<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
----------------
AMF BOWLING, INC.
(Name of Issuer)
AMF BOWLING, INC.
(Name of Person(s) Filing Statement)
ZERO COUPON CONVERTIBLE
DEBENTURES DUE 2018
(Title of Class of Securities)
03113VAA7
03113VAB5
(CUSIP Number of Class of Securities)
Roland C. Smith
President and Chief
Executive Officer
8100 AMF Drive
Richmond, Virginia 23111
(804) 730-4000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and
Communications on Behalf of Person(s) Filing Statement)
Copies to:
<TABLE>
<S> <C>
Joseph C. Carter, III, Esq. Mitchell S. Presser, Esq.
McGuire, Woods, Battle & Boothe LLP Wachtell, Lipton, Rosen & Katz
One James Center 51 West 52nd Street
901 East Cary Street New York, New York 10019
Richmond, Virginia 23219
</TABLE>
June 29, 1999
(Date Tender Offer First Published, Sent or Given to Security Holders)
----------------
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$72,000,040 $14,401
</TABLE>
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* For purposes of calculating the filing fee pursuant to Rule 0-11 of the
Securities Exchange Act of 1934, as amended, the market value of the Zero
Coupon Convertible Debentures due 2018 proposed to be acquired was determined
by the amount of cash to be paid for such debentures.
[_]Check 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:
------------
Form or Registration No.:
----------
Filing Party:
-----------------------
Date Filed:
-------------------------
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- -------------------------------------------------------------------------------
<PAGE>
INTRODUCTORY STATEMENT
This Issuer Tender Offer Statement (the "Statement") is being filed with the
Securities and Exchange Commission (the "Commission") by AMF Bowling, Inc., a
Delaware corporation ("AMF Bowling"), in connection with an offer (the
"Offer") by AMF Bowling to purchase for cash, on the terms and subject to the
conditions set forth in the Offer to Purchase dated June 29, 1999 (the "Offer
to Purchase") and the related Letter of Transmittal (the "Letter of
Transmittal"), a minimum of $450,000,000 aggregate principal amount at
maturity (40%) and up to $514,286,000 aggregate principal amount at maturity
(45.7%) of its Zero Coupon Convertible Debentures due 2018 (the "Debentures").
Copies of the Offer to Purchase and the related Letter of Transmittal are
filed as Exhibits (a)(1) and (a)(2) hereto.
Item 1. Security and Issuer.
(a) The issuer of the Debentures is AMF Bowling. The address of AMF
Bowling's principal executive office is 8100 AMF Drive, Richmond,
Virginia 23111.
(b) The securities which are the subject of the Offer are the Debentures.
As of June 28, 1999, there was $1,125,000,000 aggregate principal
amount at maturity of Debentures outstanding. The Offer is for a
minimum of $450,000,000 aggregate principal amount at maturity (40%)
and up to $514,286,000 aggregate principal amount at maturity (45.7%)
of Debentures, in denominations of $1,000 principal amount at maturity
or integral multiples thereof, at a price of $140.00 per $1,000
principal amount at maturity. The information set forth in the section
of the Offer to Purchase entitled "Ownership of Debentures" is
incorporated herein by reference.
(c) The information set forth in the section of the Offer to Purchase
entitled "Market Price Information--The Debentures" is incorporated
herein by reference.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) The information set forth in the section of the Offer to Purchase
entitled "Sources and Amount of Funds" is incorporated herein by
reference.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
The information set forth in the sections of the Offer to Purchase entitled
"AMF Bowling" and "Background and Purpose of the Offer" is incorporated herein
by reference.
(a) The information set forth in the sections of the Offer to Purchase
entitled "AMF Bowling" and "Background and Purpose of the Offer" is
incorporated herein by reference.
(b) The information set forth in the sections of the Offer to Purchase
entitled "AMF Bowling" and "Background and Purpose of the Offer" is
incorporated herein by reference.
(c) Not applicable.
(d) The information set forth in the section of the Offer to Purchase
entitled "AMF Bowling" is incorporated herein by reference.
(e) The information set forth in the sections of the Offer to Purchase
entitled "AMF Bowling--Recapitalization Plan," "Capitalization" and
"Background and Purpose of the Offer" is incorporated herein by
reference.
<PAGE>
(f) The information set forth in the sections of the Offer to Purchase
entitled "AMF Bowling" and "Background and Purpose of the Offer" is
incorporated herein by reference.
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
Item 4. Interest in Securities of the Issuer.
Not applicable.
Item 5. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuer's Securities.
Not applicable.
Item 6. Persons Retained, Employed or to Be Compensated.
The information set forth on the cover page of the Offer to Purchase and in
the sections of the Offer to Purchase entitled "Dealer Manager," "The
Depositary," "Information Agent," "Fees and Expenses" and "Indemnification" is
incorporated herein by reference.
Item 7. Financial Information.
(a) The following documents, which have been filed by AMF Bowling (File No.
001-13539) with the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are incorporated herein by
reference:
(1) AMF Bowling's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
(2) AMF Bowling's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1999;
(3) AMF Bowling's Current Reports on Form 8-K dated May 5, 1999,
June 28, 1999 and June 29, 1999;
(4) AMF Bowling's Information Statement on Schedule 14C dated May
5, 1999; and
(5) AMF Bowling's Registration Statement on Form S-3 filed with
the Commission on May 5, 1999 and Amendment No. 1 thereto
filed with the Commission on June 28, 1999 (Registration
Statement No. 333-77763).
All documents filed with the Commission by AMF Bowling pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act on or subsequent to
the date hereof shall be deemed to be incorporated by reference herein
and to be a part hereof from the date any such document is filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained
herein (or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part hereof.
(b) The information set forth in the section of the Offer to Purchase
entitled "Capitalization" is incorporated herein by reference.
2
<PAGE>
Item 8. Additional Information.
(a) The information set forth in the section of the Offer to Purchase
entitled "Ownership of Debentures" is incorporated herein by reference.
(b) There are no applicable regulatory requirements which must be complied
with or approvals which must be obtained in connection with the Offer
other than compliance with the Exchange Act and the rules and
regulations promulgated thereunder including, without limitation, Rule
13e-4 promulgated thereunder, and the requirements of state securities
or "blue sky" laws. The information set forth in the sections of the
Offer to Purchase entitled "Important Information" and "Miscellaneous"
is incorporated herein by reference.
(c) Not applicable.
(d) Not applicable.
(e) Reference is hereby made to the exhibits hereto which are incorporated
in their entirety herein by reference.
Item 9. Material to Be Filed as Exhibits.
(a) Exhibit (a)(1) Offer to Purchase, dated June 29, 1999.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Notice of Guaranteed Delivery.
Exhibit (a)(4) Letter to clients.
Exhibit (a)(5) Letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(6) Notice published in The Wall Street Journal on June 29,
1999.
Exhibit (a)(7) Press Release dated May 5, 1999.
Exhibit (a)(8) Press Release dated June 28, 1999.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
3
<PAGE>
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.
AMF BOWLING, INC.
By: /s/ Roland C. Smith
----------------------------------
Name: Roland C. Smith
Title: President and Chief
Executive Officer
Dated: June 29, 1999
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated June 29, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to clients.
(a)(5) Letter to brokers, dealers, commercial banks, trust companies and
other nominees.
(a)(6) Notice published in The Wall Street Journal on June 29, 1999.
(a)(7) Press Release dated May 5, 1999.
(a)(8) Press Release dated June 28, 1999.
</TABLE>
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
Up to $514,286,000 Aggregate
Principal Amount at Maturity of
Zero Coupon Convertible Debentures Due 2018
of
AMF Bowling, Inc.
at
$140.00 Per $1,000 Principal Amount at Maturity
- --------------------------------------------------------------------------------
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 28, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE
"EXPIRATION DATE"). DEBENTURES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY
TIME BEFORE THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
AMF Bowling, Inc. ("AMF Bowling") hereby offers (the "Offer") to purchase
upon the terms and subject to the conditions set forth in this Offer to
Purchase (this "Offer to Purchase") and in the accompanying Letter of
Transmittal (the "Letter of Transmittal"), a minimum of $450,000,000 aggregate
principal amount at maturity (40%) and up to $514,286,000 aggregate principal
amount at maturity (45.7%) of its Zero Coupon Convertible Debentures due 2018
(the "Debentures") at a cash purchase price of $140.00 per $1,000 principal
amount at maturity (the "Repurchase Price").
The Debentures are designated for trading in the PortalSM Market ("PORTAL").
The closing bid quotation per $1,000 principal amount at maturity of the
Debentures, as reported by Morgan Stanley & Co. Incorporated ("Morgan
Stanley"), a market maker for the Debentures, on June 25, 1999 was $135.0. The
Debentures are convertible into shares of common stock, par value $0.01 per
share, of AMF Bowling (the "Common Stock"), at a rate of 8.6734 shares per
$1,000 principal amount at maturity of Debentures, without giving effect to
any adjustments to the conversion rate as a result of the Rights Offering (as
hereinafter defined). The Common Stock is listed on The New York Stock
Exchange, Inc. (the "NYSE") under the symbol "PIN". The reported closing price
per share of Common Stock on the NYSE Composite Tape on June 25, 1999 was $6
5/16.
----------------
See "Risk Factors" and "Certain Federal Income Tax Consequences" for
discussions of certain factors that should be considered by holders of
Debentures in evaluating the Offer.
----------------
Unless the Offer is terminated or amended, the consummation of the Offer is
conditioned, unless waived by AMF Bowling, upon (i) the closing on
subscriptions obtained through exercise of the rights issued pursuant to the
Rights Offering which is being conducted concurrently with the Offer with
proceeds of at least $120,000,000, (ii) Debentures in an aggregate principal
amount at maturity of not less than $450,000,000 (40%) being validly tendered
in the Offer and not validly withdrawn (the "Minimum Tender Amount") and (iii)
satisfaction of the General Conditions (as hereinafter defined). Unless the
Offer is terminated, if all of the conditions to the Offer have been satisfied
or waived, Holders (as hereinafter defined) whose Debentures are validly
tendered by the Expiration Date and not withdrawn will receive the Repurchase
Price with respect to such Debentures.
The Offer and the concurrent Rights Offering are part of a recapitalization
plan being undertaken by AMF Bowling and explained in greater detail in this
Offer to Purchase. The funds required to purchase validly tendered Debentures
and to pay fees and expenses related to the Offer are to be provided from the
proceeds of the Rights Offering.
AMF Bowling will accept for purchase up to $514,286,000 aggregate principal
amount at maturity of the Debentures. If Debentures having an aggregate
principal amount at maturity in excess of $514,286,000 are
(continued on following page)
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
June 29, 1999
<PAGE>
validly tendered and not withdrawn, AMF Bowling will purchase Debentures in
aggregate principal amount at maturity of $514,286,000, pro rata in an amount
per Holder equal to (i) a fraction the numerator of which is such Holder's
total principal amount at maturity of Debentures tendered and the denominator
of which is the total principal amount at maturity of all Debentures tendered,
multiplied by (ii) $514,286,000 ("Pro Rata Acceptance"). Debentures may be
tendered only in integral multiples of $1,000 principal amount at maturity.
Affiliates of Goldman, Sachs & Co. ("Goldman Sachs") and affiliates of Kelso
& Co. ("Kelso"), which own in the aggregate a majority of the Common Stock and
approximately $495,950,000 principal amount at maturity of the Debentures and
whose affiliates are directors of AMF Bowling, have indicated that they
currently expect to tender all of their Debentures in the Offer, subject to
market conditions, although they are not obligated to do so.
----------------
Any questions or requests for assistance may be directed to Morgan Stanley &
Co. Incorporated, which is acting as dealer manager for the Offer (the "Dealer
Manager"), at the address and telephone number set forth on the last page of
this Offer to Purchase. The Dealer Manager is also acting as financial advisor
to the Board of Directors (the "Board") of AMF Bowling in connection with the
recapitalization plan, including the Rights Offering and the Offer. It is also
advising a special committee (the "Special Committee") of the Board on matters
relating to the Offer, including the pricing thereof. Requests for copies of
the Offer materials should be directed to D.F. King & Co., Inc., which is
acting as information agent for the Offer (the "Information Agent"), at the
address and telephone number set forth on the last page of this Offer to
Purchase or to a Holder's broker, dealer, commercial bank, trust company or
other nominee. None of AMF Bowling, the Board, the Special Committee, the
Trustee (as hereinafter defined), the Depositary (as hereinafter defined), the
Dealer Manager or the Information Agent makes any recommendation as to whether
or not Holders should tender any or all of their Debentures in the Offer. Each
holder must make its own decision as to whether to tender Debentures pursuant
to the Offer and, if so, the principal amount at maturity of Debentures to
tender.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Important Information...................................................... 4
Available Information...................................................... 6
Incorporation of Certain Documents by Reference............................ 6
Disclosure Regarding Forward-looking Statements............................ 7
Summary.................................................................... 8
Risk Factors............................................................... 10
Recent Developments........................................................ 16
AMF Bowling................................................................ 17
The Debentures............................................................. 21
Market Price Information................................................... 22
Selected Historical and Pro Forma Financial Data........................... 23
Capitalization............................................................. 25
Background and Purpose of the Offer........................................ 26
The Offer.................................................................. 27
Procedures for Tendering Debentures........................................ 30
Ownership of Debentures.................................................... 34
Sources and Amount of Funds................................................ 35
Certain Federal Income Tax Consequences.................................... 35
Dealer Manager............................................................. 37
The Depositary............................................................. 38
Information Agent.......................................................... 38
Fees and Expenses.......................................................... 38
Indemnification............................................................ 38
Miscellaneous.............................................................. 38
</TABLE>
3
<PAGE>
Subject to applicable securities laws and the terms set forth in this Offer
to Purchase, AMF Bowling reserves the right (i) to terminate the Offer, (ii)
to waive any and all unsatisfied conditions to the Offer, (iii) to extend the
Expiration Date or (iv) to otherwise amend the Offer in any respect. Any such
waiver, termination, extension or amendment may be made by press release or
such other means of announcement as AMF Bowling deems appropriate, subject to
compliance with applicable laws.
IMPORTANT INFORMATION
This Offer to Purchase and the accompanying Letter of Transmittal contain
important information which should be read before any decision is made with
respect to the Offer.
In order to validly tender Debentures in the Offer, a Holder must, on or
before the Expiration Date, deliver to ChaseMellon Shareholder Services,
L.L.C. ("the Depositary") at the address set forth on the last page of this
Offer to Purchase a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) or an Agent's Message (as hereinafter
defined), and any other documents required by the instructions to such Letter
of Transmittal, together with the Debentures (or such Debentures must be
transferred pursuant to the procedures for book-entry transfer described
therein and a confirmation of such book-entry transfer, including an Agent's
Message, must be received by the Depositary, on or before the Expiration
Date). If a Holder does not deliver such documents on or before the Expiration
Date, the Holder will not be eligible to receive the Repurchase Price.
Only (i) those persons in whose name Debentures are registered in the
registry maintained by the Trustee under the Indenture or (ii) persons, such
as brokers, dealers, commercial banks, trust companies and other nominees, who
are participants in the Depository Trust Company ("DTC") (or a substitute
book-entry transfer facility) and whose names appear on a security listing as
owners of the Debentures (collectively, the "Holders"), will be eligible to
tender Debentures. Any beneficial owner whose Debentures are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender Debentures should contact promptly such registered
Holder. See "Procedures for Tendering Debentures" and the accompanying Letter
of Transmittal.
The Depositary and DTC have confirmed that the Offer is eligible for the DTC
Automated Tender Offer Program ("ATOP"). Accordingly, DTC participants may
electronically transmit their acceptance of the Offer by causing DTC to
transfer Debentures to the Depositary in accordance with DTC's ATOP procedures
for transfer. DTC will then send an Agent's Message to the Depositary for its
acceptance. The Depositary will establish an account with respect to the
Debentures at DTC for purposes of the Offer, and any financial institution
that is a participant in DTC's system may make book-entry delivery of the
Debentures by causing DTC to transfer such Debentures into the Depositary's
account at DTC in accordance with DTC's procedure for such transfer. Although
tenders of Debentures may be effected through book-entry transfer at DTC, a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees or an Agent's
Message in connection with a book-entry transfer, must, in any case, be
transmitted to and received by the Depositary at the address set forth on the
last page of this Offer to Purchase on or before the Expiration Date or the
Holder must comply with the guaranteed delivery procedures described herein.
See "Procedures for Tendering Debentures."
The method of delivery of Debentures and Letters of Transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance of an Agent's Message transmitted
through ATOP, is at the election and risk of the person tendering Debentures
and delivering the Letter of Transmittal and, except as otherwise provided in
the Letter of Transmittal, delivery will be deemed made only when actually
received by the Depositary. If delivery is by mail, it is suggested that the
Holder use properly insured, registered mail with return receipt requested,
and that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Depositary on or before the Expiration Date.
Tendering Holders will not be obligated to pay any fees to the Dealer
Manager, the Information Agent or the Depositary.
4
<PAGE>
This Offer to Purchase does not constitute an offer to any person in any
jurisdiction in which such offer would be unlawful, and the Offer is not made
to, and tenders will not be accepted from, Holders in states in which the
Offer or acceptance thereof would constitute a violation of the securities or
blue sky laws of such jurisdiction. In accordance with various state
securities laws applicable to the Offer which require the Offer to be made to
the public by a licensed broker or dealer, the Offer is hereby made to the
Holders residing in each such state by the Dealer Manager on behalf of AMF
Bowling.
No person has been authorized to make any recommendation on behalf of AMF
Bowling as to whether the Holder should tender Debentures pursuant to the
Offer. No person has been authorized to give any information or to make any
representation in connection therewith, other than those contained herein or
in the accompanying Letter of Transmittal. If made or given, such
recommendation or any such information or representation must not be relied
upon as having been authorized by AMF Bowling.
Although it has no obligation to do so, AMF Bowling reserves the right in
the future to seek to acquire Debentures not tendered in the Offer by means of
open market purchases, privately negotiated acquisitions, subsequent exchange
or tender offers, redemptions or otherwise, at prices or on terms which may be
higher or lower or more or less favorable than those in the Offer.
5
<PAGE>
AVAILABLE INFORMATION
AMF Bowling is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning AMF Bowling can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Office at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also can be obtained, at
prescribed rates, from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a site on
the Internet's World Wide Web at http://www.sec.gov. that contains reports,
proxy and information statements and other information regarding registrants
that have filed electronically with the Commission, including AMF Bowling. The
Common Stock is listed and traded on the NYSE and such reports, proxy
statements and other information concerning AMF Bowling may also be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Offer to Purchase constitutes a part of an Issuer Tender Offer
Statement on Schedule 13E-4 (the "Schedule 13E-4") filed with the Commission
by AMF Bowling pursuant to Section 13(e) of the Exchange Act and the rules and
regulations promulgated thereunder. The Schedule 13E-4 and all exhibits
thereto are incorporated in this Offer to Purchase by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by AMF Bowling (File No. 001-
13539) with the Commission under the Exchange Act, are incorporated herein by
reference:
(a) AMF Bowling's Annual Report on Form 10-K for the year ended December
31, 1998;
(b) AMF Bowling's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
(c) AMF Bowling's Current Reports on Form 8-K dated May 5, 1999, June 28,
1999 and June 29, 1999;
(d) AMF Bowling's Information Statement on Schedule 14C dated May 5, 1999;
and
(e) AMF Bowling's Registration Statement on Form S-3 filed with the
Commission on May 5, 1999 and Amendment No. 1 thereto filed with the
Commission on June 28, 1999 (Registration Statement No. 333-77763 (the
"Registration Statement")).
All documents filed with the Commission by AMF Bowling pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act on or subsequent to the date
hereof and prior to the Expiration Date shall be deemed to be incorporated by
reference herein and to be a part hereof from the date any such document is
filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part hereof.
The documents incorporated by reference herein (other than exhibits to such
documents that are not specifically incorporated by reference herein) are
available without charge to any person to whom this Offer to Purchase has been
delivered upon written or oral request to AMF Bowling, Inc., 8100 AMF Drive,
Richmond, Virginia 23111, Attention: Renee Antolik, Vice President, Investor
Relations and Financial Reporting, telephone: (804) 730-4402.
6
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Offer to Purchase (and in the documents
incorporated by reference) contain forward-looking statements, which are
statements other than historical information or statements of current
condition. The following statements are or may be forward-looking statements:
statements set forth in this Offer to Purchase or statements incorporated by
reference from documents filed with the Commission, including possible or
assumed future results of the Company's (as hereinafter defined) operations,
including but not limited to any statements contained in this Offer to
Purchase or those documents concerning: (i) the manner, timing and expected
results of AMF Bowling's recapitalization plan and related activities and
charges, (ii) the expected success of the Company's plans to improve its
bowling centers operations, including revenue enhancement and cost management
programs, (iii) the ability of the Company's new management to execute its
strategies, (iv) the success of the recent management reorganization of the
Company's bowling centers and bowling products businesses, (v) the ability to
increase the pace of the Company's bowling center acquisition program, (vi)
the expected success of changes contemplated in the Company's bowling products
business, (vii) the Company's expectations concerning the Asia Pacific region
and the joint distribution and related arrangements with Shanghai Zhonglu
Industrial Corporation ("Zhonglu"), (viii) the success of the Company's
employee incentive efforts, (ix) the outcome of existing or potential
litigation, (x) the timing or amount of any changes in the interest expense of
the Company's indebtedness, (xi) the Company's ability to generate cash flow
to service its indebtedness and meet its debt payment obligations, (xii) the
amounts of capital expenditures needed to maintain or improve the Company's
bowling centers, (xiii) any statements preceded by, followed by or including
the words "believes," "expects," "predicts," "anticipates," "intends,"
"estimates," "should," "may" or similar expressions and (xiv) other statements
contained or incorporated by reference in this Offer to Purchase regarding
matters that are not historical facts.
These forward-looking statements relate to the plans and objectives of the
Company or future operations. In light of the risks and uncertainties inherent
in all future projections, the inclusion of forward-looking statements in this
Offer to Purchase should not be regarded as a representation by AMF Bowling or
any other person that the objectives or plans of the Company will be achieved.
Many factors could cause the Company's actual results to differ materially
from those in the forward-looking statements, including: (i) the Company's
ability, and the ability of its new management team, to carry out the
Company's long-term business strategies, including increasing the pace of the
Company's acquisition program, (ii) the Company's ability to integrate
acquired operations into its business, (iii) the Company's ability to identify
and develop new bowling markets to assist its growth, (iv) the continuation of
adverse financial results and substantial competition in the Company's bowling
products business, (v) the Company's ability to retain and attract experienced
bowling center management, (vi) the continuation or worsening of economic
difficulties in overseas markets, including the Asia Pacific region, (vii) the
risk of adverse political acts or developments in the Company's existing and
proposed international markets, (viii) the fluctuations in foreign currency
exchange rates affecting the Company's translation of operating results, (ix)
continued or increased competition, (x) the popularity of bowling, (xi) the
decline in general economic conditions, (xii) the status or effectiveness of
the Company's Year 2000 efforts, (xiii) adverse judgments in pending or future
litigation, (xiv) the Company's ability to effectively implement the joint
distribution and related arrangements with Zhonglu, (xv) changes in interest
and exchange rates and (xvi) the other factors discussed under "Risk Factors."
