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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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Indigo Aviation Aktiebolag (publ.)
(Name of Subject Company)
Indigo Aviation Aktiebolag (publ.)
(Name of Person Filing Statement)
Ordinary Shares and American Depositary Shares,
each American Depositary Share representing one Ordinary Share
(Title of Class of Securities)
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45567P 10 4 (American Depositary Shares)
(CUSIP Number of Class of Securities)
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Sven Holmgren
Vice President and Corporate Counsel
Indigo Aviation AB
Sodra Forstadsgatan 4
S-211 43 Malmo, Sweden
011-46-40-660-3001
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
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With a copy to:
Kenneth C. Hoffman, Esq.
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
(305) 579-0500
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Item 1. Security and Subject Company.
The name of the subject company is Indigo Aviation Aktiebolag (publ.),
a limited liability company organized under the laws of the Kingdom of Sweden,
and the address of the principal executive offices of Indigo is Sodra
Forstadsgatan 4, SE-211 43 Malmo, Sweden. The titles of the classes of equity
securities to which this statement relates are Indigo's ordinary shares, nominal
value SEK 3.14 per share, and, without duplication, the American Depositary
Shares, each representing one ordinary share. The ordinary shares and the
American depositary shares are referred to collectively herein as the Indigo
shares.
Item 2. Tender Offer of the Bidder.
This statement relates to a cash tender offer by AerFi Sverige AB, a
company organized under the laws of the Kingdom of Sweden, and an indirect
wholly-owned subsidiary of AerFi Group plc, an Irish limited liability company
("AerFi"), described in a Tender Offer Statement on Schedule 14D-1, dated
November 17, 1999, to purchase all of the issued and outstanding Indigo shares
at a price of US$13.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 17,
1999 and the related Letter of Transmittal (which together constitute the
offer).
The offer is being made pursuant to a combination agreement, dated as
of November 11, 1999, between Indigo, AerFi Sverige and AerFi. The offer is not
conditioned on obtaining financing. Pursuant to the combination agreement, if
AerFi Sverige owns more than 90% of Indigo's voting rights and more than 90% of
the outstanding Indigo shares following the unconditional time, as defined in
the combination agreement, AerFi Sverige may take all action required to
commence a compulsory acquisition in accordance with the Swedish Companies Act.
The combination agreement is summarized in Item 3 of this Statement.
Certain of Indigo's shareholders, who own 8,197,568 Indigo shares, or
approximately 72.7% of Indigo's issued and outstanding shares, have agreed to
exchange and/or sell those Indigo shares to AerFi and AerFi Sverige in separate
transactions under a share exchange agreement, dated as of November 11, 1999
and/or a share purchase agreement, dated as of November 11, 1999, respectively.
Under the share exchange agreement, 5,891,670 of these shares will be exchanged
for 21,799,179 new ordinary shares of AerFi and under the share purchase
agreement the remaining 2,305,898 Indigo shares will be sold to AerFi Sverige
for $13.00 per Indigo share in cash. The consummation of the offer is not
conditional upon the consummation of the share exchange agreement and share
purchase agreement transactions and the consummation of the share exchange
agreement and share purchase agreement transactions is not conditional upon the
consummation of the offer. In addition, the controlling shareholders of Indigo
will be granted options to purchase up to 1,000,000 new ordinary shares of AerFi
at $3.17 per share pursuant to an option agreement. See "Item 3. Identity and
Background - Arrangements with AerFi and AerFi Sverige" for a summary of these
agreements.
The Offer to Purchase states that the principal executive offices of
AerFi Sverige are located at c/o Advokatfirman Vinge KB, P.O. Box 1703, S-111 87
Stockholm, Sweden.
Item 3. Identity and Background.
(a) The name and address of Indigo, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Except as described or referred to below, there exists on the date
hereof no material contract, agreement, arrangement or understanding and no
actual or potential conflict of interest between Indigo or its affiliates and
(i) Indigo's executive officers, directors or affiliates or (ii) AerFi, AerFi
Sverige or the executive officers, directors or affiliates of AerFi or AerFi
Sverige.
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Arrangements with AerFi or AerFi Sverige
The Combination Agreement
The following is a summary of certain portions of the combination
agreement and is qualified in its entirety by reference to the combination
agreement, a copy of which has been filed with the Commission as an exhibit to
this Schedule 14D-9. The combination agreement may be examined and copies may be
obtained at the places and in the manner set forth in the Offer to Purchase.
The Offer. AerFi Sverige agreed to commence the offer no later than
five business days after the combination agreement is announced. AerFi Sverige
only has to accept for payment and pay for Indigo shares tendered under the
offer if certain conditions that are described under the heading "The Tender
Offer - Conditions of the Offer" in the Offer to Purchase, which information is
incorporated by reference herein, are satisfied or waived.
AerFi Sverige expressly reserves the right to waive the conditions to
the offer and to make any change in the terms or conditions of the offer.
However, AerFi Sverige may not, without the consent of Indigo:
o change the form of consideration to be paid;
o decrease the price per Indigo share or the number of Indigo shares
sought in the offer;
o add conditions to the offer in addition to those listed in the Offer
to Purchase;
o establish a minimum number of Indigo shares that must be tendered in
the offer;
o otherwise amend the terms or conditions of the offer in a manner that,
in Indigo's reasonable judgment, is adverse to Indigo or holders of
the Indigo shares.
However, AerFi Sverige may, without the consent of Indigo, extend the
offer:
o if any condition to the offer shall not have been satisfied or waived
when the offer expires, until those conditions are satisfied or
waived; or
o for any period required by any rule, regulation or interpretation of
the Securities and Exchange Commission or by applicable law; or
o on one or more occasions for an aggregate period of not more than 20
business days if, when the offer expires, the number of Indigo shares
validly tendered and not withdrawn do not, together with the Indigo
shares exchanged/sold to AerFi Sverige by controlling shareholders of
Indigo pursuant to the share exchange agreement and the share purchase
agreement, represent more than 90% of the voting rights and more than
90% of the Indigo shares outstanding.
As soon as practicable after the conditions described under the heading
"The Tender Offer - Conditions of the Offer" in the Offer to Purchase, which
information is incorporated by reference herein, are satisfied or waived and in
compliance with its obligations under the Exchange Act, AerFi Sverige shall
accept all validly tendered Indigo shares for payment that have not been
withdrawn. If any of the conditions listed in paragraph (1), subclauses (1),
(2), (3) and (4) of paragraph (2)(a) and paragraph 2 (b) (without the reference
to subclause (5) of paragraph 2(a)) under the heading "The Tender Offer -
Conditions of the Offer" in the Offer to Purchase, shall not have been satisfied
when the offer expires, and AerFi Sverige and Indigo reasonably believe that
that condition can be satisfied, AerFi Sverige shall extend the offer from time
to time. AerFi Sverige shall not, however, be required to extend the offer
beyond March 31, 2000.
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The Compulsory Acquisition. If AerFi Sverige owns more than 90% of the
voting rights and more than 90% of the outstanding Indigo shares after the
unconditional time, as defined in the Offer to Purchase, AerFi Sverige intends
to commence a compulsory acquisition of the remaining Indigo shares under the
Swedish Companies Act.
Stock Options. Each option or warrant to purchase Indigo shares from
Indigo that is outstanding under any of Indigo's employee stock option or
compensation plans or arrangements will be canceled. Holders of options or
warrants will, at the election of the holder, either receive cash or options to
purchase AerFi's ordinary shares.
Representations and Warranties. AerFi, AerFi Sverige and Indigo have
given various customary representations and warranties, including the following:
o Indigo, AerFi and AerFi Sverige have represented as to their corporate
status, the authorization and the enforceability of the combination
agreement against each of them, the information to be provided by each
of them for inclusion in U.S. Securities and Exchange Commission
filings related to the offer and the combination, finders' fees and
noncontravention,
o AerFi has represented as to the sources of financing for the
combination and the offer; and
o Indigo has represented as to its capitalization, its subsidiaries and
equity investments, certain information about its aircraft and leases,
third party contracts, indebtedness, the accuracy of its financial
statements and filings with the U.S. Securities and Exchange
Commission, compliance with laws, the absence of undisclosed material
liabilities, the absence of certain changes or events concerning its
business from December 31, 1998 to the date of the combination
agreement, the absence of material litigation, certain tax matters,
certain employee benefit and pension plan matters, certain
environmental matters, assets, certain labor matters, insurance, the
inapplicability of any anti-takeover statutes, year 2000 compliance
and the identification of and absence of material adverse changes.
The representations and warranties contained in the combination
agreement will only be in effect until the unconditional time.
Covenants. Indigo, AerFi Sverige and AerFi have given various
customary covenants. Set forth below is a description of certain of these
covenants:
Conduct of Business. Indigo agreed that, from November 11,
1999 until the unconditional time, it will conduct its businesses as in
the ordinary course consistent with past practice and will preserve its
business organizations and relationships with third parties intact and
keep available the services of its present officers and employees.
