. Basic Capital Management,
Inc. and Gene E. Phillips, and the SEC issued an Order Instituting Proceedings
Pursuant to Section 21C of the Securities Exchange Act of 1934 (the "Exchange
Act"), Making Findings and Imposing a Cease-and-Desist Order, In the Matter of
Basic Capital Management, Inc., Nevada Sea Investments, Inc., International
Health Products, Inc., One Realco Corporation, TacCO Financial, Inc. and Gene E.
Phillips (Administrative Proceedings File No. 3-10898, Administrative Procedure
Release No. 46538). In anticipation of the Order, Mr. Gene E. Phillips, BCM and
four corporations affiliated with International Health Products, Inc., One
Realco Corporation and TacCO Financial, Inc.) (together, the "Respondents")
submitted an Offer of Settlement and consented, without
-1-
admitting or denying any of the allegations, to the entry of a judgment
ordering Mr. Phillips and BCM to pay a civil penalty of $850,000.
The Order finds, among other things, that the Respondents violated
Section 10(b) and 13(d) of the Exchange Act, as amended, and Rules 10b-5, 13d-1
and 13d-2 promulgated thereunder, by failing to timely file reports required
under Section 13(d) with respect to the securities of Greenbriar Corporation.
Although none of the Respondents purchased more than five percent of
Greenbriar's outstanding shares, their holdings together with the holdings of
American Realty Trust, Inc., a Georgia corporation and now a wholly-owned
subsidiary of ARL ("ART"), amounted to approximately 16.1% by June 1997. Between
May 1996 and June 1997, the Respondents and ART accounted for approximately 54%
of the total trading volume in Greenbriar stock. On particular days during the
period, the Respondents bought all the Greenbriar stock traded. The Order
requires the Respondents to cease and desist from committing or causing any
violation of Sections 10(b) and 13(d) of the Exchange Act and Rules 10b-5, 13d-1
and 13d-2 promulgated thereunder.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The consideration paid by BCM to purchase the 1,437,209 Shares
described in Item 5(c) below (a total of $15,324,415) came from advances under
two existing revolving lines of credit notes, $9,234,415 was drawn by BCM on an
$18,000,000 unsecured revolving line of credit note dated May 1, 2001 payable to
the order of One Realco Corporation which bears interest at the Wall Street
Journal prime rate plus 2% and matures on June 30, 2004. $6,000,000 was drawn by
BCM on a $21,000,000 unsecured revolving line of credit note dated July 1, 2001
payable to the order of Syntek West, Inc., which bears interest at the Wall
Street Journal prime rate plus 2% and matures on June 30, 2004.
Each of the Reporting Persons have in the past utilized (and may in the
future utilize) margin accounts with various brokerage firms which accounts may,
from time to time, have debit balances and include certain of the Shares owned
by each. Since other securities are held in such accounts, it is impracticable
at any time to determine the amounts, if any, borrowed with respect to any
specific Shares and interest costs vary with applicable costs and account
balances.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
The Amended Statement is hereby further amended as follows:
(a) According to the latest information available from the Issuer, as
of March 19, 2003, the total number of issued and outstanding Shares was
11,375,127 Shares. As of May 1, 2003, after giving effect to the transactions
described in (c) below, the Reporting Persons own and hold directly and
beneficially the following Shares:
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NO. OF SHARES OWNED APPROXIMATE PERCENT
NAME DIRECTLY OF CLASS
BCM 8,103,953 71.24%
GEP Trust 27,602 0.2%
TCI 746,972 6.6%
--------- ------
8,878,527 78.05%
========= ======
Pursuant to Rule 13d-3 under the Exchange Act, each of the directors of
BCM may be deemed to beneficially own the number of Shares owned by BCM
described above; each of the directors of TCI may be deemed to beneficially own
the number of Shares owned by TCI described above; Ryan T. Phillips as a
beneficiary of the GEP Trust may be deemed to beneficially own the Shares held
directly by the GEP Trust. Those individuals and the number of Shares deemed
beneficially owned pursuant to Rule 13d-3, and the approximate percent of the
class, as well as the relationship, are set forth in the following table:
NO. OF
SHARES
BENEFICIALLY PERCENT OF
NAME OF DIRECTOR ENTITY OWNED CLASS
Ryan T. Phillips BCM and GEP 8,131,555 71.49%
Trust
Donald W. Phillips GEP Trust 27,602 0.20%
Mickey Ned Phillips BCM 8,103,953 71.24%
Ted P. Stokely TCI 746,972 6.60%
Henry A. Butler TCI 746,972 6.60%
Martin L. White TCI 746,972 6.60%
Earl D. Cecil TCI 746,972 6.60%
--------- ------
Total Shares beneficially owned 8,878,527 78.05%
by Reporting Persons and ========= ======
individuals listed above:
(b) Each of the directors of BCM share voting and dispositive power
over the 8,103,953 Shares held by BCM. Each of the directors of TCI have shared
voting and dispositive power over the 746,972 Shares held by TCI. The Trustee of
the GEP Trust has complete voting and dispository power over the 27,602 Shares
held by the GEP Trust.
