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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D/A
UNDER THE SECURITIES ACT OF 1934
ZENITH ELECTRONICS CORPORATION
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(NAME OF SUBJECT COMPANY)
LG ELECTRONICS INC.
LG SEMICON CO., LTD.
- --------------------------------------------------------------------------------
(BIDDERS)
Common Stock, par value $1.00 per share (Including the Associated Rights)
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
989349 10 5
- --------------------------------------------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
K.S. Cho
Managing Director
LG Electronics Inc.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, Korea 150-721
011-82-2-3777-3480
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON
BEHALF OF BIDDERS)
Copy to:
Scott J. Davis
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
(312) 782-0600
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CUSIP NO.: 14D-1 AND 13D
989349105
1NAMES OF REPORTING PERSONS
S.S. OR I.R.S IDENTIFICATION NOS. OF ABOVE PERSONS
LG ELECTRONICS INC. LG SEMICON CO., LTD.
(NOT APPLICABLE) (NOT APPLICABLE)
- --------------------------------------------------------------------------------
2CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_]
(B) [_]
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3SEC USE ONLY
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4SOURCE OF FUNDS
BK, WC
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5CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(E) OR 2(F)
[_]
- --------------------------------------------------------------------------------
6CITIZENSHIP OR PLACE OF ORGANIZATION
REPUBLIC OF KOREA
- --------------------------------------------------------------------------------
7AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
36,569,000*
- --------------------------------------------------------------------------------
8CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
9PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
57.68%*
- --------------------------------------------------------------------------------
10TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*On July 17, 1995, LG Electronics Inc. (the "Purchaser") and Zenith Electronics
Corporation (the "Company") entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") pursuant to which the Purchaser has agreed to
purchase 16,500,000 newly issued shares of the Company's common stock, par
value $1.00 per share, (the "Common Stock") for $10.00 per share (the "Issue
Shares") and to commence an offer to purchase up to 18,619,000 additional
shares of Common Stock for $10.00 per share from the Company's stockholders
(the "Offer"). The Stock Purchase Agreement is more fully described in
Section 14 of the Offer to Purchase, which was filed as Exhibit (a)(1) to the
Original Schedule 14D-1 filed on July 21, 1995. Prior to July 17, 1995, the
Purchaser beneficially owned 1,450,000 shares of Common Stock representing
3.09% of the outstanding shares of Common Stock. After the consummation of
the Offer and the purchase of the Issue Shares, the Purchaser will
beneficially own 57.68% of the outstanding shares of Common Stock.
Page 2 of 5 pages
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This Amendment No. 3 amends and supplements the Tender Offer Statement on
Schedule 14D-1 and Schedule 13D dated July 21, 1995, as amended (the "Schedule
14D-1") of LG Electronics Inc., a corporation organized under the laws of the
Republic of Korea (the "Purchaser"), filed in connection with the Purchaser's
offer to purchase up to 18,619,000 shares of the outstanding common stock, par
value $1.00 per share (the "Common Stock"), of Zenith Electronics Corporation, a
Delaware corporation (the "Company"), and the associated Common Stock purchase
rights (the "Rights" and, together with the Common Stock, the "Shares") upon the
terms and subject to the conditions set forth in the Schedule 14D-1. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
those terms in the Schedule 14D-1. LG Semicon Co., Ltd., a corporation organized
under the laws of the Republic of Korea ("LG Semicon") and a majority owned
subsidiary of Purchaser, hereby adopts the Schedule 14D-1 as amended hereby.
ITEM 2. IDENTITY AND BACKGROUND.
The information set forth in the "Source and Amount of Funds" and "Certain
Information Concerning LG Semicon" sections of and Annex I to the Supplement
dated October 10, 1995 (the "Supplement") to the Offer to Purchase dated July
21, 1995 is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
The information set forth in the "Contacts with the Company; Background of
Offer" section of the Supplement is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in the "Source and Amount of Funds" section of
the Supplement is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth on the Cover Page of the Supplement and in the
"Introduction" and "Plans for the Company" sections of the Supplement is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in the "Source and Amount of Funds" and "Certain
Information Concerning LG Semicon" sections of the Supplement is incorporated
herein by reference.
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ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Source and Amount of Funds" and "Certain
Information Concerning LG Semicon" section of the Supplement is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the "Certain Additional Information Concerning
Purchaser" and "Certain Information Concerning LG Semicon" sections of the
Supplement is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
The information set forth in the "Recent Developments" and "Litigation
Relating to the Offer" sections of the Supplement is incorporated herein by
reference.