Specifically, Indigo will not, except as otherwise permitted
by the combination agreement or if AerFi consents to in writing:
o adopt or propose any change in its organizational documents;
o merge or consolidate with any other person or acquire a material
amount of stock or assets of any other person;
o acquire any aircraft other than under contracts or commitments in
effect as of November 11, 1999;
o sell or otherwise dispose of any aircraft or any material
subsidiary or material amount of assets, securities or property,
except under existing contracts or commitments and in the ordinary
course consistent with past practice;
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o take any action that would make any of its representations and
warranties under the combination agreement inaccurate at or as of
any time before the unconditional time; or
o omit to take any action necessary to prevent any of its
representations or warranties from being inaccurate at any time.
However, nothing described in the preceding paragraph shall
prevent Indigo from leasing, financing or refinancing its aircraft or
any interest in its aircraft in the ordinary course of business
consistent with past practice.
Access to Information. From November 11, 1999 until the
unconditional time and subject to applicable law, Indigo agreed to:
o give AerFi and AerFi's authorized representatives full access to
Indigo's offices, properties, books and records;
o furnish to AerFi and Indigo's authorized representatives all
financial and operating data and other information that they may
reasonably request; and
o instruct Indigo's employees, counsel, financial advisors, auditors
and other authorized representatives to cooperate with AerFi in
its investigation of Indigo.
No Solicitation; Other Offers. Indigo agreed that it will:
o not solicit or encourage the submission of an acquisition
proposal;
o not engage in discussions or negotiations with, or disclose any
nonpublic information about Indigo or give access to its
properties, books or records to, any person who makes, may be
considering making, or has made, an acquisition proposal;
o not grant any waiver or release under any standstill or similar
agreement relating to any class of its equity securities; or
o notify AerFi promptly after receipt of any acquisition proposal
(or indication thereof) or any information request related to an
acquisition proposal.
However, this covenant does not prohibit Indigo from engaging
in substantive discussions with, or furnishing nonpublic information
to, any person who delivers an acquisition proposal for at least a
majority of the Indigo shares which Indigo's board of directors
determines in good faith by a majority vote to be superior to AerFi's
proposal pursuant to the combination agreement, if:
o Indigo has complied with the covenant set forth above;
o Indigo's board of directors determines in good faith by a majority
vote, after consultation with Indigo's outside legal counsel, that
it should, in its reasonable judgment, engage in discussions or
furnish nonpublic information in order to comply with its
fiduciary duties to Indigo under applicable law;
o the person who delivers the superior acquisition proposal executes
a confidentiality agreement with terms at least as favorable to
Indigo as those contained in the confidentiality agreement with
AerFi which was superseded by the combination agreement; and
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o Indigo notifies AerFi about its intentions to engage in
discussions or furnish nonpublic information.
Indigo further agreed to terminate all activities, discussions
and negotiations with any persons conducted before November 11, 1999,
relating to any acquisition proposal. However nothing prevents Indigo's
board of directors from complying with Rule 14e-2 under the Exchange
Act or the Swedish Companies Act regarding any acquisition proposal.
Indigo's board of directors may withdraw, or modify in a
manner adverse to AerFi, its recommendation to holders of Indigo shares
if:
o Indigo has complied with its obligations to AerFi described above;
o a superior acquisition proposal is pending at the time the board
of directors determines to take that action;
o the board of directors determines in good faith by a majority
vote, after consultation with Indigo's outside legal counsel, that
it should, in its reasonable judgment, take that action to comply
with its fiduciary duties to Indigo under applicable law; and
o Indigo notifies AerFi that it intends to take that action and
identifies the person making, and the material terms and
conditions of, that superior acquisition proposal.
Indemnification and Insurance of Indigo's Directors and
Officers. AerFi agreed to indemnify Indigo's directors, officers or
employees against specific claims made asserted or made within a period
of five years after the unconditional time. AerFi has also agreed to
pay all reasonable expenses incurred by or on behalf of any indemnified
party in defending against any claim promptly after statements for
those reasonable expenses are received, so long as:
o payment is permitted under applicable law; and
o the relevant indemnified party agrees to reimburse AerFi for the
payment of any expenses if it is ultimately determined that that
person is not entitled to indemnification.
For a period of five years after the unconditional time, AerFi
shall cause Indigo to maintain the officers' and directors' liability
insurance covering persons who are presently covered by Indigo's
officers' and directors' liability insurance policies, for acts or
omissions occurring at or before the unconditional time on terms at
least as favorable as those in effect on the date of the combination
agreement or at the unconditional time. However, AerFi will not be
required to expend in any one year an amount in excess of 150% of the
annual premiums currently paid by Indigo for that insurance.
Conditions of the Offer. AerFi Sverige's obligation to accept for
payment or pay for any Indigo shares is subject to the conditions set forth
under the heading "The Tender Offer Conditions of the Offer" in the Offer to
Purchase, which information is incorporated by reference herein.
Termination. The combination agreement may be terminated before the
unconditional time of the offer as follows:
(1) by mutual written consent of Indigo, AerFi Sverige and AerFi;
(2) by either Indigo or AerFi if:
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(a) the offer is not consummated by March 31, 2000 (this right
is not available to any party whose breach of any provision of
the combination agreement has been the cause of, or resulted
in, the failure of the offer to be consummated by that time);
or
(b) the acceptance and payment for the Indigo shares under the
offer is prohibited or AerFi Sverige is enjoined from
accepting and paying for the Indigo shares;
(3) by AerFi and AerFi Sverige, if, before acceptance for payment of
the Indigo shares under the offer:
(a) any person or group (other than AerFi Sverige, any of its
affiliates or any institutional investor) acquires or proposes
to acquire, after November 11, 1999, beneficial ownership of
more than 10% of the Indigo shares or more than 10% of the
assets of Indigo or is granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of
those Indigo shares or assets (this termination right shall
not be implicated solely by virtue of the Indigo shares
beneficially owned by any of Indigo's shareholders who, on
November 11, 1999, already beneficially owned more than 10% of
the outstanding Indigo shares);
(b) any person or group (other than AerFi Sverige or any of
its affiliates) makes or publicly announces an intention to
make, a tender or exchange offer for at least 10% of the
outstanding Indigo shares or publicly proposes to enter into a
definitive agreement or an agreement in principle with Indigo
regarding an acquisition proposal;
(c) (1) Indigo's board of directors withdraws or modifies in a
manner adverse to AerFi Sverige, its approval or
recommendation of the combination agreement, the offer or the
combination, or recommends or enters into, or publicly
announces its intention to enter into, an agreement or an
agreement in principle for an acquisition proposal (or shall
have resolved to do any of the foregoing); (2) there is a
material breach of the provisions described under the heading
"--Covenants--No Solicitation; Other Offers;" or (3) Indigo
enters into a definitive agreement or an agreement in
principle with a third party regarding an acquisition
proposal;
(d) (1) any of Indigo's representations or warranties in the
combination agreement that is (A) qualified by materiality or
material adverse effect or any similar standard or
qualification, was not true and correct when made or at any
time before the acceptance for purchase of the Indigo shares
or (B) not so qualified, was true and correct in all material
respects when made or at any time before the acceptance for
purchase of the Indigo shares; or (2) Indigo breaches or fails
to perform any of its obligations under the combination
agreement, and in the case of either clause (1) or (2), AerFi
reasonably determines, after five Swedish business days'
notice to Indigo, that the inaccuracy, breach or failure is
incapable of being cured by March 31, 2000; or
(e) AerFi Sverige terminates the offer because of any of the
events described under the heading "The Tender Offer -
Conditions of the Offer" in the Offer to Purchase; or
(4) by Indigo if:
(a) AerFi Sverige terminates the offer or allows the offer to
expire without either the purchase of any Indigo shares, or an
extension of, the offer, other than because of any of the
events described under the heading "The Tender Offer -
Conditions of the Offer" in the Offer to Purchase;
(b) before the purchase of Indigo shares under the offer, a
person or group makes a superior proposal and Indigo's board
of directors terminates the combination agreement and enters
into a binding agreement concerning that acquisition proposal;
provided that Indigo may not exercise this right to terminate,
and may not enter into a binding written agreement regarding
that acquisition proposal, unless:
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(1) Indigo notifies AerFi at least five
business days in advance that Indigo's board of
directors has authorized and intends to terminate the
combination agreement, specifying the material terms
and conditions of the acquisition proposal,
(2) AerFi does not make, within five
business days of receiving that notice, an offer such
that a majority of Indigo's board of directors
determines that (A) the foregoing acquisition
proposal no longer is superior to AerFi's proposal or
(B) its fiduciary duties to Indigo no longer dictate
that it should, in its reasonable judgment, terminate
the combination agreement, and
(3) on or before that termination, Indigo
pays AerFi a $5 million termination fee.
