Exhibit 99.1
Solicitation Statement Dated September 18, 2000
WHX CORPORATION
Solicitation of Consents to Amendments
of
Certain Provisions of the Indenture Governing
its
10-1/2% Senior Notes due 2005
(CUSIP No. 929248 AB 8)
THIS CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER 28, 2000, UNLESS EXTENDED. IF THE REQUISITE CONSENTS ARE OBTAINED AND
THE PROPOSED AMENDMENTS ARE ADOPTED AND BECOME EFFECTIVE, THEY WILL BE BINDING
ON ALL HOLDERS OF NOTES, AND THEIR RESPECTIVE TRANSFEREES, WHETHER OR NOT THEY
HAVE DELIVERED A CONSENT.
WHX Corporation ("WHX" or the "Company") is hereby soliciting
consents from registered holders of its 10-1/2% Senior Notes due 2005 (the
"Notes") to the amendment (the "Proposed Amendments") of certain provisions of
the indenture (the "Indenture") dated as of April 7, 1998 between the Company
and Bank One, N.A., as Trustee (the "Trustee") pursuant to which the Notes were
issued. As more fully-described herein, the primary purpose of the consent
solicitation (the "Solicitation") is to permit the Company to amend certain
provisions of the Indenture in order to provide the Company with greater
flexibility to respond to continued weakness in its integrated steel subsidiary.
See "Purpose of the Solicitation and Proposed Amendments" and "Certain
Considerations -- Losses at WPC." The Proposed Amendments to the Indenture
(which are being presented as a single proposal) are specifically set forth in
"Proposed Amendments" and in Annex A hereto.
This solicitation is being made to all holders of the Notes.
Subject to the terms and conditions set forth in this Solicitation Statement,
the Company will (i) accept all properly completed and executed consent forms
constituting or deemed to constitute a vote for the Proposed Amendments (the
"Consents") received by Innisfree M&A Incorporated (the "Information Agent")
prior to 5:00 p.m., New York City time, on September 28, 2000 (as such time may
be extended as provided herein, the "Expiration Date") and not properly revoked
only if (x) Consents (the "Requisite Consents") in respect of at least a
majority in aggregate principal amount of Notes that are outstanding have been
received by the Expiration Date (and not properly revoked) and (y) the operative
provisions of the supplemental indenture incorporating the Proposed Amendments
(the "Supplemental Indenture") have become effective and (ii) pay consenting
Holders (as hereinafter defined) $10 in cash (the "Consent Payment") for each
$1,000 principal amount of Notes for which a Consent has been accepted. The
Company is seeking Consents to all the Proposed Amendments as a single proposal.
Accordingly, a Consent form purporting to consent to only some of the Proposed
Amendments will not be valid.
The Solicitation Agent for the Consent Solicitation is:
Donaldson, Lufkin & Jenrette
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The Company will make Consent Payments to consenting Holders
as promptly as practicable after the execution of the Supplemental Indenture.
Holders who do not properly deliver their Consents prior to the Expiration Date
will not be entitled to receive Consent Payments.
The Company expressly reserves the right in its sole
discretion (i) to terminate the Solicitation at any time (including after the
Expiration Date) prior to the execution of the Supplemental Indenture (whether
or not the Requisite Consents have been received) by giving oral or written
notice of such termination to the Trustee, (ii) not to extend the Solicitation
beyond the Expiration Date and (iii) to amend, at any time or from time to time,
the terms of the Solicitation. Any such termination or amendment will be
followed as promptly as practicable by public announcement thereof (or written
notice thereof to the Registered Holders of Notes).
Only those persons in whose names Notes are registered in the
register maintained by the Trustee as of the close of business on the Expiration
Date (as the same may be extended as provided herein, the "Record Date"), or any
other person who has obtained a proxy authorizing such person (or any other
person claiming title by or through such person) to vote the applicable Notes on
behalf of a Registered Holder, will be eligible to consent to the Proposed
Amendments and be entitled to receive a Consent Payment. A beneficial owner of
Notes (other than a DTC participant) registered in the name of a nominee must
either (i) instruct the relevant holder to deliver a Consent on its behalf or
(ii) obtain a written proxy from such registered holder if such beneficial owner
desires to deliver a Consent with respect to such Notes.
The Company shall not be deemed to have accepted any Consents
until the Supplemental Indenture is executed by the Company and the Trustee. If
the Company and the Trustee execute the Supplemental Indenture as aforesaid, the
Proposed Amendments will be binding upon all holders of Notes, whether or not
such Holders have delivered their Consents.
The transfer of Notes will not have the effect of revoking the
election made in any Consent form theretofore validly delivered by the Holder of
such Notes, and each Consent will be counted notwithstanding any transfer of the
Notes to which such Consent relates, unless the procedure for revoking Consents
described herein has been complied with. Holders must deliver (and not revoke)
Consents to approve the Proposed Amendments. For purposes of determining the
principal amount of Notes outstanding, Notes held by the Company and any of its
affiliates will not be counted as outstanding. As of the date of this
Solicitation, the aggregate principal amount of Notes outstanding is
$281,490,000, none of which are held by the Company or any of its affiliates.
CONSENTS MAY BE REVOKED IN ACCORDANCE WITH THE PROCEDURE SET
FORTH HEREIN AT ANY TIME UP TO, BUT WILL BECOME IRREVOCABLE UPON, THE LATER OF
(I) THE EXPIRATION DATE AND (II) THE RECEIPT BY THE TRUSTEE FROM THE COMPANY OF
AN OFFICER'S CERTIFICATE CERTIFYING THAT THE REQUISITE CONSENTS HAVE BEEN
RECEIVED.
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ONLY HOLDERS ON THE RECORD DATE WHO PROPERLY DELIVER THEIR
CONSENTS PRIOR TO THE EXPIRATION DATE AND DO NOT PROPERLY REVOKE SUCH CONSENTS
WILL BE ENTITLED TO RECEIVE CONSENT PAYMENTS IN THE EVENT THE SUPPLEMENTAL
INDENTURE IS EXECUTED.
IF ANY HOLDER SUBMITS AN EXECUTED CONSENT FORM WITHOUT
INDICATING A VOTE WITH RESPECT TO THE PROPOSED AMENDMENTS, SUCH SUBMISSION WILL
BE DEEMED TO CONSTITUTE A VOTE FOR THE PROPOSED AMENDMENTS.
NOTES SHOULD NOT BE TENDERED OR DELIVERED IN CONNECTION WITH
THIS SOLICITATION.
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON SEPTEMBER 28, 2000, UNLESS EXTENDED.