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with other cautionary statements
that are included elsewhere in this Offer to Purchase. AMF Bowling undertakes
no obligation to release publicly the results of any future revisions it may
make to forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events. See
"Risk Factors."
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Offer to
Purchase. Many of the statements in this Offer to Purchase are forward-looking
in nature and, accordingly, whether they prove to be accurate is subject to
many risks and uncertainties. See "Disclosure Regarding Forward-Looking
Statements" and "Risk Factors."
AMF Bowling
AMF Bowling is a holding company, conducts all of its business through
subsidiaries and has only limited management service operations of its own.
Unless the context indicates otherwise, the terms the "Company" or "AMF" as
used herein refer to AMF Bowling and its subsidiaries.
AMF is the largest owner and operator of bowling centers in the world. On
June 21, 1999, the Company owned and operated 541 bowling centers throughout
the world, with 418 centers in the United States and 123 centers in 10 other
countries. AMF is also a world leader in the manufacture and sale of bowling
and other recreational products.
AMF was acquired in 1996 (the "Acquisition") by an investor group led by an
affiliate of Goldman Sachs. The original investor group currently owns
approximately 73.6% of the Common Stock.
Background and Purpose of the Offer
The Offer is part of a comprehensive recapitalization plan designed to
reduce the Company's overall debt burden, provide additional financial
flexibility and allow the Company to increase the pace of its acquisition
program on a selective basis.
Rights Offering
On or about July 7, 1999, AMF Bowling will distribute to each record holder
of Common Stock, at no charge, .4698 transferable rights for each share of
Common Stock owned (the "Rights Offering"), pursuant to a Prospectus (the
"Prospectus") dated June 28, 1999, which forms a part of the Registration
Statement. Each right issued under the Rights Offering entitles the holder to
purchase one share of Common Stock at a subscription price of $5.00 per share.
Each right carries with it a basic subscription privilege, an over-
subscription privilege and a conditional over-subscription privilege as
described in the Prospectus. The Rights Offering is part of a recapitalization
plan being undertaken by AMF Bowling.
Through the concurrent Rights Offering, which is part of the
recapitalization plan, AMF Bowling seeks to raise up to $140 million. A
portion of the net proceeds of the Rights Offering will be used to purchase
validly tendered Debentures and to pay fees and expenses related to the Offer.
The Offer
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<S> <C>
Securities Tendered Zero Coupon Convertible Debentures due 2018.
For
CUSIP Nos. 03113VAA7 and 03113VAB5
Aggregate Principal $1,125,000,000
Amount at Maturity
of Currently Outstanding
Debentures
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Expiration Date The Offer will expire at 12:00 midnight, New York
City time, on July 28, 1999 (unless extended by AMF
Bowling in its sole discretion or earlier terminated).
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<S> <C>
Repurchase Price AMF Bowling is offering to purchase, upon the terms and
subject to the conditions set forth in this Offer to Purchase
and the accompanying Letter of Transmittal, up to $514,286,000
aggregate principal amount at maturity (45.7%) of outstanding
Debentures (the "Maximum Tender Amount") for a cash purchase
price of $140.00 per $1,000 principal amount at maturity. The
Debentures were issued pursuant to the terms of an indenture,
dated as of May 12, 1998 (the "Indenture"), between AMF
Bowling and The Bank of New York, as trustee (the "Trustee").
Acceptance of Promptly after the Expiration Date and subject to the
Debentures for satisfaction or waiver of all relevant conditions, AMF Bowling
Purchase; Payment will accept for purchase, and pay for, up to $514,286,000
for Debentures; Pro Rata aggregate principal amount at maturity of Debentures validly
Acceptance tendered under the Offer as of the Expiration Date and not
withdrawn. If Debentures having an aggregate principal amount
at maturity in excess of $514,286,000 are tendered, AMF
Bowling will purchase $514,286,000 aggregate principal amount
at maturity, pro rata in an amount per Holder equal to (i) a
fraction the numerator of which is such Holder's total
principal amount at maturity of Debentures tendered and the
denominator of which is the total principal amount at maturity
of all Debentures tendered, multiplied by (ii) $514,286,000.
Debentures may be tendered only in integral multiples of
$1,000 principal amount at maturity.
Withdrawal of Tenders Tenders of Debentures may be withdrawn on or before the
Expiration Date. In order to be effective, withdrawals of
Debentures must comply with the respective procedures therefor
described under "Procedures for Tendering Debentures--
Withdrawal Rights." Tenders of any Debentures may also be
withdrawn if the Offer is terminated without any such
Debentures being purchased thereunder or as otherwise provided
herein. In the event of any termination of the Offer, the
Debentures tendered pursuant to the Offer will be returned
promptly to the tendering Holder.
Conditions; Minimum The Offer is being made as part of the Company's
Tender Amount recapitalization plan, which includes the Rights Offering. AMF
Bowling's obligation to accept for purchase, and to pay for,
Debentures validly tendered pursuant to the Offer is
conditioned upon (i) the closing on subscriptions obtained
through exercise of the rights pursuant to the Rights Offering
with proceeds of at least $120,000,000, (ii) Debentures in an
aggregate principal amount at maturity of not less than
$450,000,000 (40%) (the "Minimum Tender Amount") being validly
tendered in the Offer and not withdrawn and (iii) satisfaction
of the General Conditions.
Amendment; Waiver AMF Bowling reserves the right (i) to terminate the Offer,
(ii) to waive any and all unsatisfied conditions to the Offer,
(iii) to extend the Expiration Date or (iv) to otherwise amend
the Offer in any respect. If AMF Bowling makes a material
change in the terms of the Offer or waives a material
condition of the Offer, AMF Bowling will disseminate
information concerning such change or waiver and will extend
the Offer, in each case to the extent required by law. Any
amendment applicable to the Offer will apply to all Debentures
tendered pursuant to the Offer.
How to Tender In order to validly tender Debentures in the Offer, a record
Holder must, on or before the Expiration Date, deliver to the
Depositary at the address set forth on the last page of this
Offer to Purchase a properly completed and duly executed
accompanying Letter of Transmittal (or manually signed
facsimile thereof) or an Agent's Message, and any other
documents required by the instructions in the Letter of
Transmittal, together with such Debentures or such Debentures
must be transferred pursuant to the procedures for
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book-entry transfer described in the Letter of Transmittal and
a confirmation of such book-entry transfer, including an
Agent's Message, must be received by the Depositary.
Guaranteed Delivery A Holder who desires to tender Debentures and who cannot
comply with the procedures set forth herein on a timely basis
or whose Debentures are not immediately available may tender
such Debentures by following the procedures for guaranteed
delivery set forth herein. See "Procedures for Tendering
Debentures--Guaranteed Delivery Procedures" and the Letter of
Transmittal.
Special Procedures for Any beneficial owner whose Debentures are registered in the
Beneficial Owners name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender Debentures should
promptly contact such registered Holder. See "Procedures for
Tendering Debentures" and the Letter of Transmittal.
Certain Consequences Holders should consider the consequences of not tendering
of Not Tendering their Debentures. See "Risk Factors."
Dealer Manager AMF Bowling has retained Morgan Stanley & Co. Incorporated to
act as the dealer manager in connection with the Offer. The
Dealer Manager is also serving as the financial advisor to the
Board and the Special Committee. In its capacity as the Dealer
Manager, Morgan Stanley may contact Holders regarding the
Offer and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward this Offer to
Purchase and related materials to beneficial owners of
Debentures.
Depositary The Depositary for the Offer is ChaseMellon Shareholder
Services, L.L.C.
Information Agent The Information Agent for the Offer is D.F. King & Co., Inc.
</TABLE>
RISK FACTORS
In deciding whether to participate in the Offer, each Holder should consider
carefully, in addition to the other information contained or incorporated by
reference herein, the following:
Market and Trading Information.
The Debentures are currently listed for quotation on PORTAL. Although AMF
Bowling expects the Debentures to continue to be listed for quotation on
PORTAL following completion of the Offer, to the extent that Debentures are
tendered and accepted for payment in the Offer, the trading market for
Debentures that remain outstanding will be significantly more limited, which
is likely to adversely affect the liquidity of the Debentures. If Debentures
in an aggregate principal amount at maturity equal to the Maximum Tender
Amount are purchased in the Offer, only $610,714,000 aggregate principal
amount at maturity (54.3%) of Debentures will remain outstanding. If
Debentures in an aggregate principal amount at maturity equal to the Minimum
Tender Amount are purchased in the Offer, only $675,000,000 aggregate
principal amount at maturity (60%) of Debentures will remain outstanding. An
issue of securities with a smaller float may command a lower price than would
a comparable issue of securities with a greater float. Therefore, the market
price for Debentures that are not tendered or not purchased in the Offer may
be adversely affected to the extent that the amount of the Debentures
purchased pursuant to the Offer reduces the float. The reduced float also will
tend to make the trading prices of the Debentures that are not tendered or
purchased more volatile. As a result, there can be no assurance as to the
depth or liquidity of the trading market for the Debentures after consummation
of the Offer. Further, the Debentures are currently trading at a significant
discount from their issue price and, if the Company's recapitalization plan
(of which the Offer is a part) is successful, the trading price of the
Debentures which remain outstanding may increase to levels in excess of the
Repurchase Price. After the Expiration Date, AMF Bowling may purchase
additional Debentures in the open market, in privately negotiated
transactions, through subsequent tender or exchange offers or otherwise,
subject to compliance with the Indenture and applicable law. Any future
purchases may be on the same terms or on terms that may be more or less
favorable to Holders than the terms of the Offer.
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The Bowling Products Business has Experienced Significant Problems,
Particularly in the Asia Pacific Region.
In recent years, most of the Company's new center package sales have been to
international markets, primarily Asia Pacific countries such as China, Taiwan
and South Korea. New center package sales to China, Japan and other markets in
the Asia Pacific region represented 52.8% of the Company's new center package
sales for 1998, compared to 72.7% for 1997 and 66.5% of the Company's new
center package sales for the first quarter of 1999, compared to 53.2% for the
first quarter of 1998. Economic difficulties in the Asia Pacific region have
had and will continue to have an adverse impact on new center package sales,
shipments and order backlog. Another reason for the decline in new center
package sales is the limited availability of financing for customers desiring
to build new bowling centers, especially in the Asia Pacific region. In
addition, Zhonglu, a Chinese manufacturer of bowling equipment, has become a
significant competitor in China. As discussed under "Recent Developments" and
"AMF Bowling--Bowling Products Business", the Company recently entered into
three year joint distribution agreements with Zhonglu as well as a trademark
license agreement and option agreement. Under these agreements, among other
matters, the Company will exclusively distribute certain Zhonglu products and
parts outside of China and Zhonglu will exclusively distribute AMF products
and parts inside China. There can be no assurance that the arrangements with
Zhonglu will be successful or that other Chinese or other foreign or domestic
competitors will not begin selling bowling equipment within or outside China.
At the end of 1998, new center package backlog was 1,078 which was 37.5%
lower than at the end of 1997. As of March 31, 1999, new center package
backlog was 755 units, which is 30% lower than it was at December 31, 1998. It
is customary for a certain portion of the backlog to be cancelled before the
expected shipping date. The Company has experienced a greater number of order
cancellations recently because of economic difficulties in the Asia Pacific
region. There can be no assurance that economic conditions in the Asia Pacific
region and other regions will improve or that new center package sales will
not decrease any further.
Due to the decline in new center package sales, shipments and order backlog,
in the near term, the Company is concentrating on sales of products designed
to enable bowling center operators to modernize their facilities and on sales
of consumer products such as bowling pins, parts, balls and supplies. There
can be no assurance that the Company will be successful in this effort.
China has recently strengthened its import restrictions by requiring the
payment of full customs duties and value added taxes on the importation of new
and used capital goods. The Chinese government has also begun to prohibit
importation of used capital equipment without permits. Permits for the
importation of used bowling equipment are very difficult to obtain. Local
Chinese companies, including Zhonglu, however, are not subject to the same
restrictions. For example, Zhonglu produces and sells bowling equipment which
is not subject to the customs duties or permit requirements that affect the
Company's imported equipment. Management believes that Zhonglu has experienced
significant acceptance by local customers. These Chinese import restrictions
have had, and for the foreseeable future, management believes will continue to
have an adverse effect on sales of AMF bowling equipment in China.
The Bowling Centers Business has Experienced Declines in Constant Center
Revenue and EBITDA Margin.
The Company's bowling centers have experienced a decline in constant center
revenue and EBITDA margin primarily related to the Company's rapid growth
through acquisitions. Such growth led to significant problems in integrating
new bowling centers and managing the Company's expanded base of centers.
In response to the decline in operating results, the Company curtailed the
pace of acquisitions, assembled an experienced management team for U.S.
bowling center operations, and is in the process of putting in place
management infrastructure to support integration of new centers. The Company
is also increasing the focus on training and recruiting center managers and
implementing marketing and other customer satisfaction initiatives to increase
revenue.
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Despite these efforts to improve center performance, there can be no
assurance that the Company will be able to reverse the decline in constant
center revenue and EBITDA margins.
Difficulties in Continuing Strategy to Grow through Acquisitions.
The Company's principal strategy for growth has been to acquire bowling
centers. In the past, the Company has had difficulties integrating acquired
centers into its operations on an efficient basis. The Company recently
curtailed the pace of its acquisition program so that the Company could focus
on improving the financial performance of its existing centers. When the
Company increases the pace of its acquisition program, it will consider
acquisitions on a more selective basis. There can be no assurance that funding
will be available for acquisitions or that existing debt will permit the
Company to make acquisitions, that bowling centers will be available for
acquisition or that the Company will be able to successfully integrate
acquired centers into its operations.
Declines in the Daily Number of Games Bowled per Lane.
The Company's bowling centers business has experienced and is continuing to
experience a decline in the number of games bowled per lane per day (also
known as "lineage"). This decline has been primarily caused by a decrease in
the number of league bowlers. While more people are bowling at the Company's
bowling centers, they are bowling less often. As part of the Company's recent
efforts to focus on improving the financial performance of its existing
centers as described herein, the Company is seeking to improve lineage at its
bowling centers. However, there can be no assurances that the Company's
lineage will increase or that the lineage will not further decline.
New Executive Management Team; Dependance on Experienced Center Level
Management.
Over the last six months, our executive management team has undergone
significant change. Former chief executive officer, Douglas J. Stanard, who
had significant bowling center experience, resigned effective January 1, 1999.
He was replaced on an interim basis by Stephen E. Hare, the Company's chief
financial officer, who served as acting chief executive officer. The Company
has hired a new chief executive officer, Roland C. Smith, who has experience
in managing multi-unit chains but does not have bowling industry experience.
Mr. Hare will remain as chief financial officer. In addition, in August 1998,
the Company hired a new president of its bowling center operations from
outside the bowling industry and reorganized management of its bowling center
operations. The Company also recently named a new president of its bowling
products operations from within the company and reorganized its bowling
products management team. While we believe that the current management team
gives the Company significant executive strength, there can be no assurance
that it will be able to successfully execute business strategies.
The Company's future success depends on its ability to develop, motivate,
retain and attract experienced and innovative bowling center managers. The
loss of the services of key personnel, or the inability to attract additional
qualified personnel, could have a material adverse affect on the Company's
business, results of operations and financial condition.
Competition in Both Lines of Business.
The United States bowling center industry is very competitive and
fragmented. It consists of two large bowling center operators, the Company and
Brunswick Corporation, three medium-sized chains and over 5,000 bowling
centers owned by single-center and small chain operators. The international
bowling center industry is also extremely competitive and fragmented. There
are typically few chain operators and a large number of single-center
operators in any one country, which results in intense international
competition.
Bowling, as both a competitive sport and a recreational activity, also faces
competition from other entertainment and athletic activities. The success of
the Company's bowling center operations depends on, among other things, (i)
customers' continued interest in league and open bowling, (ii) the
availability and affordability of
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recreational and entertainment alternatives, (iii) the amount of leisure time
customers enjoy and (iv) other social and economic factors over which the
Company has no control.
The bowling products industry is also extremely competitive. The Company and
Brunswick are also the two largest manufacturers of bowling center equipment.
However, we also compete with smaller companies in certain product lines. For
example, as described above, Zhonglu became a significant source of
competition for the Company in China. Primarily because of the excess
worldwide inventory of used bowling equipment, the Company has recently
experienced intense price competition in virtually all of its markets for
equipment. The Company expects the intense price competition to continue for
the foreseeable future.
Seasonality and Market Development Cycles.
The financial performance of the Company's bowling center operations is
seasonal. Cash flows typically peak in the winter and reach their lows in the
summer. While the geographic diversity of the Company's bowling centers
operations has helped to reduce this seasonality in the past, the increase in
U.S. centers resulting from the Company's acquisitions has increased the
seasonality of that business.
The Company's bowling products business is also seasonal. The U.S. market,
which is the largest market for modernization and consumer products, is driven
by the beginning of league play in the fall of each year. While operators
purchase consumer products throughout the year, they often place larger orders
during the summer in preparation for the start of league play in the fall.
Summer is also generally the peak period for installation of modernization
equipment. Operators typically sign purchase orders for modernization
equipment during the first four months of the year after they receive winter
league revenue indications. Equipment is then shipped and installed during the
summer when leagues are generally less active. However, sales of some major
modernization equipment, such as automatic scoring and synthetic lanes, are
less predictable and fluctuate from year to year because of the longer life
cycle of those major products. Sales of new center packages can fluctuate
dramatically as a result of economic fluctuations in international markets, as
seen in the reduction of sales of new center packages to markets in the Asia
Pacific region as a result of economic difficulties in that region.
Substantial Leverage.
As of March 31, 1999, the Company had approximately $1.4 billion of
indebtedness outstanding and approximately $509.8 million of stockholders'
equity. As of March 31, 1999, on a pro forma basis, after giving effect to the
Offer and the Rights Offering and assuming Debentures in an aggregate
principal amount at maturity equal to the Minimum Tender Amount and the
Maximum Tender Amount, respectively, are purchased by AMF Bowling and $140
million is raised as a result of the exercise of rights in the Rights
Offering, the Company would have had approximately $1,213.6 million and
approximately $1,196.4 million of indebtedness, respectively, and
approximately $694.0 million and approximately $701.6 million of stockholders'
equity, respectively. As of March 31, 1999, on a pro forma basis, after giving
effect to the Offer and the Rights Offering and assuming Debentures in an
aggregate principal amount at maturity equal to the Minimum Tender Amount and
the Maximum Tender Amount, respectively, are purchased by AMF Bowling and
assuming that $120 million is raised as a result of the exercise of rights in
the Rights Offering, the Company would have had approximately $1,213.6 million
and approximately $1,196.4 million of indebtedness, respectively, and
approximately $674.0 million and approximately $681.6 million of shareholders'
equity, respectively.
The Company's EBITDA was $53.1 million in the first quarter of 1998 and
$55.0 million in the first quarter of 1999, an increase of $1.9 million, or
3.6%. The Company's EBITDA was $185.4 million in 1997 and $130.2 million in
1998, a decrease of $55.2 million, or 29.8%. The Company had interest expense
of $118.4 million in 1997 and $114.7 million in 1998 and cash interest expense
of $83.0 million, or 44.8% of EBITDA, in 1997 and $76.5 million, or 58.8% of
EBITDA, in 1998. There can be no assurance that the Company will be able to
generate enough EBITDA to pay its fixed charges (interest expense,
amortization of debt issuance costs, and the portion of rent expense
considered to represent interest expense) or that the Company will have enough
cash to make interest payments on its debt when they become due. In addition,
some of the Company's borrowings are at variable rates of interest and could
require the Company to pay more interest on its debt if interest rates rise.
Pursuant to a recent amendment to the Credit Agreement (as hereinafter
defined), interest rates for borrowings under the Credit Agreement have been
increased. See "AMF Bowling--Recapitalization Plan."
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The Company's debt service obligations could make it more vulnerable to
industry downturns and competitive pressures. In addition, the Company's
substantial debt could adversely affect its ability to, among other things,
(i) obtain additional financing or refinancing on terms and conditions
acceptable to it, (ii) pursue its acquisition strategy, (iii) maintain its
facilities, (iv) use its cash flows from operations for other purposes, such
as working capital or capital expenditures and (v) achieve the Company's other
business goals.
The Company amended AMF Bowling Worldwide, Inc.'s ("Bowling Worldwide")
credit agreement in September 1998 to increase the Company's financial
flexibility through 1999. The September 1998 amendment waived certain
financial covenants through the end of 1999, but also placed certain
restrictions on the Company's ability to make capital expenditures,
investments and acquisitions. Recently, the Company further amended the credit
agreement as part of its recapitalization plan. The latter amendment, among
other matters, relaxes certain financial covenants through the end of 2001,
enables the Company to cure non-compliance with financial covenants and gives
the Company added financial flexibility and the ability to make more
acquisitions. However, there can be no assurance that the Company will meet
the new financial covenants contained in the Credit Agreement. The amendment
to the Credit Agreement will be effective on the closing of the subscriptions
obtained in the Rights Offering and the closing of the Offer, except that the
relaxation of certain financial covenants for the quarter ending June 30, 1999
is already effective.
History of Losses; Repayment of Debentures Uncertain.
The Offer is limited to $514,286,000 aggregate principal amount at maturity
(45.7%) of Debentures, after which there will be no less than $610,714,000
aggregate principal amount at maturity (54.3%) of Debentures remaining
outstanding. The Company has not reported net income since the Acquisition.
The Company recorded a net loss of $125.9 million in 1998, a net loss of $32.2
million before extraordinary items in 1997 and a net loss on an adjusted basis
(after giving effect to the Acquisition) of $21.5 million in 1996. For the
quarter ended March 31, 1999, the Company recorded a net loss of $18.7 million
compared to a net loss of $0.6 million for the quarter ended March 31, 1998.
Accordingly, there can be no assurance that the Company will be able to
perform at a level sufficient to assure repayment of the Debentures that
remain outstanding following completion of the Offer.
International Operations.
The Company's international operations are subject to the risks inherent in
operating abroad, including: (i) currency exchange rate fluctuations, (ii)
economic and political fluctuations and destabilization, (iii) restrictive
laws, tariffs and other actions by foreign governments, such as those taken by
China, (iv) difficulty in obtaining distribution and support for the Company's
products, (v) the risk of nationalization, (vi) the laws and policies of the
United States affecting trade, international investment and loans and (vii)
foreign tax law changes.