In connection with the foregoing, Indigo agreed that
it will (1) not enter into a binding agreement with respect
to any acquisition proposal until at least the sixth business
day after it notifies AerFi, (2) negotiate in good faith with
AerFi, and consider in good faith any offer made by AerFi,
during that period and (3) notify AerFi promptly if it
changes its intention to enter into such binding agreement;
or
(c) (1) any of AerFi's representations or warranties made in
the combination agreement that is (A) qualified by materiality
or material adverse effect or any similar standard or
qualification, was not true and correct when made or at any
time before the acceptance for purchase of the Indigo shares
or (B) not so qualified, was not true and correct in all
material respects when made or at any time before the
acceptance for purchase of the Indigo shares, or
(2) AerFi breaches or fails to perform any of its obligations
under the combination agreement, and in the case of either
clause (1) or (2), Indigo reasonably determines, after five
Swedish business days' notice by Indigo to AerFi, that that
inaccuracy, breach or failure is incapable of being cured by
March 31, 2000.
Certain Fees and Expenses. Indigo has agreed to pay AerFi a termination
fee of $5 million if:
o AerFi Sverige terminates the combination agreement under clause
(c) of paragraph (3) under "--Termination" above; or
o Indigo terminates the combination agreement under clause (b) of
paragraph (4) under "--Termination" above.
Indigo has agreed to pay AerFi the termination fee of $5 million plus
documented out-of-pocket costs (not to exceed $2 million) in connection with the
negotiation, execution, delivery and performance of the combination agreement
and any consideration, investigation, negotiation and structuring of the
transactions contemplated by the combination agreement if:
o AerFi Sverige terminates the combination agreement under clause
(a) or (b) of paragraph (3) under "--Termination" above; and
o before that termination any of the events described in clause (a)
or (b) of paragraph (3) under "--Termination" above shall have
occurred and concurrently with or within 12 months after that
termination, a third party acquisition event occurs with the party
or any of its affiliates that made the acquisition, offer or
public proposal described in such clauses.
A "third party acquisition event" means (1) the consummation of an
acquisition proposal or series of acquisition proposals that results in (a)
holders of Indigo shares before that transaction, by virtue of their ownership
of those Indigo shares, in the aggregate owning less than 50% of the voting
securities of the entity
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surviving or resulting from that transaction (or, if that entity is not its own
ultimate parent, then its ultimate parent), (b) the sale, lease, exchange,
transfer or other disposition of at least 50% of the assets of Indigo and its
subsidiaries, taken as a whole or (c) the acquisition, directly or indirectly,
by any person or group (other than the current shareholders, but only with
respect to the Indigo shares beneficially owned by them as of the date of the
combination agreement) of beneficial ownership of 50% or more of the Indigo
shares (whether by merger, consolidation, share exchange, business combination,
tender or exchange offer or otherwise) or (2) the entering into by Indigo,
certain shareholders or any of their respective affiliates of a definitive
agreement with respect to any such transaction.
Indigo has agreed to pay AerFi the documented out-of-pocket costs and
expenses (not to exceed $2 million) incurred by or on behalf of AerFi in
connection with the negotiation, execution, delivery and performance of the
combination agreement and any consideration, investigation, negotiation and
structuring of the transactions contemplated by the combination agreement if:
o if the combination agreement its terminated under clause (c) or
(d) of paragraph (3) or clause (b) of paragraph (4) under
"--Termination" above, and
o at the time of that termination AerFi was in compliance with its
obligations under the combination agreement.
AerFi has agreed to pay Indigo a termination fee of $5 million if
Indigo terminates the combination agreement under clause (a) of paragraph (4)
under "--Termination" above.
AerFi has agreed to pay Indigo its documented out-of-pocket costs and
expenses incurred (not to exceed $2 million) in connection with the negotiation,
execution, delivery and performance of the combination agreement and any
consideration, investigation, negotiation and structuring of the transactions
contemplated by the combination agreement if:
o Indigo terminates the combination agreement under (a) or (c) of
paragraph (4) under "--Termination" above, and
o at the time of the termination Indigo was in compliance with its
obligations under the combination agreement.
If AerFi or Indigo fails to promptly pay any amount due as described
above, AerFi or Indigo shall also pay any costs and expenses incurred by the
other in connection with a legal action to enforce the combination agreement
that results in a judgment against AerFi or Indigo.
Except as discussed above, all costs and expenses incurred in
connection with the combination agreement will be paid by the party incurring
that cost or expense.
Amendments and Waivers. The combination agreement may be amended or
waived before the unconditional time if that amendment or waiver is in writing
and signed, in the case of an amendment, by Indigo, AerFi and AerFi Sverige or
in the case of a waiver, by the party against whom the waiver is to be
effective.
The Share Exchange Agreement
The following is a summary of certain portions of the share exchange
agreement and is qualified in its entirety by reference to the share exchange
agreement, a copy of which has been filed with the Commission as an exhibit to
this Schedule 14D-9. The combination agreement may be examined and copies may be
obtained at the places and in the manner set forth in the Offer to Purchase.
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General. On November 11, 1999, AerFi Sverige entered into the share
exchange agreement with certain of Indigo's shareholders. See "Item 6. Recent
Transactions and Intent with Respect to Indigo Shares." This document refers to
these individuals and entities as the exchanging shareholders. Each exchanging
shareholder agreed to:
o transfer and deliver a portion of its Indigo shares to AerFi in
exchange for 3.7 of AerFi's ordinary shares;
o grant all of the consents of that exchanging shareholder that may
be required under the terms and conditions of Indigo's stock
option or compensation plans or arrangements to effect the
exchange of the options and warrants that is contemplated by the
combination agreement.
Each exchanging shareholder also agreed not to:
o grant any proxy or enter into any voting arrangement regarding its
Indigo shares;
o place any encumbrance on or dispose of its Indigo shares or its
employee options except to its affiliates;
o solicit or initiate the acquisition of any interest in the
business, assets or capital stock of Indigo;
o transfer or grant any option to transfer any rights in its AerFi
during the six month period following the transfer of the Indigo
shares to AerFi, except to certain permitted transferees;
o exercise any registration rights regarding its Indigo shares; and
o disclose any confidential documents and information concerning
AerFi or any of its subsidiaries furnished to that exchanging
shareholder in connection with the share exchange agreement.
Board of Directors and Management. AerFi has agreed that when the share
exchange has been consummated, AerFi will:
o appoint Mr. Karl-Axel Granlund and Mr. John Evans to AerFi's board
of directors. These appointments will only be in effect until
November 1, 2000. AerFi has no obligation after such time to cause
any of these appointments to its board of directors. During the
time that Mr. Granlund serves as a member of AerFi's board of
directors, he will have the right to appoint an observer, subject
to certain restrictions and limitations, to attend meetings of
AerFi's board of directors on his behalf. Mr. Granlund has
informed AerFi that he intends to appoint Mr. Geir Stormorken,
managing director of Braathen Lease and Aviation Know How A/S and
of Braganza A/S as his observer.
o appoint Mr. John Evans President and Chief Executive Officer of
ErgoFi Inc., a wholly-owned subsidiary of AerFi.
Representations and Warranties. The share exchange agreement contains
various customary representations and warranties, including the following:
o by AerFi as to its corporate status, as to the authorization and
enforceability of the share exchange agreement against it, as to
its capitalization, as to the accuracy of its financial
statements, as to the absence of occurrence of certain events that
would reasonably be expected to have a material adverse effect on
its ability to perform its obligations under the share exchange
agreement, as to its aircraft fleet and related leases; and as to
its year 2000 compliant status.
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o by each exchanging shareholder as to its valid title to its Indigo
shares, the authorization and enforceability of the share exchange
agreement against it, the number of Indigo share owned by it, its
understanding that the AerFi share to be issued to it will not be
registered under the Securities Act of 1933 and finders' fees.
Certain Conditions to the Share Exchange Agreement
The sale and exchange of Indigo shares will not take place unless the
following conditions are met:
o the expiration or termination of any applicable waiting period
under the Hart-Scott-Rodino Act (the U.S. antitrust legislation);
o compliance with the Irish mergers and takeovers legislation;
o the sale and exchange of shares is not illegal; and
o all necessary filings in relation to the sale and the exchange
have been made.
AerFi's obligation to exchange the Indigo shares for AerFi shares is
also subject to the following conditions:
o all shareholders have performed their obligations under the share
exchange agreement in all material respects;
o the accuracy of Indigo's representations and warranties in the
combination agreement;
o the accuracy of the shareholders' representations and warranties
in the share exchange agreement;
o there is no law or proceeding which interferes, or could
interfere, with AerFi's ownership of Indigo or the Indigo shares
or otherwise could have a material adverse effect on Indigo or
AerFi;
o there is no change in Indigo's business, assets, financial
condition or otherwise that could be expected to have a
materially adverse effect on Indigo.
The exchanging shareholders' obligation to exchange their shares is
also subject to the following conditions:
o AerFi has performed its obligations under the share exchange
agreement in all material respects;
o the accuracy of AerFi's representations and warranties in the
share exchange agreement;
o there is no change in AerFi's business, assets, financial
condition or otherwise that could be expected to have a
materially adverse effect on AerFi; and
o AerFi's legal counsel shall have delivered certain opinions to
Indigo.