IMPORTANT
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS SOLICITATION
STATEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION CANNOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SOLICITATION AGENT OR THE
INFORMATION AGENT. THE COMPANY IS NOT AWARE OF ANY JURISDICTION IN WHICH THE
MAKING OF THE SOLICITATION IS NOT IN COMPLIANCE WITH APPLICABLE LAW. IF THE
COMPANY BECOMES AWARE OF ANY JURISDICTION IN WHICH THE MAKING OF THE
SOLICITATION WOULD NOT BE IN COMPLIANCE WITH APPLICABLE LAW, IT WILL MAKE A GOOD
FAITH EFFORT TO COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD FAITH EFFORT, IT
CANNOT COMPLY WITH ANY SUCH LAW, CONSENTS WILL NOT BE SOLICITED FROM HOLDERS
RESIDING IN SUCH JURISDICTIONS. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE
SKY OR OTHER LAWS REQUIRE THE SOLICITATION TO BE MADE BY A LICENSED BROKER OR
DEALER, THE SOLICITATION WILL BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY
THE SOLICITATION AGENT OR ONE OR MORE OTHER REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
The delivery of this Solicitation Statement shall not under
any circumstances create any implication that the information contained herein
is correct as of any time subsequent to the date hereof or that there has been
no change in the information set forth herein or in the affairs of the Company
since the date hereof.
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AVAILABLE INFORMATION
The Company and its wholly-owned subsidiary, Wheeling-Pittsburgh
Corporation ("WPC"), are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Notes and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwest Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials may
also be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's and WPC's Annual Reports on Form 10-K for the
fiscal year ended December 31, 1999 and their respective Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000, which are on
file with the Commission, are incorporated in this Solicitation Statement by
reference and made a part hereof. All documents subsequently filed by the
Company and WPC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act through the Expiration Date shall be deemed to be incorporated herein by
reference and shall be a part hereof from the date of the filing of such
documents. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or replaced for
purposes of this Solicitation Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or replaces such statement. Any
such statement so modified or replaced shall not be deemed, except as so
modified or replaced, to constitute a part of this Solicitation Statement.
The Company will provide without charge to each person,
including any beneficial owner, to whom this Solicitation Statement is
delivered, upon written or oral request of such person, a copy of the documents
incorporated by reference herein, other than exhibits to such documents not
specifically incorporated by reference. Such requests should be directed to the
Information Agent, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor,
New York, New York 10022, telephone number (212) 750-5833 or (888) 750-5834.
FORWARD-LOOKING STATEMENTS
This Solicitation Statement, including the documents incorporated
herein by reference, contains forward-looking statements as defined in Section
21E of the Exchange Act that involve known and unknown risk, uncertainties and
other factors. Forward-looking statements include
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the information in this document and the documents incorporated herein by
reference preceded by, followed by, or that include, the words "believes",
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions. Actual events, circumstances, effects and results may be materially
different from the results, performance or achievements expressed or implied by
the forward-looking statements. Consequently, the forward looking statements
contained herein and the documents incorporated herein by reference should not
be regarded as representations by WHX, WPC or any other person that the
projected outcomes can or will be achieved.
BACKUP WITHHOLDING
A holder of Notes may be subject to backup withholding at the rate of
31% with respect to the Consent Payment, or any other payment, unless such
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules will be creditable
against the holder's Federal income tax liability.
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SUMMARY
The following is a summary of certain information contained elsewhere
in this Solicitation Statement and is qualified in its entirety by the more
detailed information contained elsewhere in this Solicitation Statement or
incorporated herein by reference. See "Proposed Amendments" and Annex A hereto
for a description of certain Indenture provisions as currently in effect and as
proposed to be amended. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Indenture.
The Company.......................... The Company is a holding company formed
in July 1994 to acquire and operate a
diverse group of businesses on a
decentralized basis. The Company's
primary businesses currently are WPC,
its wholly-owned subsidiary, which
operates the ninth largest domestic
integrated steel business, conducted
through two divisions: (i) the "Steel
Division," which manufactures a wide
variety of flat rolled products and (ii)
Wheeling Corrugating Company, which
manufactures fabricated steel products,
and Handy & Harman ("H&H"), a
diversified industrial manufacturing
company whose business units encompass:
(i) manufacturing and selling of metal
wire, cable and tubing products --
primarily stainless steel and specialty
alloys; (ii) manufacturing and selling
of precious metals products and
precision electroplated materials and
molded parts; and (iii) manufacturing
and selling of other specialty products
supplied to roofing, construction,
do-it-yourself, natural gas, electric
and water industries. WHX's other
businesses include Unimast Incorporated
("Unimast"), a leading manufacturer of
steel framing and other products for
commercial and residential construction
and WHX Entertainment Corp., a co-owner
of a racetrack and video lottery
facility located in Wheeling, West
Virginia.
Purpose of the Solicitation............ The purpose of the Solicitation and the
Proposed Amendments is to modify certain
covenants and other provisions in the
Indenture in order to provide WHX with
greater flexibility to respond to
continued weakness in its integrated
steel subsidiary. See "Purpose of the
Solicitation and Proposed Amendments"
and "Certain Considerations-- Losses at
WPC."
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The Solicitation...................... The Company is soliciting Consents of
Holders to the Proposed Amendments to
the Indenture.
The Consent Payments.................. The Company will pay $10 in cash for
each $1,000 principal amount of Notes
for which a Consent is received and
accepted. The Company will make the
Consent Payments as promptly as
practicable after the execution of the
Supplemental Indenture.
Expiration Date....................... The Expiration Date is 5:00 p.m., New
York City time, on September 28, 2000,
unless the Solicitation is extended, in
which case the term "Expiration Date"
means the latest date and time to which
the Solicitation is extended. The
Company may extend the Solicitation at
any time.
Proposed Amendments.................. The Proposed Amendments would amend the
Indenture to: (A) provide that all sales
or other dispositions of assets or
capital stock of WPC or any of its
subsidiaries are not included (i) in the
definition of "Asset Sale" (and,
therefore, are not included in the
covenant imposing restrictions on Asset
Sales and the use of proceeds thereof),
(ii) in the definition of "Change of
Control" (and, therefore, are not
included in the covenant requiring WHX
to offer to repurchase Notes in the
event of a Change of Control) and (iii)
in the covenant restricting the ability
of WHX to dispose of all or
substantially all of its properties or
assets; (B) amend the covenant
permitting certain "Restricted Payments"
(i) to exclude from the computation of
Consolidated Net Income for such purpose
the contribution thereto of WPC and its
subsidiaries from and after October 1,
2000 and (ii) to permit WHX to
distribute any of the assets or capital
stock of WPC or any of its subsidiaries
to any person other than common or
preferred stockholders of WHX; and (C)
remove as Events of Default under the
Indenture those relating to any default
under any mortgage, indenture or
instrument by, judgments against or
bankruptcy or insolvency of WPC or its
subsidiaries. See "The Proposed
Amendments."
Conditions to Proposed
Amendments....................... The effectiveness of the Proposed
Amendments is conditioned upon receipt
of valid Consents (not properly revoked)
from Holders of at least a majority in
aggregate
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principal amount of Notes outstanding
and acceptance of such Consents by the
Company. The Company will not be deemed
to accept any Consents until the
Supplemental Indenture is executed.
Holders............................ The term "Registered Holder," when used
with respect to the Solicitation, means
any person in whose name a Note is
registered in the register maintained by
the Trustee as of the Record Date. The
term "Holder" means any Registered
Holder or any other person who has
obtained a proxy authorizing such person
(or any other person claiming title by
or through such person) to Consent with
respect to Notes on behalf of the
Registered Holder thereof.