These factors have contributed to the Company's decrease in international
revenue between the first quarter of 1998 and the first quarter of 1999, and
may have a further material adverse effect on the Company's results of
operations.
Holding Company Structure.
AMF Bowling is a holding company with no direct operations, except providing
certain management services to its subsidiaries. AMF Bowling conducts its
business through its subsidiaries and has no significant assets other than the
stock of its subsidiaries. AMF Bowling is dependent on capital contributions,
dividends from subsidiaries or other financing to meet its debt service
obligations, including any obligation to redeem or repurchase Debentures. AMF
Bowling's subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to make funds available to AMF Bowling,
whether in the form of loans, dividends or otherwise. Moreover, Bowling
Worldwide, AMF Bowling's principal operating subsidiary, is effectively
prohibited under its debt agreements from up-streaming funds by dividends,
loans or otherwise, to AMF Bowling to redeem or repurchase the Debentures.
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Asset Encumbrances.
The lenders (the "Lenders") under Bowling Worldwide's Fourth Amended and
Restated Credit Agreement dated as of June 14, 1999 (the "Credit Agreement")
have been granted security interests in all of Bowling Worldwide's capital
stock and substantially all of Bowling Worldwide's current and future assets,
including a pledge of all of the issued and outstanding shares of capital
stock of certain of its subsidiaries. In addition, certain of such
subsidiaries have granted to the Lenders security interests in all of the
current and future assets of such subsidiaries (other than 35% of the
outstanding capital stock of any foreign subsidiary of any such subsidiary).
In the event of a default under the Credit Agreement (whether as a result of
the failure to comply with a payment or other covenant, a cross-default, or
otherwise), the Lenders will have a prior secured claim on the capital stock
and the assets of Bowling Worldwide and such subsidiaries. If the Lenders
should attempt to foreclose on their collateral, AMF Bowling's financial
condition and the value of the Debentures will be materially adversely
affected.
Risks with respect to a Debenture Change of Control.
Upon the occurrence of a Debenture Change of Control (as defined in the
Indenture), the Debentures may be redeemed at the option of the Holder at a
Debenture Change of Control Redemption Price equal to $252.57 per $1,000
principal amount at maturity (the "Issue Price") plus accrued Original Issue
Discount (as hereinafter defined) to the date of redemption. AMF Bowling may,
at its option, elect to pay any such Debenture Change of Control Redemption
Price in cash or Common Stock. A Debenture Change of Control may also give
rise to a requirement that the Company prepay, in some cases at a premium to
principal amount, the Subsidiary Senior Subordinated Notes (as hereinafter
defined), the Subsidiary Senior Subordinated Discount Notes (as hereinafter
defined) and the Credit Agreement. The Company may not have the financial
resources to make the required payments, and AMF Bowling may not have the
financial resources to pay in cash its obligations which would then become due
under the Debentures.
In addition, in connection with the Acquisition, Bowling Worldwide issued 10
7/8% Senior Subordinated Notes Due 2006 (the "Subsidiary Senior Subordinated
Notes") and 12 1/4% Senior Subordinated Discount Notes Due 2006 (the
"Subsidiary Senior Subordinated Discount Notes" and, collectively with the
Subsidiary Senior Subordinated Notes, the "Subsidiary Notes"). Upon the
occurrence of a Change of Control (as defined in the indentures governing the
Subsidiary Notes (the "Subsidiary Indentures")), each holder of a Subsidiary
Note may require that all or a portion of such holder's Subsidiary Notes be
repurchased at 101% of the principal amount of the Subsidiary Senior
Subordinated Notes and 101% of the Accreted Value (as defined in the indenture
governing the Senior Subsidiary Discount Notes) of the Subsidiary Senior
Subordinated Discount Notes (or, following the Full Accretion Date (as defined
in the indenture governing the Senior Subsidiary Subordinated Discount Notes),
101% of the principal amount thereof), as applicable, together with accrued
and unpaid interest, if any, and Liquidated Damages (as defined in the
Subsidiary Indentures), if any, to the date of repurchase. The Subsidiary
Indentures require that prior to such a repurchase or shortly thereafter, the
Company must either repay all outstanding indebtedness under the Credit
Agreement or obtain any required consent of the Lenders to such repurchase. If
such Change of Control (which may also constitute a Debenture Change of
Control and an event of default under the Credit Agreement) were to occur,
Bowling Worldwide may not have the financial resources to repay all of its
obligations which would then become due under the Credit Agreement, the
Subsidiary Indentures and any other indebtedness that would become payable
upon the occurrence of such Change of Control, and AMF Bowling may not have
the financial resources to pay in cash its obligations which may then become
due under the Debentures.
Volatility of Common Stock.
The market price of the Common Stock has been volatile and has fallen
dramatically over the past year. See "Market Price Information." In the
future, the market price of the Common Stock into which the Debentures are
convertible may be materially adversely affected by factors such as (i) the
number of shares offered in and the price at which shares may be purchased
pursuant to the rights issued under the Rights Offering, (ii) the actual
15
<PAGE>
results of the Company's recapitalization plan and whether we accomplish the
related operating improvements which the Company seeks to achieve, (iii)
actual or anticipated fluctuations in the Company's operating results, (iv)
the Company's bowling center acquisition activity, (v) the impact of
international markets, (vi) changes in financial estimates by securities
analysts or (vii) general market conditions. There can be no assurance that
the market price of the Common Stock issuable upon conversion, redemption or
repurchase of the Debentures will not decline below the levels prevailing at
the time of the Offer or below the price offered pursuant to the rights issued
under the Rights Offering.
Pro Rata Acceptance.
AMF Bowling will purchase Debentures in the Offer up to an aggregate
principal amount at maturity equal to the Maximum Tender Amount. To the extent
that the aggregate principal amount at maturity of the Debentures validly
tendered exceeds the Maximum Tender Amount, AMF Bowling will purchase the
tendered Debentures on a Pro Rata Acceptance basis. There can be no assurance,
therefore, that all of a tendering Holder's validly tendered Debentures will
be purchased by AMF Bowling pursuant to the Offer.
Certain Bankruptcy Considerations.
Any payments made to Holders in consideration for their Debentures may also
be subject to challenge as a preference if such payments: (a) are made within
90 days of a bankruptcy filing by AMF Bowling (or within one year in the case
of Holders who are determined to be insiders of AMF Bowling), (b) are made
when AMF Bowling is insolvent and (c) permit the Holders to receive more than
they otherwise might receive in a liquidation under applicable bankruptcy
laws. If such payments were deemed to be a preference, the full amount of such
payments could be recovered by AMF Bowling as a debtor in possession or by AMF
Bowling's trustee in bankruptcy, and the Holder would be entitled to assert
claims in respect of the Debentures against AMF Bowling in its reorganization
or bankruptcy case. AMF Bowling does not believe that it is currently
insolvent, although for purposes of the preference laws described above, AMF
Bowling would be presumed insolvent for the 90 days preceding a bankruptcy or
reorganization case.
RECENT DEVELOPMENTS
New Chief Executive Officer
AMF Bowling appointed Roland C. Smith as the Company's President and Chief
Executive Officer, effective April 28, 1999. Mr. Smith replaces Stephen E.
Hare, the Company's Chief Financial Officer, who was Acting Chief Executive
Officer for the preceding six months. Mr. Hare continues as Chief Financial
Officer. Mr. Smith has also been appointed to the Board and the executive
committee of the Board.
Mr. Smith was most recently President and Chief Executive Officer of the
Triarc Restaurant Group where, among other matters, he oversaw the
restructuring and expansion of Arby's Restaurants. Mr. Smith was formerly
associated with Procter & Gamble, Pepsi, Schering-Plough and KFC
International.
New Distribution Arrangement
On June 13, 1999, AMF Bowling Products, Inc. signed joint distribution
agreements, a trademark license agreement and an option agreement with
Zhonglu. Under the distribution agreements, the Company will add to its
product mix and exclusively distribute certain Zhonglu products and parts
outside of China and Zhonglu will add to its product mix and exclusively
distribute AMF products and parts inside of China. With this distribution
arrangement, the Company will close all but one of its company owned offices
in China and will be exclusively represented in China by Zhonglu.
Additionally, AMF will have an option under certain circumstances to acquire
Zhonglu's bowling products business during the three-year term of the
agreements.
16
<PAGE>
Amendment to Credit Agreement
On June 14, 1999, the lenders under the Credit Agreement entered into an
amendment of the Credit Agreement. See "Our Business, Recapitalization Plan
and On-Going Business Strategies--Our Recapitalization Plan--Amendments to
Bank Credit Agreement."
Recent Litigation
On April 22, 1999, a putative class action was filed in the United States
District Court for the Southern District of New York by Vulcan International
Corporation ("Vulcan") against AMF Bowling, The Goldman Sachs Group, L.P.,
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Cowen & Company,
Schroder & Co. Inc., Richard A. Friedman and Douglas J. Stanard. Vulcan, as
putative class representative for itself and all persons who purchased Common
Stock in AMF Bowling's 1997 initial public offering, seeks, among other
things, damages and/or rescission against all defendants pursuant to Sections
11, 12 and/or 15 of the Securities Act of 1933 based on allegedly inaccurate
and misleading disclosures in connection with and following the initial public
offering. Management believes that the litigation is without merit and intends
to defend against it vigorously.
AMF BOWLING
Primary Business Segments and Strategies
The Company principally operates in two business segments in the U.S. and
international markets: (1) the ownership and operation of bowling centers and
(2) the manufacture and sale of bowling equipment and bowling products.
AMF is the largest owner and operator of bowling centers in the U.S. and
worldwide. As of June 21, 1999, the Company owned and operated 418 bowling
centers in the U.S. and 123 centers in 10 other countries. The Company is also
one of the world's largest manufacturers and sellers of bowling equipment.
The Company's business strategy is designed to (i) consolidate the bowling
center industry through an acquisition program, (ii) build a nationally
recognized AMF brand of bowling centers and (iii) manufacture, market and
distribute bowling products in global markets.
While the Company believes that its long-term business strategy is sound, it
continues to experience the difficulties in its bowling centers and bowling
products businesses that began in 1998 and are more fully discussed below. In
response to these difficulties, the Company has reviewed its businesses with
the assistance of management, other employees and independent consultants, to
identify the critical operating issues and key action steps required to
reinvigorate its businesses. In addition, the Company has recently appointed a
new President and Chief Executive Officer and assembled an experienced
management team to execute its business plan.
Bowling Centers Business
In the first quarter of 1999, the Company's bowling centers operations
produced revenue of $172.6 million and EBITDA of $60.5 million, up from $150.2
million and $56.8 million, respectively, in the first quarter of 1998. In
1998, the Company's bowling centers operations produced revenue of $541
million and EBITDA of $142 million, up from $429 million and $130 million,
respectively, in 1997. The 1998 EBITDA margin of 26.3% has declined from 30.4%
in 1997. The deterioration of EBITDA margin was related primarily to the
Company's rapid growth through acquisitions, which led to significant problems
in integrating new bowling centers and managing the expanded base of centers.
On a constant currency basis, the Company experienced declines in constant
center revenue of 0.8% in the first quarter of 1999, 1.6% in the first quarter
of 1998, and 1.9% in 1998,
and an increase of 0.4% in 1997 compared to the same prior year periods.
Additionally, operating expenses as a percentage of revenue increased in the
first quarter of 1999 and in 1998 compared with the same prior year
17
<PAGE>
periods. The increase in 1998 was primarily related to nationally branded
chain development activities. The increase in 1999 was primarily attributable
to higher expenses related to maintenance and supplies, advertising and
payroll.
The Company has taken several steps to address operating issues in its
bowling centers business, including:
Assembled an Experienced Management Team. In addition to hiring Roland C.
Smith as President and Chief Executive Officer, the Company also hired John P.
Watkins as President of U.S. Bowling Centers, and five new regional vice
presidents with substantial multi-unit retail experience to manage U.S.
bowling centers operations. The Company also appointed senior executives with
bowling industry experience to key operating and staff vice president
positions.
Focus on Existing Centers. Beginning in September 1998, the Company
curtailed the pace of its acquisition program and began evaluating acquisition
opportunities on a more selective basis. The Company has been focusing on
improving the performance of its existing centers to reinvigorate constant
center revenue growth, as well as league and open play lineage, and to attract
new customers.
Focus on Training and Retaining Center Managers. The Company believes that
performance of its centers depends heavily on its center managers and
therefore the Company intends to implement a new stock-based incentive plan to
reward its center managers. The Company is also designing programs to more
effectively train its center managers and staff based upon the most successful
practices of field managers. In addition, the Company has hired a new vice
president of training for U.S. bowling center operations with multi-unit
retail experience and created a training and human resources position in each
of the six regions to implement these programs.
Focus on Marketing and Customer Satisfaction. The Company is implementing
several programs which are designed to attract and retain league and open play
bowlers, including:
(a) marketing initiatives, such as "League Development Leader" and "Friends
Bowl with Friends" programs, to leverage the influence of key league
bowlers in the Company's existing customer base to help grow and retain
league participation;
(b) capital spending on certain centers to improve customer satisfaction
and generate incremental revenue with improved facilities and
innovative and updated programs and product offerings such as the
installation of Xtreme(TM) (glow-in-the-dark) bowling in many centers
as part of an overall upgrading of certain facilities; and
(c) upgrading the food and beverage menu selection and service to enhance
customers' bowling experience and to increase revenue per visit.
Bowling Products Business
The Company's bowling products business experienced significant difficulties
in the first quarter of 1999 and in 1998. In the first quarter of 1999, it
produced revenue of $32.0 million, a decrease of 22.1% from the first
quarter of 1998, and EBITDA of $(0.6) million compared to EBITDA of $0.1
million in the first quarter of 1998. It produced revenue of $213 million in
1998, a decrease of 29.0% from 1997, and EBITDA of $11 million, a decrease of
84.5% from 1997. This business, the growth of which was driven primarily by
international sales of new center packages, was severely and adversely
affected by economic difficulties in the Asia Pacific region. In addition,
competitive global pricing and a strong U.S. dollar reduced the profitability
of the Company's products business.
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<PAGE>
The Company is taking steps to address operating issues in its bowling
products business, including:
New Management Infrastructure. The Company recently appointed a president of
bowling products, consolidated its international sales force under one senior
vice president and consolidated responsibility of customer service in the U.S.
under the vice president of U.S. sales.
Cost Reduction Program. The Company is continuing to implement a
comprehensive cost reduction program to align its cost structure with reduced
bowling products revenue. The program includes closure of a manufacturing
facility, production and material cost reductions, reduction of worldwide
overhead and downsizing of its international sales force. In 1998, the Company
was successful in reducing its bowling products costs by approximately $6
million. The Company is continuing its reduction efforts and is considering
possible strategic alliances and other product development and sales
initiatives in an effort to further reduce costs. In this regard, on June 13,
1999, AMF Bowling Products, Inc. signed joint distribution agreements, a
trademark license agreement and an option agreement with Zhonglu. Under the
distribution agreements, AMF will add to its product mix and exclusively
distribute certain Zhonglu products and parts outside of China, and Zhonglu
will add to its product mix and exclusively distribute AMF products and parts
inside China. With this distribution arrangement, AMF will close all but one
of its company owned offices in China and will be exclusively represented by
Zhonglu in China. Additionally, AMF will have an option to acquire Zhonglu's
bowling products business during the three-year term of the agreements.
Focus on Modernization and Consumer Products. During this period of weakness
in international sales of new center packages, the Company has been and is
continuing to concentrate its selling efforts on products designed to enable
bowling center operators to modernize their facilities and on consumer
products such as bowling pins, parts, balls and supplies. Unlike new center
packages, these products are not as dependent on emerging markets and produce
more stable sales and profits. However, the Company intends to remain in a
position to participate in any significant growth of demand for new center
packages in emerging markets.
Recapitalization Plan
The Company is pursuing a recapitalization plan to enable it to enhance its
ability to implement its three-part business strategy. The plan is designed to
reduce leverage and increase financial flexibility so that the Company can
resume its strategy of growing through acquisitions, building a nationally
recognized brand and successfully manufacturing, marketing and distributing
bowling products globally. The recapitalization plan has three primary
components:
The Offer. AMF Bowling is conducting this Offer to repurchase up to
$514,286,000 aggregate principal amount at maturity (45.7%) of the Debentures.
Affiliates of Goldman Sachs and Kelso, which own approximately 44% of the
outstanding Debentures, have indicated that they currently expect to tender
all of their Debentures in the Offer, subject to market conditions, although
they are not obligated to do so.
The Rights Offering. Concurrent with the Offer, AMF Bowling is conducting
the Rights Offering in which it seeks to raise approximately $140,000,000. The
net proceeds of the Rights Offering will primarily be used to reduce the
Company's financial leverage by repurchasing up to $514,286,000 aggregate
principal amount at maturity of Debentures in the Offer and repaying certain
debt under the Credit Agreement. Certain members of the original investor
group, who hold approximately 72.5% of the Common Stock, have indicated that
they currently expect to fully exercise their basic subscription privileges in
the Rights Offering, subject to market conditions, and it is currently
anticipated that some of these members of the original investor group will
exercise their conditional over-subscription privileges in the Rights Offering
to an extent not yet determined, subject to market conditions. However, these
members of our original investor group are not obligated to exercise their
basic or conditional over-subscription privileges.
Amendments to the Credit Agreement. As part of the recapitalization plan,
the Company and the lenders recently entered into the Fourth Amended and
Restated Credit Agreement. The Credit Agreement (i) allows the Company to use
a portion of the net proceeds of the Rights Offering to repurchase the
Debentures pursuant to
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<PAGE>
the Offer, (ii) allows the Company to retain a portion of the proceeds for
general corporate purposes and for other purposes, including making open
market purchases of Debentures and allowing Bowling Worldwide to redeem a
portion of the Subsidiary Notes, (iii) increases access to the revolving
credit facility under the Credit Agreement for acquisitions, subject to
certain conditions, (iv) relaxes certain financial covenants through the end
of fiscal year 2001, (v) enables the Company to cure non-compliance with
financial covenants and (vi) excludes certain restructuring and other special
charges from financial covenant calculations under the Credit Agreement. In
addition, the Fourth Amended and Restated Credit Agreement increased the
interest rates for borrowings thereunder. A copy of the amendments to the
Credit Agreement (including the Fourth Amended and Restated Credit Agreement)
has been filed as Exhibit 99.1 to the Company's Current Report on Form 8-K
dated June 28, 1999.
Restructuring and Other Special Charges
The Company is likely to record certain restructuring charges, which are
likely to be approximately $7.5 million. The Company also could record other
special charges in 1999. Under the Credit Agreement such restructuring charges
and an amount up to $27.5 million of other special charges, to the extent
taken in 1999, are excluded from the calculation of the financial covenants
relating to EBITDA.
20
<PAGE>
THE DEBENTURES
The following summary of certain terms of the Debentures does not purport to
be complete and is qualified in its entirety by reference to the Indenture.
All capitalized terms used in this summary and not defined shall have the
meaning ascribed to them in the Indenture.
<TABLE>
<S> <C>
The Debentures $1,125,000,000 aggregate principal amount at maturity of
Zero Coupon Convertible Debentures due 2018.
Interest Payment Dates There are not and will not be any periodic interest
payments on the Debentures.
Yield to Maturity of 7% per annum (computed on a semi-annual bond equivalent
Debentures basis) calculated from May 12, 1998.
Conversion Rights The Debentures are convertible, at the option of the
Holder, at any time before maturity, unless previously
redeemed or otherwise purchased by AMF Bowling, into
Common Stock at the rate of 8.6734 shares per $1,000
principal amount at maturity of Debentures (the
"Conversion Rate"). Upon conversion, the Holder will not
receive any cash payment representing accrued Original
Issue Discount; such accrued Original Issue Discount will
be deemed paid by the delivery of the Common Stock
received upon conversion. The Conversion Rate is not
adjusted for accrued Original Issue Discount, but is
subject to adjustment upon the occurrence of certain
events, including the issuance of rights in the Rights
Offering. Consequently, the Conversion Rate will be
adjusted on the day following the record date for the
issuance of the rights in the Rights Offering (on a basis
assuming all rights issued in the Rights Offering are
exercised). If not all of the rights issued in the Rights
Offering are exercised, the Conversion Rate will be
appropriately readjusted.
Original Issue Discount The Debentures were originally offered at an original
issue discount (the "Original Issue Discount") for
federal income tax purposes equal to the excess of the
principal amount at maturity of the Debentures over their
Issue Price.
Redemption The Debentures are not redeemable by AMF Bowling before
May 12, 2003. Beginning on May 12, 2003, the Debentures
are redeemable for cash at any time at the option of AMF
Bowling, in whole or in part, at Redemption Prices equal
to the Issue Price plus accrued Original Issue Discount
to the date of redemption.
Debenture Change of If there is a Debenture Change of Control, the Debentures
Control may be redeemed at the option of the Holder at a
Debenture Change of Control Redemption Price equal to the
Issue Price plus accrued Original Issue Discount to the
date of redemption. AMF Bowling may, at its option, elect
to pay any such Debenture Change of Control Redemption
Price in cash or Common Stock, or any combination
thereof.
Purchase at the Option AMF Bowling will purchase Debentures at the option of the
of the Holder Holder as of May 12, 2003, May 12, 2008 and May 12, 2013
at Purchase Prices equal to the Issue Price plus accrued
Original Issue Discount to the date of purchase. AMF
Bowling may, at its option, elect to pay any such
Purchase Price in cash or Common Stock, or any
combination thereof.
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
Listing The Debentures are designated for trading in PORTAL. The
Debentures are convertible into shares of Common Stock,
which is listed and traded on the NYSE.
Governing Law The Indenture and the Debentures are governed by the laws
of the State of New York.
Indenture Dated as of May 12, 1998 between AMF Bowling and The Bank
of New York, as Trustee.
</TABLE>
MARKET PRICE INFORMATION
The Debentures
The Debentures are designated for trading in PORTAL. The following table
sets forth, for the period indicated, the high and low closing bid quotations
per $1,000 principal amount at maturity for the Debentures as reported by
Morgan Stanley, a market maker for the Debentures.
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
1998
Second Quarter (beginning May 12, 1998)................. $266.25 $235.00
Third Quarter........................................... 258.75 97.50
Fourth Quarter.......................................... 136.30 68.80
1999
First Quarter........................................... 137.50 110.00
Second Quarter (through June 25, 1999).................. 142.50 100.00
</TABLE>
Such reported quotations may not reflect actual transactions.
On June 25, 1999, the closing bid quotation per $1,000 principal amount at
maturity of Debentures, as reported by Morgan Stanley, a market maker for the
Debentures, was $135.00.