Termination. The share exchange agreement may be terminated before the
sale and exchange of Indigo shares:
o by mutual written agreement of AerFi and exchanging
shareholders holding more than 50% of the Indigo shares to be
exchanged under the share exchange agreement;
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o by AerFi or exchanging shareholders holding more than 50% of the
Indigo shares to be exchanged under the share agreement, if the
exchange has not occurred on or before March 31, 2000;
o by AerFi or exchanging shareholders holding more than 50% of the
Indigo shares to be exchanged under the share exchange agreement,
if the consummation of the offer and the combination is
prohibited or there is any judgment, injunction, order or decree
enjoining the parties from consummating the offer and the
combination;
o by exchanging shareholders holding more than 50% of the Indigo
shares to be exchanged under the share exchange agreement if any
representation or warranty made by AerFi in the share exchange
agreement that is inaccurate when made or at any time before the
exchange of Indigo shares or AerFi has breached or failed to
perform in any material respect any of its obligations under the
share exchange agreement, and either case, such exchanging
shareholder reasonably determines, after 30 calendar days' notice
by such exchanging shareholder to AerFi, that inaccuracy, breach
or failure is incapable of being cured by March 31, 2000; or
o by AerFi if any representation or warranty by Indigo in the
combination agreement or any representation or warranty by any of
the exchanging shareholders in the share exchange agreement is
inaccurate or any of the exchanging shareholders shall have
breached or failed to perform in any material respect any of
their respective obligations under the share exchange agreement,
and in either case, AerFi reasonably determines, after 30
calendar days' notice by AerFi to the exchanging shareholders,
that that inaccuracy, breach or failure is incapable of being
cured by March 31, 2000.
The Share Purchase Agreement
The following is a summary of certain portions of the share purchase
agreement and is qualified in its entirety by reference to the share purchase
agreement, a copy of which has been filed with the Commission as an exhibit to
this Schedule 14D-9. The share purchase agreement may be examined and copies may
be obtained at the places and in the manner set forth in the Offer to Purchase.
On November 11, 1999, AerFi Sverige entered into the share purchase
agreement with certain of Indigo's shareholders. See "Item 6. Recent
Transactions and Intent with Respect to Indigo Shares." Each of these
shareholders agreed to sell to AerFi Sverige the Indigo shares that are owned by
it on the date of the share purchase agreement, except for Indigo shares to be
exchanged by some of those shareholders for AerFi shares under the share
exchange agreement, at the same price per share ($13) received by holders of
Indigo shares under the offer.
The sale and purchase under the share purchase agreement is subject to
the same conditions as the share exchange under the share exchange agreement.
The Option Agreement
The following is a summary of certain portions of the option agreement
and is qualified in its entirety by reference to the option agreement, a copy of
which has been filed with the Commission as an exhibit to this Schedule 14D-9.
The option agreement may be examined and copies may be obtained at the places
and in the manner set forth in the Offer to Purchase.
On November 11, 1999, AerFi entered into an option agreement with the
exchanging shareholders. Pursuant to this agreement, AerFi will grant to the
exchanging shareholders options to purchase an aggregate of 1,000,000 AerFi
ordinary shares, exercisable at any time from the date of receipt to the third
anniversary of that date at the price of $3.17 per AerFi ordinary share in cash.
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The grant of options is subject to the same conditions as the share
exchange under the share exchange agreement.
The Registration Rights Agreement
The following is a summary of certain portions of the registration
rights agreement and is qualified in its entirety by reference to the
registration rights agreement, a copy of which has been filed with the
Commission as an exhibit to this Schedule 14D-9. The registration rights
agreement may be examined and copies may be obtained at the places and in the
manner set forth in the Offer to Purchase.
On November 11, 1999, AerFi entered into a registration rights
agreement with the exchanging shareholders. AerFi agreed that if it proposes to
sell ordinary shares in an underwritten public equity offering in any
jurisdiction under an effective registration statement, other than a
registration statement relating solely to employee benefit plans, under the
Securities Act or under a comparable law of any other jurisdiction, we will give
at least 30 days' written notice to the exchanging shareholders before filing
the registration statement. The notice shall offer to the exchanging
shareholders the opportunity to include in the offering the number of ordinary
shares as each exchanging shareholder may request. Within 20 days after receipt
of that notice, the exchanging shareholders shall, subject to the conditions
described in the registration rights agreement, have the right by notifying
AerFi in writing to require AerFi to include in the registration statement
relating to that offering the number of ordinary shares as that exchanging
shareholder may request subject to the rights of holders of already outstanding
registration rights.
The Tag-Along Rights Agreement
The following is a summary of certain portions of the tag-along rights
agreement and is qualified in its entirety by reference to the tag-along rights
agreement, a copy of which has been filed with the Commission as an exhibit to
this Schedule 14D-9. The tag-along rights agreement may be examined and copies
may be obtained at the places and in the manner set forth in the Offer to
Purchase.
General. On November 11, 1999, one of AerFi's major shareholders, Texas
Pacific Group ("TPG"), agreed to extend to the exchanging shareholders of Indigo
certain rights currently enjoyed by the officers and directors of AerFi to
include ("tag-along") their AerFi ordinary shares (or a portion thereof) in
sales by TPG of its AerFi ordinary shares (or a portion thereof).
Letter Regarding Intention to Tender
One of the shareholders of Indigo, Industrifinans SMB III ASA, has
informed Karl-Axel Granlund (one of the exchanging shareholders) that it intends
to tender all of its Indigo shares. As of September 30, 1999, Industrifinans SMB
III ASA owned 219,920 Indigo shares. A copy of the letter from Industrifinans
SMB III ASA has been filed with the Commission as an exhibit to this Schedule
14D-9.
Interests of Certain Persons in the Offer and the Combination
In considering the recommendation of the Indigo board of directors to
approve the combination, Indigo shareholders should consider that some of
Indigo's directors and officers have interests in the combination that differ
from, or are in addition to, their interests as Indigo shareholders. Indigo's
directors and officers may receive benefits from the combination not available
to Indigo shareholders generally. The Indigo board of directors was aware of
these interests and considered them, among other matters, in approving the
combination agreement and the transactions contemplated by the combination
agreement.
U.S. Employment Agreements
ErgoFi Inc., a wholly-owned subsidiary of AerFi, has entered into
employment agreements with the following officers of Indigo Airlease
Corporation, a U.S. wholly owned subsidiary of Indigo: John Evans, Joseph
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Drobnich, Israel Padron and Arthur McChesney. The agreements will become
effective upon the completion of the combination. The employment agreements for
John Evans and Joseph Drobnich will replace their current employment agreements
with Indigo Airlease Corporation, a wholly-owned U.S. subsidiary of Indigo. The
term of the agreements is for three years commencing on the closing date of the
combination and ending on the third anniversary thereof, unless renewed by
mutual written agreement. Among other things, the agreements provide for each
employee to receive:
o base salary;
o a performance-related bonus, at the absolute discretion of the
ErgoFi Inc. board;
o such other benefits and perquisites as are generally provided by
ErgoFi Inc. to its senior management employees in the United
States; and
o a car.
In addition to the benefits listed above, Joseph Drobnich is also
entitled to, until April 2, 2001, the airfare for up to two round-trips per year
for the executive's spouse between Florida and California.
The agreements also provide that, if an executive (x) is terminated by
ErgoFi Inc. without "cause", as defined in the agreements, or (y) terminates his
employment for "good reason", as defined in the agreements, as a severance
benefit, ErgoFi Inc. will continue to pay the executive for a period of (a)
eighteen months following the date of termination if the date of termination is
within twelve months of the closing date of the combination, an amount equal to
the installments of his base salary (at the rate in effect at the date of
termination) that would have been paid to him had his agreement and his
employment with ErgoFi Inc. not been terminated or (b) six months following the
date of termination if the date of termination is not within twelve months of
the closing date of the combination, an amount equal to the installments of his
base salary (at the rate in effect at the date of termination) that would have
been paid to him had his agreement and employment with ErgoFi Inc. not been
terminated.
The agreements further provide for restrictions relating to
confidentiality and, for a two-year period after the executive's termination,
restrictions relating to nonsolicitation of employees of ErgoFi Inc. and its
affiliates. They also provide that, unless otherwise waived by ErgoFi Inc., the
executive is not to compete with ErgoFi Inc. and its affiliates for a period of
two years after the executive's termination. During the two-year noncompete
period, in consideration for the executive's covenant not to compete, ErgoFi
Inc. will pay the executive:
o executive's base salary applicable at the time of termination;
o a bonus equal to the average of the aggregate amounts paid to the
executive as bonus in the two preceding years; and
o a sum equal to the aggregate amount that ErgoFi Inc. would have
paid during each year of the noncompete period for benefits for
the executive had the executive remained employed by ErgoFi Inc.