(c) During the sixty calendar days ended May 1, 2003, except for the
transactions that are described below, the Reporting Persons in any and their
respective executive officers and directors did not engage in any transaction of
the Shares or any other equity interests derivative thereof. During the period
from July 11, 2002 (the day after the date of Amendment No. 2), through January
24, 2003, after giving effect to one correction, BCM acquired a net amount of
40,800 Shares in 62 open market transactions at prices ranging from $8.00 to
$10.65 per Share. Such purchases increased BCM's ownership of Shares to
6,666,744 as of January 23, 2003. During the sixty calendar days ended May 1,
2003, none of the Reporting Persons effected any transaction in the Shares
except for BCM's purchase of 1,437,209 Shares described below.
On May 1, 2003, BCM purchased from One Realco Corporation 1,437,209
Shares of ARL at a price of $10.60 per Share in cash (an aggregate of
$15,234,415), the full amount of which was then paid by One Realco
-3-
Corporation to BCM to reduce outstanding principal and interest under a
revolving line of credit promissory note originally dated May 1, 2001 executed
by One Realco Corporation payable to the order of BCM. After giving effect to
such sale, One Realco Corporation ceased to own any Shares of ARL, and the
ownership by BCM of ARL Shares increased by 1,437,209.
(d) No person other than the Reporting Persons or their respective
Board of Directors or Trustees is known to have the right to receive or the
power to direct receipt of dividends from, or proceeds of sale of, the Shares of
ARL Common Stock held by BCM, TCI and the GEP Trust.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Item 6 of the Amended Statement is hereby further amended to read as
follows:
BCM has pledged 250,000 Shares to Jacksonville Bank and 1,772,485
Shares to Consolidated National Corporation pursuant to loan agreements with
such lenders. The 1,437,209 Shares purchased by BCM from One Realco Corporation
are also pledged to Consolidated National Corporation as an accommodation pledge
for its loan to BCM.
BCM also pledged 100,000 Shares to Beal Bank, and 737,100 Shares to
Preferred Bank as accommodation pledges in connection with loans from such
lenders to ARL. BCM pledged 355,000 Shares to RMR Investments as an
accommodation pledge on behalf of ARL in connection with a loan from RMR
Investments to ARL which is also secured by real property. BCM has also pledged
249,810 Shares to First Enterprise Bank as an accommodation pledge on behalf of
Bordeaux Investments Two, LLC for a loan from such bank to Bordeaux Investments
Two, LLC. BCM also pledged 50,000 Shares to First National Bank of Central Texas
as an accommodation pledge on behalf of One Realco Corporation for a loan from
such bank to One Realco Corporation.
Of the balance of the Shares owned by BCM, 3,152,349 are held in bank
and brokerage accounts along with other securities owned by BCM. As such, those
3,152,349 Shares may be deemed to be "collateral" for any borrowings made from
time to time pursuant to the customary margin or other account arrangements with
such banks and/or brokers. Such arrangements are standard involving margin
securities of up to a specified percentage of market value of the Shares, as
well as other securities in such account, bear interest at varying rates and
contain only standard default and similar provisions, the operation of which
should not give any other person immediate voting power or investment power over
the Shares.
Of the Shares owned by the GEP Trust, 10,000 Shares are pledged to
First National Bank of Central Texas as an accommodation pledge on behalf of One
Realco Corporation for a loan from such bank to One Realco Corporation.
-4-
Each of the loans pursuant to which Shares have been pledged by BCM or
the GEP Trust bear interest at varying rates and contain only standard default
and similar provisions, the operation of which should not give any other person
immediate voting power or investment power over the Shares.
All 746,972 Shares owned by TCI may be deemed to be "collateral" for
borrowings pursuant to margin or other account arrangements with Sinex
Securities LLC relating to a brokerage account of TCI, which is a stock margin
account maintained by TCI with such broker pursuant to customary brokerage
account arrangements. Such standard arrangements involve margin securities of up
to a specified percentage of the market value of the Shares, as well as other
securities in such account, bear interest at varying rates and contain only
standard default and similar provisions, the operation of which should not give
any other person immediate voting power or investment power over the Shares.
Except as set forth in the preceding paragraph, the Reporting Persons
do not have any contracts, arrangements, understandings or relationships (legal
or otherwise) with any person with respect to any securities of the Issuer,
including but not limited to, transfer or voting of any of the securities,
finders' fees, joint ventures, loan or option arrangements, puts or calls,
guaranties of profits, divisions of profits, divisions of profits or loss, or
the giving or withholding of proxies.
-5-
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certify that the information set forth in this Amendment No. 3
to Statement on Schedule 13D is true, complete and correct.
Dated: May 1, 2003
BASIC CAPITAL MANAGEMENT, INC.
By: /s/ RONALD E. KIMBROUGH
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Ronald E. Kimbrough
Executive Vice President and
Chief Financial Officer
TRANSCONTINENTAL REALTY INVESTORS, INC.
By: /s/ RONALD E. KIMBROUGH
-------------------------------------------
Ronald E. Kimbrough
Executive Vice President and
Chief Financial Officer
GENE E. PHILLIPS CHILDREN'S TRUST
By: /s/ DONALD W. PHILLIPS
-------------------------------------------
Donald W. Phillips, Trustee
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