<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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THERMO FIBERGEN INC.
(Name of Subject Company)
THERMO FIBERGEN INC.
(Offeror)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
CUSIP 88355U109
(CUSIP Number of Class of Securities)
COMMON STOCK REDEMPTION RIGHTS
(Title of Class of Securities)
CUSIP 88355U117
(CUSIP Number of Class of Securities)
Seth H. Hoogasian, Esq.
General Counsel
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02454-9046
(781) 622-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
with a copy to:
David E. Redlick, Esq.
David C. Phelan, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
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CALCULATION OF FILING FEE
Transaction Valuation(1): $60,116,250 Amount of Filing Fee(2): $12,023.25
--------------------
(1) For purposes of calculating fee only. This amount is based upon (a) the
maximum number of Shares to be purchased pursuant to the Offer and (b)
the price offered per Share.
(2) The amount of the filing fee, calculated in accordance with Regulation
240.0-11 under the Securities Exchange Act of 1934, as amended, equals
1/50 of one percent of the Transaction Valuation.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to
which the statement relates:
[ ] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[X] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [ ]
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This Tender Offer Statement and Rule 13e-3 Transaction Statement on
Schedule TO relates to the obligation (the "Offer") of Thermo Fibergen Inc., a
Delaware corporation (the "Company"), to redeem up to 4,715,000 shares of its
Common Stock, par value $0.01 per share (the "Shares"), from holders of its
Common Stock Redemption Rights (the "Redemption Rights"). The Company issued the
Redemption Rights as units with its Common Stock at the time of its initial
public offering in 1996. Each Redemption Right entitles the holder to surrender
for redemption during the months of September 2000 and September 2001 one Share
for each Redemption Right exercised for a redemption price of $12.75 net to the
surrendering holder in cash, without interest thereon, upon the terms and
subject to the conditions set forth herein and in the certificates representing
the Redemption Rights.
ITEM 1. SUMMARY TERM SHEET.
BEFORE YOU MAKE ANY DECISION WHETHER TO EXERCISE ANY COMMON STOCK
REDEMPTION RIGHTS, YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE
DETAILED INFORMATION INCLUDED ELSEWHERE IN THIS TENDER OFFER STATEMENT AND RULE
13e-3 TRANSACTION STATEMENT.
- Redemption; Purpose of the Offer. During the months of September 2000
and September 2001, Thermo Fibergen will redeem from surrendering
holders one share of Thermo Fibergen common stock for each share of
common stock surrendered for redemption with a common stock redemption
right. Thermo Fibergen will only redeem shares of its common stock if
the holder surrenders both the redemption right and share of common
stock. The purpose of this offer is to comply with Thermo Fibergen's
obligations under the common stock redemption rights. Thermo Fibergen
issued the common stock redemption rights as units together with its
common stock in Thermo Fibergen's initial public offering in 1996.
Thermo Fibergen is not offering to purchase any shares of its common
stock other than pursuant to the exercise of outstanding common stock
redemption rights. See Item 4 for more information regarding the
material terms of the common stock redemption rights.
- Redemption Price. The redemption price for each share of common stock
that a holder surrenders for redemption together with a common stock
redemption right is $12.75. This price is equal to the initial public
offering price on September 13, 1996 of units consisting of one share
of Thermo Fibergen common stock and one redemption right. The last
reported sale prices of Thermo Fibergen common stock and redemption
rights on the American Stock Exchange on August 25, 2000 were $12.00
per share of common stock and $0.75 per redemption right. See Item 2
for more information regarding the trading range of Thermo Fibergen
common stock.
- Fairness of the Redemption Price. The redemption price was determined
at the time of Thermo Fibergen's initial public offering. Although
Thermo Fibergen's board of directors is not setting the terms of the
redemption rights at this time, Thermo Fibergen's board of directors
has determined that the terms of the redemption rights, including the
redemption price, are fair to the Thermo Fibergen stockholders who
elect to exercise such rights during September 2000. See Item 13.
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- Conditions to the Redemption. Thermo Fibergen's obligation to redeem
shares of common stock is contingent upon compliance with applicable
law, including the requirement under Delaware General Corporation Law
that Thermo Fibergen have sufficient capital surplus to redeem its
shares of common stock. Thermo Fibergen believes that it will have
sufficient capital surplus during the September 2000 redemption period
to redeem any shares of common stock surrendered for redemption
pursuant to the outstanding common stock redemption rights. Thermo
Fibergen is not required to redeem shares of its common stock pursuant
to the common stock redemption rights at any time when Thermo
Fibergen's capital is impaired, if the redemption would impair Thermo
Fibergen's capital or if Thermo Fibergen is otherwise prohibited by law
from redeeming the shares of its common stock.
- Possible Delay in Payment. Thermo Fibergen may delay the redemption of
common stock pursuant to the common stock redemption rights if the
Securities and Exchange Commission has not completed its review of this
Tender Offer Statement and Rule 13e-3 Transaction Statement prior to
the date on which the redemption period expires or we are otherwise
prohibited by law from redeeming surrendered shares of common stock. In
any such event, we will pay the redemption price for the common stock
redemption rights that holders properly exercise during the redemption
period to the extent that we are legally permitted to do so and we will
pay for surrendered shares in full as soon as possible after the legal
prohibition or impediment no longer applies. In the event that the
payment for any redemption is so deferred, the redemption price will
bear interest at an annual rate equal to the base rate of Fleet
National Bank. See Item 4 for more information of the conditions to the
redemption.
- Redemption Rights and Common Stock Outstanding. As of July 31, 2000,
14,172,600 shares of Thermo Fibergen common stock were outstanding.
Thermo Fibergen is a majority-owned subsidiary of Thermo Fibertek Inc.,
which in turn is a majority-owned subsidiary of Thermo Electron
Corporation. As of July 31, 2000, Thermo Fibertek held 10,419,350
shares of Thermo Fibergen common stock and Thermo Electron held 14,750
shares of Thermo Fibergen common stock. Together, Thermo Fibertek and
Thermo Electron owned, as of July 31, 2000, approximately 74% of the
outstanding shares of Thermo Fibergen common stock. As of July 31,
2000, 4,715,000 common stock redemption rights were outstanding, none
of which were held by Thermo Fibertek or Thermo Electron. Consequently,
as of July 31, 2000, there were 976,500 fewer shares of Thermo Fibergen
common stock held by stockholders other than Thermo Fibertek and Thermo
Electron than outstanding common stock redemption rights.
- Redemption Period. The 2000 redemption period commences on September 1,
2000 and expires at 5:00 p.m., New York City time, on September 30,
2000. We will treat as invalid the surrender for redemption of common
stock and common stock redemption rights before the redemption period
commences or after it expires. Holders of unexercised redemption rights
will again be able to exercise such rights during the month of
September 2001. See "Possible Delay in Payment" above.
- Procedures for Exercising the Redemption Rights. In order to have
Thermo Fibergen redeem your shares of Thermo Fibergen common stock
during the September 2000 redemption period, you must:
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- Be the holder of record of common stock redemption rights for
the number of shares of common stock that you want to
surrender for redemption;
- Be the holder of record of the number of shares of common
stock that you want to surrender for redemption;
- Complete the information on the back of your common stock
redemption rights certificate; indicate the number of shares
of common stock you are surrendering; execute the certificate
and transmit the certificates for the shares of common stock
and the redemption rights certificate to American Stock
Transfer & Trust Company, Thermo Fibergen's transfer agent,
between September 1, 2000 and September 30, 2000 at the
following address: 40 Wall Street, 46th Floor, New York, New
York 10005, Attention: Reorganization Department. You must
duly endorse in blank the certificates for the shares of
common stock being surrendered for redemption. In the event
that you exercise fewer than all of the redemption rights
represented by the redemption right certificate or elect to
redeem fewer than the number of shares of common stock
represented by the stock certificate surrendered for
redemption, Thermo Fibergen will issue you a new certificate
for the redemption rights or shares of common stock that you
do not exercise or surrender for redemption.
- If you hold your shares of Thermo Fibergen common stock or
the common stock redemption rights through a broker or other
intermediary, you should contact your broker or intermediary
to determine how to exercise the common stock redemption
rights that you beneficially own. If you are not a record
holder of either the common stock or the common stock
redemption rights, you may not surrender your shares of
common stock except through the record holder.
- Payment for Redeemed Shares. If you validly surrender for redemption
your shares of Thermo Fibergen common stock in accordance with the
terms of the common stock redemption rights, we will pay for the shares
of Thermo Fibergen Common Stock that you surrender within five business
days after the 2000 redemption period expires, or such later date as
may be permitted by the terms of the common stock redemption rights.
- Withdrawal of Shares Surrendered for Redemption. You may withdraw your
surrender of Thermo Fibergen common stock and common stock redemption
rights at any time on or prior to 5:00 p.m., New York City time, on
September 30, 2000. In order for a withdrawal to be effective, Thermo
Fibergen's transfer agent must receive written notice of your
withdrawal at the address set forth above on or prior to 5:00 p.m., New
York City time on September 30, 2000.
- Termination of Redemption Rights. The redemption rights will expire
and become worthless in the event that
- prior to the beginning of the 2000 exercise period, or
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<PAGE> 6
- after the end of the 2000 exercise period and prior to the
beginning of the 2001 exercise period,
the closing price of Thermo Fibergen common stock, as reported on the
principal trading market for such common stock, has been at least 150%
of the redemption price for 20 of any 30 consecutive trading days.
Neither Thermo Electron Corporation nor any of its subsidiaries may
purchase any shares of Thermo Fibergen common stock on any of such days
during such 30 day period.
- Source of Funds. Thermo Fibergen intends to use its own working capital
to fund the redemption. If additional funds are required, Thermo
Fibergen's parent corporation, Thermo Fibertek Inc., will loan Thermo
Fibergen the required amount. See Item 7 for more information on the
funding of the redemption.
