Exhibit 99.2
Supplement No. 1 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. 1 amends the Solicitation Statement dated September
18, 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. 1 is September 29, 2000.
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Expiration Date Extended
The Solicitation Statement is hereby amended to extend the Expiration
Date of the Solicitation (as heretofore extended) to, and to amend the term
"Expiration Date" as it is used in the Solicitation Statement to mean, 5:00
p.m., New York City time, on October 4, 2000 (as such time may be further
extended in the discretion of the Company). The Record Date for the Solicitation
is the Expiration Date, as so extended.
Consent Payment Increased
The Solicitation Statement is hereby amended to increase the amount of
the Consent Payment to, and to amend the term "Consent Payment" as it is used in
the Solicitation Statement to mean, $20 in cash for each $1,000 principal amount
of Notes for which a Consent has been accepted as described in the Solicitation
Statement. Consent Payments will be made only to Holders on the Record Date who
validly consent to the Proposed Amendments prior to the Expiration Date and
whose Consents have been accepted by the Company.
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 that permits certain
Restricted Payments (Section 4.07), the Proposed Amendments are hereby revised
so that:
(i) there is deleted from the Proposed Amendments the proposed
amendment to Section 4.07 that would have excluded from the
computation of Consolidated Net Income for the purposes of
such Section the contribution thereto of WPC and its
subsidiaries from and after October 1, 2000; and
(ii) the Proposed Amendments as revised would amend Section 4.07 to
delete from the list of explicitly permitted Restricted
Payments the payment of cash dividends on the Company's
convertible preferred stock outstanding in the event that the
Company's Adjusted Consolidated Leverage Ratio is less that
6.0 to 1.0, which deletion would have the effect of allowing
the payment of cash dividends on the Company's convertible
preferred stock outstanding only so long as such payment
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meets the general requirements for Restricted Payments set
forth in Section 4.07 of the Indenture.
(b) There is hereby added to the Proposed Amendments the following
additional proposed amendments:
(i) In the definition of "Permitted Investments" (in Section
1.01): (A) with respect to the provision permitting
Investments in Persons that are engaged in a line of business
related to the business of the Company and its Restricted
Subsidiaries provided they become Wholly Owned Restricted
Subsidiaries of the Company, an amendment that would provide
that the lines of business in which the Company and its
Restricted Subsidiaries are engaged shall be determined
without regard to the businesses in which WPSC and its
Subsidiaries are engaged and (B) an amendment that would
delete the provision permitting Investments of up to $10
million in Persons engaged in a line of business related to
the business of the Company and its Restricted Subsidiaries
(irrespective of whether or not such Persons become Restricted
Subsidiaries of the Company).
The amendments summarized in (i) above would have the effect of
permitting the Company to make Investments in Persons engaged in a line of
business related to the business of the Company and its Restricted Subsidiaries,
other than WPSC, but only if such Persons become Wholly Owned Restricted
Subsidiaries of the Company.
(ii) An amendment to the definition of "Replacement Assets" (in
Section 1.01) that would provide that in determining whether a
line of business is related to the business of the Company and
its Restricted Subsidiaries the lines of business in which the
Company and its Restricted Subsidiaries are engaged shall be
determined without regard to the businesses in which WPSC and
its Subsidiaries are engaged.
(iii) An amendment to the covenant (Section 4.10) imposing
restrictions on Asset Sales and the use of the proceeds
thereof that would delete therefrom a provision permitting the
Net Proceeds of Asset Sales to be invested (within 360 days)
in property or assets not constituting Replacement Assets if,
after giving effect to the 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.
The amendments summarized in (ii) and (iii) above would have the effect
of providing that if the Company were to use the Net Proceeds of Asset Sales to
acquire other assets such acquired assets must be used in a line of business
that is related to the business of the Company and its Restricted Subsidiaries,
other than WPSC, regardless of the Company's Adjusted Consolidated Leverage
Ratio.
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ANNEX A
REVISED PROPOSED AMENDMENTS
The following is the text of the revised Proposed Amendments as they
relate 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 1.01. Definitions.