The Common Stock
The Common Stock, into which the Debentures are convertible, is listed and
traded on the NYSE under the symbol "PIN". The following table sets forth the
high and low sales prices per share of Common Stock as reported on the NYSE
Composite Tape, for the periods indicated.
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
1997
Fourth Quarter (from November 7, 1997)................. $25 1/8 $21 1/2
1998
First Quarter.......................................... 27 3/8 20 1/2
Second Quarter......................................... 31 22 5/8
Third Quarter.......................................... 28 3/8 7 1/2
Fourth Quarter......................................... 9 3 7/8
1999
First Quarter.......................................... 6 4
Second Quarter (through June 25, 1999)................. 8 3/16 3 1/2
</TABLE>
On June 25, 1999, the closing sales price per share of Common Stock, as
reported on the NYSE Composite Tape, was $6 5/16.
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<PAGE>
SELECTED HISTORICAL AND PRO FORMA
FINANCIAL DATA
(Dollars in millions, except share data)
The table below sets forth selected historical consolidated financial data
of AMF Bowling and AMF Bowling's predecessor company and financial data of AMF
Bowling adjusted for the effects of the Rights Offering and the Offer. AMF
Bowling prepared the information using the consolidated financial statements
of AMF Bowling and the combined financial statements of AMF Bowling's
predecessor company as of the dates indicated and for each of the fiscal years
in the five-year period ended December 31, 1998 and the quarterly periods
ended March 31, 1998 and 1999. The adjusted financial data of AMF Bowling is
presented as of December 31, 1998 and March 31, 1999 and for the periods then
ended.
The selected financial data includes operating results expressed in terms of
EBITDA which represents earnings before net interest expense, income taxes,
depreciation and amortization, and other income and expenses. EBITDA
information is included because AMF Bowling understands that such information
is a standard measure commonly reported and widely used by certain investors
and analysts. EBITDA is not intended to represent and should not be considered
more meaningful than, or an alternative to, other measures of performance
determined in accordance with generally accepted accounting principles.
<TABLE>
<CAPTION>
Three Months Four Months
Ended Ended
For the Year Ended December 31, March 31, April 30,
-------------------------------------------------------------- ------------------------ -----------
Predecessor Predecessor
Company (a) AMF Bowling, Inc. AMF Bowling, Inc. Company (a)
-------------- ---------------------------------------------- ------------------------ -----------
(unaudited)
As As
Adjusted As Adjusted Adjusted
1994 1995 1996 (b) 1996 (c) 1997 1998 1998 (d) 1998 1999 1999 (d) 1996 (e)
------ ------ -------- -------- ------ ------- ----------- ------ ------ -------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement
Data:
Operating revenue.. $517.8 $564.9 $548.9 $384.8 $713.7 $ 738.1 $738.1 $187.3 $202.6 $202.6 $164.9
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Cost of goods
sold.............. 196.0 184.1 173.6 130.5 212.6 202.2 202.2 38.9 39.6 39.6 43.1
Bowling center
operating
expenses.......... 115.2 166.5 178.8 123.7 251.2 335.7 335.7 78.4 93.2 93.2 80.2
Selling, general
and administrative
expenses.......... 57.1 50.8 51.0 35.1 64.5 70.0 70.0 16.9 14.8 14.8 35.5
Depreciation and
amortization...... 24.8 39.1 73.5 49.4 102.5 120.6 120.5 26.8 33.4 33.3 15.1
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Operating income
(loss)............ 124.7 124.4 72.0 46.1 82.9 9.6 9.7 26.3 21.6 21.7 (9.0)
Interest expense... 7.4 15.7 106.2 78.0 118.4 114.7 101.9 26.0 31.0 25.9 4.5
Other income
(expense), net.... (1.5) 0.2 3.8 3.9 (8.1) (5.3) (5.3) 0.1 2.3 2.3 (0.1)
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Income (loss)
before income
taxes............. 115.8 108.9 (30.4) (28.0) (43.6) (110.4) (97.5) 0.2 (11.7) (6.5) (13.6)
Provision (benefit)
for income taxes.. 16.5 12.1 (8.9) (8.5) (12.8) 7.3 7.3 0.5 1.5 1.5 (1.7)
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Net income (loss)
before equity in
loss of joint
ventures and
extraordinary
items............. 99.3 96.8 (21.5) (19.5) (30.8) (117.7) (104.8) (0.3) (13.2) (8.0) (11.9)
Equity in loss of
joint ventures,
net of tax........ -- -- -- -- (1.4) (8.2) (8.2) (0.3) (5.5) (5.5) --
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Net income (loss)
before
extraordinary
items............. 99.3 96.8 (21.5) (19.5) (32.2) (125.9) (113.0) (0.6) (18.7) (13.5) (11.9)
Extraordinary
items, net of
tax............... -- -- -- -- (23.4) -- 52.4 -- -- 58.3 --
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Net income (loss).. $ 99.3 $ 96.8 $(21.5) $(19.5) $(55.6) $(125.9) $(60.6) $ (0.6) $(18.7) $ 44.8 $(11.9)
====== ====== ====== ====== ====== ======= ====== ====== ====== ====== ======
Basic and diluted
net loss per share
before
extraordinary
items............. $(0.55) $(0.49) $(0.71) $ (2.11) $(1.45) $(0.01) $(0.31) $(0.15)
Basic and diluted
per share effect
of extraordinary
items............. -- -- (0.52) -- 0.67 -- -- 0.66
------ ------ ------ ------- ------ ------ ------ ------
Basic and diluted
net income (loss)
per share......... $(0.55) $(0.49) $(1.23) $ (2.11) $(0.78) $ 0.01) $(0.31) $ 0.51
====== ====== ====== ======= ====== ====== ====== ======
Weighted average
shares
outstanding....... N/A N/A 39,293 39,713 45,249 59,717 77,645 59,661 59,603 87,601 N/A
Ratio of earnings
to fixed
charges (f)....... 10.3 6.1 -- -- -- -- -- 1.0 -- -- --
Selected Data:
EBITDA............. $149.5 $163.5 $145.5 $ 95.5 $185.4 $ 130.2 $130.2 $ 53.1 $ 55.0 $ 55.0 $ 6.1
EBITDA margin...... 28.9% 28.9% 26.5% 24.8% 26.0% 17.6% 17.6% 28.4% 27.1% 27.1% 3.7%
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
As of
As of December 31, March 31,
----------------------------------------------- -----------------------
AMF Bowling Inc.
Predecessor -----------------------
Company(a) AMF Bowling, Inc. As Adjusted As Adjusted
----------- ----------------------- ----------- -----------
1994 1995 1996 1997 1998 1998(d) 1999 1999 (d)
----- ----- ------- ------- ------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital (g)..... $16.9 $29.2 $ 7.8 $ 43.9 $ 70.6 $ 103.0 $ 100.5 $ 132.8
Goodwill................ -- -- 771.1 772.3 772.7 772.7 767.4 767.4
Total assets............ 410.2 400.4 1,594.0 1,832.1 1,980.0 2,011.1 1,982.5 2,013.8
Total debt.............. 186.1 167.4 1,091.3 1,060.6 1,344.0 1,178.3 1,364.4 1,196.4
Stockholders' equity.... 132.4 161.5 408.8 654.0 529.6 726.5 509.8 709.2
Total capital........... 318.5 328.9 1,500.1 1,714.6 1,873.6 1,904.8 1,874.2 1,905.6
Book value per share,
basic and diluted...... N/A N/A $ 9.64 $ 10.96 $ 8.86 $ 8.28 $ 8.55 $ 8.10
</TABLE>
- --------
(a) Predecessor Company amounts represent the results of AMF Bowling Group
(former owners).
(b) Represents results of operations from January 1, 1996 through December 31,
1996 on a basis assuming the Predecessor Company had been acquired on
January 1, 1996.
(c) For the period from the inception date of January 12, 1996 through
December 31, 1996, which includes the results of operations of the
acquired business from May 1, 1996 through December 31, 1996.
(d) Amounts are adjusted to give effect to (i) the purchase of the Debentures
pursuant to the Offer, (ii) completion of the Rights Offering with
proceeds in the amount of $140 million and (iii) the amendments to the
Credit Agreement, as if such transactions had been consummated at the end
of each period presented in the case of the balance sheet data, and on
January 1 of each period presented in the case of the income statement
data. The amounts are not adjusted for restructuring charges which may be
recorded as part of the recapitalization plan. If the amount of proceeds
in the Rights Offering is $120 million, instead of $140 million, the
Company's as adjusted working capital and retained earnings for each of
the periods presented would decrease by $20 million. The amounts are
presented for illustrative purposes only and are not necessarily
indicative of what the Company's actual financial position and results of
operations would have been had the above referenced transactions been
consummated as of the above-referenced dates or of the financial position
or results of operations that may be reported by the Company in the
future.
(e) Represents results of operations from January 1, 1996 through April 30,
1996.
(f) For the years ended December 31, 1998 and 1997 and the period ended
December 31, 1996 on an historical basis, and the years ended December 31,
1998 and 1996 on an as adjusted basis, the Company had a deficiency of
earnings to fixed charges of $110.4 million, $43.6 million, $28.0 million,
$97.5 million and $30.4 million. For the quarter ended March 31, 1999, on
an historical basis, and the quarter ended March 31, 1999, on an as
adjusted basis, the Company had a deficiency of earnings to fixed charges
of $11.6 million and $6.4 million.
(g) Predecessor Company amounts reflect elimination of affiliate receivables
and payables.
24
<PAGE>
CAPITALIZATION
The following table sets forth AMF Bowling's cash, debt and capitalization
as of March 31, 1999. The table also sets forth AMF Bowling's cash, debt and
capitalization as adjusted for the completion of the Rights Offering at the
assumed subscription price of $5.00 per share and assuming AMF Bowling will
receive proceeds of $140 million if all of the rights in the Rights Offering
are exercised and $120 million if only 85.7% of all of the rights are
exercised and the Company purchases 45.7% of the Debentures in the Offer.
<TABLE>
<CAPTION>
March 31, 1999
----------------------------
(dollars in millions)
As Adjusted
for Proceeds
------------------
Rights Offering
Proceeds
------------------
Actual $140.0 $120.0
-------- -------- --------
<S> <C> <C> <C>
Cash............................................. $ 56.8 $ 89.1 $ 69.1
======== ======== ========
Short-term borrowings:
Current maturities, long-term debt............. $ 34.2 $ 34.2 $ 34.2
-------- -------- --------
Long-term debt:
Bank debt...................................... 556.7 526.7 526.7
Subsidiary senior subordinated notes........... 250.0 250.0 250.0
Subsidiary senior subordinated discount notes.. 219.5 219.5 219.5
Zero coupon convertible debentures............. 302.0 164.0 164.0
Mortgage and equipment notes................... 2.0 2.0 2.0
-------- -------- --------
Total debt................................... 1,364.4 1,196.4 1,196.4
Stockholders' equity:
Preferred stock, par value $.01, and 50,000,000
shares authorized, no shares issued and
outstanding................................... -- -- --
Common stock, par value $.01, 200,000,000
shares authorized, 59,597,550 shares issued
and outstanding before the rights offering and
87,596,479 and 83,597,550 shares issued and
outstanding after the Rights Offering ........ 0.6 0.9 0.8
Paid-in capital................................ 749.1 887.3 867.4
Retained deficit............................... (219.6) (166.3) (166.3)
Equity adjustment from foreign currency
translation................................... (20.3) (20.3) (20.3)
-------- -------- --------
Total stockholders' equity................... 509.8 701.6 681.6
-------- -------- --------
Total capitalization......................... $1,874.2 $1,898.0 $1,878.0
======== ======== ========
</TABLE>
25
<PAGE>
BACKGROUND AND PURPOSE OF THE OFFER
Background
On or about July 7, 1999, AMF Bowling will distribute to each record holder
of Common Stock, at no charge, .4698 transferable subscription rights for each
share of Common Stock owned, pursuant to a prospectus dated June 28, 1999.
Each right issued under the Rights Offering entitles the holder to purchase
one share of Common Stock, plus a portion of any shares remaining if all of
the rights have not been exercised. The subscription price is $5.00 per share.
The Rights Offering is part of a recapitalization plan being undertaken by AMF
Bowling.
As a result of matters discussed under the heading "AMF Bowling," the Board,
at a meeting on May 4, 1999, considered a proposal to raise up to $140 million
in equity capital. At that meeting, the Board appointed Messrs. Charles M.
Diker, Paul B. Edgerley and Howard A. Lipson, directors who are not employees
of AMF or affiliated with Goldman Sachs or Kelso (whose affiliates together
own more than a majority of the Common Stock and approximately 44% of the
outstanding Debentures), as the Special Committee to consider certain aspects
of the Offer in the context of the recapitalization plan, including the price
at which AMF Bowling would tender for the Debentures in the proposed
concurrent Offer.
AMF Bowling retained Morgan Stanley as financial advisor to the Board and
the Special Committee. Morgan Stanley is also acting as dealer manager in the
Offer. At a meeting held on May 4, 1999 after receiving advice from Morgan
Stanley and considering various factors, the Special Committee recommended to
the full Board pursuing the proposed Offer, subject to the approval of the
recapitalization plan by the full Board and subject to the Special Committee
approving the specific pricing of the proposed Offer. The Board approved
pursuing the recapitalization plan at the May 4 meeting.
At Board meetings held on June 10 and June 15, 1999, the Company's
management made detailed presentations of the recapitalization plan, including
the proposed amendment to the Credit Agreement and the proposed terms of the
Rights Offering and the Offer. At each meeting, Morgan Stanley made a
presentation to the Board regarding certain matters related to the Rights
Offering and the Offer. Thereafter, the Special Committee met separately with
Morgan Stanley to discuss certain matters relating to the Offer, including the
possible pricing thereof.
At a meeting held on June 16, 1999, management made a detailed presentation
to the Board about all aspects of the proposed recapitalization plan and
recommended that the Board approve it. Morgan Stanley also made a presentation
to the Board and recommended the pricing and terms of the Rights Offering and
the Offer. The Special Committee met separately with Morgan Stanley to discuss
the proposed Offer, including the possible pricing thereof. The Special
Committee then rejoined the Board meeting and, based on Morgan Stanley's
presentation and recommendations and consideration of other relevant factors,
recommended that the Board approve the Offer, including pricing the Offer on
the basis presented by management and Morgan Stanley. Based on management's
and Morgan Stanley's presentations, taking into account this recommendation of
the Special Committee and after consideration of other relevant factors, the
full Board then approved the recapitalization plan, including the Rights
Offering, the Offer and the other contemplated transactions.
At a meeting on June 22, 1999, the Company's management reviewed with the
Board the final terms of the recapitalization plan, including the pricing of
the Rights Offering and the Offer. The Board confirmed its approval of the
recapitalization plan and those terms.
Some of the factors considered by the Board include (i) the Company's
capital requirements, (ii) the advice of Morgan Stanley, (iii) the
alternatives available to the Company for the raising of capital, (iv) the
market price of the Common Stock, (v) the market price of the Debentures, (vi)
the added flexibility that could be achieved by improving the Company's
capital structure and amending the Credit Agreement, (vii) the Company's
business prospects, (viii) the operating challenges being faced by the
Company, (ix) the Company's recent poor financial performance and results, (x)
the Company's high degree of financial leverage, (xi) the Company's desire to
reinvigorate its acquisition program, (xii) the Company's need for further
flexibility in its debt agreements and (xiii) the general condition of the
securities markets.
26
<PAGE>
Purpose
This Offer is part of a comprehensive recapitalization plan designed to
reduce the Company's overall debt burden, provide additional financial
flexibility and allow the Company to increase the pace of its acquisition
program on a selective basis.
Under the terms of the Offer, Debentures acquired by AMF Bowling will be
purchased by AMF Bowling at a substantial discount to their Issue Price.
Accordingly, if AMF Bowling acquires all of the Debentures for which the Offer
is being made, AMF Bowling would recognize an extraordinary gain after giving
effect to unamortized debt issuance costs and transaction costs of
approximately $53.3 million (calculated as of March 31, 1999). Such
extraordinary gain represents the excess of the Issue Price and accrued
Original Issue Discount of the Debentures (calculated as of March 31, 1999)
over their purchase price less the write off of unamortized deferred financing
costs associated with the Debentures being purchased, expenses associated with
the purchase of the Debentures and restructuring charges. As of December 31,
1998, AMF Bowling had, for income tax purposes, an accumulated net operating
loss carryforward of approximately $194.5 million. Accordingly, AMF Bowling
does not expect to incur any current income tax liability with respect to such
gain. Transaction costs with respect to the Rights Offering are expected to be
approximately $1.5 million. AMF Bowling expects to use the net proceeds of the
Rights Offering to, among other things, purchase the Debentures in the Offer,
pay such transaction costs of approximately $0.4 million for such purchase,
repay $30.0 million of the outstanding Bank Facility as described under
"Capitalization," pay $3.8 million to the bank lenders in connection with the
amendment to the Credit Agreement and pay other fees and expenses of the Offer
and the Rights Offering. The Company may use any remaining proceeds of the
Rights Offering for general corporate purposes.
THE OFFER
Principal Terms of the Offer
Upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the accompanying Letter of Transmittal, AMF Bowling is
offering to purchase up to $514,286,000 aggregate principal amount at maturity
(45.7%) of outstanding Debentures for a cash purchase price of $140.00 per
$1,000 principal amount at maturity.
Conditions of the Offer
Notwithstanding any other provision of the Offer, AMF Bowling shall not be
required to accept for purchase, or to pay for, the Debentures tendered
pursuant to the Offer, and may terminate, extend or amend the Offer or delay
or refrain (subject to Rule 14e-1(c) under the Exchange Act) acceptance for
purchase or payment for Debentures so tendered, (i) unless the closing shall
occur for the subscriptions obtained through exercise of the rights issued
pursuant to the Rights Offering with proceeds of at least $120,000,000, (ii)
unless, as of the Expiration Date, Debentures having an aggregate principal
amount at maturity of at least the Minimum Tender Amount have been validly
tendered and not withdrawn (the "Minimum Tender Condition") or (iii) if, at
any time after June 28, 1999 and prior to the time of payment for any
Debentures, any of the following (each a "General Condition" and collectively,
the "General Conditions") shall occur:
(1) there shall have been threatened, instituted or pending any action or
proceeding by or before any court or governmental regulatory or
administrative authority or tribunal, domestic or foreign, (i) which
challenges the making of the Offer, the purchase of Debentures pursuant
to the Offer or otherwise relates in any manner to the Offer, (ii)
which, in the sole judgment of AMF Bowling, would or might directly or
indirectly materially impair the contemplated benefits of the Offer to
the Company, (iii) which, in the sole judgment of AMF Bowling, would or
might directly or indirectly materially affect the business, assets,
liabilities, condition (financial or otherwise), operations, results of
operations or prospects of the Company, or (iv) which, in the sole
judgment of AMF Bowling, otherwise is reasonably likely to result in
the Offer not being in the best interests of AMF Bowling;
(2) a statute, rule, regulation, judgment, order, stay, decree or
injunction shall have been threatened, proposed, sought, promulgated,
enacted, entered, enforced or deemed to be applicable by any court or
27
<PAGE>
governmental regulatory or administrative agency, authority or tribunal,
domestic or foreign, which, in the sole judgment of AMF Bowling, would or
might directly or indirectly (i) prohibit, prevent, restrict or delay
consummation of the Offer, (ii) materially impair the contemplated
benefits of the Offer to the Company, (iii) materially affect the
business, assets, liabilities, condition (financial or otherwise),
operations, results of operations or prospects of the Company, or (iv)
otherwise is reasonably likely to result in the Offer not being in the
best interests of AMF Bowling;
(3) there shall have occurred or be likely to occur any event affecting the
business or financial condition of AMF Bowling that, in the sole
judgment of AMF Bowling, would or might, directly or indirectly, (i)
prohibit, prevent, restrict or delay consummation of the Offer, (ii)
materially impair the contemplated benefits of the Offer to the
Company, (iii) materially affect the business, assets, liabilities,
condition (financial or otherwise), operations, results of operations
or prospects of the Company or (iv) otherwise is reasonably likely to
result in the Offer not being in the best interests of AMF Bowling;
(4) (i) any general suspension or limitation of trading in, or limitation
on prices for, securities in the financial markets of the United
States, (ii) any suspension of trading of any securities of AMF Bowling
on any United States securities exchange or interdealer quotation
system, (iii) the declaration of a banking moratorium, or any
suspension of payments in respect of banks, by Federal or New York
authorities or (iv) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by the
United States or any other substantial state, national, or
international calamity or emergency if the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable in the sole judgment of AMF Bowling for AMF Bowling to
proceed with the Offer;
(5) any change in the general political, market, economic or financial
conditions in the United States or abroad that in the sole judgment of
AMF Bowling has or may have a material adverse effect on AMF Bowling's
business, assets, liabilities, operations, results of operations,
condition (financial or otherwise) or prospects or the trading in the
securities of the Company, or any decline in either the Dow Jones
Industrial Average or the Standard and Poor's Index of 500 Industrial
Companies by an amount in excess of 10%, as measured from the close of
business on June 28, 1999;
(6) AMF Bowling shall not have obtained all consents, approvals, waivers or
amendments from third parties necessary to permit the consummation of
the Offer; or
(7) any change shall have occurred (or any development shall have occurred
involving any prospective change) in the business, assets, liabilities,
condition (financial or otherwise), operations, results of operations,
or prospects of AMF Bowling that, in the sole judgment of AMF Bowling,
has or may have a material adverse effect on AMF Bowling or that would
or might prohibit, prevent, restrict or delay consummation of the
Offer.
The foregoing conditions are for the sole benefit of AMF Bowling and may be
asserted by AMF Bowling, in its sole discretion, regardless of the
circumstances giving rise to any such condition or may be waived by AMF
Bowling in whole or in part at any time and from time to time in AMF Bowling's
sole discretion. The failure by AMF Bowling at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time.
Expiration Date; Extension; Termination; Amendments
The Offer will expire on the Expiration Date. AMF Bowling expressly reserves
the right to extend the Offer on a daily basis or for such period or periods
as it may determine in its sole discretion from time to time by giving written
or oral notice to the Depositary and by making a public disclosure before 9:00
a.m., New York City time, on the next business day following the previously
scheduled Expiration Date. During any such extended period, all Debentures
previously tendered and not accepted for purchase will remain subject to the
Offer and may, subject to the terms and conditions of the Offer, be accepted
for purchase by AMF Bowling or may be withdrawn by the applicable Holder.
28
<PAGE>
AMF Bowling expressly reserves the absolute right, in its sole discretion,
to (i) waive any condition to the Offer, (ii) amend any terms of the Offer and
(iii) modify the Offer. Any waiver or amendment applicable to the Offer will
apply to all Debentures validly tendered regardless of when or in what order
such Debentures were tendered. If AMF Bowling makes a material change in the
terms of the Offer or waives a material condition of the Offer, AMF Bowling
will disseminate information concerning such change or waiver and will extend
the Expiration Date, in each case, to the extent required by law.