Procedure for Consenting.......... A Holder of Notes desiring to deliver a
Consent form should, complete and sign
the Consent form, or a facsimile
thereof, have the signature thereon (and
on any proxy delivered therewith)
guaranteed or notarized (unless such
Consent form or proxy, as the case may
be, is given by or for the account of an
Eligible Institution (as defined below))
and mail or otherwise deliver the
Consent form, or such facsimile
(together with a duly executed proxy, if
the Holder is not a Registered Holder,
and any other proxy, guarantee or
notarization required to establish a
beneficial owner's or registered
holder's right to execute a Consent
form) to the Information Agent at its
address set forth below. A beneficial
owner of Notes that is not a Holder of
such Notes desiring to deliver a Consent
form should request the Registered
Holder of such Notes to effect the
transaction for such beneficial owner or
to provide such beneficial owner with a
proxy authorizing such beneficial owner
to Consent with respect to Notes on
behalf of such Registered Holder. The
term "Eligible Institution", when used
with respect to the Solicitation, means
a firm that is a member of a registered
national securities exchange or the
National Association of Securities
Dealers, Inc., or a commercial bank or
trust company having an office or
correspondent in the United States.
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Revocation....................... Consents may be revoked by filing a
written notice of revocation with the
Information Agent at any time prior to
the later of the Expiration Date and
receipt by the Trustee from the Company
of an officer's certificate in
accordance with the Indenture certifying
that the Requisite Consents have been
received. Any Holder who properly
revokes a Consent will not receive a
Consent Payment, unless such Consent is
properly redelivered prior to the
Expiration Date. The transfer of Notes
after the Record Date will not have the
effect of revoking the election made in
any Consent form theretofore validly
delivered by a Holder of such Notes
prior to such transfer, and each Consent
will be counted notwithstanding any
transfer after the Record Date of the
Notes to which such Consent relates
unless the procedure for revoking
Consents described herein has been
compiled with. The Company is seeking
Consents to all the Proposed Amendments
as a single proposal. Accordingly, a
Consent form purporting to consent to
only some of the Proposed Amendments
will not be valid.
Delivery of Consent
Forms........................ Each Consent form should be sent to the
Information Agent, as follows:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Facsimile Transmission: (212) 750-5799
(call to confirm at (212) 750-5833)
Telephone Number: (212) 750-5833
Toll Free: (888) 750-5834
Amendment to Solicitation....... The Company expressly reserves the right
in its sole discretion, (i) to terminate
the Solicitation at any time (including
after the Expiration Date) prior to the
execution of the Supplemental Indenture
(whether or not the Requisite Consents
have been received) by giving oral or
written notice of such termination to
the Trustee, (ii) not to extend the
Solicitation beyond the Expiration Date
and (iii) to amend, at any time or from
time to time, the terms of the
Solicitation. Any such termination or
amendment
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will be followed as promptly as
practicable by public announcement
thereof (or written notice thereof to
the Registered Holders of Notes).
Certain Tax Considerations...... The Company believes that the only
Federal income tax consequence of
adoption of the Proposed Amendments to
holders of Notes will be that the full
amount of the Consent Payment would be
subject to tax as ordinary income to
those holders who receive it. See
"Certain Federal Income Tax
Consequences."
Assistance; Additional Materials. Questions regarding the Solicitation
should be directed to the Company's
financial advisor and Solicitation
Agent, Donaldson, Lufkin and Jenrette
Securities Corporation ("DLJ" or the
"Solicitation Agent"). All requests and
correspondence to DLJ should be directed
to DLJ at the following address: 2121
Avenue of the Stars, Los Angeles,
California 90067, attention: Niron
Stabinsky, (310) 282- 7495 or (800)
237-5022 ext. 7495.
Questions relating to the procedure for
consenting as well as requests for
assistance or for additional material
should be directed to the Information
Agent as indicated above.
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THE COMPANY
The Company is a holding company formed in July 1994 to invest in
and/or acquire and operate a diverse group of businesses on a decentralized
basis. The Company's primary businesses currently are WPC and H&H. WHX's other
businesses include Unimast and WHX Entertainment Corp.
Wheeling-Pittsburgh Corporation
WPC operates the ninth largest domestic integrated steel
business, conducted through two divisions: (i) the "Steel Division," which
manufactures a wide variety of flat rolled products and (ii) Wheeling
Corrugating Company, which manufactures fabricated steel products. WPC sells a
broad array of value-added products, including cold rolled steel, tin and
zinc-coated steels and fabricated steel products. WPC's products are sold to the
construction industry, steel service centers, converters, processors, and the
container and appliance industries.
Handy & Harman
WHX acquired H&H in April 1998. H&H's business groups are:
(i)manufacturing and selling of metal wire, cable and tubing products, primarily
stainless steel and specialty alloy; (ii) manufacturing and selling of precious
metals products and precision electroplated materials and molded parts; and
(iii) manufacturing and selling of other specialty products supplied to roofing,
construction, do-it-yourself, natural gas, electric, and water industries. H&H's
products are sold to industrial users in a wide range of applications which
include the electric, electronic, automotive original equipment, computer
equipment, oil and other energy related, refrigeration, construction, utility,
telecommunications and medical industries.
Unimast
In March 1995, the Company acquired Unimast, a leading manufacturer of
steel framing and related accessories for commercial and residential building
construction. Unimast uses galvanized steel to manufacture steel framing
components for wall, floor and roofing systems, in addition to other roll formed
expanded metal construction accessories.
WHX Entertainment
In October 1994, WHX Entertainment purchased a fifty percent interest
in the operations of Wheeling-Downs Racing Association ("Wheeling-Downs").
Wheeling-Downs operates a racetrack and video lottery facility located in
Wheeling, West Virginia.
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PURPOSE OF THE SOLICITATION
AND PROPOSED AMENDMENTS
The purpose of the Solicitation and the Proposed Amendments is to
modify certain covenants contained in the Indenture in order to provide WHX with
greater flexibility to respond to continued weakness in its integrated steel
subsidiary, WPC. Such additional flexibility is sought to ensure that adverse
effects at WPC do not negatively impact the creditworthiness of WHX. See
"Certain Considerations" and "The Proposed Amendments."
WHX operates the nation's ninth largest integrated steel company
through its wholly-owned subsidiary WPC. WPC's primary business has deteriorated
due to declining prices and soft demand for its steel products in North America.
The combination of inflows of cheap foreign steel, excess domestic capacity and
unusually high steel inventories have contributed to a reduction in realized
pricing. Compared to most of its integrated steel competitors, WPC has a low
percentage of fixed price contract sales and is therefore subject to a higher
than normal level of volatility in periods of declining steel prices. As a
result, at current pricing levels, WPC has reported sizeable losses. For the six
month period ended June 30, 2000, WPC reported a loss before taxes of $17.3
million. Weakness in WPC's primary markets is ongoing and will likely result in
greater losses before taxes and, potentially, significant operating losses.
WPC has utilized available sources of cash, including the trade
receivables facility of its wholly-owned subsidiary, Wheeling-Pittsburgh Steel
Corporation ("WPSC"), and WPSC's revolving credit facility ("RCF") to fund
operations. If weakness in WPC's primary markets continues, it is likely that
such sources of cash will not be sufficient to allow WPC to continue to fund its
operations as currently structured.