Swedish Employment Agreement
Indigo has entered into an employment agreement with Mario Schuler,
managing director of Indigo, which will become effective upon completion of the
combination. The employment agreement will replace the current employment
agreement between Mr. Schuler and Indigo. The term of the agreement is for three
years commencing on the closing date of the combination and ending on the third
anniversary thereof, unless renewed by mutual written agreement. Among other
things, the agreement provides for:
o base salary;
o a performance-related bonus, at the absolute discretion of the
board;
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o a house, including electricity, water, heating and fees for a
security alarm system at no cost to the executive;
o the free use of a car; and
o such other benefits and perquisites as are generally provided by
Indigo to its other senior management employees in Sweden.
The agreement also provides that, if the executive (x) is terminated by
Indigo without "cause", as defined in the agreement, or (y) terminates his
employment for "good reason", as defined in the agreement, as a severance
benefit, Indigo will continue to pay the executive for a period of (a) eighteen
months following the date of termination if the date of termination is within
twelve months of the closing date of the combination, an amount equal to the
installments of his base salary (at the rate in effect at the date of
termination) that would have been paid to him had his agreement and his
employment with Indigo not been terminated or (b) six months following the date
of termination if the date of termination is not within twelve months of the
closing date of the combination, an amount equal to the installments of his base
salary (at the rate in effect at the date of termination) that would have been
paid to him had his agreement and employment with Indigo not been terminated.
The agreement further provides for restrictions relating to
confidentiality and, for a two-year period after executive's termination,
restrictions relating to nonsolicitation of employees of Indigo and its
affiliates. It also provides that, unless otherwise waived by Indigo, the
executive is not to compete with Indigo and its affiliates for a period of two
years after the executive's termination. During the two-year noncompete period,
in consideration for the executive's covenant not to compete, Indigo will pay
the executive:
o executive's base salary applicable at the time of termination;
o a bonus equal to the average of the aggregate amounts paid to the
executive as bonus in the two preceding years; and
o a sum equal to the aggregate amount that Indigo would have paid
during each year of the noncompete period for benefits for the
executive had the executive remained employed by Indigo.
Consulting Agreements
ErgoFi Inc. has entered into a consulting agreement with Bradley
Winograd which will become effective upon the completion of the combination. The
consulting agreement will replace the current employment agreement between Mr.
Winograd and Indigo Airlease Corporation. The term of the consulting agreement
is for six months commencing on the closing date of the combination. If the
parties mutually agree in writing, the term may be extended for additional
six-month periods.
The agreement provides that, in consideration of Mr. Winograd's
agreement to provide consulting services to ErgoFi Inc. in relation to all
financial matters in respect of Indigo and its subsidiaries, including in
relation to the integration of the AerFi and Indigo businesses, ErgoFi Inc. will
pay Mr. Winograd a consulting fee at the rate of $242,500 per year pro-rated on
a monthly basis and will provide Mr. Winograd with such benefits as are
generally provided to employees of ErgoFi Inc.
The agreement also provides that if Mr. Winograd is terminated without
cause prior to the termination of the original six month term, Mr. Winograd will
be entitled to receive the fees and benefits he would have received during that
six month term had his agreement and consultancy with ErgoFi Inc. not been
terminated.
The agreement further provides that Mr. Winograd is entitled to a car
and, at ErgoFi Inc.'s absolute discretion, a performance-related bonus at the
end of the term.
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It is expected that Mr. Karl-Axel Granlund will also enter into a
consulting agreement with Indigo in connection with his services as a director
of AerFi. The terms of this consulting agreement are currently being negotiated.
Item 4. The Solicitation or Recommendation.
(a) Recommendation of the Board of Directors.
Indigo's board of directors has unanimously approved the combination
agreement and the offer and determined that the combination agreement and the
offer are fair to, and in the best interest of, Indigo's shareholders. The board
of directors unanimously recommends that all holders of Indigo shares accept the
offer and tender their Indigo shares pursuant to the offer.
(b) Background of the Offer
On December 18, 1998, Mr. Patrick Blaney, the Chief Executive of AerFi,
wrote to Mr. Karl-Axel Granlund, the Chairman of Indigo, to inform him of the
recent completion of AerFi's restructuring and suggested a meeting to consider
whether an opportunity may exist for both organizations to work together to
their mutual benefit. Mr. Granlund responded on December 21, 1998 by noting that
Indigo was agreeable to a meeting to explore what opportunities might exist
which could benefit Indigo and AerFi.
On January 13, 1999, Mr. Blaney and Mr. Edward Hansom, AerFi's Chief
Financial Officer, met with Mr. Granlund at AerFi's offices in Shannon, Co.
Clare, Ireland. Both parties discussed their respective businesses and their
respective strategies for future growth. In particular, Mr. Blaney discussed
AerCo Limited, a bankruptcy-remote special purpose company that owns and leases
33 commercial jet aircraft and in which AerFi holds certain subordinated debt
securities and all of the residual economic interest. Mr. Blaney discussed how
AerCo Limited could purchase additional aircraft, and if Indigo was interested,
a proposal to securitize some or all of Indigo's existing fleet in AerCo Limited
could be submitted to AerCo Limited's board of directors.
On January 14, 1999, Mr. Bradley Winograd, Executive Vice President and
Chief Financial Officer of Indigo Airlease Corporation, a U.S. wholly owned
subsidiary of Indigo, wrote to Mr. Blaney offering a Boeing 737-200 aircraft for
sale. Mr. Blaney replied to Mr. Winograd on January 14, 1999 to the effect that
the proposed sale fell outside AerFi's acquisition criteria and therefore was
not of interest to AerFi.
On February 4, 1999, Mr. Hansom made a presentation on securitization
opportunities for Indigo to the Indigo board of directors. Mr. Hansom outlined
AerFi's experience with aircraft securitization, including the structure and
economic aspects of AerCo Limited. In addition, Mr. Hansom gave his views on
each of the funding options available to Indigo including bank debt, public
debt, aircraft sales and securitizations. Mr. Hansom also provided a comparison
of the possible financial terms of an aircraft securitization by AerCo Limited
compared with other aircraft securitization vehicles. On March 19, 1999, Mr.
Blaney spoke with Mr. Granlund during which conversation Mr. Blaney stated that
he would write to Mr. Granlund in this regard.
On March 30, 1999, Mr. Blaney wrote to Mr. Granlund concerning the
consolidation trend in the aircraft leasing industry. Mr. Blaney stated that it
was his view that Indigo and AerFi must identify either a chosen niche in the
industry or seek amalgamation opportunities in order to compete effectively with
industry leaders. Mr. Blaney noted that AerFi and Indigo had businesses and
management teams which were complementary with little overlap. In addition,
Indigo had achieved good market recognition and had developed a significant
track record in the aircraft leasing industry in a short space of time.
Meanwhile, AerFi had become a strong, cash rich company which had successfully
launched the AerCo Limited securitization vehicle. In his letter, Mr. Blaney
proposed that AerFi and Indigo merge their businesses as this would combine
complementary skills and achieve critical mass in terms of portfolio and
financing capability. Mr. Blaney stated that he believed the following issues
would have to be addressed to achieve such a combination:
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o the relative valuation of both entities;
o the amount of liquidity or cash provided to those shareholders
who wished to exit; and
o the balance of continuing shareholders and allocation of control.
During the first week of April 1999, Mr. Granlund advised Mr. Blaney
that Indigo was already in discussions with other parties who were interested in
possible investment in, or combination with, Indigo. However, Mr. Granlund
indicated that Indigo's Board of directors would be prepared to consider any
offer AerFi was prepared to make. Mr. Granlund emphasized that Indigo did not
feel it was obliged to find a combination opportunity at that time and
consequently, in any proposals to be made by AerFi, the valuation attributed to
Indigo and the liquidity offered to Indigo's shareholders would be very
important.
On April 16, 1999, AerFi and Indigo entered into a confidentiality
agreement following which AerFi provided Indigo with certain confidential
information relating to AerFi.
On April 26, 1999, Mr. Blaney and representatives of Greenhill & Co.,
financial adviser to AerFi, met with Mr. Mitchell Gordon, a non-executive
director of Indigo, appointed by Indigo's Board to represent the interests of
Indigo's public shareholders. The parties discussed which Indigo shareholders
wanted liquidity and the possible advantages to Indigo of proceeding with a
combination with AerFi.
On May 4, 1999, Mr. Blaney wrote to Mr. Granlund proposing that,
subject to Board approval and customary due diligence, AerFi would make a cash
tender offer for some of Indigo's shares, with certain Indigo shareholders
agreeing to exchange their Indigo shares for AerFi's ordinary shares at an
agreed exchange ratio. Mr. Blaney attached an analysis from Greenhill & Co. that
assumed a $13.00 per share offer price in the cash tender offer. In addition,
Mr. Blaney also proposed that Mr. John Evans, Chief Executive Officer of Indigo
Airlease Corporation, a U.S. wholly owned subsidiary of Indigo, would be offered
a senior management position in the combined entity.
On May 10, 1999, Mr. Granlund spoke with Mr. Blaney and Mr. Hansom and
indicated that AerFi's proposal was not acceptable to Indigo for a number of
reasons, including the total amount of cash available for the cash tender offer.