AMF Bowling expressly reserves the right, in its sole discretion, to
terminate the Offer for any reason, including if any of the conditions
applicable thereto set forth under "--Conditions of the Offer" shall exist and
shall not have been waived by AMF Bowling. Any such termination will be
followed as promptly as practicable by public announcement thereof. In the
event AMF Bowling shall terminate the Offer, it shall give immediate notice
thereof to the Depositary, and all Debentures theretofore tendered pursuant to
the Offer shall be returned promptly to the tendering Holders.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by a press release or other public announcement
thereof, such announcement in the case of an extension to be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner by which AMF
Bowling may choose to make such announcement, AMF Bowling will not, unless
otherwise required by law, have any obligation to publish, advertise or
otherwise communicate any such announcement.
Acceptance of Debentures for Purchase; Payment for Debentures; Maximum Tender
Amount and Pro Rata Acceptance
Upon the terms and subject to the conditions of the Offer, unless previously
terminated, promptly after the Expiration Date, AMF Bowling will, subject to
the satisfaction or waiver of all relevant conditions, accept for purchase,
and pay for, Debentures validly tendered under the Offer as of the Expiration
Date and not withdrawn; provided, however, that if more than the Maximum
Tender Amount of Debentures has been validly tendered, AMF Bowling will
purchase Debentures in an aggregate amount equal to the Maximum Tender Amount
on a Pro Rata Acceptance basis.
AMF Bowling expressly reserves the right, in its sole discretion, to delay
for a reasonable period, acceptance for purchase of Debentures validly
tendered under the Offer or the payment for Debentures accepted for purchase
(subject to Rule 14e-1(c) under the Exchange Act, which requires that AMF
Bowling pay the consideration offered or return the Debentures deposited by or
on behalf of the Holders promptly after the termination or withdrawal of the
Offer), or to terminate the Offer and not accept for purchase any Debentures
not theretofore accepted for purchase, if any of the conditions set forth
under "--Conditions of the Offer" shall not have been satisfied or waived by
AMF Bowling or in order to comply in whole or in part with any applicable law.
In all cases, payment for Debentures purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) such Debentures, or
timely Book-Entry Confirmation (as hereinafter defined) of such Debentures
into the Depositary's account at DTC pursuant to the procedures set forth
below in "Procedures for Tendering Debentures," (ii) a properly completed and
duly executed Letter of Transmittal (or an Agent's Message in lieu thereof)
and (iii) all necessary signature guarantees and any other documents required
by the Letter of Transmittal. See "Procedures for Tendering Debentures" for a
description of the procedures for tendering Debentures pursuant to the Offer.
For purposes of the Offer, AMF Bowling will be deemed to have accepted for
payment (and therefore purchased) Debentures when and if it gives oral notice
to the Depositary of its acceptance of such Debentures for payment pursuant to
the Offer. Payment for Debentures purchased pursuant to the Offer will be made
by AMF Bowling by depositing the Repurchase Price therefor with the
Depositary, which will act as agent for tendering Holders for the purpose of
receiving the Repurchase Price from AMF Bowling and transmitting the
Repurchase Price to the tendering Holders.
29
<PAGE>
Tenders with respect to the Debentures pursuant to the Offer will be
accepted only in principal amounts at maturity equal to $1,000 or integral
multiples thereof.
If, for any reason whatsoever, acceptance for purchase of or payment for
validly tendered Debentures pursuant to the Offer is delayed or AMF Bowling is
unable to accept for purchase or to pay for validly tendered Debentures
pursuant to the Offer, then the Depositary may, nevertheless, on behalf of AMF
Bowling, retain tendered Debentures, without prejudice to the rights of AMF
Bowling described under "--Expiration Date; Extension; Termination;
Amendments," "--Conditions of the Offer" and "Procedures for Tendering
Debentures--Withdrawal of Tenders," but subject further to Rule 14e-1(c) under
the Exchange Act, which requires that AMF Bowling pay the consideration
offered or return the Debentures deposited by or on behalf of the Holders
promptly after the termination or withdrawal of the Offer.
AMF Bowling does not expect to increase the consideration offered in the
Offer, but if the consideration offered in the Offer is increased, all
tendering Holders whose Debentures are accepted for payment pursuant to the
Offer will be given the increased consideration regardless of when or in what
order such Debentures were validly tendered.
Under no circumstances will any interest be payable because of any delay in
the transmission of funds to the Holders of purchased Debentures or otherwise.
If any tendered Debentures are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer or if certificates are
submitted evidencing more Debentures than are tendered, certificates
evidencing unpurchased Debentures will be returned, without expense, to the
tendering Holder (or, in the case of Debentures tendered by book-entry
transfer into the Depositary's account at DTC, the account maintained at DTC
designated by the participant therein who so delivered such Debentures),
unless otherwise requested by such Holder under "Special Delivery
Instructions" in the Letter of Transmittal, promptly following the Expiration
Date or the termination of the Offer.
The Debentures purchased pursuant to the Offer will cease to be outstanding
and will be delivered to the Trustee for cancellation as promptly as
practicable after such purchase. Any Debentures which remain outstanding after
consummation of the Offer will continue to be obligations of AMF Bowling in
accordance with the provisions of the Indenture.
After the Expiration Date, AMF Bowling may purchase additional Debentures in
the open market, in privately negotiated transactions, through subsequent
tender or exchange offers or otherwise, subject to compliance with the
Indenture and applicable law. Any future purchases may be on the same terms or
on terms that may be more or less favorable to Holders than the terms of the
Offer. Any future purchases will depend on various factors at that time.
If more than 45.7% of the Debentures are validly tendered and not withdrawn
in the Offer and/or if subscriptions are received for more than $120 million
of AMF common stock, AMF Bowling may, but is not obligated to, increase the
outstanding principal amount at maturity of Debentures being sought, but not
in excess of 60% of the outstanding Debentures, and in that event extend the
expiration dates of the Offer and the Rights Offering.
PROCEDURES FOR TENDERING DEBENTURES
Tendering Debentures
The tender of Debentures pursuant to any of the procedures set forth in this
Offer to Purchase and in the Letter of Transmittal will constitute a binding
agreement between the tendering Holder and AMF Bowling upon the terms and
subject to the conditions of the Offer. The tender of Debentures will
constitute an agreement to deliver good and marketable title to all tendered
Debentures on the Expiration Date free and clear of all liens, charges,
claims, encumbrances, interests and restrictions of any kind.
Except as provided in "--Guaranteed Delivery Procedures," unless the
Debentures being tendered are deposited by the Holder with the Depositary on
or before the Expiration Date (accompanied by a properly
30
<PAGE>
completed and duly executed Letter of Transmittal), AMF Bowling may, at its
option, reject such tender. Payment for Debentures will be made only against
deposit of validly tendered Debentures and delivery of all other required
documents.
Any beneficial owner whose Debentures are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Debentures should contact promptly such registered Holder.
Only record Holders are authorized to tender their Debentures pursuant to
the Offer. Accordingly, to properly tender Debentures or cause Debentures to
be tendered, the following procedures must be followed:
Debentures held through DTC. Each beneficial owner of Debentures held
through a participant (a "DTC Participant") of DTC (i.e., a custodian bank,
depositary, broker, trust company or other nominee) must instruct such DTC
Participant to cause its Debentures to be tendered in accordance with the
procedures set forth in this Offer to Purchase.
To effectively tender Debentures that are held through DTC, DTC Participants
should transmit their acceptance through ATOP, for which the transaction will
be eligible, and DTC will then edit and verify the acceptance and send an
Agent's Message to the Depositary for its acceptance. Delivery of tendered
Debentures must be made to the Depositary pursuant to the book-entry delivery
procedures set forth below or the tendering DTC Participant must comply with
the guaranteed delivery procedures set forth below. No Letters of Transmittal
will be required to tender Debentures through ATOP.
The Depositary will establish an account with respect to the Debentures at
DTC for purposes of the Offer within two business days after the date of this
Offer to Purchase, and any financial institution that is a participant in DTC
may make book-entry delivery of the Debentures by causing DTC to transfer such
Debentures into the Depositary's account in accordance with DTC's procedures
for such transfer. However, although delivery of Debentures may be effected
through book-entry transfer into the Depositary's account at DTC, the Letter
of Transmittal (or facsimile thereof), with any required signature guarantees
or an Agent's Message in connection with a book-entry transfer, and any other
required documents, must, in any case, be transmitted to and received by the
Depositary at its address set forth on the last page of this Offer to Purchase
on or before the Expiration Date, or the tendering Holder must comply with the
guaranteed delivery procedures described below. Delivery of documents to DTC
does not constitute delivery to the Depositary. The confirmation of a book-
entry transfer into the Depositary's account at DTC as described above is
referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states (i) that DTC has received an express acknowledgment from the DTC
Participant described in such Agent's Message, (ii) the principal amount of
Debentures which have been tendered by such DTC Participant pursuant to the
Offer, (iii) that such DTC Participant has received this Offer to Purchase and
the Letter of Transmittal and agrees to be bound by the terms of this Offer to
Purchase and the Letter of Transmittal and (iv) that AMF Bowling may enforce
such agreement against such DTC Participant.
Debentures held by Record Holders. Each record Holder must complete and sign
a Letter of Transmittal, and mail or deliver such Letter of Transmittal, and
any other documents required by the Letter of Transmittal, together with
certificate(s) representing all tendered Debentures, to the Depositary at its
address set forth on the last page of this Offer to Purchase, or the Holder
must comply with the guaranteed delivery procedures set forth in this Offer to
Purchase. See "--Guaranteed Delivery Procedures."
All signatures on a Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on a Letter of Transmittal need not be guaranteed if
such Debentures are tendered for the account of an Eligible Institution (as
hereinafter defined). If a Letter of Transmittal or any
31
<PAGE>
Debenture is signed by a trustee, executor, administrator, guardian, attorney-
in-fact, agent, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person must so indicate when signing, and
proper evidence satisfactory to AMF Bowling of the authority of such person so
to act must be submitted.
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, each tendering Holder waives any right to receive
any notice of the acceptance for purchase of its Debentures.
Backup Federal Income Tax Withholding. Under the "backup withholding"
provisions of federal income tax law, unless a tendering Holder, or his or her
assignee (in either case, the "Payee"), satisfies the conditions described in
Instruction 5 of the Letter of Transmittal or is otherwise exempt, the
aggregate purchase price may be subject to backup withholding tax at a rate of
31%. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal or otherwise certify
such Holder's exemption from backup withholding. See Instruction 5 of the
Letter of Transmittal.
Effect of Letter of Transmittal. Subject to and effective upon the
acceptance for purchase of and payment for Debentures validly tendered
thereby, by executing and delivering a Letter of Transmittal a tendering
Holder (i) irrevocably tenders, sells, assigns and transfers to AMF Bowling,
all right, title and interest in and to all of the Debentures tendered
thereby, (ii) waives any and all rights with respect to the Debentures
(including without limitation any existing or past defaults and their
consequences in respect of the Debentures and the Indenture), (iii) releases
and discharges AMF Bowling from any and all claims such Holder may have now,
or may have in the future, arising out of, or related to, the Debentures
including, without limitation, any claims that such Holder is entitled to
receive additional principal or interest payments with respect to the
Debentures or to participate in any redemption or defeasance of the Debentures
and (iv) irrevocably constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of such Holder with respect to any such
tendered Debentures, with full power of substitution and resubstitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) to (a) deliver certificates representing such Debentures, or
transfer ownership of such Debentures, on the account books maintained by DTC,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to AMF Bowling, (b) present such Debentures for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Debentures (except that the
Depositary will have no rights to, or control over, funds from AMF Bowling,
except as agent for AMF Bowling, for the Repurchase Price for any tendered
Debentures that are purchased by AMF Bowling), all in accordance with the
terms of the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Debentures will be resolved by AMF
Bowling, in its sole discretion and whose determination will be final and
binding. AMF Bowling reserves the absolute right to reject any or all tenders,
in its sole discretion, that are not in proper form or the acceptance of which
may be unlawful. AMF Bowling also reserves the absolute right to waive any
condition to the Offer and any irregularities or conditions of tender as to
particular Debentures. AMF Bowling's interpretation of the terms and
conditions of the Offer (including the instructions in the Letter of
Transmittal) will be final and binding. Unless waived, any irregularities in
connection with tenders must be cured within such time as AMF Bowling shall
determine in its sole discretion. None of AMF Bowling, the Trustee, the
Depositary, the Dealer Manager, the Information Agent or any other person
shall be under any duty to give notification of defects in such tenders or
incur liabilities for failure to give such notification. Tenders of Debentures
will not be deemed to have been made until such irregularities have been cured
or waived. Any Debentures received by the Depositary that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Depositary to the tendering Holder, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
Letters of Transmittal and Debentures must be sent only to the Depositary.
Do not send Letters of Transmittal or Debentures to AMF Bowling, the Trustee,
the Dealer Manager or the Information Agent.
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The method of delivery of Debentures and Letters of Transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or Letters of
Transmittal and, except as otherwise provided in the Letter of Transmittal,
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, it is suggested that the Holder use properly insured,
registered mail with return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Depositary on or before such date.
Guaranteed Delivery Procedures
DTC Participants. A DTC Participant who wishes to cause its Debentures to be
tendered, but who cannot transmit its acceptance through ATOP on or before the
Expiration Date, may cause a tender to be effected if:
(a) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution"), including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities dealer, municipal
securities broker, government securities dealer or government
securities broker; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v)
a savings institution that is a participant in a Securities Transfer
Association recognized program; and
(b) on or before the Expiration Date, the Depositary receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail, hand delivery, facsimile transmission or
overnight courier) substantially in the form provided herewith; and
(c) Book-Entry Confirmation of the transfer into the Depositary's account
at DTC, and all other documents required by the Letter of Transmittal,
are received by the Depositary within three NYSE trading days after the
date of receipt by the Depositary of such Notice of Guaranteed
Delivery.
Record Holders. A record Holder who wishes to tender its Debentures but (i)
whose Debentures are not lost, but are not immediately available and will not
be available for tendering on or before the Expiration Date or (ii) who cannot
deliver its Debentures, the Letter of Transmittal, or any other required
documents, to the Depositary before the Expiration Date, may effect a tender
if:
(a) the tender is made by or through an Eligible Institution; and
(b) on or before the Expiration Date, the Depositary receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail, hand delivery, facsimile transmission or
overnight courier) substantially in the form provided herewith; and
(c) a properly completed and executed Letter of Transmittal, as well as the
certificate(s) representing all tendered Debentures in proper form for
transfer, and all other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading
days after the date of receipt by the Depositary of such Notice of
Guaranteed Delivery.
Under no circumstances will interest be paid by AMF Bowling by reason of any
delay in making payment to any person using the guaranteed delivery procedures
described above or otherwise.
Withdrawal Rights
Tenders of Debentures (or any portion of such Debentures in integral
multiples of $1,000 principal amount at maturity) may be withdrawn at any time
before the Expiration Date in accordance with the procedures set forth below
and in the Letter of Transmittal.
Debentures held through DTC. A DTC Participant who has transmitted its
acceptance through ATOP in respect of Debentures held through DTC may, before
the Expiration Date, withdraw the instruction given thereby
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by (i) withdrawing its acceptance through ATOP or (ii) delivering to the
Depositary by mail, hand delivery or facsimile transmission of notice of
withdrawal of such instruction. Such notice of withdrawal must contain the
name and number of the DTC Participant, the principal amount of Debentures to
which such withdrawal relates and the signature of the DTC Participant.
Withdrawal of such an instruction will be effective upon receipt of such
notice of withdrawal by the Depositary.
Debentures held by Record Holders. A Holder may withdraw its tender of
Debentures, before the Expiration Date, by delivering to the Depositary by
mail, hand delivery or facsimile transmission of notice of withdrawal. Any
such notice of withdrawal must (i) specify the name of the person who tendered
the Debentures to be withdrawn, (ii) contain a description of the Debentures
to be withdrawn and identify the Debenture certificate number or numbers shown
on the particular certificates evidencing such Debentures and the aggregate
principal amount at maturity represented by such Debentures and (iii) be
signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Debentures were tendered (including any
required signature guarantees), or be accompanied by (x) documents of transfer
in a form acceptable to AMF Bowling, in its sole discretion, and (y) a
properly completed irrevocable proxy that authorized such person to effect
such revocation on behalf of such Holder. If the Debentures to be withdrawn
have been delivered or otherwise identified to the Depositary, a signed notice
of withdrawal is effective immediately upon receipt by the Depositary even if
physical release is not yet effected. Any Debentures properly withdrawn will
be deemed to be not validly tendered for purposes of the Offer.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on the notice of withdrawal need not be guaranteed if
the Debentures being withdrawn are held for the account of an Eligible
Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as
the person's name appears on its transmission through ATOP or Letter of
Transmittal, as the case may be, to which such withdrawal relates. If a notice
of withdrawal is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person must so indicate
when signing and must submit with the revocation appropriate evidence of
authority to execute the notice of withdrawal. A Holder or DTC Participant may
withdraw a tender only if such withdrawal complies with the provisions of this
Offer to Purchase and the Letter of Transmittal.
A withdrawal of an instruction previously given pursuant to the transmission
of an acceptance through ATOP or a withdrawal of a tender by a Holder may be
rescinded only by (i) a new transmission of acceptance through ATOP or (ii)
execution and delivery of a new Letter of Transmittal, as the case may be, in
accordance with the procedures described herein and in the Letter of
Transmittal.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by AMF Bowling, in its sole
discretion, which determination shall be final and binding. None of AMF
Bowling, the Trustee, the Depositary, the Dealer Manager, the Information
Agent or any other person shall be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liabilities
for failure to give any such notification.
OWNERSHIP OF DEBENTURES
On November 12, 1998, GS Capital Partners II, L.P. ("GS Capital II"), GS
Capital Partners II Offshore, L.P. ("GS Offshore"), GS Capital Partners II
Germany Civil Law Partnership ("GS Germany"), Stone Street Fund 1995, L.P.
("1995 Stone"), Stone Street Fund 1996, L.P. ("1996 Stone"), Bridge Street
Fund 1995, L.P. ("1995 Bridge") and Bridge Street Fund 1996, L.P. ("1996
Bridge" and together with GS Capital II, GS Offshore, GS Germany, 1995 Stone,
1996 Stone and 1995 Bridge, the "Goldman Sachs Group Affiliates"),
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Kelso Investment Associates V, L.P. ("KIA V") and Kelso Equity Partners V,
L.P. ("KEP V" and, together with KIA V, the "Kelso Affiliates") entered into
an agreement (the "Debenture and Note Purchase Agreement"), in which the
parties thereto agreed to make open market purchases of the Debentures from
time to time for their respective accounts in agreed-upon proportions. Under
the Debenture and Note Purchase Agreement, the Goldman Sachs Group Affiliates
have purchased $415,957,000 in aggregate principal amount at maturity
(approximately 36.9%) of Debentures and the Kelso Affiliates have purchased
$79,993,000 in aggregate principal amount at maturity (approximately 7.1%) of
Debentures, collectively representing approximately 44% of the outstanding
Debentures. Both the Goldman Sachs Group Affiliates and the Kelso Affiliates
have indicated that they currently intend to tender all of their Debentures in
the Offer subject to market conditions, although they are not obligated to do
so.
SOURCES AND AMOUNT OF FUNDS
The precise amount of funds required by AMF Bowling to purchase Debentures
validly tendered pursuant to the Offer and to pay the fees and expenses
related to the Offer will not be known until the Expiration Date. If the
Maximum Tender Amount were tendered and purchased the amount of funds required
to pay the aggregate Repurchase Price will be approximately $72 million. The
funds required to purchase validly tendered Debentures and to pay fees and
expenses are to be provided from the proceeds of the Rights Offering.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is for general information only and is based on the
federal income tax law now in effect, which is subject to change, possibly
retroactively. The following discussion is a summary of certain federal income
tax consequences of the Offer and does not discuss all aspects of federal
income taxation which may be relevant to any particular holder of Debentures
in light of such holder's individual investment circumstances or to certain
types of holders subject to special tax rules (e.g., financial institutions,
broker-dealers, insurance companies, tax-exempt organizations, and foreign
taxpayers) or holders that hold Debentures as a part of a straddle, hedge or
synthetic security transaction for federal income tax purposes, nor does it
address any state, local or foreign tax consequences. This summary assumes
that the holders have held their Debentures as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code"). Each holder of Debentures is urged to consult such holder's tax
advisor regarding the specific federal, state, local, and foreign income and
other tax consequences of the Offer.
As used herein, the term "U.S. Holder" means a holder of Debentures that,
for United States federal income tax purposes, is (i) a citizen or individual
resident of the United States, (ii) a corporation or partnership formed under
the laws of the United States or any political subdivision thereof, (iii) an
estate the income of which is subject to U.S. federal income taxation
regardless of its source, or (iv) a trust, if a court within the United States
is able to exercise primary jurisdiction over the administration of the trust
and one or more United States persons have the authority to control all
substantial decisions of the trust. The term "Non-U.S. Holder" means any
holder of Debentures that is not a U.S. Holder.
U.S. Holders
A U.S. Holder who sells a Debenture to AMF Bowling pursuant to the Offer
will recognize taxable gain or loss equal to the difference between the
Repurchase Price and such U.S. Holder's adjusted tax basis in the Debenture.
In general, a U.S. Holder's adjusted tax basis in a Debenture will equal its
initial investment in the Debenture, increased by any original issue discount
(as defined in the Code) ("OID") or market discount (as discussed below)
includible in its income during the period it has held the Debenture and
reduced by (i) the amount of any payments on the Debenture that are not
qualified stated interest payments and (ii) the amount of any amortizable bond
premium or acquisition premium applied to reduce interest on the Debenture.
Except to the extent of any accrued market discount (as discussed below),
any gain or loss recognized on the sale of a Debenture pursuant to the Offer
should be capital gain or loss and will generally be long-term capital gain or
loss if the U.S. Holder has held the Debenture for more than one year at the
time of the sale.
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In the case of an individual U.S. Holder, gain on most capital assets held
for more than one year is subject to tax at a maximum rate of 20%. If an
individual U.S. Holder recognizes a capital loss on the sale of the Debenture,
such loss will be deductible only to the extent of such U.S. Holder's net
capital gains from other sources, plus $3,000 of ordinary income. Any
disallowed capital loss may be carried forward to subsequent taxable years,
subject to the same limitation. In the case of a corporate U.S. Holder, any
capital loss realized on the sale of a Debenture will be deductible only to
the extent of such U.S. Holder's net capital gain from other sources. Any net
capital loss may generally be carried back, subject to certain limitations, to
the three immediately preceding taxable years and forward to the five
immediately succeeding taxable years.
