Seilon, Inc.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22764; 811-3879]

Seilon, Inc.; Notice of Application

July 25, 1997.

AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of Application for Deregistration under the Investment

Company Act of 1940 (the ``Act'').

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APPLICANT: Seilon, Inc. (``Seilon'').

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant seeks an order declaring that it has

ceased to be an investment company.

FILING DATE: The application was filed on March 18, 1997, and amended

on July 9, 1997.

HEARING OR NOTIFICATION OF HEARING: An order granting the application

will be issued unless the SEC orders a hearing. Interested persons may

request a hearing by writing to the SEC's Secretary and serving

applicant with a copy of the request, personally or by mail. Hearing

requests should be received by the SEC by 5:30 p.m. on August 19, 1997,

and should be accompanied by proof of service on applicant, in the form

of an affidavit or, for lawyers, a certificate of service. Hearing

requests should state the nature of the writer's interest, the reason

for the request, and the issues contested. Persons may request

notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, NW., Washington, DC 20549.

Applicant, P.O. Box 411, 212 West Main Street, Smithville, Missouri

64089.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Staff Attorney, at (202) 942-0574, or Mercer E. Bullard,

Branch Chief, at (202) 942-0564 (Division of Investment Management,

Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the

application. The complete application may be obtained for a fee at the

SEC's Public Reference Branch.

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Applicant's Representations

1. Seilon is a registered closed-end management investment company

organized as a Delaware corporation. In October 1984, Seilon registered

under the Act by filing a notification of registration on Form N-8A.

Seilon has made no public offering of securities since its registration

under the Act. Seilon has not filed any securities registration

statements pursuant to the Securities Act of 1993. Any sales of

securities of Seilon have been effected through private placements

pursuant to applicable federal and state exemptions. Seilon has

approximately 2,300 stockholders. Seilon states that it is not a party

to any litigation or administrative proceeding, and that it is not in

the process of liquidating or winding up its affairs and has no

intention of liquidating its assets. Seilon requests an order declaring

that it has ceased to be an investment company because it does not meet

the definition of an investment company under section 3(a)(1) of the

Act.

2. Seilon was incorporated in November, 1921, as the Sciberling

Rubber Company, with its principal offices located in Akron, Ohio.

Originally, Seilon was primarily engaged in the business of

manufacturing tires, but in the early 1960's, Seilon's stock price

began to deteriorate. As a result, Mr. Edward Lamb, an attorney in

Toledo, Ohio, acquired voting control over the company in order to

diversify its business activities.

3. As part of Seilon's plan to diversify its business activities,

it changed its name from the Sciberling Rubber Company to Seilon, Inc.

During the 1960's, Seilon acquired Thomas International (sugar cane

harvesting equipment), Lockport (central pivot irrigation systems), and

Air-Way Sanitizer (vacuum cleaner systems), among others. All of these

companies were operating companies that did not hold investment

securities. In 1969, Seilon acquired a controlling interest in First

Bancorporation, a registered bank holding company in Reno, Nevada.

Consequently, Seilon was required to become a registered bank holding

company and to divest itself of certain non-banking businesses. In

1976, Seilon changed the name of First Bancorporation to Nevada

National Bancorporation (``Nevada Bancorp''). In 1982, Seilon sold

Nevada Bancorp and thereafter, Seilon sold Thomson International, the

remaining asset of Seilon, to facilitate the retirement of Seilon's

outstanding debt.

4. After selling Nevada Bancorp and Thomas International, Seilon's

only assets were cash and other short-term liquid assets, which it

intended to utilize for the acquisition of another operating company.

Because Seilon was unable to purchase another operating company, it

registered under the Act.

5. Around 1989, Seilon acquired College Transitions, Inc., a

corporation headquartered in Conyers, Georgia, and changed its name to

Diversified Merchandise and Service Corporation (``Diversified'').

Diversified was engaged in the wholesale distribution of college-

identified expendable merchandise to convenience stores in the

Southeast United States. In 1991, Diversified filed for bankruptcy

under Chapter 7 of the U.S. Bankruptcy Code and liquidated its assets.

Since Diversified's liquidation, Seilon has not owned any other

operating subsidiaries and essentially has remained inactive. After the

liquidation, Seilon's only assets were cash, cash equivalents, and

other liquid assets.