Mr. Granlund also indicated that Indigo wished to receive $15 per share.
Subsequently, AerFi indicated to Indigo that it was not willing to improve its
offer.
On June 9, 1999, Mr. Blaney met Mr. Evans in London where they
discussed whether it was possible to re-commence discussions on a merger. On
June 16, 1999, Mr. Blaney met with certain senior Company employees at the Paris
Air Show during which Indigo employees outlined their experience and
achievements to date.
On June 14, 1999, Indigo's board of directors held a special telephonic
meeting to discuss the possibility of a transaction with AerFi. Mr. Granlund and
Mr. Evans reported on the status of the discussions with AerFi and another
potential acquiror that had expressed an interest in a combination with Indigo.
Indigo's board agreed to engage an investment bank to act as financial advisor
in evaluating a possible transaction and appointed a sub-committee, consisting
of Mr. Granlund, Mr. Evans, Mr. Gordon, Mr. David Neeleman and Mr. Geir
Stormorken as members, Mr. Bradley Winograd as secretary and Mr. Jan-Eric
Osterlund as deputy, to select the investment bank and to handle contacts with
the investment bank relating to a possible transaction.
On June 15, 1999, the sub-committee of Indigo's board of directors met
and selected Bear Stearns & Co., Inc. to act as its financial advisor.
On June 18, 1999, Indigo and AerFi entered into a further
confidentiality agreement following which both parties exchanged information
relating to each other's business, including financial projections relating to
Indigo's business. See "The Tender Offer--Certain Information Concerning Indigo"
in the Offer to Purchase which information is incorporated herein by reference.
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On June 23, 1999, Mr. Blaney, certain AerFi employees and
representatives of Greenhill & Co. met with Mr. Evans, Mr. Winograd and
representatives of Bear Stearns in New York, and Mr. Evans and Mr. Winograd made
a presentation about Indigo's business and financial situation.
On July 16, 1999, Mr. Blaney wrote to Mr. Granlund to outline AerFi's
proposed terms for a potential acquisition of Indigo by AerFi. The proposal was
subject to AerFi's board of directors' approval, all necessary regulatory
approvals and to due diligence. It included a cash offer of $11.00 per Indigo
share for 6.706 million Indigo shares and a share exchange in respect of
Indigo's remaining shares at an exchange ratio of one Indigo share for 3.593
AerFi ordinary shares. The proposal also offered two AerFi board seats to
representatives of Indigo following the combination.
On July 21, 1999, Mr. Gordon spoke with Greenhill & Co. during which he
emphasized that the cash purchase price would have to be over $13.00 per share.
Following further discussions between the parties, on July 26, 1999, Mr. Gordon
called Greenhill & Co. to confirm that a cash tender offer of $13.00 per Indigo
share up to a maximum of $70 million, with the remaining shares exchanging at a
ratio of one Indigo share for 3.875 AerFi ordinary shares, would be acceptable
to Indigo subject to satisfaction of significant remaining outstanding issues.
On July 30, 1999, Mr. Blaney wrote to Mr. Granlund to outline AerFi's
proposed terms for a potential acquisition of Indigo, subject to AeriFi's board
of directors' approval, regulatory approval and due diligence. Mr. Blaney
indicated that AerFi would be prepared to pay $13.00 per share for 5.385 million
Indigo shares with the remaining Indigo shares exchanging for AerFi shares at a
ratio of one Indigo share for 3.875 AerFi ordinary shares.
On August 5, 1999, Indigo's board of directors held a special meeting
to consider the proposed transaction with AerFi. Indigo's board reviewed the
status of discussions with AerFi and received an oral report from Bear Stearns.
Indigo's board of directors resolved to enter into an exclusivity agreement with
AerFi and to dissolve the sub-committee that had been formed at the June 14,
1999 meeting. Mr. Granlund and Mr. Evans were designated the contact persons for
further discussions with AerFi.
On August 6, 1999, Indigo granted AerFi an exclusivity period for the
negotiation of terms on a combination of both entities. Subsequently this was
extended to November 10, 1999.
During August and September 1999, the parties undertook extensive due
diligence on each other's businesses. Following the completion of the due
diligence reviews in mid September, both parties held discussions to consider
issues raised by the due diligence process.
Following their discussion, on September 24, 1999, Mr. Blaney wrote to Mr.
Granlund to propose a combination on the following terms:
(i) a cash tender offer of $13.00 per Indigo share,
(ii) a total cash tender offer of $70 million,
(iii) an exchange ratio of 3.7 AerFi ordinary shares per Indigo share
not tendered in the offer,
(iv) new options over 4 million AerFi ordinary shares at an exercise
price of $3.00 per share for Indigo employees,
(v) a loyalty bonus of $0.75 per new AerFi share option granted to
Indigo employees,
(vi) AerFi board seats for Mr. Granlund and Mr. Evans,
(vii) Mr. Evans to become Chief Executive Officer of AerFi's newly
formed U.S. subsidiary.
Mr. Blaney also wrote to Mr. Evans on September 24, 1999 to outline in
more detail the benefits of the proposed merger for Indigo's employees,
including proposed terms for exchanging existing Indigo employee options for
AerFi options. Following further discussions between Mr. Blaney, Mr. Granlund
and Mr. Evans it was
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agreed that those shareholders in Indigo participating in the share exchange
would receive options to purchase in aggregate one million AerFi ordinary shares
at $3.17 per share exercisable within three years of the closing of any
combination transaction.
On October 19 and 20, 1999 the management of both entities met in
Ireland to discuss each other's businesses further.
During the remainder of October and November 1999, AerFi, Indigo, the
controlling shareholders and their respective counsel negotiated the structure
of the combination and the agreements to implement it, including the combination
agreement, the share exchange agreement, the share purchase agreement and the
option agreement.
On November 7, 1999, AerFi's directors held a conference call with
AerFi's management and AerFi's legal and financial advisors to review the status
of the proposed transaction with Indigo.
On November 9, 1999, Indigo's board of directors held a special
telephonic meeting to review, with the advice and assistance of Indigo's
financial and legal advisors, the final proposed terms and conditions of the
combination agreement, the tender offer and related transactions. Indigo's
Swedish and U.S. counsel reviewed the terms and conditions of the combination
agreement as well as the agreements that were to be entered into by the
controlling shareholders, including the share exchange agreement, the share
purchase agreement and the option agreement. Representatives of Bear Stearns
summarized and reviewed its financial analysis of the proposed transaction and
delivered Bear Stearns' opinion that, as of November 9, 1999, the $13.00 per
share in cash to be received by the holders of Indigo shares in the offer was
fair from a financial point of view, to such holders other than Indigo's
controlling shareholders. Indigo's board of directors then discussed the merits
of the proposed combination agreement and offer. At the conclusion of this
discussion, Mr. Evans informed the board that there were outstanding issues
relating to the terms of employment that were being offered by AerFi to Indigo's
key management employees and requested that the board allow him an additional
day to continue to negotiate such terms prior to making a final decision on the
proposal. The members of the board agreed to allow Mr. Evans an additional day
to negotiate such terms and accordingly the board meeting was adjourned until
November 10, 1999.
On November 10, 1999, Indigo's board of directors reconvened its
special telephonic meeting. Mr. Evans informed the board that Indigo's key
management employees were satisfied with the terms of their proposed employment
arrangements. Following a brief discussion on the terms of the combination
agreement and the offer, the Indigo board unanimously approved that Indigo enter
into the combination agreement, determined that the combination agreement and
the offer are fair to and in the best interests of the holders of Indigo shares
and recommended that shareholders of Indigo accept the offer and tender their
Indigo shares pursuant to the offer.
On November 10, 1999, AerFi's board of directors met and reviewed the
terms and conditions of the combination agreement, the offer, the share exchange
agreement, the share purchase agreement and all related agreements. Following
such review AerFi's board of directors unanimously approved the offer and
AerFi's entry into the combination agreement, the share exchange agreement, the
share purchase agreement and all related agreements.
The combination agreement, the share exchange agreement, the share purchase
agreement and the other related agreements were signed on November 11, 1999.
(c) Reasons for the Recommendation of the Board of Directors.