- Consequences of the Redemption. Depending upon the number of shares of
Thermo Fibergen common stock surrendered for redemption during the 2000
redemption period, the exercise of common stock redemption rights may
have the following consequences:
- The American Stock Exchange may delist Thermo Fibergen common
stock and/or the common stock redemption rights if the
redemption of shares of Thermo Fibergen common stock reduces
the number of publicly held shares of common stock or common
stock redemption rights or the number of holders of common
stock or common stock redemption rights to a number less than
that required under the Exchange's minimum listing criteria.
After the 2000 redemption period, we plan to evaluate the
benefits and detriments of seeking to delist the common stock
and common stock redemption rights and may determine to
delist. Even if Thermo Fibergen's common stock is not
delisted after the 2000 redemption period, the reduction in
the number of shares of common stock outstanding may
adversely affect the market, including the trading volume,
for Thermo Fibergen common stock after the 2000 redemption
period expires.
- If a sufficient number of holders of common stock redemption
rights surrender shares for redemption during the 2000
redemption period, Thermo Fibergen may be able to deregister
the common stock and common stock redemption rights and
terminate its reporting obligations under the Securities
Exchange Act of 1934, including its obligation to file annual
and other periodic reports or to provide the type of
going-private disclosure contained in this Tender Offer
Statement and Rule 13e-3 Transaction Statement. If we are
entitled to deregister the common stock and the common stock
redemption rights under the Exchange Act, we plan to evaluate
the benefits and detriments of deregistration after the 2000
redemption period and may determine to deregister the common
stock or the common stock redemption rights. We will only be
able to deregister if the common stock is no longer listed on
the American Stock Exchange.
- Since Thermo Fibergen will not be redeeming any shares of
common stock held by Thermo Fibertek or Thermo Electron and
the number of outstanding shares of common stock may decrease
due to exercise of
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common stock redemption rights, Thermo Fibertek may own after
the 2000 redemption period 90% or more of the outstanding
shares of Thermo Fibergen common stock. If Thermo Fibertek
owns 90% or more of the outstanding shares of Thermo Fibergen
common stock, Thermo Fibertek will be able to cause Thermo
Fibergen to merge with Thermo Fibertek without any action by
the board of directors or stockholders of Thermo Fibergen.
While Thermo Fibertek does not currently plan to merge Thermo
Fibergen into Thermo Fibertek, Thermo Fibertek plans to
evaluate the benefits and detriments of a merger after the
2000 redemption period and may determine to merge Thermo
Fibergen into Thermo Fibertek.
- If you do not surrender your shares of Thermo Fibergen common
stock, your shares will remain outstanding after the 2000
redemption period expires.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) Name and Address. The subject company is Thermo Fibergen Inc. (the
"Company"). The principal executive offices of the Company are located at 8
Alfred Circle, Bedford, Massachusetts 01730, and its telephone number is (781)
622-1000.
(b) Securities. The exact title of the class of equity securities to be
redeemed by the Company is: Common Stock, par value $0.01 per share, of the
Company.
As of July 31, 2000, 14,172,600 Shares were outstanding. The Company is
a majority-owned subsidiary of Thermo Fibertek Inc. ("Thermo Fibertek"), which
in turn is a majority-owned subsidiary of Thermo Electron Corporation ("Thermo
Electron"). As of July 31, 2000, Thermo Fibertek held 10,419,350 shares of
Thermo Fibergen common stock and Thermo Electron held 14,750 shares of Thermo
Fibergen common stock. Together, Thermo Fibertek and Thermo Electron owned, as
of July 31, 2000, approximately 74% of the outstanding shares of Thermo Fibergen
common stock.
As of July 31, 2000, the Company also had 4,715,000 Redemption Rights
outstanding. Neither Thermo Fibertek nor Thermo Electron owned any Redemption
Rights on that date. Consequently, as of July 31, 2000, there were 976,500 fewer
Shares held by stockholders of the Company other than Thermo Fibertek and Thermo
Electron than outstanding Redemption Rights.
A Redemption Right entitles the holder thereof, at the holder's option,
to require the Company to redeem for cash, during a specified period in 2000 and
2001, one Share for $12.75, adjusted as provided below. The 2000 exercise period
begins on September 1, 2000 and ends on September 30, 2000 (the "2000 Exercise
Period"). The 2001 exercise period begins on September 1, 2001 and ends on
September 30, 2001 (the "2001 Exercise Period"). This Tender Offer Statement and
Rule 13e-3 Transaction Statement is being filed because the Securities and
Exchange Commission may deem the 2000 Exercise Period to constitute the
commencement of a going private transaction under Rule 13e-3 and a tender offer
by the Company for the Shares which could be redeemed by the Company pursuant to
the outstanding Redemption Rights.
(c) Trading Market and Price. The Shares and the Redemption Rights are
listed on the American Stock Exchange under the symbols "TFG" and "TFGR",
respectively. The following table sets forth the high and low closing prices per
Share and
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Redemption Right on the American Stock Exchange, as reported in publicly
available sources for each of the periods indicated.
<TABLE>
<CAPTION>
COMMON STOCK REDEMPTION RIGHT
---------------------- -----------------------
FISCAL YEAR ENDED JANUARY 2, 1999: HIGH LOW HIGH LOW
------- ------ ------ -------
<S> <C> <C> <C> <C>
1st Quarter............................... $ 9.625 $ 8.50 $3.50 $2.625
-------------------------------------------------------------------------------------------------------
2nd Quarter............................... $ 9.875 $ 8.875 $3.125 $2.8125
-------------------------------------------------------------------------------------------------------
3rd Quarter............................... $ 9.6875 $ 7.25 $5.125 $2.625
-------------------------------------------------------------------------------------------------------
4th Quarter............................... $ 7.875 $ 7.25 $4.875 $3.125
-------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED JANUARY 1, 2000:
-------------------------------------------------------------------------------------------------------
1st Quarter............................... $ 9.375 $ 8.50 $3.375 $2.50
-------------------------------------------------------------------------------------------------------
2nd Quarter............................... $11.75 $ 9.0625 $2.50 $1.00
-------------------------------------------------------------------------------------------------------
3rd Quarter............................... $11.50 $11.1875 $1.375 $1.0625
-------------------------------------------------------------------------------------------------------
4th Quarter............................... $12.1875 $ 9.75 $1.9375 $0.875
-------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDING JANUARY 1, 2001:
-------------------------------------------------------------------------------------------------------
1st Quarter............................... $12.25 $11.625 $0.9375 $0.8125
-------------------------------------------------------------------------------------------------------
2nd Quarter............................... $12.4375 $11.25 $1.00 $0.50
-------------------------------------------------------------------------------------------------------
3rd Quarter (through August 25, 2000)..... $12.50 $11.50 $0.75 $0.63
-------------------------------------------------------------------------------------------------------
</TABLE>
As of July 31, 2000, there were 30 holders of record of the Shares and
295 beneficial owners of the Shares. As of July 31, 2000, there were 25 holders
of record of the Redemption Rights.
On August 25, 2000, the closing sale prices per Share and Redemption
Right, as reported on the American Stock Exchange, were $12.00 and $0.75 ,
respectively.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) Name and Address. The filing person is Thermo Fibergen Inc.
The principal executive offices of Thermo Fibergen are located at 8 Alfred
Circle, Bedford, Massachusetts 01730, and its telephone number is (781)
622-1000. The Company operates in two business segments: fiber recover and water
clarification services and cellulose based products. The Company is a
majority-owned subsidiary of Thermo Fibertek Inc., a Delaware corporation, the
address of which is 245 Winter Street, Waltham, Massachusetts 02454. Thermo
Fibertek is a majority-owned subsidiary of Thermo Electron Corporation. Thermo
Electron is a Delaware corporation and is
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engaged in the business of developing, manufacturing and selling
measurement and detection instruments that its customers use to monitor,
collect, and analyze data. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02451. The name and business address of each of the
executive officers and directors of Thermo Fibergen and Thermo Electron are set
forth on Schedule I hereto.
ITEM 4. TERMS OF THE TRANSACTION.
(a) Material Terms. During the 2000 Exercise Period, holders of
Redemption Rights may require the Company to redeem one Share for each
Redemption Right exercised by such holder. Redemption Rights entitling the
holders to require the Company to redeem 4,715,000 Shares were outstanding as of
July 31, 2000. Upon the valid exercise of the Redemption Rights during the
period beginning on September 1, 2000 and ending on September 30, 2000, the
Company will pay cash in the amount of $12.75 per share of Common Stock that the
Company redeems, adjusted as provided below (the "Redemption Price").
Certificates for Redemption Rights may be exercised in whole or in part.
In order to have the Company redeem your Shares during the September
2000 redemption period, you must:
- Be the holder of record of Redemption Rights for the number of
Shares that you want to surrender for redemption;
- Be the holder of record of the number of Shares that you want
to surrender for redemption;
- Complete the information on the back of your Redemption Rights
Certificate, indicate the number of Shares being surrendered,
execute the Certificate and transmit the certificates for the
Shares and the Redemption Rights Certificate to American Stock
Transfer & Trust Company, Thermo Fibergen's transfer agent,
between September 1, 2000 and September 30, 2000 at the
following address: 40 Wall Street, 46th Floor, New York, New
York 10005, Attention: Reorganization Department. You must
duly endorse in blank the certificates for the Shares being
surrendered for redemption. In the event that you exercise
fewer than all of the Redemption Rights represented by the
Redemption Rights Certificate or elect to redeem fewer than
the number of Shares represented by the stock certificate
surrendered, the Company will issue a new certificate for the
Redemption Rights or Shares that you do not exercise or
surrender for redemption.
If you hold your Shares or Redemption Rights through a broker or other
intermediary, you should contact your broker or intermediary to determine how to
exercise the Redemption Rights that you beneficially own. If you are not a
record holder of both the Shares and the Redemption Rights, you may not
surrender for redemption your Shares except through the record holder.