An exception to the capital gain treatment described above applies if a U.S.
Holder acquired a Debenture at a "market discount." Market discount is the
amount by which the U.S. Holder's basis in the Debenture immediately after its
acquisition is exceeded by the "revised issue price" of the Debenture (which
is generally equal to the issue price of the Debenture plus the amount of OID
that has accrued on the Debenture since its issuance). A Debenture will be
considered to have no market discount if such excess is less than 1/4 of 1% of
the stated redemption price of the Debenture at maturity multiplied by the
number of complete years from the U.S. Holder's acquisition date of the
Debenture to its maturity date. The gain realized by the U.S. Holder of a
market discount Debenture on its sale to AMF Bowling will be treated as
ordinary income to the extent that market discount on the Debenture has
accrued on a straight-line basis (or, at the election of the U.S. Holder, on a
constant interest basis) from its acquisition date to the date of sale, unless
the U.S. Holder has elected to include market discount in income currently as
it accrues. Gain in excess of such accrued market discount will be subject to
the capital gains rules described above.
Non-U.S. Holders
Except to the extent of any OID accrued while a Debenture was held by a Non-
U.S. Holder as described below and subject to the discussion concerning backup
withholding, any gain realized by such Non-U.S. Holder on the sale of a
Debenture pursuant to the Offer will not be subject to U.S. federal income
tax, unless (i) such gain is effectively connected with such Non-U.S. Holder's
conduct of a trade or business in the U.S. or, in the case of a Non-U.S.
Holder that is a resident of a county that has a tax treaty with the U.S. and
eligible to obtain the benefits of such treaty, is attributable to a permanent
establishment (or, in the case of an individual, a fixed base) in the United
States, (ii) subject to certain exceptions, the Non-U.S. Holder is an
individual who is present in the United States for 183 days or more in the
taxable year of the disposition and certain other conditions are met, or (iii)
the Non-U.S. Holder is a U.S. expatriate (such as a former citizen or resident
of the U.S.) and is subject to certain provisions of U.S. tax law applicable
to certain U.S. expatriates.
An exception to the general rules described above applies if any OID has
accrued on a Debenture while such Debenture was held by the Non-U.S. Holder.
The gain realized by such Non-U.S. Holder may be subject to U.S. federal
income tax to the extent of such OID unless (i) such OID is not effectively
connected with such Non-U.S. Holder's conduct of a trade or business in the
U.S., (ii) such Non-U.S. Holder does not actually or constructively own 10% or
more of the total voting power of all voting stock of AMF Bowling and is not a
"controlled foreign corporation" (as defined in the Code) with respect to
which AMF Bowling is a related person, and (iii) certain Internal Revenue
Service certification statements prescribed in the Code, for example, Form W-
8, are provided to AMF Bowling or the Depositary.
Information Reporting and Backup Withholding
U.S. Holders. Proceeds payable to a U.S. Holder on a sale of Debentures
pursuant to the Offer may be subject to "backup withholding" at a rate of 31%
if (i) the U.S. Holder fails to furnish a social security number or other
taxpayer identification number ("TIN") certified under penalties of perjury
within a reasonable time after the request therefor, (ii) the U.S. Holder
furnishes an incorrect TIN, (iii) the U.S. Holder fails to report properly
interest or dividends, or (iv) under certain circumstances, the U.S. Holder
fails to provide a certified statement, signed under penalties of perjury,
that the TIN furnished is the correct number and that the U.S.
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Holder is not subject to backup withholding. In addition, if the U.S. Holder
does not provide AMF Bowling with a correct TIN, the U.S. Holder may be
subject to penalties imposed by the IRS. Any amount withheld from a payment
under the backup withholding rules will be creditable against the U.S.
Holder's federal income tax liability, provided that the required information
is furnished to the Internal Revenue Service. Backup withholding will not
apply, however, with respect to payments made to certain holders, including
corporations and tax-exempt organizations, provided their exemptions from
backup withholding are properly established.
Non-U.S. Holders. In the case of a Non-U.S. Holder, backup withholding and
additional information reporting will not apply to payments of the Repurchase
Price by AMF Bowling if the Non-U.S. Holder certifies as to its non-U.S.
status under penalties of perjury or otherwise establishes an exemption
(provided that neither AMF nor the Depositary has actual knowledge that such
Non-U.S. Holder is a U.S. person or that the conditions of any other exemption
are not, in fact, satisfied).
The payment of the Repurchase Price to or through the U.S. office of any
broker, U.S. or foreign, will be subject to information reporting and possible
backup withholding unless the holder certifies as to its Non-U.S. Holder
status under penalty of perjury or otherwise establishes an exemption,
provided that the broker does not have actual knowledge that the holder is a
U.S. person or that the conditions of any other exemption are not, in fact,
satisfied. The payment of the Repurchase Price to or through a non-U.S. office
of a non-U.S. broker that is not a U.S. related person will not be subject to
information reporting or backup withholding. For this purpose, a "U.S. related
person" is (i) a "controlled foreign corporation" for U.S. federal income tax
purposes or (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with
the conduct of a U.S. trade or business.
In the case of the payment of proceeds to or through a non-U.S. office of a
broker that is either a U.S. person or a U.S. related person, information
reporting is required on the payment unless the broker has documentary
evidence in the files that the holder is a Non-U.S. Holder and the broker has
no actual knowledge to the contrary. Backup withholding will not apply to
payments made through foreign offices of a broker that is not a U.S. person or
a U.S. related person (absent actual knowledge that the payee is a U.S.
person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against its U.S.
federal income tax liability, provided that the required information is
provided to the Internal Revenue Service.
DEALER MANAGER
Morgan Stanley is acting as the Dealer Manager for AMF Bowling in connection
with the Offer. Any questions or requests for assistance may be directed to
the Dealer Manager at the address or telephone number set forth on the last
page of this Offer to Purchase. The Dealer Manager is also acting as financial
advisor to the Board in connection with the recapitalization plan, including
the Rights Offering and the Offer. It is also advising the Special Committee
on matters relating to the Offer, including the pricing thereof. Morgan
Stanley's advice has included assistance in determining the Repurchase Price,
the subscription price in the Rights Offering and the impact of the Rights
Offering on AMF Bowling and its stockholders from a financial point of view.
It has also discussed with management and the Board the possible effects of
the Rights Offering and the recapitalization plan, including the Offer. Morgan
Stanley also performed analyses to assist the Board in determining the
appropriate and desirable pricing and other terms for the Rights Offering and
the Special Committee in determining the appropriate and desirable pricing of
the Offer.
Morgan Stanley and some of its affiliates have performed in the past and may
perform in the future other financial advisory and investment banking services
for the Company. The Company has paid, and may in the future pay, such parties
compensation for their services. Morgan Stanley was one of the initial
purchasers of the
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Debentures when they were issued in May 1998 and is currently a market maker
for the Debentures. In addition, Morgan Stanley was an underwriter of the
Company's initial public offering in November 1997 (the "IPO"), serving as the
qualified independent underwriter for purposes of the rules of the National
Association of Securities Dealers, Inc. in the IPO.
THE DEPOSITARY
The Depositary for the Offer is ChaseMellon Shareholder Services, L.L.C. All
deliveries, correspondence and questions sent or presented to the Depositary
relating to the Offer should be directed to one of the addresses or telephone
numbers set forth on the last page of this Offer to Purchase.
INFORMATION AGENT
D.F. King & Co., Inc. is acting as the Information Agent for AMF Bowling in
connection with the Offer. Requests for copies of the Offer materials should
be directed to the Information Agent at the address or telephone number set
forth on the last page of this Offer to Purchase.
FEES AND EXPENSES
AMF Bowling has agreed to pay Morgan Stanley a fee of $500,000 for serving
as Dealer Manager and financial advisor, as described above. AMF Bowling has
also agreed to reimburse reasonable expenses of the Dealer Manager in
connection with this Offer.
The Company will pay the Depositary and the Information Agent reasonable and
customary compensation for their services in connection with the Offer, plus
reimbursement for reasonable expenses.
Brokers, dealers (including the Dealer Manager), commercial banks, trust
companies and other nominees will be reimbursed by AMF Bowling for customary
mailing and handling expenses incurred by them in forwarding material to their
customers. AMF Bowling will not pay any fees or commissions to any broker,
dealer, commercial bank, trust company or other person (other than the Dealer
Manager, the Depositary and the Information Agent) in connection with the
solicitation of tenders of Debentures pursuant to the Offer.
INDEMNIFICATION
AMF Bowling has agreed to indemnify the Depositary, the Information Agent
and the Dealer Manager against certain liabilities, including, in certain
cases, under the securities laws.
MISCELLANEOUS
Directors, officers and regular employees of AMF Bowling (who will not be
specifically compensated for such services) and the Dealer Manager may contact
Holders by mail, telephone, telex, telegram messages, facsimiles and personal
interviews regarding the Offer and may request brokers, dealers, commercial
banks, trust companies and other nominees to forward this Offer to Purchase
and related materials to beneficial owners of Debentures.
AMF Bowling is not aware of any jurisdiction where the making of the Offer
is not in compliance with the laws of such jurisdiction. If AMF Bowling
becomes aware of any jurisdiction where the making of the Offer would not be
in compliance with such laws, AMF Bowling will make a good faith effort to
comply with any such laws or seek to have such laws declared inapplicable to
the Offer. If, after such good faith effort, AMF Bowling cannot comply with
any such applicable laws, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the Holders residing in such jurisdiction.
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Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal, certificates for Debentures and any other
required documents should be sent by each Holder or such Holder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
By Courier: Registered Mail: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
85 Challenger Road--Mail Post Office Box 3301 120 Broadway, 13th Floor
Drop-Reorg South Hackensack, NJ New York, NY 10271
Ridgefield Park, NJ 07606 Attention: Reorganization
07660 Attention: Reorganization Department
Attention: Reorganization Department
Department
By Facsimile:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
Any requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and Notice of Guaranteed Delivery should be directed to the
Information Agent at the address and telephone number set forth below:
The Information Agent:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 628-8532
Any questions or requests for assistance may be directed to the Dealer
Manager at the address and telephone number set forth below:
The Dealer Manager:
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Attention: Investment Banking Department
Telephone No.: (800) 223-2440, ext. 7898
You may also contact your broker, dealer, commercial bank or trust company
or any other nominee for assistance concerning the Offer.
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Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender up to $514,286,000 Aggregate Principal Amount
At Maturity of Zero Coupon Convertible Debentures Due 2018
of
AMF Bowling, Inc.
Pursuant to the Offer to Purchase Dated June 29, 1999
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 28, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE
"EXPIRATION DATE"). DEBENTURES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY
TIME BEFORE THE EXPIRATION DATE.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C. (The "Depositary")
By Courier: Registered Mail: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
85 Challenger Road--Mail Post Office Box 3301 120 Broadway, 13th Floor
Drop-Reorg South Hackensack, NJ New York, NY 10271
Ridgefield Park, NJ 07606 Attention:
07660 Attention: Reorganization Reorganization
Attention: Department Department
Reorganization
Department
By Facsimile:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE
VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER TO PURCHASE (AS DEFINED
BELOW) SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase, dated June 29, 1999 (as the same may be amended from time to time,
the "Offer to Purchase"), of AMF Bowling, Inc. ("AMF Bowling") and this Letter
of Transmittal and instructions hereto (the "Letter of Transmittal"), which
together constitute AMF Bowling's offer to purchase (the "Offer") a minimum of
$450,000,000 aggregate principal amount at maturity (40%) up to $514,286,000
aggregate principal amount at maturity (45.7%) of its Zero Coupon Convertible
Debentures due 2018 (the "Debentures"), upon the terms and subject to the
conditions set forth in the Offer to Purchase.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE PAYMENT FOR THE DEBENTURES TO BE
PURCHASED PURSUANT TO THE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
DEBENTURES TO THE DEPOSITARY BEFORE THE EXPIRATION DATE.
This Letter of Transmittal is to be used by Holders if certificates
representing Debentures are to be physically delivered to the Depositary
herewith by Holders. This Letter of Transmittal is also being supplied for
informational purposes only to persons who hold Debentures in book-entry form
through the facilities of The Depository Trust Company ("DTC"). Tender of
Debentures held through DTC must be made pursuant to the procedures described
under "Procedures for Tendering Debentures -- Tendering Debentures --
Debentures Held Through DTC" in the Offer to Purchase. Delivery of documents
to DTC does not constitute delivery to the Depositary.
<PAGE>
In order to properly complete this Letter of Transmittal, a Holder must (i)
complete the box entitled "Description of Debentures Tendered;" (ii) if
appropriate, check and complete the boxes relating to guaranteed delivery,
Special Issuance or Payment Instructions and Special Delivery Instructions;
(iii) sign the Letter of Transmittal; and (iv) complete Substitute Form W-9 (a
foreign holder should obtain Form W-8 from the Depositary and complete such
form). Each Holder should carefully read the detailed Instructions contained
herein before completing this Letter of Transmittal.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Offer.
If Holders desire to tender Debentures pursuant to the Offer and (i)
certificates representing such Holder's Debentures are not lost but are not
immediately available or time will not permit this Letter of Transmittal,
certificates representing such Debentures or other required documents to reach
the Depositary before the Expiration Date or (ii) the procedures for book-
entry transfer cannot be completed before the Expiration Date, such Holders
may effect a tender of such Debentures in accordance with the guaranteed
delivery procedures described under "Procedures for Tendering Debentures --
Guaranteed Delivery Procedures" in the Offer to Purchase. See Instruction 1
below.
All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Offer to Purchase.
Your bank or broker can assist you in completing this form. The instructions
included with this Letter of Transmittal must be followed.
Any questions or requests for assistance may be directed to Morgan Stanley &
Co. Incorporated, the dealer manager for the Offer (the "Dealer Manager"),
whose address and telephone number is set forth on the last page of this
Letter of Transmittal. Requests for additional copies of the Offer to Purchase
and this Letter of Transmittal should be directed to D.F. King & Co., Inc.
(the "Information Agent"), whose address and telephone number are set forth on
the last page of this Letter of Transmittal. See Instruction 9 below.
AMF Bowling is not aware of any jurisdiction where the making of the Offer
is not in compliance with the laws of such jurisdiction. If AMF Bowling
becomes aware of any jurisdiction where the making of the Offer would not be
in compliance with such laws, AMF Bowling will make a good faith effort to
comply with any such laws or seek to have such laws declared inapplicable to
the Offer. If, after such good faith effort, AMF Bowling cannot comply with
any such applicable laws, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the Holders residing in such jurisdiction.
[_] CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): _________________________________________
Window Ticket No. (if any): ______________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Eligible Institution that Guaranteed Delivery: ___________________
If delivered by book-entry: _____________________________________________
DTC Account Number: __________________________________________________
Transaction Code Number: _____________________________________________
[_] CHECK HERE IF TENDERED DEBENTURES ARE BEING TENDERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN
THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER DEBENTURES BY BOOK-ENTRY
TRANSFER):
Name of Tendering Institution: __________________________________________
Account Number: _________________________________________________________
Transfer Code Number: ___________________________________________________
2
<PAGE>
List below the Debentures to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal. Tenders of Debentures will be accepted only in principal
amounts at maturity equal to $1,000 or integral multiples thereof.
________________________________________________________________________________
DESCRIPTION OF DEBENTURES TENDERED
________________________________________________________________________________
Name(s) and Address(es) Aggregate Principal Aggregate Principal
of Registered Holder(s) Certificate Amount at Amount at
(Please fill in, if Number* Maturity Represented Maturity Tendered**
blank)
_______________________ ___________ ____________________ ____________________
_______________________ ___________ ____________________ ____________________
_______________________ ___________ ____________________ ____________________
_______________________ ___________ ____________________ ____________________
_______________________ ___________ ____________________ ____________________
_______________________ ___________ ____________________ ____________________
________________________________________________________________________________
TOTAL PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES: $_______
________________________________________________________________________________
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Aggregate Principal
Amount at Maturity Tendered" and subject to the terms and conditions of
the Offer to Purchase, a Holder will be deemed to have tendered the
entire aggregate principal amount at maturity represented by the
Debentures indicated in the column labeled "Aggregate Principal Amount
at Maturity Represented." See Instruction 2 below.
3
<PAGE>
SPECIAL ISSUANCE OR SPECIAL DELIVERY INSTRUCTIONS
PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 2 THROUGH 6)
(SEE INSTRUCTIONS 2 THROUGH 6)
To be completed ONLY if certifi-
To be completed ONLY if certifi- cates for Debentures representing
cates for Debentures representing principal amount at maturity not
principal amount at maturity not tendered and/or the check for the
tendered or not purchased and/or Repurchase Price for principal
the check for the purchase price amount at maturity of Debentures
for principal amount at maturity purchased are to be sent to an
of Debentures purchased are to be address different from that shown
issued to the order of someone in the box entitled "Description
other than the registered Hold- of Debentures Tendered" within
er(s) of the Debentures or the this Letter of Transmittal.
name of the registered Holder(s)
of the Debentures needs to be
corrected or changed.
Issue:[_] Debentures Deliver:[_] Debentures
[_] Checks [_] Checks
(Complete as applicable) (Complete as applicable)
Name _____________________________ Name______________________________
(Please Print) (Please Print)
Address __________________________ Address __________________________
__________________________________ __________________________________
(Zip Code) (Zip Code)
__________________________________ __________________________________
(Taxpayer Identification or (Taxpayer Identification or
Social Security Number) Social Security Number)
(See substitute Form W-9 herein) (See substitute Form W-9 herein)
4
<PAGE>
HOLDERS WHO WISH TO ACCEPT THE OFFER AND TENDER THEIR DEBENTURES MUST
COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to AMF Bowling the principal amount at maturity of Debentures
indicated above.
Subject to and effective upon the acceptance for purchase of and payment for
Debentures validly tendered hereby, by executing and delivering a Letter of
Transmittal, a tendering Holder (i) irrevocably tenders, sells, assigns and
transfers to AMF Bowling, all right, title and interest in and to all of the
Debentures tendered hereby, (ii) waives any and all rights with respect to the
Debentures (including, without limitation, any existing or past defaults and
their consequences in respect of the Debentures and the Indenture under which
the Debentures were issued), (iii) releases and discharges AMF Bowling from
any and all claims such Holder may have now, or may have in the future,
arising out of, or related to, the Debentures including, without limitation,
any claims that such Holder is entitled to receive additional principal or
interest payments with respect to the Debentures or to participate in any
redemption or defeasance of the Debentures and (iv) irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
such Holder with respect to any such tendered Debentures, with full power of
substitution and resubstitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) deliver certificates
representing such Debentures, or transfer ownership of such Debentures, on the
account books maintained by DTC, together, in any such case, with all
accompanying evidences of transfer and authenticity, to AMF Bowling, (b)
present such Debentures for transfer on the relevant security register and
(c) receive all benefits or otherwise exercise all rights of beneficial
ownership of such Debentures (except that the Depositary will have no rights
to, or control over, funds from AMF Bowling, except as agent for AMF Bowling,
for the Repurchase Price for any tendered Debentures that are purchased by AMF
Bowling), all in accordance with the terms of the Offer.
The undersigned understands that tenders of Debentures may be withdrawn by
written notice of withdrawal received by the Depositary at any time before the
Expiration Date. See Instruction 1 below.
The undersigned hereby represents and warrants that the undersigned (i) owns
the Debentures tendered hereby and is entitled to tender such Debentures and
(ii) has full power and authority to tender, sell, assign and transfer the
Debentures tendered hereby and that when such Debentures are accepted for
purchase and payment by AMF Bowling, AMF Bowling will acquire good title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim or right. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or AMF Bowling to be necessary or desirable to complete the sale, assignment
and transfer of the Debentures tendered hereby.
For the purposes of the Offer, the undersigned understands that AMF Bowling
will be deemed to have accepted for purchase validly tendered Debentures (or
defectively tendered Debentures with respect to which AMF Bowling has waived
such defect) only if, as and when AMF Bowling gives oral or written notice
thereof to the Depositary. Payment for Debentures purchased pursuant to the
Offer will be made by deposit of the Repurchase Price for such Debentures with
the Depositary, which will act as agent for tendering Holders for the purpose
of receiving payments from AMF Bowling and transmitting such payments to such
Holders.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that valid tender of Debentures pursuant to any
one of the procedures described under "Procedures for Tendering Debentures" in
the Offer to Purchase and in the instructions hereto will constitute a binding
5
<PAGE>
agreement between the undersigned and AMF Bowling upon the terms and subject
to the conditions of the Offer, including the undersigned's waiver of any
existing defaults and their consequences in respect of the Debentures and the
Indenture under which the Debentures were issued (including, without
limitation, a default in the payment of interest).
The undersigned understands that the delivery and surrender of the
Debentures is not effective, and the risk loss of the Debentures does not pass
to the Depositary, until receipt by the Depositary of this Letter of
Transmittal, or a facsimile hereof, properly completed and duly executed,
together with all accompanying evidences of authority and any other required
documents in form satisfactory to AMF Bowling. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Debentures pursuant to the procedures described in
the Offer to Purchase and the form and validity (including time of receipt of
notices of withdrawal) of all documents will be determined by AMF Bowling, in
its sole direction, which determination shall be final and binding on all
parties.
Unless otherwise indicated herein under "Special Issuance or Payment
Instructions," the undersigned hereby requests that any Debentures
representing principal amounts at maturity not tendered be issued in the
name(s) of the undersigned, and checks constituting payments for Debentures
purchased in connection with the Offer be issued to the order of the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Debentures
representing principal amounts at maturity not tendered and checks
constituting payments for Debentures to be purchased in connection with the
Offer be delivered to the undersigned at the address(es) shown herein. In the
event that the "Special Issuance or Payment Instructions" box or the "Special
Delivery Instructions" box, or both, are completed, the undersigned hereby
requests that any Debentures representing principal amounts not tendered be
issued in the name(s) of, certificates for such Debentures be delivered to,
and checks constituting payments for Debentures purchased in connection with
the Offer be issued in the name(s) of, and be delivered to, the person(s) at
the address(es) so indicated, as applicable. The undersigned recognizes that
AMF Bowling has no obligation pursuant to the "Special Issuance or Payment
Instructions" box to transfer any Debentures from the name of the registered
Holder(s) thereof if AMF Bowling does not accept for purchase any of the
principal amount at maturity of such Debentures so tendered.
6
<PAGE>
PLEASE SIGN BELOW
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
DEBENTURES REGARDLESS OF WHETHER DEBENTURES
ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) of
Debentures exactly as his (their) name(s) appear(s) on certificate(s) for
Debentures or by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted with this Letter of Transmittal. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must set forth his or her full title below under "Capacity" and submit
evidence satisfactory to AMF Bowling of such person's authority to so act. See
Instruction 3 below.
If the signature appearing below is not of the registered Holder(s) of the
Debentures, then the registered Holder(s) must sign a valid power of attorney.