The information set forth in the Supplement is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Description
- ----------- -----------
99(a)(10) Supplement dated October 10, 1995 to the Offer to Purchase dated
July 21, 1995.
99(a)(11) Press Release Dated October 10, 1995.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Dated: October 10, 1995
LG ELECTRONICS INC.
/s/ K.S. Cho
---------------------------------------
Name: K.S. Cho
Title: Managing Director
LG SEMICON CO., LTD.
/s/ Young-Pyo Bae
---------------------------------------
Name: Young-Pyo Bae
Title: Executive Director
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99(a)(10) Supplement dated October 10, 1995 to the Offer to Purchase dated
July 21, 1995.
99(a)(11) Press Release Dated October 10, 1995.
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EXHIBIT 99(a)(10)
SUPPLEMENT TO THE OFFER TO PURCHASE DATED JULY 21, 1995
IMPORTANT NOTICE TO STOCKHOLDERS
OF
ZENITH ELECTRONICS CORPORATION
LG ELECTRONICS INC.
HEREBY SUPPLEMENTS ITS OFFER TO PURCHASE FOR CASH
UP TO 18,619,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
AT
$10.00 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
NOVEMBER 7, 1995, UNLESS THE OFFER IS FURTHER EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF A STOCK PURCHASE AGREEMENT
DATED AS OF JULY 17, 1995 (THE "STOCK PURCHASE AGREEMENT") BY AND BETWEEN
ZENITH ELECTRONICS CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), AND LG
ELECTRONICS INC., A CORPORATION ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF
KOREA (THE "PURCHASER"). UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THE STOCK PURCHASE AGREEMENT, INCLUDING THE OFFER, AND BASED ON THE NUMBER OF
SHARES OUTSTANDING AS OF JUNE 30, 1995 AND THE SALE OF THE ISSUE SHARES (AS
DEFINED BELOW), THE PURCHASER WILL OWN 57.68% OF THE TOTAL NUMBER OF SHARES OF
THE COMPANY'S OUTSTANDING COMMON STOCK. THE PURPOSE OF THE OFFER IS TO ACQUIRE
A PORTION OF THIS INTEREST IN THE COMPANY AS PART OF THE ACQUISITION BY THE
PURCHASER OF A CONTROLLING INTEREST IN THE COMPANY.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT, INCLUDING THE
PURCHASE BY THE PURCHASER OF 16,500,000 SHARES TO BE ISSUED BY THE COMPANY FOR
$10.00 PER SHARE (THE "ISSUE SHARES"), TO BE CONSUMMATED SIMULTANEOUSLY WITH
THE PURCHASE OF 18,619,000 SHARES UNDER THE OFFER, RECEIPT BY THE PURCHASER
AND THE COMPANY OF ALL NECESSARY GOVERNMENTAL AND REGULATORY APPROVALS,
APPROVAL OF THE STOCKHOLDER PROPOSALS (AS DEFINED IN THE OFFER TO PURCHASE) BY
THE STOCKHOLDERS OF THE COMPANY, THERE BEING AT LEAST 18,619,000 SHARES
VALIDLY TENDERED IN ACCORDANCE WITH THE TERMS OF THE OFFER PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) OF THE OFFER AND NOT
WITHDRAWN AND A NUMBER OF OTHER CONDITIONS SET FORTH THEREIN.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES HEREUNDER.
THE PURCHASER IS UNABLE TO DETERMINE WITH CERTAINTY THE AMOUNT OF TIME
NECESSARY TO OBTAIN THE APPROVAL OF THE STOCKHOLDER PROPOSALS AND ALL
NECESSARY GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER
AND THE PURCHASE OF THE ISSUE SHARES AND TO SATISFY CERTAIN OTHER CONDITIONS
DESCRIBED IN THE OFFER TO PURCHASE. THE TIME NECESSARY TO OBTAIN SUCH
APPROVALS AND TO SATISFY SUCH OTHER CONDITIONS MAY EXTEND BEYOND THE PRESENTLY
SCHEDULED EXPIRATION DATE, AND, THEREFORE, THE PURCHASER WILL EXTEND THE OFFER
FROM TIME TO TIME UNTIL SUCH APPROVALS HAVE BEEN RECEIVED AND SUCH OTHER
CONDITIONS HAVE BEEN SATISFIED, UNLESS THE STOCK PURCHASE AGREEMENT HAS BEEN
TERMINATED. SEE THE INTRODUCTION OF THIS SUPPLEMENT AND SECTIONS 6 AND 15 OF
THE OFFER TO PURCHASE.