6. In 1996, in order to infuse additional capital into the company,

Seilon undertook a private placement of its common stock with a group

related to the Mayfield International, Inc. in Minneapolis, Minnesota.

The private placement was for 650,000 shares of common stock of Seilon

at a price of $1.00 per share, and 250,000 shares of preferred stock at

a price of $1.00 per share. With this additional funding, Seilon

acquired ninety percent of the outstanding stock of Peachtree Medical

Equipment, Inc. (``Peachtree'') and Physicians Home Care Services, Inc.

(``Physicians Home Care''), both of which are Georgia corporations,

from David and Paula Court on July 27, 1996, at a price of $900,000.

David and Paula Count each own the remaining ten percent of stock in

Peachtree and Physicians Home Care, respectively. Seilon was unable to

borrow any funds for these acquisitions because of the limitations of

the Act related to the issuance of debt.

7. Seilon states that, if an order pursuant to section 8(f) is

granted by the SEC, it intends to aggressively pursue the acquisition

of several other companies in the health care business, subject to its

ability to obtain financing at a reasonable cost. Currently, due to the

limitations of the Act, such acquisitions will be limited to the extent

that Seilon is unable to issue debt to finance such transactions.

Seilon states that it does not anticipate acquiring investment

securities, nor do Peachtree and Physicians Home Care contemplate

owning investment securities that would subject Seilon to the

requirements of the Act. Thus, the deregistration would allow Seilon

the resumption of its historic posture, similar to that it assumed in

the period from 1921 to 1983, and would further permit the acquisition

of other concerns with the use of seller financing as opposed to

equity.

Applicant's Legal Analysis

1. Section 3(a)(1)(C) of the Act defines an investment company as

any issuer which ``is engaged * * * in the business of investing,

reinvesting, owning, holding, or trading in securities, and owns or

proposes to acquire investment securities having a value exceeding

forty percentum of the value of such issuer's total assets (exclusive

of Government securities and cash items) on an unconsolidated basis.''

\1\ At the time of its initial filing under the Act, Seilon believed

that it met the definition of investment company under section

3(a)(1)(C) of the Act, because its short-term liquid assets were

securities as defined in the Act and accounted for more than 40% of its

total assets. Seilon now believes that it does not meet the definition

of investment company under section 3(a)(1)(C) of the Act.

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\1\ Investment securities are defined in section 3(a)(2) to

include all securities except (A) Government securities, (B)

securities issued by employees' securities companies, and (C)

securities issued by majority owned subsidiaries of the owner which

are not investment companies, and are not relying on the exception

from the definition of investment company in sections 3(c)(1) or

3(c)(7) of the Act.

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2. Seilon states that at the end of 1996, the value of its assets

was $1,144,251. Seilon holds subsidiary promissory notes in the amount

of $900,000. Seilon asserts that the promissory notes are excluded from

the definition of investment securities under section 3(a)(2) of the

Act because the promissory notes are securities of Peachtree and

Physicians Home Care, Seilon's majority-owned subsidiaries. Seilon also

asserts that any remaining cash and cash items held by it are excluded

from the definition of investment securities under section 3(a)(2).

Thus, Seilon contends that it does not own any investment securities

and does not meet the criteria in section 3(a)(1)(C) of the Act to be

deemed an investment company. Further, Seilon asserts that its

subsidiaries do not have any investment securities that can be

attributed to Seilon.

3. Seilon asserts that it has always derived all of its revenues

and income from the business of its operating subsidiaries, rather than

from its incidental holdings of cash and cash

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equivalents. Seilon states that it has not derived any net income from

investment securities for the last twelve years. Seilon states that all

of such subsidiaries have been majority-owned and none of them has ever

been an investment company within the meaning of the Act. In addition,

Seilon asserts that its recent acquisitions have been for the purpose

of operating such businesses. Seilon states that its net income is

derived from the operation of its subsidiaries, which generate income

from the sale of home health services and the sale and rental of

durable medical equipment.

For the Commission, by the Division of Investment Management,

pursuant to delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97-20172 Filed 7-30-97; 8:45 am]

BILLING CODE 8010-01-M