If you validly surrender your Shares in accordance with the terms of
the Redemption Rights, we will pay for the Shares that you surrender within five
business days after the 2000 Exercise Period expires (or such later date as may
be permitted by the terms of the Redemption Rights).
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The 2000 Exercise Period expires at 5:00 p.m., New York City time, on
September 30, 2000. Unless required to comply with applicable law, the 2000
Exercise Period will not be extended. Holders of Redemption Rights may withdraw
the exercise of any Redemption Right surrendered for exercise at any time on or
prior to 5:00 p.m., New York City time on September 30, 2000 by delivering a
written notice of withdrawal to the Company's transfer agent at the address set
forth above.
The obligation of the Company to redeem Shares upon exercise of the
Redemption Rights is contingent upon compliance with Delaware General
Corporation Law Section 160. If at any time the Company's capital is impaired or
the redemption of the Shares would cause an impairment of the Company's capital,
or if the Company is otherwise prohibited by law from redeeming the Shares, the
redemption of the Shares validly surrendered for redemption during the 2000
Exercise Period will occur to the extent permissible and, to the extent
permitted, as soon as possible after the legal prohibition or impediment is no
longer applicable. In the event that the payment for any redemption is so
deferred, the redemption price shall bear interest at an annual rate equal to
the base rate of Fleet National Bank.
If at any time or from time to time prior to September 30, 2001, any of
the following shall occur:
- a capital reorganization of the Common Stock;
- a merger or consolidation of the Company with or into another
corporation;
- the liquidation or dissolution of the Company or the sale of
all or substantially all of the Company's assets to any other
person;
- payment of a dividend in Shares or Redemption Rights or a
distribution made in Shares or Redemption Rights, or a
distribution to all holders of Shares of a security or right
convertible into or exchangeable for Shares;
- a subdivision of outstanding Shares or Redemption Rights;
- the combination of the outstanding Shares or Redemption Rights
into a smaller number of Shares or Redemption Rights; or
- the issuance of other securities of the Company by
reclassification of the Company's Shares or Redemption Rights
(including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation) or similar event;
then as a part of such event, effective provision shall be made in a manner
determined by the Board of Directors of the Company so that the holders of
Redemption Rights shall thereafter be entitled to surrender for redemption the
number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such event, to the end that the
provisions of the Redemption Rights shall be applicable after that event in as
nearly equivalent a manner as may be practicable.
The Redemption Rights will expire and become worthless in the event
that
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- prior to the beginning of the 2000 Exercise Period or
- after the end of the 2000 Exercise Period and prior to the
beginning of the 2001 Exercise Period,
the closing price of the Company's Common Stock as reported on the principal
trading market for such Common Stock has been at least 150% of the Redemption
Price, as adjusted as provided above, for 20 of any 30 consecutive trading days.
Neither Thermo Electron nor any of its subsidiaries may purchase any Shares on
any of such days during such 30 day period.
Certain Federal Income Tax Consequences. The following is a general
summary of the material U.S. federal income tax consequences of the exercise of
Redemption Rights. This summary is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable treasury regulations
thereunder, judicial decisions and current administrative rulings as in effect
on the date of this Tender Offer Statement and Rule 13e-3 Transaction Statement.
The discussion does not address all aspects of U.S. federal income taxation that
may be relevant to particular taxpayers in light of their personal circumstances
or to taxpayers subject to special treatment under the Code (for example, life
insurance companies, foreign corporations, foreign partnerships, foreign estates
or trusts, or individuals who are not citizens or residents of the United States
and beneficial owners whose Shares were acquired pursuant to the exercise of
warrants, employee stock options or otherwise as compensation) and does not
address any aspect of state, local, foreign or other taxation.
Because of the unique features of the Redemption Rights, the tax
consequences of their exercise is unclear. The discussion below represents the
Company's view of the possible federal income tax consequences of the exercise
that are most likely to result. The discussion is provided for general
information purposes only, and it is possible that the federal income tax
consequences of the exercise of the Redemption Rights may be different than
those discussed.
PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO
THE EXERCISE OF THE REDEMPTION RIGHTS UNDER U.S. FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.
- Treatment of Shares as Equity. The Company intends to treat the
Shares as equity for federal income tax purposes. Whether the
Shares are equity for federal income tax purposes during the
period prior to the expiration of the Redemption Rights is a
question of fact, and no one factor is conclusive. Although no
definitive set of relevant factors exists, Section 385 of the Code
lists five factors that "may" be taken into account in
regulations, yet to be issued, setting forth rules for determining
whether an interest in a corporation is to be treated as equity or
debt for federal income tax purposes. These factors are (1)
whether there is a written unconditional promise to pay on demand
or on a specified date a sum certain in money in return for an
adequate consideration in money or money's worth, and to pay a
fixed rate of interest, (2) whether there is a subordination to or
preference over any indebtedness of the corporation, (3) the ratio
of debt to equity of the corporation, (4) whether there is
convertibility into the stock of the corporation, and (5) the
relationship between holdings of stock in the corporation and the
holdings of the interest in question. The Internal Revenue
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Service has indicated that the intent of the parties in creating
the instrument is a factor that may be taken into account as well.
An analysis of the foregoing factors indicates that it is likely,
although not certain, that the Shares will be treated as equity
for tax purposes even prior to the expiration of the Redemption
Rights. The Company is obliged to redeem the Shares for a fixed
amount of money upon exercise of Redemption Rights at essentially
predetermined dates, raising the possibility that the Shares will
be treated as convertible debt. However, no provisions for
interest payments or guaranteed dividends of any sort are made.
The Company is also prohibited from redeeming the Shares to the
extent that such redemptions would cause or increase any
impairment of the Company's capital or if such redemptions are
otherwise prohibited by law. Furthermore, the Shares are
subordinated to all indebtedness of the Company, the Shares are
voting stock, there are no "conversion" rights other than a
possible "deemed" conversion at the time of expiration of the
Redemption Rights, and, finally, the parties intend to create an
equity interest notwithstanding the contrary treatment for
financial accounting purposes.
The discussion that follows is premised on the characterization of
the Shares as equity and not as convertible debt. If the Shares
were to be treated as debt, certain other considerations would
apply. For example, redemptions by the Company of the Shares would
not be subject to the rules of Section 302 of the Code, as
discussed below, but would instead be treated as payments of
principal and interest.
- Consequences of the Exercise of a Redemption Right. The amount of
cash received by a holder of Shares upon exercise of a Redemption
Right will be treated either as (i) a distribution by the Company
in exchange for the Share redeemed, in which case the holder will
recognize gain or loss measured by the difference between the
amount realized and the holder's tax basis for the Share
surrendered (including the holder's tax basis in the Redemption
Right exercised with respect to such Share) or (ii) a distribution
of property to which Section 301 of the Code applies (that is, as
a dividend, to the extent of the Company's earnings and profits;
see "Distribution Treatment," below) to the extent the
distribution exceeds the holder's tax basis in the Redemption
Right. For this purpose, the determination of whether the
distribution will be treated as an exchange for stock or as a Code
Section 301 distribution will be made in accordance with the
provisions of Section 302 of the Code, as explained below.
Under Section 302 of the Code, a holder will be treated as having
sold the holder's Shares (rather than having received a Code
Section 301 distribution) upon the redemption of a Share pursuant
to the exercise of a Redemption Right if (1) the redemption
results in the complete termination of the holder's interest in
the Company, (2) the holder's percentage ownership of the
outstanding Common Stock of the Company (and any other voting
stock) immediately after such redemption is less than 80% of such
holder's percentage ownership of the total of such outstanding
stock immediately before the redemption or (3) the distribution
from the Company upon such redemption is not "essentially
equivalent to a dividend" based on the individual holder's
particular facts and circumstances. For purposes of
- 12 -
<PAGE> 13
making these determinations, the holder's percentage ownership
will in general be calculated by taking into account all Shares
owned by him, including those deemed to be owned by him pursuant
to Section 318 of the Code. Section 318 of the Code provides that
in applying the above rules, a holder is considered to own shares
directly or indirectly owned by certain members of the holder's
family or certain related entities and to own shares with respect
to which the holder holds options.
For a redemption to qualify as "not essentially equivalent to a
dividend," it must result in a "meaningful reduction" in the
holder's percentage interest in the Company. The Internal Revenue
Service has indicated in published rulings that any reduction in
the percentage interest of a small shareholder in a publicly held
corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction," absent special
circumstances. In applying these rules, other transactions that
are part of an overall plan may be taken into account to determine
the decrease, if any, of a shareholder's percentage interest.
Under such an approach, it is likely that the exercise of
Redemption Rights by other holders of Shares will have to be taken
into account in determining whether a particular holder's
percentage interest is reduced. In a case in which a holder would
have an increase in his percentage interest after the exercise of
the Redemption Right (for example, if such holder redeemed a
lesser percentage of his shares as compared to other Share
holders), the holder could avoid dividend treatment by selling
Shares rather than redeeming them.
- Sale or Exchange Treatment. If a redemption is treated as a sale
or exchange of a Share (rather than as a Code Section 301
distribution), any gain or loss recognized will be capital gain or
loss if the redeemed Share is held as a capital asset. Such gain
or loss will be long term capital gain if the holding period of
such Share exceeds one year.
Under certain circumstances the holding period of a Share holder
with respect to a Share may have been suspended. In particular, it
is possible that a Redemption Right will be characterized for
federal income tax purposes as an option to sell a Share. In that
case, it is possible that the short sale rules of Section 1233 of
the Code would apply, resulting in, among other possible results,
suspension of the holding period of a number of Shares equal to
the number of Shares subject to the Redemption Right until the
expiration of the Redemption Right. Whether Section 1233 of the
Code would apply to suspend any Share holder's holding period for
Shares will depend on a variety of factual determinations with
respect to the holder, including the timing of the holder's
acquisition of Redemption Rights and corresponding Shares.