Signature(s) of Holder(s) or Authorized Signatory: ____________________________
Dated: ____________ , 1999
Name(s): ______________________________________________________________________
(Please Print)
Capacity: _____________________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Include Zip Code)
____________________________________ _____________________________________
(Area Code and Telephone Number) (Tax Identification or Social
Security Number)
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (IF REQUIRED--SEE INSTRUCTION 3 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
_______________________________________________________________________________
(Name of Eligible Institution Guaranteeing Signatures)
_______________________________________________________________________________
(Address (Including Zip Code) and Telephone Number
(Including Area Code) of Eligible Institution)
_______________________________________________________________________________
(Authorized Signature)
_______________________________________________________________________________
(Printed Name)
_______________________________________________________________________________
(Title)
Dated: ____________, 1999
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Procedures for Tendering Debentures; Guaranteed Delivery Procedures;
Withdrawal of Tenders. To tender the Debentures in the Offer, certificates
representing such Debentures, together with a properly completed and duly
executed copy (or facsimile) of this Letter of Transmittal, and any other
documents required by this Letter of Transmittal must be received by the
Depositary at one of its addresses set forth herein on or before the
Expiration Date. The method of delivery of this Letter of Transmittal,
certificates for Debentures and all other required documents to the Depositary
is at the election and risk of Holders. If such delivery is to be made by
mail, it is suggested that Holders use properly insured registered mail,
return receipt requested, and that the mailing be made sufficiently in advance
of the Expiration Date to permit delivery to the Depositary on or before such
date. Except as otherwise provided below, the delivery will be deemed made
when actually received or confirmed by the Depositary. THIS LETTER OF
TRANSMITTAL AND DEBENTURES SHOULD BE SENT ONLY TO THE DEPOSITARY, AND NOT TO
AMF BOWLING, THE TRUSTEE, THE DEALER MANAGER OR THE INFORMATION AGENT. This
Letter of Transmittal is also being supplied for informational purposes only
to persons who hold Debentures in book-entry form through the facilities of
DTC. Tender of Debentures held through DTC must be made pursuant to the
procedures described under "Procedures for Tendering Debentures -- Tendering
Debentures -- Debentures Held Through DTC" in the Offer to Purchase.
Except as provided herein for the book-entry or guaranteed delivery
procedures, unless the Debentures being tendered are deposited with the
Depositary on or before the Expiration Date (accompanied by the appropriate,
properly completed and duly executed Letter of Transmittal and any required
signature guarantees and other documents required by this Letter of
Transmittal), AMF Bowling may, in its sole discretion, reject such tender.
Payment for Debentures will be made only against deposit of tendered
Debentures.
By executing this Letter of Transmittal (or a facsimile thereof), a
tendering Holder waives any right to receive any notice of the acceptance for
payment of tendered Debentures. For a full description of the procedures for
tendering Debentures, see "Procedures for Tendering Debentures -- Tendering
Debentures" in the Offer to Purchase. If a Holder desires to tender Debentures
pursuant to the Offer and (i) certificates representing such Holder's
Debentures are not lost but are not immediately available or time will not
permit this Letter of Transmittal, certificates representing Debentures or
other required documents to reach the Depositary on or before the Expiration
Date or (ii) the procedures or book-entry transfer cannot be completed on or
before the Expiration Date, such Holder may effect a tender of such Debentures
in accordance with the guaranteed delivery procedures described under
"Procedures for Tendering Debentures -- Guaranteed Delivery Procedures" in the
Offer to Purchase. Tenders of Debentures may be withdrawn at any time before
the Expiration Date pursuant to the procedures described under "Procedures For
Tendering Debentures -- Withdrawal Rights" in the Offer to Purchase.
2. Partial Tenders. Tenders of Debentures pursuant to the Offer will be
accepted only in principal amounts at maturity equal to $1,000 or integral
multiples thereof. If less than the entire principal amount at maturity of any
Debentures evidenced by a submitted certificate is tendered, the tendering
Holder must fill in the principal amount at maturity tendered in the last
column of the box entitled "Description of Debentures Tendered" herein. The
entire principal amount at maturity represented by the certificates for all
Debentures delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount at maturity of all
Debentures is not tendered or not accepted for purchase, certificates for the
principal amount at maturity of Debentures not tendered or not accepted for
purchase will be sent to the Holder unless otherwise provided in the
appropriate box on this Letter of Transmittal (see Instruction 4), promptly
after the Debentures are accepted for purchase.
3. Signatures on this Letter of Transmittal, Bond Powers and Endorsement:
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered Holder(s) of the Debentures tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s)
without alteration, enlargement or any change whatsoever.
8
<PAGE>
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF DEBENTURES WHO IS
NOT THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID POWER
OF ATTORNEY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY AN
ELIGIBLE INSTITUTION.
If any of the Debentures tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Debentures are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many copies of this
Letter of Transmittal and any necessary accompanying documents as there are
different names in which certificates are held. If this Letter of Transmittal
is signed by the Holder, and the certificates for any principal amount at
maturity of Debentures not tendered or accepted for purchase are to be issued
(or if any principal amount at maturity of Debentures that is not tendered or
accepted for purchase is to be reissued or returned) to the Holder, and checks
constituting payments for Debentures to be purchased in connection with the
Offer are to be issued to the order of the Holder, then the Holder need not
endorse any certificates for tendered Debentures nor provide a separate bond
power. In any other case (including if this Letter of Transmittal is not
signed by the Holder), the Holder must either properly endorse the
certificates for Debentures tendered or transmit a separate properly completed
bond power with this Letter of Transmittal (in either case, executed exactly
as the name(s) of the registered Holder(s) appear(s) on such Debentures), with
the signature on the endorsement or bond power guaranteed by an Eligible
Institution, unless such certificates or bond powers are executed by an
Eligible Institution.
If this Letter of Transmittal or any certificates representing Debentures or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to AMF Bowling of their authority so to act must
be submitted with this Letter of Transmittal.
Endorsements on certificates for Debentures and signatures on bond powers
provided in accordance with this Instruction 3 by registered Holders not
executing this Letter of Transmittal must be guaranteed by an Eligible
Institution.
No signature guarantee is required if such Debentures are tendered for the
account of an Eligible Institution. In all other cases, all signatures on
Letters of Transmittal accompanying Debentures must be guaranteed by an
Eligible Institution.
4. Special Issuance or Payment and Special Delivery Instructions. Tendering
Holders should indicate in the applicable box or boxes the name and address to
which certificates representing Debentures for principal amounts at maturity
not tendered or not accepted for purchase or checks constituting payments for
Debentures purchased in connection with the Offer are to be issued or sent, if
different from the name and address of the Holder signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated. If no instructions are given, Debentures not tendered or not
accepted for purchase will be returned to the Holder.
5. Taxpayer Identification Number and Substitute Form W-9. Each tendering
U.S. Holder is required to provide the Depositary with the U.S. Holder's
correct taxpayer identification number ("TIN"), generally the U.S. Holder's
social security or federal employer identification number, on Substitute Form
W-9, which is provided under "Important Tax Information" below, or
alternatively, to establish another basis for exemption from backup
withholding. A U.S. Holder must cross out item (2) in "Part III:
Certification" on Substitute Form W-9 if such U.S. Holder is subject to backup
withholding. Failure to provide the information on the form may subject the
tendering U.S. Holder to a $50 penalty imposed by the Internal Revenue Service
("IRS") and to 31% federal income tax backup withholding on the payments made
to the U.S. Holder or other payee with respect to Debentures purchased
pursuant to the Offer. The U.S. Holder should write "Applied For" in the space
provided for the TIN in Part I, and sign and date the Substitute Form W-9,
including the section entitled "Certificate of Taxpayer Awaiting
Identification Number" in Part IV, if the tendering U.S. Holder has not been
issued a TIN and has applied for a TIN or intends to apply for a TIN in the
near future. If "Applied For" is written in Part I and the Depositary is not
provided with a TIN within 60 days, thereafter the Depositary will withhold
31% from all such payments with respect to the Debentures to be purchased
until a TIN is provided to the Depositary. Each Non-U.S. Holder must complete
and submit Form W-8 in order to be exempt from the 31% federal income tax
backup withholding due on payments with respect to the Debentures.
9
<PAGE>
6. Transfer Taxes. AMF Bowling will pay all transfer taxes, if any, payable
on the purchase and transfer of Debentures purchased pursuant to the Offer,
except in the case of deliveries of certificates for Debentures for principal
amounts at maturity not tendered or purchased that are to be registered or
issued in the name of any person other than the Holder of Debentures tendered
hereby, in which case the amount of any transfer taxes (whether imposed on the
registered Holder or such other person) payable on account of the transfer to
such person will be deducted from the Repurchase Price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Irregularities. All questions as to the validity, form, eligibility
(including the time of receipt) and acceptance for payment of any tenders of
Debentures pursuant to the procedures described in the Offer to Purchase and
the form and validity (including the time of receipt of notices of withdrawal)
of all documents will be determined by AMF Bowling, in its sole discretion,
which determination shall be final and binding on all parties. AMF Bowling
reserves the absolute right to reject any or all tenders determined by it not
to be in proper form or the acceptance of or payment for which may be
unlawful. AMF Bowling also reserves the absolute right to waive any of the
conditions of the Offer and any defect or irregularity on the tender of any
particular Debentures. AMF Bowling's interpretations of the terms and
conditions of the Offer (including without limitation the instructions in this
Letter of Transmittal) shall be final and binding. No alternative, conditional
or contingent tenders will be accepted. Unless waived, any irregularities in
connection with tenders must be cured within such time as AMF Bowling shall
determine. None of AMF Bowling, the Depositary, the Trustee, the Dealer
Manager, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in such tenders or will
incur any liability to Holders for failure to give such notification. Tenders
of such Debentures shall not be deemed to have been made until such
irregularities have been cured or waived. Any Debentures received by the
Depositary that are not properly tendered and as to which the irregularities
have not been cured or waived will be returned by the Depositary to the
tendering Holders, unless such Holders have otherwise provided herein, as
promptly as practical following the Expiration Date.
8. Waiver of Conditions. AMF Bowling expressly reserves the absolute right,
in its sole and absolute discretion, to amend or waive any of the conditions
to the Offer in the case of any Debentures tendered, in whole or in part, at
any time and from time to time.
9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering Debentures and requests for assistance may be directed
to the Dealer Manager whose address and telephone number is set forth on the
last page of this Letter of Transmittal. A Holder may also contact such
Holder's broker, dealer, commercial bank, trust company or nominee for
assistance concerning the Offer. Requests for additional copies of this Letter
of Transmittal or the Notice of Guaranteed Delivery should be directed to the
Information Agent whose address and telephone number is set forth on the last
page of this Letter of Transmittal.
10
<PAGE>
IMPORTANT INFORMATION
Under federal income tax laws, a Holder whose tendered Debentures are
accepted for payment is required by law to provide the Depositary (as payer)
with such Holder's correct TIN on Substitute Form W-9 included herein or
otherwise establish a basis for exemption from backup withholding. If such
Holder is an individual, he TIN is his social security number. If the
Depositary is not provided with the correct TIN, a $50 penalty may be imposed
by the Internal Revenue Service, and payments made with respect to Debentures
purchased pursuant to the Offer may be subject to backup withholding. Failure
to comply truthfully with the backup withholding requirements also may result
in the imposition of severe criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions. A foreign person, including entities, may qualify as an exempt
recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9. To prevent backup withholding on payments
made with respect to Debentures purchased pursuant to the Offer, the Holder is
required to provide the Depositary with either: (i) the Holder's correct TIN
by completing the form included herein, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and
that (A) the Holder has not been notified by the Internal Revenue Service that
the Holder is subject to backup withholding as a result of failure to report
all interest or dividends or (B) the Internal Revenue Service has notified the
Holder that the Holder is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
NUMBER TO GIVE THE DEPOSITARY. The Holder is required to give the Depositary
the TIN (e.g., social security number or employer identification number) of
the registered Holder. If the Debentures are held in more than one name or are
held not in the name of the actual owner, consult the "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9"
included herein for additional guidance on which number to report.
11
<PAGE>
PAYER'S NAME: ChaseMellon Shareholder Services, L.L.C.
SUBSTITUTE Name: __________________________________________________
Form W-9 Business name, if different from above: ________________
Address (number, street and apt. or suite no.): ________
City, state and ZIP code: ______________________________
Department of Check appropriate box: [_] Individual/Sole Proprietor
the Treasury [_] Corporation [_] Partnership
Internal Revenue [_] Other (Specify) _____________
Service
Requester's name and address (optional): _______________
________________________________________________________
PART I: Taxpayer Identification PART II: For
Number (TIN) Payees Exempt from
Backup Withholding
____________________________________
Payer's Request Social security number For Payees Exempt
for Taxpayer from Backup
Identification OR withholding, see
Number (TIN) and the enclosed
Certification ____________________________________ Guidelines and
Employer identification number complete as
(If awaiting TIN write "Applied For" instructed
and complete Parts III and IV) therein.
________________________________________________________
PART III: CERTIFICATION
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup
withholding as a result of failure to report all
interest or dividends, or (c) the IRS has
notified me that I am no longer subject to
backup withholding.
________________________________________________________
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because you
have failed to report all interest or dividends on
your tax return. For real estate transactions, item
(2) does not apply. For mortgage interest paid,
acquisition or abandonment of secured property,
cancellation of debt, contributions to an individual
retirement arrangement (IRA), and generally payments
other than interest and dividends, you are not
required to sign the Certification, but you must
provide your correct TIN.
__________________________ _____________________, 1999
Signature Date
________________________________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU WROTE "APPLIED FOR"
IN THE APPROPRIATE LINE IN PART I OF SUBSTITUTE FORM W-9
________________________________________________________________________________
PART IV: CERTIFICATE OF TAXPAYER AWAITING IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration or (b) I
intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days,
31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
____________________________________ ________________________________, 1999
Signature Date
12
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER
Social Security numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer Identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number
to give the Payer.
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF:
------------------------- -----------------------------------
<S> <C> <C>
1. Individual The individual.
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds,
any one of the individuals(1)
3. Custodian account of a minor (Uniform Gift The minor (2)
to Minors Act)
4. (a) The usual revocable savings trust (grantor The grantor-trustee (1)
is also trustee)
(b) So-called trust account that is not a legal The actual owner (1)
or valid trust under state law
5. Sole proprietorship The owner (3)
6. A valid trust, estate, or pension trust The legal entity (Do not furnish the identifying number
of the personal representative or trustee unless the legal
entity itself is not designated in the account title.) (4)
7. Corporation The corporation
8. Association, club, religious, charitable, The organization
educational or other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture The public entity
in the name of a public entity (such as State
or local government, school district, or prison)
that receives agricultural program payments
</TABLE>
- -------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
13
<PAGE>
Section references are to the Internal Revenue Code.
Obtaining a Number. If you don't have a taxpayer identification number or you
don't know your number, obtain Form SS-5, Application for a Social Security
Number Card, or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service (the "IRS") and apply for a number.
Payees Exempt from Backup Withholding. The following is a list of payees
exempt from backup withholding and for which no information reporting is
required. For interest and dividends, all listed payees are exempt except item
(9). For broker transactions, payees listed in (1) through (13) and a person
registered under the Investment Advisers Act of 1940 who regularly acts as a
broker are exempt. Payments subject to reporting under sections 6041 and 6041A
are generally exempt from backup withholding only if made to payees described
in items (1) through (7), except that the following payments made to a
corporation and reportable on Form 1099-MISC are not exempt from backup
withholding or information reporting: medical and health care payments,
attorneys' fees and payments for services paid by a federal executive agency.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7) if the
account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the
United States and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 401(k) distributions made by an ESOP.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to you.
14
<PAGE>
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041(A)(a), 6042, 6044,
6045, 6049, 6050A and 6050N, and the regulations under such sections.
Privacy Act Notice. Section 6109 requires you to give your correct taxpayer
identification number to persons who must file information returns with the
IRS to report interest, dividends, and certain other income paid to you,
mortgage interest you paid, the acquisition or abandonment of secured
property, cancellation of debt, or contributions you made to an IRA. The IRS
uses the numbers for identification purposes and to help verify the accuracy
of your tax return. You must provide your taxpayer identification number
whether or not you are qualified to file a tax return. Payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
Penalties.
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure
is due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. If you
make a false statement with no reasonable basis that results in no
backup withholding, you are subject to a $500 penalty.
(3) Criminal Penalty for Falsifying Information. Falsifying certifications
or affirmations may subject you to criminal penalties including fines
and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR
TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE
15
<PAGE>
Any requests for additional copies of this Letter of Transmittal or the
Notice of Guaranteed Delivery should be directed to the Information Agent at
the address and telephone number set forth below.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 628-8532
Any questions or requests for assistance may be directed to the Dealer
Manager at the address and telephone number set forth below. A Holder may also
contact such Holder's broker, dealer, commercial bank or trust company or
nominee for assistance concerning the Offer.
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Attention: Investment Banking Department
Telephone No.: (800) 223-2440 ext. 7898
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Certificates for up to
$514,286,000 Aggregate Principal Amount at Maturity of
Zero Coupon Convertible Debentures Due 2018
of
AMF Bowling, Inc.
Capitalized terms used but not defined herein have the meanings given them
in the Offer to Purchase, dated June 29, 1999 (the "Offer to Purchase").
This Notice of Guaranteed Delivery, or one substantially equivalent hereto,
may be used to cause a tender of Zero Coupon Convertible Debentures due 2018
(the "Debentures") of AMF Bowling, Inc. ("AMF Bowling") by (i) a record holder
of Debentures if certificates for the Debentures are not immediately available
or time will not permit all required documents to reach the Depositary for the
Offer on or before the Expiration Date or (ii) by a DTC Participant (as
defined in the Offer to Purchase) if the procedures for book-entry transfer
described in the Offer to Purchase cannot be completed on a timely basis.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C. (The "Depositary")
By Courier: Registered Mail: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
85 Challenger Road--Mail Post Office Box 3301 120 Broadway, 13th Floor
Drop-Reorg South Hackensack, NJ New York, NY 10271
Ridgefield Park, NJ 07606 Attention:
07660 Attention: Reorganization Reorganization
Attention: Reorganization Department Department
Department
By Facsimile:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET
FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature in a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box of the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and the Letter of Transmittal accompanying the Offer to Purchase.
On the terms and subject to the conditions of the Offer to Purchase and the
Letter of Transmittal, the undersigned hereby represents that it is the holder
of the Debentures being tendered (or caused to be tendered) hereby and is
entitled to tender (or cause to be tendered) such Debentures as contemplated
by the Offer to Purchase and, pursuant to the guaranteed delivery procedures
described in the Offer to Purchase and Letter of Transmittal, hereby tenders
(or causes a tender) to AMF Bowling Debentures of the aggregate principal
amount at maturity as indicated below.
Except as stated in the Offer to Purchase, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned.
A record holder must execute this Notice of Guaranteed Delivery exactly as
its name appears on its Debentures, and a DTC Participant must execute this
Notice of Guaranteed Delivery exactly as its name is registered with The
Depository Trust Company. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
must set forth his or her name, address and capacity as indicated below and
submit evidence to AMF Bowling of such person's authority to so act.
Aggregate Principal Amount at Maturity of Debentures
Tendered:______________________________ __________________________________
Certificate Nos. for Debentures __________________________________
(if available): SIGNATURE(S) OF HOLDER(S)
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Dated:______________, 1999
Name(s) of Holders:
__________________________________
[_] Check Box if being executed by a DTC
Participant: __________________________________
Please Type or Print
DTC Participant's Number: __________________________________
Address
Transaction Code Number: __________________________________
Zip Code
Account Number: __________________________________
Area Code and Telephone No.
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or
correspondent in the United States or another "Eligible Guarantor
Institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, hereby guarantees that, within
three New York Stock Exchange trading days from the date of receipt
by the Depositary of this Notice of Guaranteed Delivery, a properly
completed and validly executed Letter of Transmittal (or a facsimile
thereof), together with Debentures tendered hereby in proper form
for transfer, (or confirmation of the book-entry transfer of such
Debentures into the Depositary's account at The Depository Trust
Company, pursuant to the procedures for book-entry transfer set
forth under "Procedures for Tendering Debentures" in the Offer to
Purchase) and all other required documents will be delivered by the
undersigned to the Depositary.
Name of Firm: _______________________________________________________
Address: ____________________________________________________________
Zip Code: ___________________________________________________________
Area Code and Telephone Number: _____________________________________
Authorized Signature: _______________________________________________
Title: ______________________________________________________________
NAME: _______________________________________________________________
(Please Type or Print)
The institution which completes this form must deliver to the
Depositary the guarantee, the Letter of Transmittal (or facsimile
thereof) and certificates for Debentures within the time periods
specified herein. Failure to do so could result in a financial loss
to such institution.
DO NOT SEND CERTIFICATES FOR DEBENTURES WITH THIS FORM. THEY SHOULD
BE SENT WITH THE LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
Up to $514,286,000 Aggregate Principal Amount at Maturity
of Zero Coupon Convertible Debentures Due 2018
of
AMF Bowling, Inc.
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO
PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS AND THE PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY
28, 1999, UNLESS THE OFFER IS EXTENDED (SUCH TIME AND DATE OR THE
LATEST EXTENSION THEREOF, IF EXTENDED, THE "EXPIRATION DATE").
DEBENTURES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY TIME
BEFORE THE EXPIRATION DATE.
June 29, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated June 29, 1999
(as the same may be amended from time to time, the "Offer to Purchase"), and a
Letter of Transmittal and instructions thereto (the "Letter of Transmittal")
relating to the offer (the "Offer") by AMF Bowling, Inc. ("AMF Bowling") to
purchase for cash a minimum of $450,000,000 aggregate principal amount at
maturity (40%) and up to $514,286,000 aggregate principal amount at maturity
(45.7%) of its Zero Coupon Convertible Debentures due 2018 (the "Debentures")
at a price of $140.00 per $1,000 principal amount at maturity (the "Repurchase
Price").
The materials are being forwarded to you as the beneficial owner of
Debentures by us for your account or benefit but not registered in your name. A
tender of any Debentures may only be made by us as the registered holder and
pursuant to your instructions. Therefore, AMF Bowling urges beneficial owners
of Debentures registered in the name of a broker, dealer, commercial bank,
trust company or any other nominee to contact such registered holder promptly
if they wish to tender Debentures in the Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all such Debentures held by us for your account or benefit pursuant to the
terms and conditions set forth in the Offer to Purchase and the Letter of
Transmittal. We urge you to read carefully the Offer to Purchase and the Letter
of Transmittal before instructing us to tender your Debentures.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Debentures on your behalf in accordance with the
provisions of the Offer. Debentures tendered pursuant to the offer may be
validly withdrawn, subject to the procedures described in the Offer to
Purchase, at any time before the Expiration Date.