In addition, WHX anticipates that, if steel prices and demand remain
weak or deteriorate further, WPSC will need to renegotiate certain covenants
contained in the RCF no later than the fourth quarter of 2000. While WPSC has
had preliminary discussions regarding renegotiating such covenants, no assurance
can be given that such covenants will be successfully renegotiated. A failure to
renegotiate such covenants would result in an event of default under the RCF,
resulting in a potential cross-default under the Indenture governing the Notes.
Further, if WPC or any of its subsidiaries were to seek protection under the
United States Bankruptcy Code, such action would constitute a default under the
Indenture governing the Notes. These events could have a material adverse effect
in the creditworthiness of WHX and could result in a significant reduction in
the value of the Notes. Accordingly, in order to provide WHX with greater
flexibility to explore the disposition and/or restructuring of its WPC
operations and/or finances, WHX is seeking the Consent of the Holders to the
Proposed Amendments.
WHX believes that the Proposed Amendments will provide it with the
flexibility necessary to effectively respond to the problems currently facing
WPC. WHX believes that it must explore strategic alternatives, including without
limitation, (a) the disposition (via sale, merger, spin-off, etc.) of WPC's
operations; (b) rationalization/restructuring of WPC's operations, either as a
stand-alone entity or in conjunction with one or more third parties (e.g.,
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domestic and/or foreign competitors, suppliers, etc.); (c) the negotiation of
modifications to WPC's outstanding debt and/or (d) seeking protection for WPC
under the United States Bankruptcy Code. There can be no assurance that any such
efforts will be successful or that WPC will be able to continue to fund losses
resulting from its operations. The Proposed Amendments would provide WHX with
additional flexibility to take actions to preserve the creditworthiness and
value of WHX.
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CERTAIN CONSIDERATIONS
Holders of Notes should carefully consider the factors set
forth below as well as the other information set forth in and incorporated by
reference in this Solicitation Statement prior to marking and returning a
Consent.
Losses at WPC
WPC's primary business has deteriorated due to declining prices and
soft demand for its steel products in North America. The combination of inflows
of cheap foreign steel, excess domestic capacity and unusually high steel
inventories have contributed to a reduction in realized pricing. Compared to
most of its integrated steel competitors, WPC has a low percentage of fixed
price contract sales and is therefore subject to a higher than normal level of
volatility in periods of declining steel prices. As a result, for the six month
period ended June 30, 2000, WPC reported a loss before taxes of $17.3 million.
Weakness in WPC's primary markets will likely result in greater losses
before taxes. If WPC is unable to fund such losses, it may be forced to
restructure its debt and/or seek protection from its creditors under the United
States Bankruptcy Code. See "Purpose of the Solicitation and Proposed
Amendments."
Under the terms of an agreement among WHX, WPC and the bank lenders to
WPC (the "Keepwell Agreement"), WHX is obligated, under certain conditions, to
provide financial support to WPC. Specifically, WHX may be required by the bank
lenders or the agent to make cash contributions to WPC if the borrowing
availability under WPC's inventory line of credit falls below $10 million.
Effects of the Proposed Amendments
If the Proposed Amendments become effective, certain restrictive
covenants and other provisions contained in the Indenture will be eliminated or
modified and the Holders will no longer be entitled to the benefit of such
provisions. The elimination or modification of these covenants and other
provisions could permit WHX to take actions that could increase the credit risks
with respect to it faced by the Holders, adversely affect the market price of
the Notes or otherwise be adverse to the interests of the Holders. See "The
Proposed Amendments."
Certain Tax Considerations
For a discussion of certain federal income tax considerations
relating to the Proposed Amendments and the receipt of the Consent Payments by
Holders, see "Certain Federal Income Tax Consequences."
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Consequences to Non-consenting Holders
Holders who do not timely consent to the Proposed Amendments
prior to the Expiration Date will not be eligible to receive the Consent
Payments even though the Proposed Amendments will be binding upon them upon
execution of the Supplemental Indenture.
PROPOSED AMENDMENTS
Set forth below is a summary description of the proposed modifications
to the Indenture for which the Consents of the Registered Holders of the Notes
are being solicited hereby. This description is qualified by reference to the
full text of the Proposed Amendments, which is set forth in Annex A hereto.
As of September 18, 2000, the outstanding principal amount of the Notes
was $281,490,000. The Notes bear interest at a rate of 10 1/2% per annum,
payable on each April 15 and October 15. WHX may redeem the Notes at 105.250% of
the principal amount of the Notes on or after April 15, 2002, at 102.625% on or
after April 15, 2003 and at par on or after April 15, 2004, in each case plus
accrued and unpaid interest. The Notes contain numerous covenants, including
those proposed to be eliminated or modified as outlined below. The foregoing
summary of certain terms of the Notes is qualified in its entirety by reference
to the complete terms contained in the Indenture (including the form of the
Notes attached thereto), copies of which are available upon request without
charge from the Information Agent.
The Proposed Amendments would:
A. amend the definition of "Asset Sale" (in Section 1.01) to exclude
therefrom sales and other dispositions of the assets or capital stock of WPC and
its direct and indirect subsidiaries, thereby removing any such sale or
disposition from the covenant (Section 4.10) imposing restrictions on Asset
Sales and the use of the proceeds thereof and requiring offers to repurchase
Notes in certain circumstances;
B. amend the definition of "Change of Control" (in Section 1.01) to
exclude therefrom sales and other dispositions of the assets or capital stock of
WPC and its direct and indirect subsidiaries, thereby removing any such sale or
disposition from the covenant (Section 4.14) requiring WHX to offer to
repurchase all outstanding Notes at a price of 101% of the outstanding principal
amount thereof upon the occurrence of a Change of Control;
C. amend the covenant (Section 5.01) that restricts the ability of WHX
to dispose of all or substantially all of its properties or assets to provide
that no sale or other disposition of the assets or capital stock of WPC or any
of its direct or indirect subsidiaries shall in itself constitute a disposition
covered by such covenant;
D. amend the covenant (Section 4.07) that permits certain Restricted
Payments (i) to exclude from the computation of Consolidated Net Income for such
purpose the contribution thereto of WPC and its subsidiaries from and after
October 1, 2000 and (ii) to permit WHX to
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distribute any of the assets or capital stock of WPC or any of its subsidiaries
to any person other than common or preferred stockholders of WHX;
E. amend the Events of Default (in Section 6.01) to eliminate as Events
of Default those relating to defaults under any mortgage, indenture or
instrument by, judgments against and bankruptcy, insolvency and related filings
and other events of WPC or any of its direct or indirect subsidiaries; and
F. create certain defined terms to facilitate the foregoing amendments.
The Company is seeking Consents to all the Proposed Amendments
as a single proposal. Accordingly, a Consent form purporting to consent to only
some of the Proposed Amendments will not be valid.
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THE SOLICITATION
Terms of the Solicitation
Subject to the terms and conditions set forth herein, the Company
hereby offers to make a Consent Payment of $10 for each $1,000 principal amount
of Notes for which a valid Consent is (i) received by the Information Agent at
the address set forth below prior to the Expiration Date, (ii) not properly
revoked as provided herein prior to the later of the Expiration Date and receipt
by the Trustee from the Company of an officer's certificate certifying to the
receipt of the Requisite Consents and (iii) accepted by the Company as provided
herein.