Accordingly, Share holders should consult their own tax advisors
regarding the application of Code Section 1233.
It is likely that a Share and any related Redemption Right will be
considered to be a tax straddle subject to the rules of Section
1092 of the Code. The tax straddle rules will only apply if both
(a) the Share is considered to be actively traded and (b) the
Redemption Right is considered to be either (i) an "option" with
respect to the Share or with respect to substantially identical
stock or securities or (ii) a position with respect to
substantially similar or related property (other than stock).
Assuming that a Share and associated
- 13 -
<PAGE> 14
Redemption Right are considered to be a tax straddle, Temporary
Treasury Regulations provide that the holding period of a Share
that is part of that straddle generally will not begin earlier
than the expiration of the Redemption Right with respect to that
Share, unless the holder held the Share for more than one year
prior to the acquisition of the Redemption Right.
- Distribution Treatment. If a redemption of Shares is treated as a
Code Section 301 distribution pursuant to the rules of Code
Section 302 discussed above, the distribution will be treated as a
dividend only to the extent of the Company's accumulated earnings
and profits or its earnings and profits for the taxable year in
which such distributions occur. Any distribution by the Company
that is not a dividend will be treated first as a return of basis
to the Share holder and then as gain from the sale or exchange of
the Shares with respect to which the distribution is made.
To the extent that the Company has earnings and profits and the
distribution to a Share holder upon exercise of a Redemption Right
is treated as a Code Section 301 distribution, corporate holders
will generally be eligible for the dividends received deduction.
This deduction generally equals 70% of the amount received as
dividends, although corporations owning 20% or more of the stock
of the Company will be eligible for an 80% deduction. Corporate
holders would be eligible for the dividends received deduction
only if, among other things, the Shares with respect to which the
Redemption Right is exercised have been held for more than 45
days. Under Section 246(c) of the Code, the holding period of
stock is suspended for any periods for which the holder has, among
other things, (i) an option to sell such stock or (ii) a
diminished risk of loss by holding one or more other positions
with respect to substantially similar or related property. It is
likely that the Redemption Right would be considered an option or
other position triggering the suspension of the holding period
under Section 246(c) of the Code.
Section 246A of the Code reduces the dividends received deduction
in the case of "debt-financed portfolio stock." Debt-financed
portfolio stock is defined as portfolio stock, such as the Shares,
acquired or carried by the corporate holder with indebtedness that
is "directly attributable" to the investment in such stock. The
reduction is generally a fraction, the numerator of which is the
amount of the holder's indebtedness attributable to such stock and
the denominator of which is the holder's adjusted tax basis in the
stock.
In addition, the amount of any distribution that is treated as a
dividend and that is received by a corporate holder upon exercise
of its Redemption Rights will be subject to the provisions of
Section 1059 of the Code relating to "extraordinary dividends." If
a distribution to a corporate Share holder upon exercise of a
Redemption Right is subject to the rules of Section 1059, the tax
basis of the holder's remaining Shares will be reduced by the
amount of the dividend received deduction (the "non-taxed portion"
of the dividend) attributable to the distribution. If the
non-taxed portion exceeds the holder's tax basis in such remaining
Shares, such excess will be treated as gain from the sale of
Shares.
- Backup Withholding. A beneficial owner may be subject to backup
federal income tax withholding at a rate of 31% with respect to
the amount of cash
- 14 -
<PAGE> 15
received pursuant to the exercise of the Redemption Rights unless
the owner provides its tax identification number ("TIN") on the
back of the Redemption Right Certificate and certifies that such
number is correct or properly certifies that it is awaiting a TIN,
or unless an exemption applies. A beneficial owner that does not
furnish its TIN may be subject to a penalty imposed by the
Internal Revenue Service.
If backup withholding applies to a beneficial owner, the transfer
agent is required to withhold 31% from payments to such owner.
Backup withholding is not an additional tax. Rather, the amount of
the backup withholding can be credited against the federal income
tax liability of the person subject to the backup withholding,
provided that the required information is given to the Internal
Revenue Service. If backup withholding results in an overpayment
of tax, a refund can be obtained by the beneficial owner upon
filing an income tax return.
EACH BENEFICIAL OWNER OF SHARES IS URGED TO CONSULT SUCH BENEFICIAL
OWNER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH BENEFICIAL OWNER
OF THE OFFER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.
(b) Purchases. Neither Thermo Fibertek nor Thermo Electron owns any
Redemption Rights. The Company anticipates that any officer or director of the
Company or Thermo Electron who holds Redemption Rights will exercise those
Redemption Rights.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(e) Agreements Involving the Subject Company's Securities. In
connection with the initial issuance of the Redemption Rights, Thermo Electron
guaranteed on a subordinated basis the performance of the Company's financial
obligations under the Redemption Rights. The Company and Thermo Electron also
entered into an agreement pursuant to which the Company will repay any amounts
paid by Thermo Electron pursuant to the guarantee.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) Purpose. The purpose of the Offer is to comply with the Company's
obligations under the outstanding Redemption Rights. The Redemption Rights were
issued in the Company's initial public offering in 1996 as units consisting of
one share of Common Stock and one Redemption Right. The units were designed to
offer purchasers of the Company's Common Stock with some protection against a
decline in the market value of the Company's Common Stock by providing two one
month periods during which the Company would repurchase the Common Stock at the
initial offering price.
(b) Use of Securities Acquired. If any Redemption Rights are exercised,
the Shares acquired by redemption will be retired.
(c) Plans. If, after the 2000 Exercise Period, the Company is eligible
to deregister the Shares and the Redemption Rights under the Securities Exchange
Act of 1934, as amended, the Company plans to evaluate the benefits and
detriments of deregistration and may determine to deregister the Shares and the
Redemption Rights.
- 15 -
<PAGE> 16
Registration of the Shares under the Exchange Act may be terminated
upon application by the Company to the SEC if the Shares are no longer
listed on a national securities exchange and there are fewer than 300
record holders of the Shares. Registration of the Redemption Rights under the
Exchange Act may be terminated upon application by the Company to the SEC if the
Shares are no longer listed on a national securities exchange and there are
fewer than 300 record holders of the Redemption Rights.
The American Stock Exchange may delist the Common Stock and/or the
Redemption Rights if the redemption of Shares reduces the number of publicly
held Shares or Redemption Rights or the number of holders of Common Stock or
Redemption Rights to a number less than that required under the Exchange's
minimum listing criteria. After the 2000 Exercise Period, we plan to evaluate
the benefits and detriments of seeking to delist and may determine to delist the
Common Stock and Redemption Rights.
Thermo Fibertek may own more than 90% of outstanding Shares after the
2000 Redemption Period. In such circumstance, Thermo Fibertek would be eligible
to merge the Company into Thermo Fibertek without any action by the Company, its
Board of Directors or its stockholders other than Thermo Fibertek. While Thermo
Fibertek does not currently plan to merge the Company into Thermo Fibertek,
Thermo Fibertek plans to evaluate the benefits and detriments of a merger after
the 2000 Exercise Period and may determine to merge Thermo Fibergen into Thermo
Fibertek. The consideration in any such merger may differ from the redemption
price.
The Company has been approached by one of its customers with an offer
to purchase and terminate the contract to operate the fiber recovery and water
clarification system in Cowspen, South Carolina. The facility accounted for
revenues of approximately $1,400,000 during the fiscal year ended January 1,
2000. The Company is currently negotiating such a transaction.
The Company has a contractual right in 2001 to buy-out the minority
interests in its Next Fiber Products joint venture. The Company has not
determined whether to exercise such right or to seek to negotiate an earlier
exercise date.
Except for the foregoing, neither the Company, nor to the Company's
knowledge any of its affiliates, currently have any plans, proposals or
negotiations regarding:
- any extraordinary transaction, such as a merger or
liquidation;
- any purchase, sale or transfer of a material amount of the
Company's assets;
- any material change in the present dividend rate or policy;
- any change in the present board of directors or management;
- any material change in the Company's corporate structure or
business;
- any delisting of the Company's securities;
- the acquisition by any person of additional securities of the
Company; or
- any change in the Company's Certificate of Incorporation or
By-Laws.
- 16 -
<PAGE> 17
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Source of Funds. If all 4,715,000 Redemption Rights are exercised
during the 2000 Exercise Period, the Company would have to make aggregate
payments of $60,116,250. The Company intends to use its own working capital to
fund the redemption payments. To the extent the Company's working capital is not
sufficient, Thermo Fibertek has agreed to provide any required funds in the form
of a loan. Any loan by Thermo Fibertek will be unsecured, repayable upon demand
and bear interest at a floating rate equal to the 30-day Dealer Commercial Paper
Rate plus 150 basis points, adjusted at the beginning of each fiscal month. The
Company does not have any arrangement with respect to the repayment of any such
loan.
(b) Conditions. Not applicable.
(d) Borrowed Funds. See Item 7(a).
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Securities Ownership. As of July 31, 2000, Thermo Fibertek and
Thermo Electron owned 10,419,350 Shares and 14,750 Shares, respectively. Neither
Thermo Fibertek nor Thermo Electron owned any Redemption Rights as of July 31,
2000. See Schedule I for a complete listing of the aggregate number and
percentage of the Company's Common Stock and Redemption Rights owned by each
director and executive officer of the Company and Thermo Electron.
(b) Securities Transactions. None of Thermo Electron, Thermo Fibertek
or Thermo Fibergen have purchased any Common Stock since June 1, 2000. No
director or officer of Thermo Electron or Thermo Fibergen has purchased or sold
any Common Stock since June 1, 2000.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Solicitations or Recommendations. The Company has not employed,
retained or compensated any person to make solicitations or recommendations in
connection with the exercise of the Redemption Rights.
ITEM 10. FINANCIAL STATEMENTS.