[Only revised definitions are shown.]
"Permitted Investments" means (a) any Investment in the Company
or in a Wholly Owned Restricted Subsidiary of the Company, (b) any Investment in
Cash Equivalents, U.S. Government Obligations and Triple A Rated Securities, (c)
any Investment by the Company or any Restricted Subsidiary of the Company in a
Person that is engaged in the same line of business as the Company and its
Restricted Subsidiaries were engaged in on the date of this Indenture or a line
of business or manufacturing or fabricating operation reasonably related thereto
(including any downstream steel manufacturing or processing operation or
manufacturing or fabricating operation in the construction products business) if
as a result of such Investment (i) such Person becomes a Wholly Owned Restricted
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company, (d) any Investment made as a result of the receipt of
non-cash consideration from (i) an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof or (ii) a disposition of assets that does
not constitute an Asset Sale, (e) any Investment acquired solely in exchange for
Equity Interests (other than Disqualified Stock) of the Company [BEGIN
UNDERLINE] and [END UNDERLINE] (f) Investments existing as of the date of the
Indenture. [BEGIN STRIKE-THROUGH] AND (G) OTHER INVESTMENTS IN ANY PERSON THAT
IS ENGAGED IN THE SAME LINE OF BUSINESS AS THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES WERE ENGAGED IN ON THE DATE OF THE INDENTURE OR A LINE OF BUSINESS
OR MANUFACTURING OR FABRICATING OPERATION REASONABLY RELATED THERETO (INCLUDING
ANY DOWNSTREAM STEEL MANUFACTURING OR PROCESSING OPERATION OR MANUFACTURING OR
FABRICATING OPERATION IN THE CONSTRUCTION PRODUCTS BUSINESS) WHICH INVESTMENT
HAS A FAIR MARKET VALUE (AS DETERMINED BY A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE COMPANY AND SET FORTH IN AN OFFICER'S CERTIFICATE DELIVERED TO THE
TRUSTEE), WHEN TAKEN TOGETHER WITH ALL OTHER INVESTMENTS MADE PURSUANT TO THIS
CLAUSE (G) THAT ARE AT THE TIME OUTSTANDING, NOT TO EXCEED $10.0 MILLION. [END
STRIKE-THROUGH] [BEGIN UNDERLINE] For purposes of this definition, the lines of
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business in which the Company and its Restricted Subsidiaries are engaged shall
be determined without regard to the businesses in which WPSC and its
Subsidiaries are engaged. [END UNDERLINE]
"Replacement Assets" means (x) properties and assets (other than
cash or any Capital Stock or other security) that will be used in a business of
the Company and its Restricted Subsidiaries conducted on the date of this
Indenture or in a line of business or manufacturing or fabricating operation
reasonably related thereto (including any downstream steel processing or
manufacturing operation or manufacturing or fabricating operation in the
construction products business) or (y) Capital Stock of any Person that is
engaged in a business referred to in clause (x) and that will become on the date
of the acquisition thereof a Wholly Owned Restricted Subsidiary of the Company
as a result of such acquisition. [BEGIN UNDERLINE] For purposes of this
definition, the lines of business in which the Company and its Restricted
Subsidiaries are engaged shall be determined without regard to the businesses in
which WPSC and its Subsidiaries are engaged. [END UNDERLINE]
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:
(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 AT THE DIVIDEND RATE IN
EFFEECT, 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 RATION
WOULD BE LESS THAN 6.0 TO 1.0 [END STRIKE-THROUGH] [BEGIN UNDER LINE]
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 4.10. 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
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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 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. [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 ASSETS
(INCLUDING GAPITAL 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. 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
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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.
The following provision of the Indenture is the principal other
provision that will be affected by the revisions to the Proposed Amendments (no
changes to the text of which is made by the Proposed Amendments):
Section 1.01. Definitions.
[Only affected definition is shown.]
"Restricted Investment" means an Investment other than a
Permitted Investment.
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