--------------
Questions and requests for assistance, or for additional copies of the Offer
to Purchase, this Supplement, the Letter of Transmittal or other tender offer
materials, may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth on the back cover
of this Supplement. Holders of Shares may also contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
--------------
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
--------------
October 10, 1995
<PAGE>
To All Holders of Common Stock (Including the Associated Rights)
of Zenith Electronics Corporation:
INTRODUCTION
The following information supplements and amends the Offer to Purchase dated
July 21, 1995 (the "Offer to Purchase") of LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea (the "Purchaser"), pursuant
to which the Purchaser is offering to purchase up to 18,619,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), of Zenith
Electronics Corporation, a Delaware corporation (the "Company"), and the
associated Common Stock purchase rights (the "Rights" and, together with the
Common Stock, the "Shares"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, as amended by this Supplement, and in the
related Letter of Transmittal (which collectively constitute the "Offer"), at
the purchase price of $10.00 per Share (the "Offer Price"), net to the
tendering stockholder in cash, without interest thereon. The Offer is being
made pursuant to the terms of the Stock Purchase Agreement dated as of July 17,
1995 by and between the Company and the Purchaser (the "Stock Purchase
Agreement").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES HEREUNDER.
The offer is conditioned upon the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to consummate
the transactions contemplated by the Stock Purchase Agreement, including the
purchase by the Purchaser of 16,500,000 Shares to be issued by the Company for
$10.00 per Share (the "Issue Shares") to be consummated simultaneously with the
purchase of 18,619,000 Shares under the Offer (the "Offer Shares"), receipt by
the Purchaser and the Company of all necessary governmental and regulatory
approvals, approval of the Stockholder Proposals (as defined in the Offer to
Purchase) by the stockholders of the Company, there being at least 18,619,000
shares validly tendered in accordance with the terms of the Offer prior to the
Expiration Date (as defined in the Offer to Purchase) of the Offer and not
withdrawn and a number of other conditions set forth herein. See Section 6 and
15 of the Offer to Purchase.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
Pursuant to this Supplement, the Purchaser is extending the Offer, which
previously would have expired at 12:00 midnight New York City time on Thursday,
October 19, 1995, to 12:00 midnight, New York City time, on Tuesday, November
7, 1995, unless the Offer is further extended. As of the date of this
Supplement, approximately 20,244,000 Shares have been tendered in response to
the Offer and not withdrawn.
The Company's stockholders meeting at which approval of the Stockholder
Proposals will be sought is presently scheduled for 9:00 a.m. Chicago time on
Tuesday, November 7, 1995. However, there can be no assurance that approval of
the Stockholder Proposals or the other conditions to the Offer will be
satisfied by 12:00 midnight on November 7, 1995, when the Offer is presently
set to expire.
<PAGE>
BECAUSE (1) THE PURCHASER IS UNABLE TO DETERMINE WITH CERTAINTY THE AMOUNT OF
TIME NECESSARY TO OBTAIN THE APPROVAL OF THE STOCKHOLDER PROPOSALS AND ALL
NECESSARY GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER
AND THE PURCHASE OF THE ISSUE SHARES AND TO SATISFY CERTAIN OTHER CONDITIONS
THERETO AND (2) THE TIME NECESSARY TO OBTAIN SUCH APPROVALS AND TO SATISFY SUCH
OTHER CONDITIONS MAY EXTEND BEYOND THE PRESENTLY SCHEDULED EXPIRATION DATE, THE
PURCHASER WILL EXTEND THE OFFER FROM TIME TO TIME UNTIL SUCH APPROVALS HAVE
BEEN RECEIVED AND SUCH OTHER CONDITIONS HAVE BEEN SATISFIED, UNLESS THE STOCK
PURCHASE AGREEMENT HAS BEEN TERMINATED.
Upon the terms and subject to the conditions of the Offer, the Purchaser will
purchase up to 18,619,000 Shares (approximately 39.70% of the Shares
outstanding as of June 30, 1995). If more than 18,619,000 Shares are validly
tendered prior to the Expiration Date and not properly withdrawn in accordance
with Section 3 of the Offer to Purchase, the Purchaser will, upon the terms and
subject to the conditions of the Offer, accept such Shares for payment on a pro
rata basis, with adjustments to avoid purchases of fractional Shares, based
upon the number of Shares validly tendered prior to the Expiration Date and not
properly withdrawn in accordance with Section 3 of the Offer to Purchase. Under
the Stock Purchase Agreement, the Purchaser may not purchase less than
18,619,000 Shares under the Offer.
