Exhibit 99.2
Supplement No. 2 to
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)
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This Supplement No. 2 amends the Solicitation Statement dated September
18, 2000 (as amended by Supplement No. 1 thereto dated September 29, 2000, the
"Solicitation Statement") of WHX Corporation (the "Company") by which the
Company is soliciting (the "Solicitation") the consent of the registered holders
of its 10-1/2% Senior Notes due 2005 (the "Notes") to the amendment of certain
provisions of the indenture dated as of April 7, 1998 between the Company and
Bank One, N.A., as trustee, pursuant to which the Notes were issued (the
"Indenture"). Capitalized terms not defined in this Supplement have the meanings
given to them in the Solicitation Statement.
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The Solicitation Agent for the Consent Solicitation is:
Donaldson, Lufkin & Jenrette
The date of this Supplement No. 2 is October 3, 2000.
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Proposed Amendments Revised
The Solicitation Statement is hereby amended to revise the Proposed
Amendments for which consents are solicited pursuant to the Solicitation
Statement as set forth below and to amend the term "Proposed Amendments" as it
is used in the Solicitation Statement to mean the Proposed Amendments set forth
in the Solicitation Statement, as revised in this Supplement.
The following is a summary of the changes to the Proposed Amendments
effected hereby and is qualified by reference to the full text of those Proposed
Amendments affected by these changes, which is set forth in Annex A hereto, and
to the full text of the Indenture, copies of which are available upon request
without charge from the Information Agent:
(a) With respect to the covenant in the Indenture concerning Restricted
Payments (Section 4.07), the Proposed Amendments are hereby revised to further
amend such covenant to provide that no Restricted Payments will be permitted
until October 1, 2002, other than certain payments, distributions and other
transactions specifically set forth currently in the Indenture (in the second
paragraph of Section 4.07).
(b) With respect to the covenant in the Indenture concerning the
incurrence of Indebtedness and the issuance of Preferred Stock (Section 4.09),
the Proposed Amendments are hereby revised to amend the provision thereof that
permits the incurrence of Indebtedness and issuance of Preferred Stock if, after
giving effect thereto, the Company's Consolidated Leverage Ratio would be less
than 5.0 to 1.0 to change such ratio to 4.5 to 1.0.
(c) With respect to the covenant in the Indenture concerning Asset
Sales (Section 4.10), the Proposed Amendments are hereby revised to further
amend such covenant to provide that within 90 days of any Asset Sale, the
Company may utilize the Net Proceeds from such sale to either reduce working
capital and certain other Indebtedness or purchase Notes in the open market or
in negotiated transactions. To the extent that 50% of the Net Proceeds as
reduced by any working capital and other Indebtedness reductions are not
utilized to purchase Notes, the Company will be required to make an Asset Sale
Offer with such Net Proceeds at 85% of the principal amount of the Notes plus
accrued and unpaid interest, if such Asset Sale occurs prior to April 1, 2001,
or 95% of the principal amount of the Notes plus accrued and unpaid interest, if
such Asset Sale occurs on or after April 1, 2001.
Expiration Date Unchanged
The Expiration Date for the Solicitation remains October 4, 2000.
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ANNEX A
REVISED PROPOSED AMENDMENTS
The following is the text of the revised Proposed Amendments as they
relate to the indicated covenants and other 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 of the
Indenture will be amended, 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 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 [BEGIN UNDERLINE]
such Restricted Payment is made on or after October 1, 2002 and, [END UNDERLINE]
at the time of and after giving effect to such Restricted Payment:
(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
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(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), 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 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
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WPN and/or any of its Affiliates; (g) payments permitted under the WHX
Agreements; (h) [BEGIN STRIKE-THROUGH] THE PAYMENT OF CASH DIVIDENDS ON THE
COMPANY'S CONVERTIBLE PREFERRED STOCK OUTSTANDING, AND 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 6.0 TO 1.0 [END STRIKE-THROUGH] [BEGIN UNDERLINE]
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 [END UNDERLINE] ; and (i) 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) [BEGIN STRIKE-THROUGH] , (e) AND (h) (ONLY WITH RESPECT
TO DIVIDEND PAYMENTS MADE SUBSEQUENT TO JANUARY 1, 1999) [END STRIKE-THROUGH]
[BEGIN UNDERLINE] and (e) [END UNDERLINE] 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 is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed.
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or
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indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Indebtedness) and that the Company
will not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Company and its Restricted
Subsidiaries may incur Indebtedness and Restricted Subsidiaries of the Company
may issue shares of Preferred Stock if the Company's Adjusted Consolidated
Leverage Ratio would have been less than [BEGIN STRIKE-THROUGH] 5.0 [END
STRIKE-THROUGH] [BEGIN UNDERLINE] 4.5 [END UNDERLINE] to 1, on a pro forma basis
after giving effect to the incurrence of such Indebtedness or the issuance of
such Preferred Stock, as the case may be, and the application of the net
proceeds therefrom.