CONSENT PAYMENTS WILL BE MADE ONLY TO HOLDERS ON THE RECORD DATE WHO,
PRIOR TO THE EXPIRATION DATE, HAVE VALIDLY CONSENTED TO THE PROPOSED AMENDMENTS.
ANY BENEFICIAL OWNER OF NOTES WHO IS NOT THE REGISTERED HOLDER BUT WHO DESIRES
TO GIVE A CONSENT AND THUS BE ENTITLED TO RECEIVE A CONSENT PAYMENT IN THE EVENT
THE SUPPLEMENTAL INDENTURE IS EXECUTED MUST EITHER (I) OBTAIN A PROXY FROM THE
REGISTERED HOLDER OF SUCH NOTES THAT AUTHORIZES SUCH BENEFICIAL OWNER TO CONSENT
IN THE MANNER DESCRIBED BELOW OR (II) REQUEST THE REGISTER HOLDER TO GIVE SUCH
CONSENT ON ITS BEHALF.
The Company will make the Consent Payments as promptly as practicable
after the execution of the Supplemental Indenture. The Company reserves the
right, in its sole discretion, to delay making Consent Payments, in whole or in
part, in order to comply with any applicable law.
The Consents will become irrevocable on the later of the Expiration
Date and the date on which the Trustee receives from the Company an officer's
certificate certifying that the Requisite Consents have been received. Following
such delivery, the Trustee and the Company will execute the Supplemental
Indenture. The Proposed Amendments shall be effective upon execution of the
Supplemental Indenture. After execution of the Supplemental Indenture, all
holders of Notes including non-consenting holders and all subsequent holders of
the Notes, will be bound by the Proposed Amendments. Non-consenting holders will
not be entitled to any rights of appraisal or similar rights of dissenters with
respect to the proposed modification to the Indenture.
The term "Expiration Date" means 5:00 p.m., New York City time, on
September 28, 2000, unless the Company, in its sole discretion, extends the
period during which the Solicitation is open, in which event the term
"Expiration Date" shall mean the time and date on which the Solicitation, as so
extended by the Company, expires. The Company reserves the right to extend the
Solicitation at any time and from time to time by giving oral or written notice
to the Trustee no later than 9:00 a.m., New York City time, on the business day
following any previously announced Expiration Date. Any such extension will be
followed as promptly as practicable by
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public announcement thereof (or written notice thereof to the Registered Holders
of Notes). The Company will not be obligated, and does not intend, to extend the
Solicitation if the Requisite Consents have been received as of the Expiration
Date.
The Company expressly reserves the right, in its sole discretion, (i)
to terminate the Solicitation at any time (including after the Expiration Date)
prior to the execution of the Supplemental Indenture (whether or not the
Requisite Consents have been received) by giving oral or written notice of such
termination to the Trustee, (ii) not to extend the Solicitation beyond the
Expiration Date and (iii) to amend, at any time or from time to time, the terms
of the Solicitation. Any such termination or amendment will be followed as
promptly as practicable by public announcement thereof (or written notice
thereof to the Registered Holders of Notes).
If Consents received by the Information Agent (and not properly
revoked) as of the Expiration Date are sufficient to permit adoption of the
Proposed Amendments, the Company intends to execute the Supplemental Indenture.
Consents will be deemed to be accepted when the Supplemental Indenture has been
executed by the Company and the Trustee. The Company reserves the right to
accept any or all Consents received after the Expiration Date.
Consent Procedure
This Solicitation Statement is being sent to the current registered
holders of the Notes. The Company has designated the Expiration Date, as the
same may be extended as provided herein, as the Record Date for the
Solicitation.
Approval of the Proposed Amendments requires the consent of the
Registered Holders of at least a majority in aggregate principal amount of the
Notes that are outstanding. As of the date of this Solicitation Statement,
$281,490,000 principal amount of Notes were outstanding, none of which were
owned by the Company or any Affiliate.
Except as permitted by an omnibus proxy executed by DTC, as defined and
described below, only (i) Registered Holders or (ii) any other person who has
obtained a proxy which authorizes such person (or any other person claiming
title by or through such person) to vote the applicable Notes on behalf of such
Registered Holder (collectively, "Holders") may execute and deliver a Consent
and receive a Consent Payment. A beneficial owner of Notes who is not the
Registered Holder of such Notes (e.g., a beneficial holder whose Notes are
registered in the name of a nominee such as a brokerage firm) must (i) arrange
with the Registered Holder to execute and deliver a Consent on such beneficial
owner's behalf or (ii) obtain a proxy from the Registered Holder authorizing the
beneficial owner to vote the Notes on behalf of such Registered Holder. For
purposes of the Solicitation, (i) the Company anticipates that Depository Trust
Company ("DTC") will authorize (by omnibus proxy) brokers, banks and other
financial institutions that participate in DTC ("DTC Participants") to execute
Consents as if they were Registered Holders and, in such case, (ii) the term
"Registered Holder," with respect to Notes registered in the name of Cede & Co.,
which is the nominee for DTC, shall be deemed to include DTC Participants. A
Consent by a DTC Participant must be signed in the manner in which its name
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appears on the position listing of Cede & Co. A Consent by a Holder is a
continuing Consent notwithstanding that registered ownership of the Notes has
been transferred after the Record Date unless such Consent is timely revoked in
accordance with the procedure described herein.
The Consent form is enclosed with this Solicitation Statement. A
Consent form (or, if the Holder signing such Consent form is not the Registered
Holder, the accompanying irrevocable proxy), to be effective, must be executed
by the Registered Holder of the Notes to which such Consent form (or such
irrevocable proxy) relates in the same manner as the name of the Registered
Holder appears on such Notes or as set forth in a DTC security position listing.
If such Notes are held of record by two or more Registered Holders, all such
Registered Holders must sign the Consent form (or such irrevocable proxy). If
such Notes are registered in different names, separate Consent forms (or
irrevocable proxies) must be executed covering each form of registration. If a
Consent form is signed by a trustee, executor, administrator, guardian,
attorney- in-fact, 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 Consent form appropriate evidence of authority to
execute the Consent form. In addition, (i) if a Holder is a Registered Holder
and a Consent form relates to less than the total principal amount of Notes
registered in the name of such Registered Holder as of the Record Date or (ii)
if a Holder is not a Registered Holder and is consenting pursuant to a proxy
given by a Registered Holder and a Consent form relates to less than the total
principal amount of Notes to which such proxy relates, such Consent form must
list the certificate numbers (or CUSIP numbers if held through DTC) and
principal amount of Notes to which the Consent form relates. Otherwise, the
Consent form will be deemed to relate to the total principal amount of Notes
registered in the name of (or set forth in the position listing of Cede & Co.
for) such Registered Holder or to which such proxy relates, as the case may be.