1
<PAGE>
Your attention is directed to the following:
1. Unless the Offer is terminated or amended, the consummation of the
Offer is conditioned, unless waived by AMF Bowling, upon (i) the closing on
subscriptions obtained in exercising of the rights issued in and pursuant
to the terms of the Rights Offering (as defined in the Offer to Purchase)
being conducted concurrently with the Offer with proceeds of at least
$120,000,000, (ii) Debentures in an aggregate principal amount at maturity
of not less than $450,000,000 aggregate principal amount at maturity (40%)
being validly tendered in the Offer and (iii) satisfaction of the General
Conditions (as defined in the Offer to Purchase).
2. Stockholders of AMF Bowling, which own in the aggregate a majority of
AMF Bowling's common stock and approximately $495,950,000 principal amount
at maturity of the Debentures, have indicated that they intend to tender
all of their Debentures in the Offer subject to market conditions, although
they are not obligated to do so.
3. The Offer and the concurrent Rights Offering are part of a
recapitalization plan being undertaken by AMF Bowling. For more
information, please refer to the Offer to Purchase. The funds required to
purchase validly tendered Debentures and to pay fees and expenses related
to the Offer are to be provided from the proceeds of the Rights Offering.
4. The Offer is being made for Debentures having an aggregate principal
amount at maturity of a minimum of $450,000,000 (40%) and up to
$514,286,000 (45.7%). If Debentures having an aggregate principal amount in
excess of $514,286,000 are tendered, AMF Bowling will purchase Debentures
having an aggregate principal amount of $514,286,000 pro rata in an amount
per holder equal to a fraction the numerator of which is such holder's
total principal amount of all Debentures validly tendered and the
denominator of which is the total principal amount of Debentures tendered,
multiplied by $514,286,000.
5. The Offer and withdrawal rights will expire on the Expiration Date.
6. Any transfer taxes incident to the transfer of Debentures from the
tendering holder to AMF Bowling will be paid by AMF Bowling, except as
provided in the Offer to Purchase and the Letter of Transmittal.
If you wish to have us tender any or all of your Debentures held by us for
your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. If you authorize the
tender of your Debentures, all such Debentures will be tendered unless
otherwise specified below. The Letter of Transmittal is furnished to you for
informational purposes only and may not be used by you to tender Debentures
held by us and registered in our name for your account or benefit.
2
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred therein relating to the Offer.
This will instruct you to tender the principal amount at maturity of
Debentures indicated below held by you for the account or benefit of the
undersigned pursuant to the terms of and conditions set forth in the Offer to
Purchase and the Letter of Transmittal.
Box 1 [_] Please tender ALL my Debentures held by you for my account or
benefit.
Box 2 [_] Please tender LESS than all my Debentures. I wish to tender
$________ aggregate principal amount at maturity of Debentures.
Box 3 [_] Please do not tender any Debentures held by you for my account or
benefit.
Date:_______________, 1999
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
SIGNATURE(S) PLEASE PRINT NAME(S) HERE
Unless a specific contrary instruction is given, your signature(s) hereon
shall constitute an instruction to us to tender all of your debentures.
3
<PAGE>
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
UP TO $514,286,000 AGGREGATE PRINCIPAL AMOUNT AT MATURITY
OF ZERO COUPON CONVERTIBLE DEBENTURES DUE 2018
OF
AMF BOWLING, INC.
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE,
THE OFFER AND WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 28, 1999, UNLESS THE OFFER IS
EXTENDED (SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF
EXTENDED, THE "EXPIRATION DATE"). DEBENTURES TENDERED IN THE OFFER MAY BE
WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
June 29, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is an Offer to Purchase, dated June 29, 1999
(as the same may be amended from time to time, the "Offer to Purchase"), and a
Letter of Transmittal and instructions thereto (the "Letter of Transmittal")
relating to the offer (the "Offer") by AMF Bowling, Inc. ("AMF Bowling") to
purchase for cash a minimum of $450,000,000 aggregate principal amount at
maturity (40%) and up to $514,286,000 aggregate principal amount at maturity
(45.7%) of its Zero Coupon Convertible Debentures due 2018 (the "Debentures")
at a price of $140.00 per $1,000 principal amount at maturity (the "Repurchase
Price").
Unless the Offer is terminated or amended, the consummation of the Offer is
conditioned, unless waived by AMF Bowling, upon (i) closing on subscriptions
obtained in exercising of the rights issued pursuant to the terms of the Rights
Offering (as defined in the Offer to Purchase) being conducted concurrently
with the Offer with proceeds of at least $120,000,000, (ii) Debentures in an
aggregate principal amount at maturity of not less than $450,000,000 aggregate
principal amount at maturity (40%) being validly tendered in the Offer and
(iii) satisfaction of the General Conditions (as defined in the Offer to
Purchase).
Stockholders of AMF Bowling, which own in the aggregate a majority of AMF
Bowling's common stock and approximately $495,950,000 principal amount at
maturity of the Debentures, have indicated that they intend to tender all of
their Debentures in the Offer subject to market conditions, although they are
not obligated to do so.
The Offer and the concurrent Rights Offering are part of a recapitalization
plan being undertaken by AMF Bowling. For more information, please refer to the
Offer to Purchase. The funds required to purchase validly tendered Debentures
and to pay fees and expenses related to the Offer are to be provided from the
proceeds of the Rights Offering.
We are asking you to contact your clients for whom you hold Debentures
registered in your name or in the name of your nominee. AMF Bowling will pay
all transfer taxes, if any, applicable to the tender of Debentures, except as
provided in the Offer to Purchase and the instructions to the Letter of
Transmittal.
Enclosed is a copy of each of the following documents for forwarding to your
clients:
1. The Offer to Purchase.
2. A Blue Letter of Transmittal, including Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9, for your use in
connection with the tender of Debentures by record holders and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to accept the Offer.
3. A Yellow form of letter addressed "To Our Clients" that may be sent to
your clients for whose accounts you hold Debentures registered in your name
or the name of your nominee, with space provided for obtaining the clients'
instructions with regard to the Offer.
<PAGE>
4. A Gray Notice of Guaranteed Delivery to be used to tender in the Offer
if certificates for Debentures are not lost but not immediately available,
or if the procedure for book-entry transfer cannot be completed on or
before the Expiration Date.
YOUR PROMPT ACTION IS REQUESTED. DEBENTURES TENDERED PURSUANT TO THE OFFER
MAY BE VALIDLY WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE OFFER TO
PURCHASE, AT ANY TIME BEFORE THE EXPIRATION DATE.
AMF Bowling will not pay any fees or commissions to any broker, dealer,
commercial bank, trust company or other person in connection with the
solicitation of tenders of Debentures pursuant to the Offer. You will be
reimbursed by AMF Bowling for customary mailing and handling expenses incurred
by you in forwarding any of the enclosed materials to your clients.
Please refer to "Procedures for Tendering Debentures" in the Offer to
Purchase for a description of the procedures which must be followed to tender
Debentures in the Offer.
Any requests for additional copies of the Offer to Purchase, the Letter of
Transmittal and Notice of Guaranteed Delivery should be directed to the
Information Agent and any questions or requests for assistance should be
directed to the Dealer Manager at their respective addresses and telephone
numbers set forth on the last page of the Offer to Purchase.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF AMF BOWLING, THE TRUSTEE FOR THE DEBENTURES, THE DEALER
MANAGER, THE INFORMATION AGENT FOR THE OFFER OR THE DEPOSITARY FOR THE OFFER,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY
OF THEM WITH RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit (a)(6)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell these securities. The Offer is made only pursuant to the Offer to
Purchase and the related Letter of Transmittal (which are incorporated by
reference herein) and is not being made to (nor will tenders be accepted from)
holders of debentures in any jurisdiction in which the Offer or the acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction.
Offer to Purchase for Cash
Up to $514,286,000 Aggregate
Principal Amount at Maturity of
Zero Coupon Convertible Debentures due 2018
at
$140.00 Per $1000 Principal Amount at Maturity
by
AMF Bowling, Inc.
AMF Bowling, Inc. ("AMF Bowling") hereby offers (the "Offer") to purchase upon
the terms and subject to the conditions set forth in the Offer to Purchase (the
"Offer to Purchase") and in the accompanying Letter of Transmittal (the "Letter
of Transmittal"), a minimum of $450,000,000 aggregate principal amount at
maturity (40%) and up to $514,286,000 aggregate principal amount at maturity
(45.7%) of its Zero Coupon Convertible Debentures due 2018 (the "Debentures") at
a cash purchase price of $140.00 per $1,000 principal amount at maturity (the
"Repurchase Price"). See the Offer to Purchase for capitalized terms used but
not defined herein. Unless the context otherwise requires, the term "Offer to
Purchase" includes the Letter of Transmittal.
- --------------------------------------------------------------------------------
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JULY 28, 1999, UNLESS THE OFFER IS EXTENDED (SUCH TIME
AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE "EXPIRATION DATE").
DEBENTURES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE
EXPIRATION DATE.
- --------------------------------------------------------------------------------
Unless the Offer is terminated or amended, the consummation of the Offer is
conditioned, unless waived by AMF Bowling, upon (i) the closing on subscriptions
obtained through the exercise of the rights issued pursuant to the Rights
Offering (as defined in the Offer to Purchase) which is being conducted
concurrently with the Offer with proceeds of at least $120,000,000, (ii)
Debentures in an aggregate principal amount at maturity of not less than
$450,000,000 being validly tendered in the Offer and not validly withdrawn and
(iii) satisfaction of the General Conditions (as defined in the Offer to
Purchase).
Subject to applicable securities laws and the terms set forth in the Offer to
Purchase, AMF Bowling reserves the right (i) to terminate the Offer, (ii) to
waive any and all unsatisfied conditions to the Offer, (iii) to extend the
Expiration Date or (iv) to otherwise amend the Offer in any respect. Unless the
Offer is terminated, if all of the conditions to the Offer have been satisfied
or waived, Holders (as defined in the Offer to Purchase ) whose Debentures are
validly tendered by the Expiration Date and not withdrawn will receive the
Repurchase Price with respect to such Debentures.
<PAGE>
Affiliates of Goldman, Sachs & Co. and Kelso & Co., which own in the
aggregate a majority of the common stock, par value $0.01 per share, of AMF
Bowling (the "Common Stock") and approximately $495,950,000 principal amount at
maturity of the Debentures, have indicated that they currently expect to tender
all of their Debentures in the Offer, subject to market conditions, although
they are not obligated to do so. There is $1,125,000,000 aggregate principal
amount at maturity of Debentures outstanding as of June 28, 1999.
The Offer and the concurrent Rights Offering are part of a recapitalization
plan being undertaken by AMF Bowling. For more information, please refer to the
Offer to Purchase. The funds required to purchase validly tendered Debentures
and to pay fees and expenses related to the Offer are to be provided from the
proceeds of the Rights Offering.
The Debentures are designated for trading in the Portal/SM/ Market ("PORTAL").
The closing bid quotation per $1,000 principal amount at maturity of the
Debentures as reported by Morgan Stanley & Co. Incorporated ("Morgan Stanley"),
a market maker for the Debentures, on June 25, 1999 was $135.00. The Debentures
are convertible into shares of Common Stock. The Common Stock is listed on The
New York Stock Exchange, Inc. (the "NYSE") under the symbol "PIN." The reported
closing price of the Common Stock on the NYSE Composite Tape on June 25, 1999
was $6.313 per share.
AMF Bowling will accept for purchase up to $514,286,000 aggregate principal
amount at maturity of the Debentures. If Debentures having an aggregate
principal amount at maturity in excess of $514,286,000 are validly tendered and
not withdrawn, AMF Bowling will purchase Debentures in aggregate principal
amount at maturity of $514,286,000, pro rata in an amount per Holder equal to
(i) a fraction the numerator of which is such Holder's total principal amount at
maturity of Debentures tendered and the denominator of which is the total
principal amount at maturity of all Debentures validly tendered, multiplied by
(ii) $514,286,000. Debentures may be tendered only in integral multiples of
$1,000 principal amount at maturity.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms of any extension or amendment) and
applicable law, AMF Bowling will pay for Debentures purchased pursuant to the
Offer by depositing the Repurchase Price therefor with ChaseMellon Shareholder
Services, L.L.C., the depositary for the Offer, which will act as agent for
tendering Holders for the purpose of receiving the Repurchase Price from AMF
Bowling and transmitting the Repurchase Price to the tendering Holders.
No person has been authorized to give any information or to make any
representations other than those contained in the Offer to Purchase and, if
given or made, such information or representations, must not be relied upon as
having been authorized.
NEITHER AMF BOWLING NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY DEBENTURE HOLDER AS TO WHETHER TO TENDER ALL OR ANY OF HIS OR HER
DEBENTURES. EACH DEBENTURE HOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER DEBENTURES AND, IF SO, HOW MANY DEBENTURES TO TENDER.
The information required by Rule 13e-4(d)(1) of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
Any questions or requests for assistance may be directed to Morgan Stanley,
which is acting as dealer manager for the Offer (the "Dealer Manager"), at the
address and telephone number set forth below. Requests for copies of the Offer
materials should be directed to D.F. King & Co., Inc., which is acting as
information agent for the Offer (the "Information Agent"), at the address and
telephone number set forth below. A Holder may also contact such Holder's
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 628-8532
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
Attention: Investment Banking Department
Telephone No.: (800) 223-2440, ext. 7898
June 29, 1999
<PAGE>
Exhibit (a) (7)
<TABLE>
<S> <C> <C> <C> <C>
AMF Bowling, Inc. International Headquarters Post Office Box 15060 804.730.4000 Telephone 804.559.6276 Facsimile
8100 AMF Drive Richmond, Virginia 23227
Richmond, Virginia 23111
</TABLE>
FOR IMMEDIATE RELEASE Contact: Stephen E. Hare
May 5, 1999 Chief Financial
Officer
(804) 730-4401
Renee D. Antolik
Director, Investor
Relations
(804) 730-4402
(800) 832-0151
Press Release
AMF Bowling, Inc. Announces Recapitalization Plan
Rights Offering to Raise $140 Million of New Equity
Richmond, Virginia--May 5, 1999--AMF Bowling, Inc. (NYSE: PIN) announced today
a recapitalization plan which includes a rights offering to raise
approximately $140 million and a tender for a portion of its outstanding
convertible zero coupon debentures at a discount.
AMF intends to effect a rights offering in which all AMF stockholders would
receive rights to purchase new AMF common shares. AMF will apply to list the
rights on the New York Stock Exchange. The rights would also have an over-
subscription privilege pursuant to which participating stockholders could
elect to purchase a proportionate share of the shares not purchased in the
rights offering by other stockholders. The number of rights per share to be
offered and the exercise price of the rights have not been determined. Certain
of AMF's significant stockholders are currently expected to participate fully
in the rights offering, subject to final terms and conditions, but they are
not obligated to do so. The rights offering is expected to raise approximately
$140 million. The offering would be made only by means of a prospectus filed
as part of an effective registration statement under the Securities Act of
1933, as amended.
The Company currently intends to use a portion of the proceeds of the rights
offering to make a tender offer for the Company's outstanding convertible zero
coupon debentures. The Company currently intends to tender for a minimum of
45% and up to 60% of the outstanding debentures at an indicated price not to
exceed 14% of face value. Affiliates of Goldman Sachs and Kelso & Company, who
together own approximately 44% of the outstanding debentures, have indicated
that they currently expect to tender their debentures pursuant to the tender
offer, subject to pro ration, and subject to the conditions and prices
thereof, but they are not obligated to do so.
A portion of the proceeds of the rights offering would also be used to fund
future bowling center acquisitions, along with funds that may be available
under the Company's credit agreement, and for general corporate purposes. AMF
has requested that, in connection with its recapitalization plan, the lenders
under its credit agreement provide the Company with (i) the ability to
increase the pace of its center acquisition program on a selective basis, (ii)
greater financial flexibility under the covenants contained in its credit
agreement and (iii) certain other modifications.
AMF Always Means Fun!
<PAGE>
The commencement of the rights offering and the tender offer are subject to
approval by the Board of Directors of the final terms and pricing. The rights
offering and the tender offer are expected to be conditioned upon each other.
----------------
As the largest owner and operator of bowling centers in the world, AMF is a
leading provider of family fun and recreation. The Company owns and operates
545 bowling centers throughout the world, with 422 centers in the U.S. and 123
centers in 10 countries. AMF is also a world leader in the manufacturing and
marketing of bowling products, manufactures and sells the PlayMaster and
renaissance brands of billiards tables and owns the Michael Jordan Golf
Company.
A registration statement relating to the rights offering has been filed with
the Securities and Exchange Commission but has not yet become effective. The
securities referenced herein may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. The rights
offering will be made only be means of a prospectus. This press release is not
an offer or the solicitation of an offer to buy or sell any securities of AMF,
and no such offer or solicitation will be made except in compliance with
applicable securities laws.
This press release contains forward-looking statements that are based upon the
Company's estimates and expectations concerning future events and are subject
to certain risks and uncertainties that could cause actual results to differ
materially, all of which are difficult or impossible to predict and many of
which are beyond the control of AMF. In light of the significant uncertainties
inherent in forward-looking statements, the including of such forward-looking
statements should not be regarding as a representation that the Company's
objectives or plans will be realized. The Company does not hereby undertake to
update such forward-looking statements.
<PAGE>
Exhibit (a)(8)
[LETTERHEAD OF AMF APPEARS HERE]
FOR IMMEDIATE RELEASE Contact: Stephen E. Hare
June 28, 1999 Chief Financial Officer
(804) 730-4401
Renee Antolik
VP, Investor Relations
[LOGO OF AMF APPEARS HERE] (804) 730-4402
(800) 832-0151
Press Release
AMF Bowling, Inc. Announces Terms of $140 Million Rights Offering
and Tender Offer for Debentures
Richmond, Virginia--June 28, 1999--AMF Bowling, Inc. (NYSE: PIN) announced today
the terms of its rights offering to raise up to $140 million and its tender
offer for a portion of its outstanding Zero Coupon Convertible Debentures due
2018 as part of its previously announced recapitalization plan.
Under the terms of the rights offering, the Company will issue rights to
subscribe for approximately 28 million shares of common stock. Each holder of
common stock will receive .4698 rights for each share held at the close of
business on July 7, 1999, the record date for the rights offering. Each whole
right may be exercised for one share of common stock at a subscription price of
$5.00 per share. AMF's common stock price closed at $6.313 on June 25, 1999. The
rights are transferable and will be listed for trading on the NYSE under the
symbol "PINRT." The rights will expire at 5:00 p.m., New York City time on July
28, 1999, unless extended by AMF.
The rights have an over-subscription privilege which entitles participating
holders to elect to purchase a portion of the shares not purchased in the rights
offering by other rights holders. The rights also include a conditional
over-subscription privilege which entitles participating holders to elect to
purchase additional shares to increase the total proceeds of the rights offering
to $120 million, if the subscriptions otherwise received would not reach that
amount. Certain of AMF's significant stockholders are currently expected to
fully exercise their basic subscription privileges in the rights offering,
subject to market conditions, and it is currently anticipated that some of those
significant stockholders will exercise their conditional over-subscription
privileges to an undetermined extent, subject to market conditions. However,
those significant stockholders are not obligated to exercise their basic
subscription and conditional over-subscription privileges in the rights
offering.
The Securities and Exchange Commission has declared the registration statement
with respect to the rights offering effective today. Prospectuses and
certificates evidencing the rights will be mailed on or about July 9, 1999 to
stockholders of record on the record date.
The Company also announced its tender offer for a minimum of 40% and up to 45.7%
of the Company's outstanding zero coupon convertible debentures to be tendered
by affiliates of
<PAGE>
Goldman, Sachs & Co. and Kelso & Company. The consideration for the tendered
debentures is $140 cash per $1,000 principal amount of debentures at maturity.
The Company will use a portion of the proceeds of the rights offering to pay for
debentures tendered in the tender offer. Affiliates of Goldman Sachs and Kelso,
who together own approximately 44% of the outstanding debentures, have indicated
that they currently expect to tender their debentures pursuant to the tender
offer, but they are not obligated to do so. If more than 45.7% of the
outstanding debentures are tendered in the offer, AMF will purchase 45.7% of the
outstanding debentures from tendering holders on a pro rata basis. Debentures
may be tendered only in integral multiples of $1,000 principal amount at
maturity. The tender offer is conditioned upon the rights offering closing with
at least $120 million of total proceeds. The tender offer is expected to
commence tomorrow. The tender offer and withdrawal rights for the tendered
debentures will expire at 12:00 Midnight, New York City time, on July 28, 1999.
A portion of the proceeds of the rights offering will also be contributed to the
Company's principal operating subsidiary and be used to fund future bowling
center acquisitions, along with funds that may be available under the Company's
credit agreement, and for general corporate purposes.
As part of its recapitalization plan, the lenders under AMF's credit agreement
have amended the credit agreement to provide the Company with (i) the ability to
resume its center acquisition program, (ii) greater financial flexibility under
the covenants contained in its credit agreement and (iii) certain other
modifications.
This press release does not constitute an offer to sell or the solicitation of
an offer to buy any securities of AMF, and no such offer or solicitation will be
made except in compliance with applicable securities laws. The rights offering
will be made only by means of a prospectus. A copy of the prospectus may be
obtained from the information agent for the rights offering, D.F. King & Co. To
contact the Information Agent, banks and brokerage firms should call collect
(212) 269-5550, and others should call (800) 628-8532.
D.F. King is also acting as information agent for the tender offer. Morgan
Stanley & Co. is acting as dealer-manager for the tender offer. Questions or
requests for assistance or for copies of the Offer to Purchase may be directed
to either the Information Agent or the Dealer Manager. To contact D.F. King in
connection with the tender offer, banks and brokerage firms should call collect
(212) 269-5550, and others should call (800) 628-8532. To contact Morgan
Stanley, please call (800) 223-2440, ext. 7898.
As the largest owner and operator of bowling centers in the world, AMF is a
leading provider of family fun and recreation. The Company owns and/or operates
541 bowling centers throughout the world, with 418 centers in the U.S. and 123
centers in 10 countries. AMF is also a world leader in the manufacturing and
marketing of bowling products, manufactures and sells the PlayMaster and
Renaissance brands of billiards tables and owns the Michael Jordan Golf Company.
This press release contains forward-looking statements that are based upon the
Company's estimates and expectations concerning future events and are subject to
certain risks and uncertainties that could cause actual results to differ
materially, all of which are difficult or impossible to predict and many of
which are beyond the control of AMF. In light of the significant uncertainties
inherent in forward-looking statements, the including of such forward-looking
statements should not be regarding as a representation that the Company's
objectives or plans will be realized. The Company does not hereby undertake to
update such forward-looking statements.