In making its recommendation to Indigo's shareholders, Indigo's board of
directors considered a number of factors, including, but not limited to, the
following:
(i) the terms and provisions of the combination agreement and the
offer;
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(ii) discussions with management of Indigo (at board meetings on June
14, 1999, August 5, 1999, November 9, 1999 and November 10, 1999
and at previous board meetings) relating to Indigo's financial
position, results of operations, business and prospects,
including Indigo's prospects if it were to remain independent;
(iii) the unfavorable treatment in the capital markets for small-cap
commercial finance companies, such as Indigo, which made it
difficult for Indigo to remain independent and obtain on
attractive terms the additional capital necessary to grow its
business;
(iv) the results of previous discussions with third parties regarding
potential merger or other business combination transactions with
Indigo;
(v) the trading price of Indigo's shares since its initial public
offering in April 1998, and in particular the fact that over the
past 12 months the shares had traded on the Nasdaq National
Market primarily in a range between $6.00 and $9.00 and the fact
that the $13.00 cash tender offer price represents a premium of
approximately 27% over the last sale price of $10.25 for the
Indigo shares on the Nasdaq National Market on November 9, 1999,
the day prior to the meeting of the board to approve the
combination agreement;
(vi) the presentation by Bear Stearns at the November 9, 1999 board
meeting and the oral opinion of Bear Stearns to the effect that,
as of such date, and based on the assumptions made, matters
considered and limits of review as set forth in the opinion, the
$13.00 per Indigo share in cash to be received by the holders of
Indigo shares in the offer was fair, from a financial point of
view, to such holders, other than the controlling shareholders. A
copy of the written opinion of Bear Stearns, dated November 11,
1999, which sets forth the assumptions made, matters considered
and certain limitations on the scope of review undertaken by Bear
Stearns, is attached as Annex I hereto and is incorporated by
herein by reference. Shareholders are urged to, and should, read
the opinion of Bear Stearns carefully in its entirety;
(vii) the fact that holders of approximately 72.7% of the Indigo
shares were prepared to enter into the related share exchange
agreement and share purchase agreement;
(viii) the fact that the offer is not conditioned on the availability
of financing; and
(ix) the fact that the combination agreement permits
Indigo's board of directors, in the exercise of its
fiduciary duties, to terminate the combination
agreement in favor of a superior alternative
acquisition proposal although such termination would
trigger the payment of a fee to AerFi by Indigo of $5
million and the reimbursement of expenses incurred by
AerFi up to a maximum of $2 million.
Indigo's board of directors recognized that the consummation of the
offer and, if it is completed, the compulsory acquisition, will deprive Indigo's
current public shareholders of the opportunity to participate in Indigo's future
growth prospects and, therefore, in reaching its conclusion, the board
determined that the historical results of operations and the future prospects of
Indigo were adequately reflected in the $13.00 cash tender offer price per
Indigo share. Indigo's board of directors also considered that although Indigo
had in the past had discussions with third parties regarding possible merger or
business combination transactions, no buyer other than AerFi had indicated an
intention to make a proposal on terms as favorable to Indigo and its
shareholders as that in the offer and related transactions.
In view of the variety of factors considered in `connection with its
evaluation of the transaction, Indigo's board did not assign relative weights to
the specific factors considered in reaching its decision.
Considering the above factors, Indigo's board of directors determined
that acceptance of the offer and the tender of Indigo shares pursuant to the
offer would be in the best interest of Indigo's shareholders.
19
<PAGE>
Item 5. Person Retained, Employed or to be Compensated.
Indigo retained Bear Stearns & Co., Inc., to act as its financial
advisor in connection with the offer and the combination. Pursuant to an
engagement letter between Indigo and Bear Stearns, dated June 25, 1999, Indigo
agreed to pay Bear Stearns an initial cash fee of $100,000. If the offer is not
consummated by January 15, 2000, Bear Stearns will receive a cash fee of
$100,000 upon termination. Upon consummation of the offer, Indigo will pay Bear
Stearns a cash fee of $700,000, against which any fairness opinion fees shall be
credited. Indigo agreed to pay Bear Stearns a cash fee of $400,000 at the time
the fairness opinion was rendered. In addition, Indigo agreed to reimburse Bear
Stearns for all reasonable out-of-pocket expenses.
In addition, the Indigo Board of Directors approved the payment to
Mitchell Gordon, a director of Indigo, of an aggregate of $140,000 for his
services in advising the Board on the terms and conditions of the combination
agreement and the offer and negotiating and facilitating the transaction with
AerFi.
Except as set forth above, neither Indigo nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of Indigo on its
behalf with respect to the offer.
Item 6. Recent Transactions and Intent with Respect to Indigo Shares.
(a) Except as described below, during the past sixty (60) days, no
transactions in the Indigo shares have been effected by Indigo or, to the best
of Indigo's knowledge, by any executive officer, director, affiliate or
subsidiary of Indigo.
On November 11, 1999, certain shareholders of Indigo entered into the
share exchange agreement and/or the share purchase agreement whereby such
shareholders have agreed to exchange a portion of their Indigo shares for new
ordinary shares of AerFi and/or to sell all or a portion of their Indigo shares
for $13.00 in cash. The consummation of the transactions contemplated by the
share exchange agreement and the share purchase agreement are subject only to
customary conditions, including the expiration of any applicable waiting period,
and are not conditioned upon the consummation of the offer. The share purchase
agreement and share exchange agreement are summarized in Item 3 above.
The table below sets forth the directors and executive officers of
Indigo who will exchange and/or sell their Indigo shares pursuant to the share
exchange agreement and/or the share purchase agreement, and the number of Indigo
shares that each of these directors and executive officers will exchange and/or
sell.
<TABLE>
Number of Indigo Shares to be
Exchanged under the Share Exchange Number of Indigo Shares to be sold
Name Agreement under the Share Purchase Agreement
- ---- ---------------------------------- ----------------------------------
<S> <C> <C>
Karl-Axel Granlund (1)............... 2,599,858 764,285
Geir Stormorken (2).................. 1,303,789 456,785
Jan-Eric Osterlund (3)............... 684,645 259,417
John Evans........................... 696,305 503,856
Jon David Haugse (4)................. 477,037 153,980
Bradley M. Winograd.................. 130,036 94,075
Arne Wennberg........................ 0 64,500
David Neeleman....................... 0 9,000
</TABLE>
- -----------
(1) Includes, in the aggregate, (i) 2,500,000 shares owned by Volito AB, of
which Mr. Granlund beneficially owns approximately 65.0% of the outstanding
capital stock, (ii) 864,043 shares owned by corporations that are wholly
owned by Mr. Granlund and (iii) 100 shares owned by Mr. Granlund directly.
(2) Includes, in the aggregate, (i) 1,440,074 shares owned by Braathen Lease
and Aviation Know How A/S and (ii) 320,500 shares owned by Braganza A/S.
Mr. Stormorken is the Managing Director of each of this entities but
disclaims the beneficial ownership of these shares.
(3) Includes, in the aggregate, 944,062 shares owned by QueQuoin Holding, Ltd.
of which Mr. Osterlund is the chairman. Mr. Osterlund disclaims the
beneficial ownership of these shares.
20
<PAGE>
(4) Includes, in the aggregate, 631,017 shares owned by Industrifinans SMB II
ASA of which Mr. Haugse is the Managing Director. Mr. Haugse disclaims the
beneficial ownership of these shares.
(b) To the best of Indigo's knowledge, except as set forth above, all
other Indigo directors and executive officers who own Indigo shares will tender
or cause the tender of all their Indigo shares under the offer.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth herein, no negotiation is being undertaken or
is underway by Indigo in response to the offer which relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization,
involving Indigo or any subsidiary thereof, (ii) a purchase, sale or transfer of
a material amount of assets by Indigo or any subsidiary thereof, (iii) a tender
offer for or other acquisition of securities by or of Indigo; or (iv) any
material change in the present capitalization or dividend policy of Indigo.
(b) Except as set forth herein, there is no transaction, board
resolution, agreement in principle or signed contract in response to the offer
that relates to, or would result in, one or more of the events referred to in
Item 7(a) above.
Item 8. Additional Information to by Furnished.
None.
21
<PAGE>
Item 9. Material to be Filed as Exhibits.
Exhibit
Number Description
- ------ -------------------------------------------------------------
(a)(1) Offer to Purchase, dated November 17, 1999 (filed as Exhibit
(a)(1) to the Schedule 14D-1 of AerFi Group plc and AerFi
Sverige AB filed with the Securities and Exchange Commission
(the "Commission") on November 17, 1999 (the "Schedule
14D-1") and incorporated herein by reference).
(a)(2) Letter of Transmittal, dated November 17, 1999 (filed as
Exhibit (a)(2) to the Schedule 14D-1 and incorporated herein
by reference).
(a)(3) Notice of Guaranteed Delivery (filed as Exhibit (a)(3) to the
Schedule 14D-1 and incorporated herein by reference).
(a)(4) Letter from Greenhill & Co., LLC to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees (filed
as Exhibit (a)(4) to the Schedule 14D-1 and incorporated
herein by reference).
(a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (filed as Exhibit
(a)(5) to the Schedule 14D-1 and incorporated herein by
reference).
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (filed as Exhibit (a)(6) to
the Schedule 14D-1 and incorporated herein by reference).
(a)(7) Summary Advertisement as published in The New York Times on
November 17, 1999 (filed as Exhibit (a)(7) to the Schedule
14D-1 and incorporated herein by reference).
(a)(8) Text of Press Release issued by AerFi on November 11, 1999
(filed as Exhibit (a)(8) to the Schedule 14D-1 and
incorporated herein by reference).
(a)(9) Letter to Shareholders, dated November 17, 1999.*
(a)(10) Opinion of Bear, Stearns & Co. Inc., dated November 11, 1999
(attached to this Schedule 14D-9 as Annex I).*
(c)(1) Combination Agreement, dated November 11, 1999, among Indigo
Aviation AB, AerFi Group plc and AerFi Sverige AB (filed as
Exhibit (c)(1) to the Schedule 14D-1 and incorporated herein
by reference).