The registered ownership of Notes shall be proven by the Trustee, as
registrar of the Notes. The ownership of Notes held through DTC by DTC
Participants shall be established by a DTC security position listing provided by
DTC. All questions as to the validity, form, eligibility (including time of
receipt) and the acceptance of Consent forms and revocations of elections made
on Consent forms with respect to Notes will be resolved in the first instance by
the Company, whose determination shall be binding subject only to such final
review as may be prescribed by the Trustee in accordance with the Indenture
concerning proof of execution and ownership. The Company reserves the absolute
right to reject any or all Consent forms and revocations that are not in proper
form or the acceptance of which could, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the right, subject to such final review
as the Trustee may prescribe in accordance with the Indenture for proof of
execution and ownership, to waive any irregularities or conditions of delivery
as to particular Consent forms or revocations. Unless waived, any irregularities
in connection with the deliveries must be cured within such time as the Company
determines. None of the Company, the Solicitation Agent, the Trustee, the
Information Agent or any other person shall be under any duty to give
notification of any such irregularities or waiver, nor shall any of them incur
any liability for failure to give such notification. Deliveries of such Consent
forms or notices of revocation will not be deemed to
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have been made until such irregularities have been cured or waived. The
Company's interpretation of the terms and conditions of this Solicitation shall
be binding.
Consents to the Proposed Amendments, to be effective, must be properly
executed and received by the Information Agent prior to the Expiration Date.
Each Holder of Notes wishing to consent with respect of the Proposed Amendments
must complete, sign and date the accompanying Consent form (or a facsimile
thereof) in accordance with the instructions set forth herein and therein, have
the signature thereon (and on any proxy delivered therewith) notarized or
guaranteed (unless such consent form or proxy, as the case may be, is given by
or for the account of an Eligible Institution) and mail, hand deliver or send by
overnight courier, or telecopy the Consent form and any other required documents
to the Information Agent. The method of delivery of all documents, including
fully executed Consent forms, is at the election and risk of the Holder. Such
delivery will be deemed made only when actually received by the Information
Agent. A signature guarantee must be by a firm that is a member of a registered
national securities exchange or a member in good standing of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States.
Each Consent form should be sent to the Information Agent, as follows:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Facsimile Transmission:(212) 570-5799
(call to confirm at (212) 750-5833)
Telephone Number:(212) 750-5833
Toll Free:(888) 750-5834
HOLDERS OF NOTES WHO WISH TO CONSENT SHOULD MAIL, HAND DELIVER, SEND BY
OVERNIGHT COURIER, OR TELECOPY THEIR PROPERLY COMPLETED AND EXECUTED CONSENT
FORMS TOGETHER WITH OTHER REQUIRED DOCUMENTS TO THE INFORMATION AGENT IN
ACCORDANCE WITH THE INSTRUCTIONS SET FORTH HEREIN AND THEREIN. CONSENT FORMS
SHOULD BE DELIVERED TO THE INFORMATION AGENT AND NOT TO THE COMPANY, THE
SOLICITATION AGENT OR THE TRUSTEE. HOWEVER, THE COMPANY RESERVES THE RIGHT TO
ACCEPT ANY CONSENT RECEIVED BY THE COMPANY, THE SOLICITATION AGENT OR THE
TRUSTEE.
IN NO EVENT SHOULD A HOLDER TENDER OR DELIVER NOTES.
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Conditions of the Solicitation
The Company shall not be deemed to have accepted any Consents unless
and until the Supplemental Indenture is executed by the Company and the Trustee.
Revocation of Consents
Any Holder of Notes as to which a Consent has been given may revoke
such Consent as to such Notes or any portion of such Notes (in integral
multiples of $1,000) by filing a written notice of revocation with the Trustee,
at Bank One, N.A., 100 East Broad Street, Columbus, Ohio 43125, Attention :
David Knox, prior to the later of the Expiration Date and the time that the
Trustee receives from the Company an officer's certificate in accordance with
the Indenture certifying to receipt of the Requisite Consents. The transfer of
Notes will not have the effect of revoking the election made in any Consent form
theretofore validly given by a Holder of such Notes, and each Consent will be
counted notwithstanding any transfer of the Notes to which such Consent relates,
unless the procedure for revoking Consents described below has been complied
with.
A written notice of revocation, to be effective, must (i) contain the
name of the Registered Holder, the certificate numbers, if any, to which such
revocation relates, the principal amount of Notes to which such revocation
relates and the signature of a Holder (with such signature, and the signatures
in any accompanying proxy, notarized or guaranteed as described above) and (ii)
be accompanied by a properly completed irrevocable proxy if such Holder is not
the Registered Holder of such Notes.
The revocation (or, if the Holder is not the Registered Holder, the
accompanying irrevocable proxy), to be effective, must be executed by the
Registered Holder of such Notes in the same manner as the name of the Registered
Holder appears on the Notes to which the revocation relates. If a revocation is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
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
revocation. A revocation of the Consent shall be effective only as to the Notes
listed on the revocation and only if such revocation complies with the
provisions of this Solicitation Statement. Only a Holder of Notes is entitled to
revoke a Consent previously given. A beneficial owner of Notes other than the
Registered Holder must arrange with the Registered Holder to execute and deliver
on his or her behalf a revocation of any Consent already given with respect to
such Notes or obtain an irrevocable proxy from the Registered Holder authorizing
such beneficial holder to revoke such Consent in accordance with the procedures
described herein. A purported notice of revocation that is not received by the
Trustee in a timely fashion and accepted by the Trustee as a valid revocation
will not be effective to revoke a Consent previously given.
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A revocation of a Consent may only be rescinded by the execution and
delivery of a new Consent. A Holder who has delivered a revocation may
thereafter deliver a new Consent by following one of the described procedures at
any time prior to the Expiration Date.
Prior to the execution of a Supplemental Indenture, the Company intends
to consult with the Trustee to determine whether such Trustee has received any
revocations of Consents. The Company reserves the right to contest the validity
of any such revocations.
Assistance; Additional Materials
Questions relating to the procedure for consenting as well as requests
for assistance or for additional copies of the Solicitation Statement or the
Consent form may be directed to the Information Agent at the address set forth
above.
Financial Advisor and Solicitation Agent
The Company has retained DLJ as its financial advisor and Solicitation
Agent in connection with the Solicitation. DLJ has not been retained to render
an opinion as to the fairness of the Solicitation. DLJ will receive a customary
fee in connection with the Solicitation. In addition, the Company will reimburse
DLJ for reasonable out-of-pocket expenses and has agreed to indemnify DLJ
against certain liabilities and expenses. Questions regarding the Solicitation
should be directed to DLJ at the following address: 2121 Avenue of the Stars,
Los Angeles, California 90067, attention: Niron Stabinsky, (310) 282-7495.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain of the anticipated
Federal income tax consequences to Holders of the Notes arising from the Consent
Payment and the Proposed Amendments. The tax treatment of a Holder might vary
depending upon such Holder's particular situation, and certain Holders
(including foreign persons or entities, insurance companies, tax- exempt
organizations, financial institutions and dealers in securities) might be
subject to special rules not discussed below.