(a) Financial Information. The audited financial statements of the
Company as of and for the fiscal years ended January 1, 2000 and January 2, 1999
are incorporated herein by reference to the Financial Statements of the Company
included as Exhibit 13 to the Company's Annual Report on Form 10-K for its
fiscal year ended January 1, 2000 (the "Form 10-K"). Unaudited financial
statements as of July 1, 2000 and for the six month periods ended July 1, 2000
and July 3, 1999 are incorporated herein by reference to the Financial
Statements of the Company included in the Company's Quarterly Report on Form
10-Q for the period ended July 1, 2000 ("Form 10-Q").
The Form 10-K and Form 10-Q are available for inspection at the SEC's
public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549
and should also be available for inspection at the regional offices of the SEC
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies may be obtained at prescribed rates
- 17 -
<PAGE> 18
from the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The SEC also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at http://www.sec.gov. In addition, the Form 10-K
and Form 10-Q are also available for inspection at the offices of the American
Stock Exchange, 86 Trinity Place, New York, NY 10006-1881.
(b) Pro Forma Information. Not applicable.
(c) Summary Information. Set forth below is certain selected financial
information with respect to the Company excerpted or derived from the audited
financial statements contained in the Company's Form 10-K, and the unaudited
financial statements contained in the Company's Form 10-Q (collectively, the
"Company Reports"). More comprehensive financial information is included in the
Company Reports and in other documents filed by the Company with the SEC (which
may be inspected or obtained in the manner set forth above), and the following
financial information is qualified in its entirety by reference to the Company
Reports and other documents and all of the financial information (including any
related notes) contained therein or incorporated therein by reference.
The selected financial information of the Company presented below as of
and for the fiscal years ended January 1, 2000, January 2, 1999, January 3,
1998, December 28, 1996 and December 30, 1995 has been derived from the
Company's Financial Statements, which have been audited by Arthur Andersen LLP.
The selected financial information for the six months ended July 1, 2000, and
July 3, 1999 has not been audited. The results of operations for the six months
ended July 1, 2000 are not necessarily indicative of results for the entire
year. The selected financial information presented below should be read in
conjunction with the Company's Financial Statements and related notes set forth
in the Form 10-K and the Form 10-Q. Copies of the Form 10-K and Form 10-Q are
available from the Company by writing to the address set forth above under Item
2 or from the Commission at one of the addresses set forth above.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Six Months Ended
---------------------
July 1, July 3,
(In thousands except per share amounts) 2000 1999 1999(a) 1998 1997 1996(b) 1995
--------------------------------------- -------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $ 4,479 $ 4,327 $ 8,579 $ 5,276 $ 4,836 $ 2,223 $ --
Net Income (Loss) 419 561 1,040 399 1,098 (367) (601)
Earnings (Loss) per Share:
Basic .03 .04 .07 .03 .07 (.03) (.06)
Diluted .03 .03 .07 .02 .07 (.03) (.06)
Weighted Average Shares:
Basic 14,165 14,523 14,389 14,715 14,715 11,321 10,000
Diluted 14,543 16,115 15,540 16,867 16,414 11,321 10,000
BALANCE SHEET DATA (AT END OF
PERIOD):
Working Capital $(10,267) $53,133 $(9,167) $55,909 $58,609 $56,477 $ --
Total Assets 71,132 68,012 72,438 71,116 70,164 71,033 --
Common Stock Subject to
Redemption -- 58,802 -- 58,260 57,176 56,087 --
Shareholders' Investment 5,668 7,409 5,640 11,242 11,959 11,921 --
OTHER DATA:
Book Value per Share $ .40 $ .52 $ .40 $ .76
Cash Dividends -- -- -- -- -- -- --
Ratio of Earnings to Fixed Charges(c) n/a 1.03x n/a n/a
Ratio of Earnings to Fixed Charges
Coverage Deficiency $ 556 n/a $ 126 $ 1,142
</TABLE>
- 18 -
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
for Thermo Fibertek Inc. 3.76x 4.86x 4.00x 4.02x
</TABLE>
(a) Reflects the reclassification of common stock subject to redemption to
current liabilities.
(b) Reflects the transfer of $12.5 million in cash to the Company from Thermo
Fibertek in connection with the capitalization of the Company in February
1996, the acquisition of Grantek in July 1996, and the net proceeds from
the Company's initial public offering in September 1996.
(c) For purposes of computing the ratios of earnings to fixed charges,
"earnings" represent income before taxes and minority interest, plus
fixed charges. "Fixed charges" consist of interest expense, accretion of
common stock subject to redemption, and one-third of rental expense,
which is deemed to be the interest component of such rental expense.
ITEM 11. ADDITIONAL INFORMATION.
(a) Agreements, Regulatory Requirements and Legal Proceedings. None
(b) Other Material Information. None
ITEM 12. EXHIBITS.
(a)(1) Notice, dated July 28, 2000, of commencement of redemption
period
(a)(2) Form of Redemption Right Certificate
(a)(3) Form of letter to brokers, dealers and other financial
intermediaries
(a)(4) Form of letter to clients of brokers, dealers and financial
intermediaries
(b) Not applicable
(d) Not applicable
(g) Not applicable
(h) Not applicable
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
ITEM 1. SUMMARY TERM SHEET See Item 1 of Schedule TO above.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a)-(c) See Item 2 of Schedule TO above.
(d) The Company has not declared any dividends since its
initial public offering in 1996. Other than the requirements of Delaware law,
there are no legal or contractual restrictions on the Company's ability to
declare dividends.
(e) The Company has not made an underwritten public offering
of its securities during the past three years.
(f) The Company has not purchased any Redemption Rights during
the past two years. The following table sets forth the number of Shares
purchased by the Company, the range of prices paid and the average purchase
price for each quarter during
- 19 -
<PAGE> 20
the fiscal year ended January 1, 2000. Except as provided in the following
table, the Company has not purchased any Shares during the two year period
ending July 31, 2000.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 1, 2000: SHARES PURCHASED PRICE RANGE AVERAGE PURCHASE PRICE
---------------------------------- ---------------- ----------- ----------------------
<S> <C> <C> <C>
1st Quarter............................... 250,000 $8.906 $ 8.906
-----------------------------------------------------------------------------------------------------------------
2nd Quarter............................... 152,600 $ 9.238 - 14.425 $10.477
-----------------------------------------------------------------------------------------------------------------
3rd Quarter............................... 69,100 $11.238 - 11.363 $11.336
-----------------------------------------------------------------------------------------------------------------
4th Quarter............................... 82,700 $10.800 - 11.175 $11.017
-----------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a)-(c) See Item 3 of Schedule TO above.
ITEM 4. TERMS OF THE TRANSACTION.
(a) and (b) See Item 4 of Schedule TO above.
(c) Different Terms. All holders of Redemption Rights will
be treated equally in the transaction.
(d) Appraisal Rights. Not applicable.
(e) Provisions for Unaffiliated Security Holders. The Company
has not made any provisions in connection with the Redemption Rights to grant
unaffiliated security holders access to the corporate files of the Company or to
obtain counsel or appraisal services at the expense of the Company.
(f) Eligibility for Listing or Trading. The transaction does
not involve the offer of securities of the Company in exchange for equity
securities held by unaffiliated security holders of the Company.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) Transactions. At July 1, 2000, $12,288,000 of the
Company's cash equivalents were invested in a cash management arrangement with
Thermo Electron. This arrangement with Thermo Electron has been terminated.
Under this arrangement, amounts advanced to Thermo Electron by the Company for
domestic cash management purposes bore interest at the 30-day Dealer Commercial
Paper Rate plus 50 basis points, set at the beginning of each month. Thermo
Electron was contractually required to maintain cash, cash equivalents, and/or
immediately available bank lines of credit equal to at least 50% of all funds
invested under this cash management arrangement by all Thermo Electron
subsidiaries other than wholly-owned subsidiaries. The Company had the
contractual right to withdraw its funds invested in the cash management
arrangement upon 30 days' prior notice. In addition, under this domestic cash
management arrangement, amounts borrowed from Thermo Electron for domestic cash
management purposes bore interest at the 30-day Dealer Commercial Paper Rate
- 20 -
<PAGE> 21
plus 150 basis points, set at the beginning of each month. The Company had no
borrowings under this arrangement at July 1, 2000.
As of July 1, 2000, $342,000 was owed to the Company by Thermo Electron
and its other subsidiaries for taxes, net of amounts owed to Thermo Electron and
its other subsidiaries for amounts due under a services agreement with Thermo
Electron and related administrative charges, for other products and services,
and for miscellaneous items. The largest amount due to the Company from Thermo
Electron and its other subsidiaries since January 3, 1999 was $377,000. These
amounts do not bear interest and are expected to be paid to the Company in the
normal course of business.
In March 1999, the Company purchased 250,000 shares of Common Stock
from Thermo Electron for an aggregate purchase price of $2,227,000. The purchase
price was the fair market value of the shares of Common Stock. The fair market
value of such shares was determined based on the average of the closing prices
of the Common Stock as reported on the American Stock Exchange for the five
trading days preceding March 18, 1999, the date the parties entered into a
definitive stock purchase agreement. Thermo Electron had previously purchased
the shares of Common Stock in open market transactions for an aggregate purchase
price of approximately $1,970,000.
On January 31, 2000, Thermo Electron announced a reorganization plan
involving itself and certain of its subsidiaries, including the Company. Thermo
Electron announced that it plans to spin off its equity interest in Thermo
Fibertek as a dividend to Thermo Electron's shareholders. When the spinoff is
completed, Thermo Fibertek will no longer be a subsidiary of Thermo Electron and
will have its own entirely separate and independent board of directors and
management team. The completion of this transaction is subject to a number of
conditions, including receipt of a favorable ruling by the Internal Revenue
Service regarding the tax treatment of the spinoff and final action by the board
of directors of Thermo Electron. The Company will remain a subsidiary of Thermo
Fibertek after the spinoff.