Notwithstanding the foregoing, the Company and, to the extent
set forth below, its Restricted Subsidiaries may incur the following (each of
which shall be given independent effect):
(a) Indebtedness of the Company under the Notes and this
Indenture;
(b) Permitted Working Capital Indebtedness of the Company and
its Restricted Subsidiaries;
(c) Existing Indebtedness (other than Permitted Working Capital
Indebtedness or Indebtedness under the Letter of Credit Facility);
(d) Indebtedness of the Company and its Restricted Subsidiaries
under the Letter of Credit Facility;
(e) Capital Expenditure Indebtedness, Capital Lease Obligations
and purchase money Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $70.0
million at any time outstanding;
(f) (i) Hedging Obligations of the Company and its Restricted
Subsidiaries covering Indebtedness of the Company or such Restricted
Subsidiary (which Indebtedness is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of any
such Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates; or (ii)
repurchase agreements, reverse repurchase agreements or similar
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in Federal-Financial Agreements of Depository
Institutions with Securities and Others (or any successor guidelines),
as adopted by the Comptroller of the Currency;
(g) Indebtedness of the Company and its Restricted Subsidiaries
in an aggregate principal amount not to exceed $45.0 million at any
time outstanding;
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(h) Indebtedness of the Company representing guarantees of
Indebtedness incurred by one of its Restricted Subsidiaries pursuant
to, and in compliance with, another provision of this covenant;
(i) Indebtedness of the Company or any of its Restricted
Subsidiaries representing guarantees of a portion of the Indebtedness
of Wheeling-Nisshin which is not greater than the Company's or such
Restricted Subsidiary's pro rata ownership of the outstanding Equity
Interests in Wheeling-Nisshin; provided, however, that (i) in the case
of a guarantee of any such Indebtedness by the Company, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and (ii) at the time
of incurrence and after giving effect to the Indebtedness of
Wheeling-Nisshin which is being guaranteed, the Consolidated Interest
Coverage Ratio of Wheeling-Nisshin for its most recently ended four
full fiscal quarters for which internal financial statements are
available would have been at least 2.00 to 1, determined on a pro forma
basis as if any additional Indebtedness had been incurred at the
beginning of such four-quarter period;
(j) Indebtedness of the Company or its Restricted Subsidiaries
representing guarantees of Indebtedness of Wheeling-Nisshin required to
be made pursuant to the Letter of Undertaking not to exceed $10.0
million;
(k) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Restricted Subsidiaries; provided, however,
that (i) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and (ii) (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Wholly Owned Restricted Subsidiary of the Company and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Wholly Owned Restricted Subsidiary of the Company
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case
may be; and
(l) any Permitted Refinancing Indebtedness representing a
replacement, re- newel, refinancing or extension of all or any portion
of the Indebtedness permitted under the first paragraph and clauses (a)
and (c) of this covenant.
In the event that the incurrence of any Indebtedness would be
permitted by the first paragraph set forth above or one or more of the
provisions set forth in the second paragraph above, the Company may designate
(in the form of an officer's certificate delivered to the Trustee) the
particular provision of this Indenture pursuant to which it is incurring such
Indebtedness.
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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.
Within [BEGIN STRIKE-THROUGH] 360 [END STRIKE-THROUGH] [BEGIN
UNDERLINE] 90 [END UNDERLINE] days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any such Restricted Subsidiary shall apply such Net
Proceeds [BEGIN UNDERLINE] (i) [END UNDERLINE] 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) [BEGIN UNDERLINE] (an "Indebtedness
Reduction") or (ii) to purchase Notes in the open market or in negotiated
transactions ("Open Market Purchases"). To the extent that 50% of the excess, if
any, of the Net Proceeds from such Asset Sale over any Indebtedness Reduction
made with such Net Proceeds are not utilized within 90 days after receipt of
such Net Proceeds to purchase Notes in Open Market Purchases (such proceeds not
so utilized being referred to herein as the "Shortfall Proceeds") then, within
30 days thereafter, the Company shall commence a pro rata Asset Sale Offer
pursuant to Section 3.09 hereof to purchase the maximum amount of Notes that can
be purchased with such Shortfall Proceeds at a price equal to (x) 85% of the
principal amount thereof plus accrued and unpaid interest, if any, thereon, if
such Asset Sale occurred prior to April 1, 2001 or (y) 95% of the principal
amount thereof plus accrued and unpaid interest, if any, thereon, if such Asset
Sale occurred on or after April 1, 2001. [END UNDERLINE] To the extent such Net
Proceeds are not utilized as contemplated in the preceding [BEGIN
STRIKE-THROUGH] SENTENCE [END STRIKE-THROUGH] [BEGIN UNDERLINE] sentences [END
UNDERLINE], such Net Proceeds may, within 360 days after receipt thereof, be
utilized to acquire Replacement Assets [BEGIN UNDERLINE] or for Indebtedness
Reductions [END UNDERLINE] [BEGIN STRIKE-THROUGH] ; 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 [END STRIKE-THROUGH]
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[BEGIN STRIKE-THROUGH] COMPANY'S ADJUSTED CONSOLIDATED LEVERAGE RATIO WOULD BE
LESS THAN 6.0 TO 1.0 [END STRIKE-THROUGH]. 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.
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