The U.S. Federal income tax consequences of the adoption of the
Proposed Amendments to Holders who continue to hold Notes after the Expiration
Date will depend on whether a constructive exchange of Notes for new Notes
having modified terms is deemed to have occurred as a result thereof. Under
governing Treasury regulations, a "significant modification" of a debt
instrument results in a deemed exchange, whereas a "modification" that is not
"significant" is not treated as such an exchange. Although the regulations
establish, as a general rule, that a modification is significant if the legal
rights or obligations that are altered and the degree to which they are altered
are economically significant, the regulations further provide that the addition,
deletion or alteration of customary accounting or financial covenants relating
to a debt
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instrument does not result in a significant modification of the debt instrument.
The regulations also provide that more substantial amendments to the terms of a
debt instrument such as a release, substitution or addition of collateral as
security for a recourse debt or a change in the priority of a debt instrument
will result in a substantial modification only if there is a substantial
impairment or enhancement of the obligor's capacity to meet its payment
obligations under the debt instrument from an adequate capacity to a primarily
speculative capacity or vice versa. The Company believes that the adoption of
the Proposed Amendments should not result in a significant modification of the
Notes and thus should not create a deemed exchange for U.S. Federal income tax
purposes. However, in the absence of judicial authority on point, there can be
no assurance as to this result.
There is no direct authority determining the Federal income tax
consequences of a Consent Payment. A holder of Notes who receives a Consent
Payment might be treated as receiving a fee to obtain its consent (or waiver of
rights) or as receiving additional interest with respect to the Notes. In such
event, a Holder would recognize ordinary income equal to the amount of such
payment. The Company presently intends to treat the Consent Payment for Federal
income tax purposes as a fee paid to Holders of the Notes.
THE PRECEDING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
INTENDED FOR GENERAL INFORMATION ONLY, AND DOES NOT CONSTITUTE TAX ADVICE. EACH
HOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISER AS TO THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES TO HIM OR HER OF THE CONSENT PAYMENT AND THE
PROPOSED AMENDMENTS.
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ANNEX A
THE PROPOSED AMENDMENTS
The following is the text of the Proposed Amendments to the stated
covenants and provisions of the Indenture. The following is qualified in its
entirety by reference to the Supplemental Indenture, copies of which may be
obtained without charge from the Information Agent. Capitalized terms not
otherwise defined in this Annex A have the meanings assigned thereto in the
Indenture.
If the Proposed Amendments are adopted, the following sections will be
amended in the Indenture, effective as of the date of the Company's acceptance
of the Consents, as follows (strike-through indicates text to be deleted and
double underline indicates text to be added):
Section 1.01. Definitions.
-----------
[Only revised and added definitions are shown.]
"Asset Sale" means the sale, lease, conveyance, disposition or
other transfer (a "disposition") of any properties, assets or rights (including,
without limitation, a sale and leaseback transaction or the issuance, sale or
transfer by the Company of Equity Interests of a Restricted Subsidiary) whether
in a single transaction or a series of related transactions; provided, however,
that the following transactions will be deemed not to be Asset Sales: (a) sales
of inventory (other than Owned Precious Metal Inventory) in the ordinary course
of business; (b) the sale of Owned Precious Metal Inventory in exchange for
consideration having a fair market value at least equal to that of the Owned
Precious Metal Inventory being sold; (c) the sale or transfer of Precious Metals
in connection with a Future Payables Transaction involving the same quantity of
Precious Metals so sold or transferred; (d) a disposition of assets by the
Company to a Wholly Owned Restricted Subsidiary of the Company or by a Wholly
Owned Restricted Subsidiary of the Company to the Company or to another Wholly
Owned Restricted Subsidiary of the Company; (e) a disposition of Equity
Interests by a Wholly Owned Restricted Subsidiary of the Company to the Company
or to another Wholly Owned Restricted Subsidiary of the Company; (f) a Permitted
Investment or Restricted Payment that is permitted by this Indenture; (g) the
issuance by the Company of Equity Interests; (h) the disposition of properties,
assets or rights in any fiscal year the aggregate Net Proceeds of which are less
than $1 million; (i) the sale of accounts receivable pursuant to the Receivables
Facility or any other receivable facility entered into by the Company and/or its
Restricted Subsidiaries in the ordinary course of business; and (j) any sale,
lease, conveyance, disposition or other transfer (including without limitation
by way of a sale and leaseback transaction) of all or any part of the assets,
properties or Capital Stock of any or all of the WPC Related Persons.
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"Change of Control" means any of the following: (a) the sale,
lease, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions; of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to any Person (as such term in used in Section 13(d)(3) of the
Exchange Act), (b) the adoption of a plan relating to the liquidation or
dissolution of the Company, (c) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that (i)
any "Person" or "group" (as such terms are used in Section 13(d)(3) of the
Exchange Act) other than WHX or an underwriter or group of underwriters in an
underwritten public offering becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of at least 50% of the voting
power of the outstanding voting stock of the Company, (d) the merger or
consolidation of the Company with or into another corporation with the effect
that the existing stockholders of the Company hold less than 50% of the combined
voting power of the then outstanding voting securities of the surviving
corporation of such merger or the corporation resulting from such consolidation
or (e) the first day on which more than a majority of the members of the Board
of Directors of the Company are not Continuing Directors. Notwithstanding the
foregoing, the sale, lease, transfer, conveyance or other disposition of all or
a substantial portion of the assets, properties or Capital Stock of any of the
WPC Related Persons shall not constitute a Change of Control .
"WPC Related Persons" means, collectively, WPC and all direct
and indirect Subsidiaries of WPC.
Section 4.07. Restricted Payments.
-------------------
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
the Company) or to the direct or indirect holders of the Company's Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company); (b)
purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the
Company); (c) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value, any Indebtedness that is
subordinated in right of payment to the Notes, except a payment of interest or
principal at Stated Maturity; or (d) make any Restricted Investment (all such
payments and other actions set forth in clauses (a) through (d) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
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(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Adjusted
Consolidated Leverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture, is less than
the sum of (A) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) commencing April 1, 1998 to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), provided, however, that for
each fiscal quarter from and after October 1, 2000 Consolidated Net
Income shall be calculated without regard to the contribution thereto
of any of the WPC Related Persons, plus (B) 100% of the aggregate Net
Cash Proceeds received by the Company from the issue or sale since the
date of this Indenture of Equity Interests of the Company (other than
Disqualified Stock) or of Disqualified Stock or debt securities of the
Company that have been converted into such "Equity Interests (other
than any such Equity Interests, Disqualified Stock or convertible debt
securities sold to a Restricted Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (C) to the extent that any
Restricted Investment that was made after the date of this Indenture is
sold for cash or Cash Equivalents or otherwise liquidated or repaid for
cash, Cash Equivalents, the sum of (x) the initial amount of such
Restricted Investment and (y) 50 % of the aggregate Net Proceeds
received by the Company or any Restricted Subsidiary of the Company in
excess of the initial amount of such Restricted Investment, plus (D)
25.0 million.