The human resources committee of the Company's board of directors (the
"Committee") established a stock holding policy that requires its chief
executive officer to acquire and hold a minimum number of shares of Common
Stock. In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Company may make interest-free loans to the chief executive officer, to
enable him to purchase Common Stock in the open market. Loans will be repayable
upon the earlier of demand or the tenth anniversary of the date of the loan,
unless otherwise determined by the Committee. No such loans are outstanding.
(b)-(c) Significant Corporate Events; Negotiations or
Contacts. There have been no negotiations, transactions or material contacts
between the Company and any of its affiliates with respect to any merger,
consolidation, acquisition, tender offer, the election of the Company's board of
directors or the sale or other transfer of a material amount of the Company's
assets.
(e) Agreements Involving the Subject Company's Securities.
See Item 5 of Schedule TO above.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. See Item 6
of Schedule TO above.
- 21 -
<PAGE> 22
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) Purpose. The purpose of the Offer is to comply with the
Company's obligations under the outstanding Redemption Rights. The Redemption
Rights were issued in the Company's initial public offering in 1996, as units
consisting of one share of Common Stock and one Redemption Right. The units were
designed to offer purchasers of the Company's Common Stock some protection
against a decline in the market value of the Company's Common Stock by providing
two one month periods during which the Company would repurchase the Common Stock
at the initial offering price.
(b) Alternatives. Not applicable.
(c) Reasons. The structure and timing of the transaction
are required by the terms of the Company's outstanding Redemption Rights.
(d) Effects.
Possible Effects of the Offer. The redemption of Shares pursuant to the
Offer would reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares. This could adversely affect the
liquidity and market value of the remaining Shares held by the public.
American Stock Exchange Listing. The Shares would be delisted if the
redemption of Shares reduces the number of publicly held Shares to a number less
than that required under the American Stock Exchange's minimum listing criteria.
Similarly, the exercise of Redemption Rights may result in the remaining
Redemption Rights being delisted. The listing requirements of the American Stock
Exchange require that an issuer have at least 200,000 publicly held shares, held
by at least 300 stockholders, with a market value of at least $1,000,000, and
have stockholders' equity of at least $2,000,000 or $4,000,000 (depending on the
profitability levels during the issuer's four most recent fiscal years).
In the event that the Shares or Redemption Rights no longer meet the
requirements for listing on the American Stock Exchange, it is possible that the
Shares or Redemption Rights would continue to trade in the over-the-counter
market and that price or other quotations might still be available from other
sources. The extent of the public market for the Shares or Redemption Rights and
the availability of such quotations would, however, depend upon such factors as
the number of holders and/or the aggregate market value of such Shares or
Redemption Rights remaining at such time, the interest in maintaining a market
in such Shares or Redemption Rights on the part of securities firms, the
possible termination of registration of such Shares or Redemption Rights under
the Exchange Act, as described below, and other factors. The Company cannot
predict whether a reduction in the number of Shares or Redemption Rights that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or Redemption Rights or whether
it would cause future market prices of Shares to be greater or less than the
Redemption Price.
Exchange Act Registration. The Shares and Redemption Rights are
currently registered under the Exchange Act. If a sufficient number of holders
of Redemption Rights surrender Shares for redemption during the 2000 Exercise
Period, the Company could deregister the Shares and the Redemption Rights, in
which case the Company's reporting obligations under the Exchange Act would
terminate. If, after the 2000
- 22 -
<PAGE> 23
Exercise Period, the Company is eligible to terminate the registration of
its Common Stock and Redemption Rights under the Exchange Act, it plans to
evaluate the benefits and detriments of such deregistration. Registration of the
Shares and the Redemption Rights may be terminated upon application by the
Company to the Commission if the Shares or the Redemption Rights are no longer
listed on a national securities exchange and there are fewer than 300 record
holders of the Shares or the Redemption Rights.
The termination of the registration of the Shares and Redemption Rights
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of the Shares and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a) and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of the securities pursuant to
Rule 144 under the Securities Act. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or eligible for listing on the American Stock Exchange.
Margin Regulations. The Shares are currently "margin securities" under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such Shares for the purpose of buying,
carrying or trading in securities ("purpose loans"). Following the redemption of
Shares pursuant to the Offer, depending upon factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, the Shares might no longer constitute "margin securities" for purposes
of the Federal Reserve Board's margin regulations and therefore could no longer
be used as collateral for purpose loans made by brokers. In addition, if
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
See "Certain Federal Income Tax Consequences" under Item 4 to Schedule
TO above.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) and (b) Fairness; Factors Considered in Determining
Fairness. In connection with the 2000 Exercise Period, the Board of Directors of
the Company (the "Board") has not taken any action to set the Redemption Price
or the redemption period, each of which was fixed at the time of the Company's
initial public offering in 1996.
At a meeting held on August 29, 2000, the Board determined
that the terms of the Offer, including the Redemption Price, were fair to the
stockholders of the Company other than Thermo Fibertek and its affiliates who
elect to exercise Redemption Rights during the 2000 Exercise Period. In making
that determination, the Board considered many factors that reflect upon the
substantive and procedural fairness of the Offer. The Board considered the
fairness of the redemption price in light of:
- the current market value of the Common Stock, both alone
and in combination with Redemption Rights;
- 23 -
<PAGE> 24
- the historical market price of the Common Stock, both
alone and in combination with Redemption Rights;
- the prices paid by the Company and its affiliates in
open market purchases of the Common Stock since the
IPO;
- the net book value per share; and
- a comparison of the ratio of revenue to market
capitalization of the Company with similar data for
selected publicly traded companies engaged in businesses
which the Board judged to be analogous to the Company's
business.
The Board also considered the procedural fairness of the terms of the Offer.
In determining that the terms of the Offer, including the
Redemption Price, were fair to the stockholders of the Company other than Thermo
Fibertek and its affiliates who elect to exercise Redemption Rights during the
2000 Exercise Period, the Board considered the following:
- The Board considered the current market value of the
Common Stock and the Redemption Rights. At August 25,
2000, the market value of the Common Stock and the
Redemption Rights were $12.00 and $0.75, respectively. In
recent months, the market value of the Common Stock has
been at a slight discount to the Redemption Price and the
combined market value of the Common Stock and the
Redemption Rights has been at a slight premium to the
Redemption Price. The Board believes that the Redemption
Price, less a discount reflecting the return that could
be earned on an equivalent investment until the
redemption payment date, is acting as a floor on the
value of the Common Stock. Once the Redemption Rights
expire, the Board believes that it is likely that the
market value of the Common Stock may move to a price
substantially below this floor.
- Since the Company's initial public offering, the Company,
Thermo Fibertek and Thermo Electron have repurchased an
aggregate of 1,241,150 shares of Common Stock at prices
ranging from $7.80 to $14.425 per share, with a weighted
average purchase price of $9.11 per share. The Company,
Thermo Fibertek and Thermo Electron have not purchased
any Redemption Rights. The Board noted that the average
repurchase price for the Common Stock paid by the
Company, Thermo Fibertek and Thermo Electron was below
the Redemption Price.
- The Board also noted that the Company has not received
any offers from third parties to purchase the outstanding
shares of the Company, to merge the Company with another
entity or to sell substantially all of the assets of the
Company to a third party.
- Using publicly available information, the Board compared
selected financial data of the Company with similar data
for selected publicly traded companies engaged in
businesses which the Board judged to be
- 24 -
<PAGE> 25
comparable to the Company. The companies selected by the
Board were Trex Company, Inc. and U.S. Plastic Lumber
Corp. Both companies manufacture and sell plastic lumber
in competition with the Company's fiber-based composites.
Trex Company is the nation's largest manufacturer of
non-wood decking. U.S. Plastic Lumber is a significant
competitor in the plastic wood market and also provides
environmental recycling services. Both Trex Company and
U.S. Plastic Lumber are established competitors in the
plastic lumber business with significant current revenues
and operating profits. Since the Company is at a much
earlier stage of development, it is difficult to rely on
comparisons of current financial performance with Trex
Company and U.S. Plastic Lumber to establish a valuation
analysis for the Company. There are no comparable public
companies that compete with the Company in its other
lines of business -- fiber-recovery and
water-clarification services, and cellulose-based
products.
Because both Trex Company and U.S. Plastic Lumber are
profitable while the Company has minimal earnings, the
Board believes that comparisons based on multiples of
earnings are of limited value. Trex Company is trading at
a multiple of 30.0 times trailing 12 month earnings per
share of $1.29, based upon its closing stock price on
August 23, 2000. U.S. Plastic Lumber is trading at a
multiple of 18.8 times trailing 12 month earnings per
share of $0.18. based upon its closing stock price on
August 23, 2000. Based on these multiples, the Company's
implied value would range from $1.13 to $1.80 per share,
significantly below the Redemption Price.
Deriving a valuation for the Company based on a multiple
of revenues also yields a figure much lower than the
Redemption Price, although the Board again believes that
such comparison needs to be considered in light of the
comparative stage of the Company's development. Trex
Company's market value at August 23, 2000 was 5.13 times
trailing 12 month revenues, while U.S. Plastic Lumber
traded at such date at 0.78 times trailing 12 month
revenues. Based on these multiples, the Company's implied
value would range from $0.48 to $3.16 per share.
- The Board considered that the Redemption Price reflected
a substantial premium over the net book value per Share
(adjusted to treat the Common Stock subject to redemption
as equity) of $4.63 as of July 1, 2000. However, the
Board does not believe that net book value per Share is
particularly meaningful.
- The Board considered that the repurchase of Shares
pursuant to the Redemption Rights was procedurally fair
to the Company's stockholders. The Board did not believe
that the Redemption Rights are coercive. No stockholder
who wished to remain a stockholder of the Company was
being forced to sell such stockholder's interest in the
Company. Since the Redemption Rights are publicly traded,
any investor who only owned Common Stock could purchase
the Redemption Rights, at a price set by the market and
not the Company, in order to surrender such holder's
Shares. In addition, the Company
- 25 -
<PAGE> 26
stockholders and the market generally have been fully
informed of the existence of the Redemption Rights since
the Company's initial public offering. Consequently, the
holders of these instruments purchased them with
knowledge of, and at a price that was reflective of, the
redemption period in September 2000. While a stockholder
vote is not required for the Company to honor its
Redemption Rights, the Company's obligations have been
clearly disclosed to stockholders prior to their purchase
of either the Common Stock or the Redemption Rights.