(c)(2) Share Exchange Agreement, dated November 11, 1999, among
AerFi Group plc and certain shareholders of Indigo Aviation
AB (filed as Exhibit (c)(2) to the Schedule 14D-1 and
incorporated herein by reference).
(c)(3) Share Purchase Agreement, dated November 11, 1999, among
AerFi Group plc, AerFi Sverige AB and certain shareholders of
Indigo Aviation AB (filed as Exhibit (c)(3) to the Schedule
14D-1 and incorporated herein by reference).
(c)(4) Option Agreement, dated November 11, 1999, among AerFi Group
plc and certain shareholders of Indigo Aviation AB (filed as
Exhibit (c)(4) to the Schedule 14D-1 and incorporated herein
by reference).
(c)(5) Registration Rights Agreement, dated November 11, 1999, among
AerFi Group plc and certain shareholders of Indigo Aviation
AB (filed as Exhibit (c)(5) to the Schedule 14D-1 and
incorporated herein by reference).
(c)(6) Tag-Along Rights Agreement, dated November 11, 1999, among
AerFi Group plc, Texas Pacific Group and certain shareholders
of Indigo Aviation AB (filed as Exhibit (c)(6) to the
Schedule 14D-1 and incorporated herein by reference).
(c)(7) Letter, dated November 9, 1999, addressed to Karl-Axel
Granlund from Industrifinans SMB III ASA (filed as Exhibit
(c)(7) to the Schedule 14D-1 and incorporated herein by
reference).
* Filed herewith.
22
<PAGE>
SIGNATURE
After reasonable 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.
November 17, 1999
INDIGO AVIATION AB
By: /s/ Bradley M. Winograd
--------------------------------------
Name: Bradley M. Winograd
Title: Executive Vice President and
Chief Financial Officer
23
<PAGE>
ANNEX I
[LETTERHEAD OF BEAR, STEARNS & CO., INC.]
November 11, 1999
Board of Directors
Indigo Aviation AB
Sodra Forstadsgatan 4
S-211 43 Malmo, Sweden
Ladies and Gentlemen:
We understand that Indigo Aviation AB. ("Indigo") and AerFi Group PLC ("AerFi")
have entered into a Combination Agreement (the "Combination Agreement") dated
November 11, 1999, pursuant to which AerFi will offer to acquire the
approximately 3.0 million shares of Indigo currently held by public shareholders
for $13.00 per share in cash (the "Cash Purchase Price"). We also understand
that certain shareholders of Indigo (as set forth in the Share Purchase
Agreement, the "Inside Shareholders") and AerFi have entered into a Share
Purchase Agreement (the "Share Purchase Agreement") dated November 11, 1999,
pursuant to which AerFi will acquire approximately 2.3 million shares held by
the Inside Shareholders for the Cash Purchase Price. Additionally, we understand
that certain Inside Shareholders and AerFi have entered into a Share Exchange
Agreement (the "Share Exchange Agreement") dated November 11, 1999, pursuant to
which approximately 5.9 million shares currently held by such Inside
Shareholders will be acquired in a stock for stock exchange whereby each such
Indigo share will be exchanged for 3.7 AerFi shares, and an Option Agreement
(the "Option Agreement") dated November 11, 1999 whereby such Inside
Shareholders will be granted options to purchase an aggregate of 1,000,000 AerFi
shares at a price of $3.17 per share. You have provided us with a copy of the
Combination Agreement, the Share Exchange Agreement, the Option Agreement and
the Share Purchase Agreement (together, these agreements constitute the
"Transaction").
You have asked us to render our opinion as to whether the Cash Purchase Price is
fair, from a financial point of view, to the shareholders of Indigo (other than
the Inside Shareholders).
In the course of performing our review and analyses for rendering this opinion,
we have:
o reviewed the Combination Agreement, the Share Exchange Agreement,
the Option Agreement and the Share Purchase Agreement;
o reviewed Indigo's Annual Reports to Shareholders and Annual
Reports on Form 20-F for the fiscal years ended December 31, 1998
through 1999, and its Quarterly Reports on Form 6-K for the
periods ended March 31, June 30, 1999 and September 30, 1999;
o reviewed certain operating and financial information, including
projections, provided to us by management relating to Indigo's
business and prospects;
o met with certain members of Indigo's senior management to discuss
Indigo's business, operations, historical and projected financial
statements and future prospects;
o reviewed the historical prices, valuation parameters and trading
volume of the common shares of Indigo;
o reviewed publicly available financial data, stock market
performance data and valuation parameters of companies which we
deemed generally comparable to Indigo;
<PAGE>
o performed discounted cash flow analyses based on the projections
for Indigo furnished to us; and
o conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
We have relied upon and assumed, without independent verification, the accuracy
and completeness of the financial and other information, including without
limitation the projections provided to us by Indigo and current and future
estimates of aircraft values as provided by Avitas and adjusted, as
appropriate, by management. With respect to Indigo's projected financial
results, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the senior
management of Indigo as to the expected future performance of Indigo,
respectively. We have not assumed any responsibility for the independent
verification of any such information or of the projections provided to us, and
we have further relied upon the assurances of the senior management of Indigo
that they are unaware of any facts that would make the information and
projections provided to us incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any independent
appraisal of the assets or liabilities of Indigo, nor have we been furnished
with any such appraisals. Our opinion is necessarily based on economic, market
and other conditions, and the information made available to us, as of the date
hereof.
We have acted as a financial advisor to Indigo in connection with the
Transaction and will receive a fee for such services. In the ordinary course of
business, Bear Stearns may actively trade the equity and debt securities of
Indigo for our own account and for the account of our customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of Indigo and does not constitute a recommendation to the
Board of Directors of Indigo or any holders of Indigo common stock as to how to
vote in connection with the Transaction. This opinion does not address Indigo's
underlying business decision to pursue the Transaction. This letter is not to be
used for any other purpose, or reproduced, disseminated, quoted to or referred
to at any time, in whole or in part, without our prior written consent;
provided, however, that this letter may be included in its entirety in any offer
to purchase to be distributed to the holders of Indigo common stock in
connection with the Transaction.
Based on and subject to the foregoing, it is our opinion that, as of the date
hereof, the Cash Purchase Price is fair, from a financial point of view, to the
shareholders of Indigo (other than the Inside Shareholders).
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/ Steven Begleiter
----------------------------
Senior Managing Director
2
<PAGE>
EXHIBIT INDEX
(a)(9) Letter to Shareholders, dated November 17, 1999.
(a)(10) Opinion of Bear, Stearns & Co. Inc., dated November 11, 1999
(attached to this Schedule 14D-9 as Annex I).
EXHIBIT (a)(9)
[LETTERHEAD OF INDIGO AVIATION AB]
November 17, 1999
To the Shareholders of
Indigo Aviation AB
We are pleased to inform you that on November 11, 1999, Indigo Aviation
AB entered into a combination agreement with AerFi Group plc and AerFi Sverige
AB, an indirect wholly owned subsidiary of AerFi, pursuant to which AerFi
Sverige has today commenced a tender offer to purchase all of the outstanding
ordinary shares, nominal value SEK 3.14 per share, and, without duplication, the
American Depositary Shares, each representing one Ordinary Share, of Indigo for
$13.00 per share in cash. Pursuant to the combination agreement, if AerFi
Sverige owns more than 90% of Indigo's voting rights and more than 90% of
Indigo's outstanding shares following the unconditional time, as defined in the
combination agreement, AerFi Sverige may take all action required to commence a
compulsory acquisition in accordance with the Swedish Companies Act.
Certain of Indigo's shareholders, who own approximately 72.7% of
Indigo's issued and outstanding shares, have agreed to exchange and/or sell
those shares to AerFi and AerFi Sverige in separate transactions under a share
exchange agreement and/or a share purchase agreement, respectively.
Indigo's board of directors has unanimously approved the combination
agreement and the offer and determined that the combination agreement and the
offer are fair to you and in your best interests. The board of directors
unanimously recommends that you accept the offer and tender your shares in the
offer.
In arriving at its recommendation, the board of directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Bear, Stearns & Co., Inc.,
Indigo's financial advisor, dated November 11, 1999, that, as of such date, the
$13.00 per share in cash to be received by the holders of shares in the offer
was fair, from a financial point of view, to the holders of shares, other than
Indigo's controlling shareholders.
In addition to the attached Schedule 14D-9 relating to the offer, also
enclosed is the Offer to Purchase, dated November 17, 1999, of AerFi Sverige,
together with related materials, including a Letter of Transmittal to be used
for tendering your shares. These documents set forth the terms and conditions of
the offer and provide instructions as to how to tender your shares. We urge you
to read the enclosed materials carefully.
Sincerely,
/s/ John Evans
-------------------------------------
JOHN EVANS
President and Chief Executive Officer