The foregoing provisions will not prohibit (a) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of this
Indenture; (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the Net Cash Proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of, other Equity
Interests of the Company (other than any Disqualified Stock); provided that the
amount of any such Net Cash Proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (iii) (B) of the preceding paragraph; (c) the defeasance, redemption,
repurchase, retirement or other acquisition of subordinated Indebtedness with
the Net Cash Proceeds from an incurrence of, or in exchange for, Permitted
Refinancing Indebtedness; (d) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis; (e) so long as no Default or Event of Default shall have occurred and be
continuing, the repurchase, redemption or other acquisition or
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retirement for value of any Equity Interests of the Company held by any member
of the Company's or any of its Restricted Subsidiaries' management upon the
death, disability or termination of employment of such member of management;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $750,000 in any calendar
year and $3.0 million in the aggregate; (f) the payment by the Company or any of
its Restricted Subsidiaries of management fees to WPN or any Affiliate of WPN
not to exceed $5.5 million in any calendar year, in exchange for services
provided to the Company and its Restricted Subsidiaries by WPN or any Affiliate
of WPN pursuant to any management agreement between the Company and/or any of
its Restricted Subsidiaries and WPN and/or any of its Affiliates; (g) payments
permitted under the WHX Agreements; (h) the payment of cash dividends on the
Company's convertible preferred stock outstanding, and at the dividend rate in
effect, on the date of this Indenture, provided that in the case of any such
dividend payments made subsequent to January 1, 1999, the Company may only make
such dividend payments if, at the time of such dividend payment and after giving
pro forma effect thereto, the Company's Adjusted Consolidated Leverage Ratio
would be less than 6. to 1.0; (i) distributions of all or any part of the
assets, properties or Capital Stock of any or all of the WPC Related Persons to
any Person other than common or preferred stockholders of WHX; and (j) the
direct or indirect purchase or other acquisition of Equity Interests of H&H
pursuant to or in connection with the Tender Offer and the Merger.
In determining the amount of Restricted Payments permissible
under clause (iii) of the first paragraph of this covenant, amounts expended
pursuant to clauses (a), (e) and (h) (only with respect to dividend payments
made subsequent to January 1, 1999) of the immediately preceding paragraph shall
be included as Restricted Payments for purposes of such clause (iii).
The Board of Directors of the Company may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would
not cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation. All such outstanding Investments will
be deemed to constitute Investments in an amount equal to the greater of (a) the
net book value of such Investments at the time of such designation and (b) the
fair market value of such Investments at the time of such designation. Such
designation will be permitted only if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors of the Company whose resolution with respect thereto
shall be delivered to the Trustee. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an officer's
certificate stating that such Restricted Payment
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is permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed.
Section 5.01. Merger, Consolidation, or Sale of Assets.
----------------------------------------
The Company shall not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another corporation, Person or
entity unless (a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, (c) immediately after such transaction no Default or Event of
Default exists and (d) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Adjusted Consolidated Leverage Ratio test set forth
in the first paragraph of Section 4.09 hereof. Notwithstanding the foregoing,
the following shall be permitted: (i) the Merger and (ii) the sale, assignment,
transfer, lease, conveyance or other disposition of all or any part of the
assets, properties or Capital Stock of any or all of the WPC Related Persons.
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on,
or Liquidated Damages, if any, with respect to, the Notes, and such default
continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of
or premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase) or
otherwise;
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(c) the Company fails to comply with any of the provisions of
Sections 4.07, 4.09, 4.10, 4. 14 or Article V hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
30 days after notice to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25 % in principal amount of the Notes then
outstanding of such failure;
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is caused by a
failure to pay principal of or premium or interest on such Indebtedness prior to
the expiration of any grace period provided in such Indebtedness (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(f) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Company
or any of its Subsidiaries and such judgment or judgments are not paid or
discharged for a period (during which execution shall not be effectively stayed
by reason of pending appeal or otherwise) of 60 days, provided that the
aggregate of all such undischarged judgments exceeds $10.0 million;
(g) the Company or any of its Significant Subsidiaries pursuant
to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
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(i) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of the property of the
Company or any of its Significant Subsidiaries; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days;
provided, however, that if the entry of such order or decree is appealed and
dismissed on appeal then the Event of Default hereunder by reason of the entry
of such order or decree shall be deemed to have been cured. Notwithstanding the
foregoing, as used in clauses (e), (f), (g) and (h) of this Section 6.01 the
terms Subsidiaries, Restricted Subsidiaries and Significant Subsidiaries shall
not include any of the WPC Related Persons.
The following provisions of the Indenture are the principal other
provisions that will be affected by the Proposed Amendments (no changes to the
text of which are made by the Proposed Amendments):
Section 4.10. Asset Sales.
------------
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (a) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors of the Company set forth in an officer's
certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (b) at least 75 % of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; provided, however, that the amount of (i) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or such Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (ii) any securities,
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary within 60 days of receipt into cash or Cash Equivalents (to the
extent of the cash or Cash Equivalents received) shall be deemed to be cash or
Cash Equivalents for purposes of this provision.
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Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any such Restricted Subsidiary shall apply such Net
Proceeds to reduce Indebtedness under Permitted Working Capital Indebtedness or
any other Indebtedness of a Restricted Subsidiary of the Company (and, in the
case of such Indebtedness other than Indebtedness under Permitted Working
Capital Indebtedness, to correspondingly reduce commitments with respect
thereto). To the extent such Net Proceeds are not utilized as contemplated in
the preceding sentence, such Net Proceeds may, within 360 days after receipt
thereof, be utilized to acquire Replacement Assets; provided that such Net
Proceeds may be invested by the Company or such Restricted Subsidiary, within
360 days after receipt thereof, in property or assets (including Capital Stock
of any Person that will become a Wholly Owned Restricted Subsidiary of the
Company as a result of such investment) not constituting Replacement Assets if
after giving effect to such Asset Sale and the application of the Net Proceeds
therefrom, the Company's Adjusted Consolidated Leverage Ratio would be less than
6.0 to 1.0. Pending the final application of any such Net Proceeds, the Company
or any such Restricted Subsidiary may otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in this paragraph will be
deemed after the expiration of the time periods set forth above to constitute
"Excess Proceeds."
Within 30 days of each date on which the aggregate amount of
Excess Proceeds exceeds $35.0 million, the Company shall commence a pro rata
Asset Sale Offer pursuant to Section 3.09 hereof to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase in accordance with the procedures set forth in Section 3.09
hereof. To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the amount that the Company is required to
repurchase, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate amount of Notes surrendered by Holders
thereof exceeds the amount that the Company is required to repurchase, the
Trustee shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Trustee so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased).
Upon completion of such offer to purchase, the amount of Excess Proceeds shall
be reset at zero.
Section 4.14. Offer to Repurchase Upon Change of Control.
-------------------------------------------
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an
offer price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of repurchase (the "Change of Control Payment"). Within 30 days following
any Change of Control, the Company shall mail a notice to each Holder and the
Trustee stating: (1) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all
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Notes validly tendered and not withdrawn will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no earlier than 30 days but
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (3) that any Note not tendered will continue to accrue
interest; (4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (5) that Holders electing to have any Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, properly endorsed for
transfer, together with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed and such customary documents as the
Company may reasonably request, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes as a result of a Change of
Control.
(b) On or before 10:00 a.m. New York time on the Change of
Control Payment Date, the Company shall, to the extent lawful, (a) accept for
payment all Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, (b) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all Notes or portions thereof so
tendered and (c) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officer's Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and the Trustee shall promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided, however, that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
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