- The Board also considered that it has a contractual
obligation to the holders of the Redemption Rights to
repurchase Shares properly surrendered for redemption,
which obligation is not contingent upon the fairness of
the consideration to surrendering stockholders.
On the basis of the forgoing factors, the Board determined that the
terms of the Offer, including the Redemption Price, were fair to stockholders
who elect to surrender their Shares for redemption during the 2000 Exercise
Period.
The Board did not consider the liquidation value of the Company to be a
true indicator of the Company's value because there is no intention to liquidate
the Company.
The Board did not retain an investment bank to advise the Board as to
the fairness of the Redemption Price. In the Board's view, such a "fairness
opinion" would cause the Company to incur a significant expense and would not
materially affect the transaction, as the Company is contractually obligated to
honor any exercise of the Redemption Rights whether or not the investment bank
advised the Board that the Redemption Price is fair.
(c) Approval of Security Holders. The exercise of the
Redemption Rights, and the Company's redemption of the Shares surrendered for
redemption, are not subject to approval by a majority of the holders of the
Company's Common Stock.
(d) Unaffiliated Representatives. The Board of Directors has
not retained an unaffiliated representative to act on behalf of the Company's
stockholders.
(e) Approval of Directors. Exercise of the Redemption Rights,
and the Company's redemption of the Shares surrendered for redemption, is not
subject to approval of the Company's Board of Directors.
(f) Other Offers. The Company has not received any other offer
for the sale of the Company.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
(a) Report, Opinion or Appraisal. The Company has not received
any report, opinion or appraisal from an outside party that is materially
related to the transaction.
(b) Preparer and Summary of the Report, Opinion or Appraisal.
Not applicable.
(c) Availability of Documents. Not applicable.
- 26 -
<PAGE> 27
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a), (b) and (d) See Item 7 of Schedule TO above.
(c) Expenses. The following is an estimate of fees and
expenses to be incurred by the Company in connection with the redemption:
LEGAL............................................ $50,000.00
FILING........................................... 12,023.25
MISCELLANEOUS.................................... 37,976.75
-----------
$100,000.00
===========
ITEM 11. INTEREST IN SECURITIES OF SUBJECT COMPANY. See Item 8
of Schedule TO above.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d) Intent to Tender or Vote in a Going-private Transaction.
The Company anticipates that the directors and executive officers of the Company
and Thermo Electron who own Redemption Rights will exercise such rights in the
2000 Exercise Period.
(e) Recommendations of Others. No officer or director of the
Company or any of its affiliates has made a recommendation with respect to the
Redemption Rights.
ITEM 13. FINANCIAL STATEMENTS. See Item 10 of Schedule TO above.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Solicitation or Recommendations. See Item 9 of Schedule TO
above.
(b) Employees and Corporate Assets. Not applicable.
ITEM 15. ADDITIONAL INFORMATION. See Item 9 of Schedule TO above.
ITEM 16. EXHIBITS.
(c) See form of Guarantee included in Exhibit (a)(2).
(f) Not applicable.
- 27 -
<PAGE> 28
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this Statement is true, complete and correct.
THERMO FIBERGEN INC.
By: /s/ Yiannis A. Monovoukas
---------------------------------
Name: Yiannis A. Monovoukas
Title: President and Chief Executive Officer
Date: August 30, 2000
- 28 -
<PAGE> 29
SCHEDULE I
MEMBERS OF THE BOARDS OF DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY AND THERMO ELECTRON
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The name, business address, position with the Company, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of the Company, together with the names,
principal businesses and addresses of any corporations or other organizations in
which such principal occupations are conducted, are set forth below. Unless
otherwise indicated, each occupation set forth refers to the Company, each
individual is a United States citizen and each individual's business address is
8 Alfred Circle, Bedford, Massachusetts 01730. Unless otherwise indicated, to
the knowledge of the Company, no director or executive officer of the Company
has been convicted in a criminal proceeding during the last five years
(excluding traffic violations or similar misdemeanors) and no director or
executive officer of the Company was a party to any judicial or administrative
proceeding during the last five years (except for any matters that were
dismissed without sanction or settlement) that resulted in a judgement, decree
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws.
DR. YIANNIS A. MONOVOUKAS Dr. Monovoukas, 39, has been president, chief
executive officer and a director of the Company
since its incorporation in February 1996. Dr.
Monovoukas was a corporate business analyst with
Thermo Electron from July 1995 to February 1996.
From 1993 through June 1995, Dr. Monovoukas was a
graduate student at the Harvard Business School.
THEO MELAS-KYRIAZI Mr. Melas-Kyriazi, 41, has been a vice president,
of Thermo Electron since March 1998 and has been
chief financial officer of the Company and Thermo
Electron since January 1999. Prior to his
appointment as a vice president at Thermo
Electron, Mr. Melas-Kyriazi served as president
and chief executive officer of ThermoSpectra
Corporation, a wholly-owned subsidiary of Thermo
Electron that develops, manufactures, and markets
precision imaging, inspection, measurement, and
temperature-control instrumentation for customers
in an array of industries from its inception until
March 1998. Mr. Melas-Kyriazi is a citizen of
Greece.
ANNE T. BARRETT Ms. Barrett, 70, has been a director of the
Company since July 1996. Ms. Barrett has been an
independent consultant on investor relations and
communications matters since her retirement from
Thermo Electron in November 1993. Prior to that
time, Ms. Barrett was director of corporate
communications for Thermo Electron for more than
five years.
FRANCIS L. MCKONE Mr. McKone, 66, has been a director of the Company
since March 1998. Mr. McKone is the chief
executive officer and chairman of the board of
Albany International Corp., a worldwide supplier
of paper- machine fabrics, positions he has held
since 1993 and 1998, respectively. From 1984 to
1998, he was also president of Albany
International Corp. and from 1984 to 1993, he was
that company's co-chief executive officer. He is
also a director of Albany International Corp. and
Thermo Fibertek Inc.
JONATHAN W. PAINTER Mr. Painter, 41, has been a director of the
Company since its incorporation in February 1996.
Mr. Painter has been executive vice president,
operations, of Thermo Fibertek since September
1997, was treasurer of Thermo Electron from August
1994 through June 1997, and was treasurer
<PAGE> 30
of Thermo Fibertek from October 1994 through June
1997.
WILLIAM A. RAINVILLE Mr. Rainville, 58, has been chairman of the board
and a director of the Company since its
incorporation in February 1996. Mr. Rainville has
been president and chief executive officer of
Thermo Fibertek since its inception in November
1991 and a director of Thermo Fibertek since
January 1992. Mr. Rainville has been the chief
operating officer, recycling and resource
recovery, of Thermo Electron since September 1998.
He was a senior vice president of Thermo Electron
from March 1993 through September 1998. Mr.
Rainville is also a director of Thermo Fibertek
and Thermo TerraTech Inc.
ROGER D. WELLINGTON Mr. Wellington, 73, has been a director of the
Company since April 1998. Mr. Wellington serves as
the president and chief executive officer of
Wellington Consultants, Inc. and of Wellington
Associates Inc., international business consulting
firms he founded in 1994 and 1989, respectively.
Mr. Wellington is also a director of Photoelectron
Corporation.
Stock Ownership. The following table sets forth the aggregate number
and percentage of the Company's Common Stock owned by each director and
executive officer of the Company as of June 30, 2000. Except for Mr. Rainville,
no director or executive officer of the Company owned any Redemption Rights as
of June 30, 2000.
NAME (1) NUMBER OF SHARES(2)
-------- -------------------
Dr. Yiannis A. Monovoukas 134,450
Theo Melas-Kyriazi 27,000
Anne T. Barrett 22,000
Francis L. McKone 18,037
Jonathan W. Painter 21,000
William A. Rainville (3) 78,000
Roger D. Wellington 13,625
All directors and current executive
officers as a
group (7 persons) 314,112
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for the
benefit of minor children, and all share ownership includes sole voting and
investment power.
(2) Shares of Common Stock beneficially owned by Mr. Monovoukas, Mr.
Melas-Kyriazi, Ms. Barrett, Mr. McKone, Mr. Painter, Mr. Rainville and Mr.
Wellington and all directors and current executive officers as a group include
120,000, 27,000, 21,000, 16,000, 20,000, 75,000, 12,000 and 291,000 shares,
respectively, that such person or group had the right to acquire within 60 days
of June 30, 2000, through the exercise of stock options. Shares beneficially
owned by Mr. McKone and Mr. Wellington and by all directors and current
executive officers as a group include 1,937, 1,625 and 3,562 shares,
respectively, allocated through April 1, 2000, to their respective accounts
maintained under the Company's Deferred Compensation Plan. None of the directors
or the chief executive officer owned more than 1% of the Common Stock
outstanding as of June 30, 2000; all directors and current executive officers as
a group beneficially owned 2.20% of the Common Stock outstanding as of such
date.
<PAGE> 31
(3) As of June 30, 2000, Mr. Rainville also beneficially owned 1,500 Redemption
Rights.
DIRECTORS AND EXECUTIVE OFFICERS OF THERMO ELECTRON
The name, business address, position with Thermo Electron, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Thermo Electron, together with the
names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
below. Unless otherwise indicated, each occupation set forth refers to Thermo
Electron, each individual is a United States citizen and each individual's
business address is 81 Wyman Street, Waltham, Massachusetts 02454. Unless
otherwise indicated, to the knowledge of the Company, no director or executive
officer of Thermo Electron has been convicted in a criminal proceeding during
the last five years (excluding traffic violations or similar misdemeanors) and
no director or executive officer of Thermo Electron was a party to any judicial
or administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a
judgement, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
SAMUEL W. BODMAN Mr. Bodman, 61, has been a director of Thermo
Electron since May 1999. Since 1988, Mr. Bodman
has served as the chairman and chief executive
officer of Cabot Corporation, a manufacturer of
specialty chemicals and materials located at 75
State Street, Boston, MA 02109. Mr. Bodman is also
a director of Cabot Corporation, John Hancock
Mutual Life Insurance Company, Security Capital
Group Incorporated and Westvaco Corporation.
PETER O. CRISP Mr. Crisp, 67, has been a director of Thermo
Electron since 1974. Mr. Crisp was a general
partner of Venrock Associates, a venture capital
investment firm located at 30 Rockefeller Plaza,
New York, NY 10112, for more than five years until
his retirement in September 1997. He has been the
vice chairman of Rockefeller Financial Services,
Inc. since December 1997. Mr. Crisp is also a
director of American Superconductor Corporation,
Evans & Sutherland Computer Corporation, NovaCare
Inc., and United States Trust Corporation.
MARIJN E. DEKKERS Dr. Dekkers, 42, has been a director, president
and chief operating officer of Thermo Electron
since July 2000. From 1999 to July 2000, Dr.
Dekkers was president of the electronic materials
division of Honeywell International (formerly
Allied Signal Co.), a manufacturer of automated
controls for the aerospace, automotive,
pharmaceutical, fibers and plastics industries,
and also was vice president, general manager of
Honeywell International's specialty films division
from 1995 to 1999. For the ten years prior to
1995, Dr. Dekkers held various operating positions
with General Electric Co. Mr. Dekkers is a citizen
of the Netherlands.
ELIAS P. GYFTOPOULOS Dr. Gyftopoulos, 72, has been a director of Thermo
Electron since 1976. Dr. Gyftopoulos is Professor
Emeritus of the Massachusetts Institute of
Technology, where he was the Ford Professor of
Mechanical Engineering and of Nuclear Engineering
for more than 20 years until his retirement in
1996. Dr. Gyftopoulos is also a director of Thermo
Cardiosystems Inc. and Trex Medical Corporation.
FRANK JUNGERS Mr. Jungers, 73, has been a director of Thermo
Electron since 1978. Mr. Jungers has been a
consultant on business and energy matters since
1977. His business address is 822 N.W. Murray
Boulevard, Suite 242, Portland, OR 97229. Mr.
<PAGE> 32
Jungers is also a director of The AES Corporation,
Donaldson, Lufkin & Jenrette, Inc. and Statia
Terminals Group N.V.
JIM P. MANZI Mr. Manzi, 48, has been a director of Thermo
Electron since May 2000. He was the chairman,
president and chief executive officer of Lotus
Development Corporation, a software manufacturer,
from 1984 until 1995. Since leaving Lotus, he has
been involved in a number of technology startup
ventures, primarily related to the Internet.
ROBERT A. MCCABE Mr. McCabe, 65, has been a director of Thermo
Electron since 1962. He has been the chairman of
Pilot Capital Corporation located at 444 Madison
Avenue, Suite 2103, New York, NY 10022, which is
engaged in private investments, since 1998. Mr.
McCabe was the president of Pilot Capital
Corporation from 1987 to 1998. Mr. McCabe is also a
director of Atlantic Bank & Trust Company, Burns
International Services Corporation, and Church &
Dwight Company.
HUTHAM S. OLAYAN Ms. Olayan, 46, has been a director of Thermo
Electron since 1987. She has served since 1995 as
president and a director of Olayan America
Corporation, a member of the Olayan Group, and as
president and a director of Competrol Real Estate
Limited, another member of the Olayan Group, from
1986 until its merger into Olayan America
Corporation in 1997. The surviving company which is
located at 505 Park Avenue, Suite 1100, New York,
NY 10022, is engaged in private investments,
including real estate, and advisory services. Ms.
Olayan is also a director of Trex Medical
Corporation. Mr. Olayan is a citizen of Saudi
Arabia.
ROBERT W. O'LEARY Mr. O'Leary, 56, has been a director of Thermo
Electron since June 1998. He has been the president
and chief executive officer of PacifiCare Health
Systems, Inc., a managed health services company
located at 3120 Lake Center Drive, Santa Ana, CA
92704, since July 2000. From 1995 to July 2000, Mr.
O'Leary was the president and chairman of Premier,
Inc., a strategic alliance of not-for-profit health
care and hospital systems. Mr. O'Leary is also a
director of Smiths Industries Plc and Eco Soil
Systems, Inc.
RICHARD F. SYRON Dr. Syron, 56, has been a director of Thermo
Electron since September 1997, its chief executive
officer since June 1999 and chairman of the board
since January 2000. He also served as President of
Thermo Electron from June 1999 to July 2000. From
April 1994 until May 1999, Dr. Syron was the
chairman and chief executive officer of the
American Stock Exchange Inc. located at 86 Trinity
Place, New York, NY 10006-1881. Dr. Syron is also a
director of Dreyfus Corporation, The John Hancock
Corporation, and Thermo Fibertek Inc.
BRIAN D. HOLT Mr. Holt, 51, became the chief operating officer,
energy and environment, of Thermo Electron in
September 1998. Mr. Holt has been the president and
chief executive officer of Thermo Ecotek
Corporation, a majority-owned subsidiary of Thermo
Electron located at 245 Winter Street, Waltham, MA
02451, that is involved in clean-power resources,
clean fuels, and naturally derived products for
protecting crops since February 1994. From March
1996 to September 1998, he was a vice president of
Thermo Electron. Mr. Holt is also a director of
Thermo TerraTech Inc.
JOHN T. KEISER Mr. Keiser, 64, became chief operating officer,
biomedical, of Thermo Electron in September 1998
and was a vice president from April 1997 until his
promotion. He has also been the president of Thermo
Electron's wholly owned biomedical group, a
manufacturer of medical equipment and instruments,
since 1994. Mr. Keiser is a director of Thermo
Cardiosystems Inc., and Trex Medical Corporation.
THEO MELAS-KYRIAZI Mr. Melas-Kyriazi, 40, has been a vice president,
of Thermo Electron since March 1998 and its chief
financial officer since January 1999. Prior to his
appointment as a vice president at Thermo Electron,
Mr. Melas-Kyriazi served as president and chief
executive officer of ThermoSpectra Corporation, a
wholly-owned subsidiary of Thermo Electron that
develops, manufactures, and markets precision
imaging, inspection, measurement, and
temperature-control instrumentation for customers
in
<PAGE> 33
an array of industries from its inception until
March 1998. Mr. Melas-Kyriazi is a citizen of
Greece.
WILLIAM A. RAINVILLE Mr. Rainville, 58, became chief operating officer,
recycling and resource recovery, of Thermo
Electron in September 1998. Prior to that time,
Mr. Rainville was a senior vice president of
Thermo Electron from March 1993 to September 1998;
and a vice president of Thermo Electron from 1986
to 1993. He has been president and chief executive
officer of Thermo Fibertek Inc., a majority-owned
subsidiary of Thermo Electron located at 245
Winter Street, Waltham, MA 02451 that develops and
manufactures equipment and products for the
papermaking and paper-recycling industries, since
its inception in 1991. Mr. Rainville is also a
director of Thermo Fibergen Inc., Thermo Fibertek
Inc. and Thermo TerraTech Inc.
Stock Ownership. The following table sets forth the aggregate number
and percentage of the Company's Common Stock owned by each director and
executive officer of Thermo Electron as of June 30, 2000. Except for Mr. Jungers
and Mr. Rainville, no director or executive officer of the Thermo Electron owned
any of the Company's Redemption Rights as of June 30, 2000.
NAME (1) NUMBER OF SHARES(2)
-------- -------------------
Samuel W. Bodman 0
Peter O. Crisp 1,000
Marijn E. Dekkers 0
Elias P. Gyftopoulos 1,000
Frank Jungers (3) 4,000
Jim P. Manzi 0
Robert A. McCabe 1,000
Hutham S. Olayan 2,000
Robert W. O'Leary 0
Richard F. Syron 0
Brian D. Holt 2,000
John T. Keiser 0
Theo Melas-Kyriazi 27,000
William A. Rainville (3) 78,000
All directors and current executive
officers as a group (14 persons) 116,000
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for the
benefit of minor children, and all share ownership includes sole voting and
investment power.
(2) Shares of Common Stock of the Company beneficially owned by Mr. Crisp,
Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe, Ms. Olayan, Mr. Holt, Mr.
Melas-Kyriazi and Mr. Rainville and all directors and current executive officers
as a group include 1,000, 1,000, 1,000, 1,000, 1,000, 2,000, 27,000, 75,000 and
109,000 shares, respectively, that such person or group had the right to acquire
within 60 days of June 30, 2000, through the exercise of stock options. The
directors and the named executive officers did not individually, and the
directors and current executive officers as a group did not, beneficially own
more than 1% of the Company's Common Stock outstanding as of June 30, 2000.
(3) As of June 30, 2000, Mr. Jungers and Mr. Rainville also beneficially
owned 1,500 and 1,500 Redemption Rights, respectively.
<PAGE> 34
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
12(a)(1) Notice, dated July 28, 2000, of pending commencement of redemption
period (filed with Thermo Fibergen's Tender Offer Statement on
Schedule TO-C [File No. 005-51361] and incorporated herein by
reference).
12(a)(2) Form of Redemption Right Certificate (filed as Exhibit 4.4 to
Thermo Fibergen's Registration Statement on Form S-1 [Reg.
No. 333-07585] and incorporated herein by reference).
12(a)(3) Form of letter to brokers, dealers and other financial
intermediaries
12(a)(4) Form of letter to clients of brokers, dealers and financial
intermediaries