All capitalized terms used but not otherwise defined herein have the meanings
assigned to those terms in the Offer to Purchase.
THE OFFER TO PURCHASE, THIS SUPPLEMENT AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Company's primary business has been the consumer electronics business in
the United States. This business in the United States has been marked by
intense competition, with the Company's major competitors being significantly
larger foreign owned companies, generally with greater worldwide television
volume and overall resources. In efforts to increase market share or achieve
higher production volumes, the Company's competitors have aggressively lowered
their selling prices in the past several years. Despite the Company's
significant cost reduction measures, the Company's achievement of record unit
sales in 1994, recent growth in the Company's market share in the United
States, significant sales growth in Latin America and its growing Network
Systems products business, the Company has incurred losses in all but one of
the years since 1985.
As part of its strategy to return to profitability, the Company developed a
plan in 1994 to expand and modernize its Melrose Park, Illinois color picture
tube plant by adding a fifth color picture tube production line, capable of
handling larger, wider-screen tubes, and by increasing automation on existing
production lines. In seeking the $150 million funding necessary for this
program, the Company initiated discussions in June 1994 with the Purchaser with
respect to a possible joint venture involving the Melrose Park plant. At a
meeting on November 15, 1994 among Jerry K. Pearlman, Chairman of the Company
(and at the time its chief executive officer), certain other officers of the
Company, and Mr. Cha Hong (John) Koo, President of the Purchaser, and certain
other officers of the Purchaser, the Company suggested that, as an alternative,
the Purchaser consider an equity investment in the Company. However, the
Purchaser indicated that at that time it was interested only in the joint
venture. The Company and the Purchaser executed a Mutual Non-Disclosure
Agreement dated as of November 25, 1994. Numerous discussions concerning the
possible joint venture were held between the
2
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Purchaser and the Company over the next several months. In late March 1995, the
Purchaser submitted a proposal to the Company for the joint venture offering to
contribute $100 million in cash and $35 million in promissory notes in return
for a 49.0% equity interest in the joint venture. The parties subsequently
discussed a number of revised proposals, with the last proposal being submitted
to the Company at the June 27, 1995 meeting of the Company's Board of Directors
described below.
The Company's selection of the Purchaser as a possible joint venture partner
grew out of a long-standing business relationship with the Purchaser, as well
as the Company's high regard for the Purchaser's manufacturing and automation
expertise. This relationship began in the mid-1970's when the Purchaser
produced radios for the Company. Since then, the Company has purchased
electronic components from the Purchaser and in recent years the Company has
produced color picture tubes and other components for the Purchaser, and the
Purchaser has produced VCRs and TV-VCR combination products for the Company. In
1991, the Purchaser purchased 1,450,000 shares of newly issued shares of the
Company's Common Stock. At that time, the Company and the Purchaser also
entered into a number of additional technology agreements, providing for, among
other things, expanded cooperative engineering efforts on products, including
high definition television.
In January 1995, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") began assisting the Company in exploring possible strategic
alternatives, especially focusing on alternatives for raising equity capital to
fund the Melrose Park expansion and modernization program.
On February 23, 1995, the Company announced that, effective on April 24, 1995
(the date of its annual meeting of stockholders), Mr. Albin F. Moschner would
become President and Chief Executive Officer and Mr. Pearlman would retire,
remaining as Chairman until December 31, 1995.
In March and early April, 1995, the Company began the process for a public
equity offering, but this process ended in mid-April in light of the Company's
first quarter results and its expectations for the year.
During the week of April 2, 1995, the Chairman of the Executive Committee of
the Board of the Company, Mr. T. Kimball Brooker, was contacted by
representatives of a non-United States entity involved in the consumer
electronics business (the "Other Consumer Products Entity") which had an
interest in a possible change of control transaction involving the Company.
On April 12, 1995, representatives of the Company, including Messrs.
Pearlman, Moschner and Brooker, held an introductory meeting with the chief
executive officer and other representatives of the Other Consumer Products
Entity. At this meeting, the representatives of the Other Consumer Products
Entity and the representatives of the Company discussed the need for the Other
Consumer Products Entity to review certain information and documents relating
to the Company before the Other Consumer Products Entity would be able to
decide if it wanted to submit a proposal and the need for an agreement to
govern the terms of such review. No proposal for a transaction between the
Company and the Other Consumer Products Entity was made at the April 12, 1995
meeting.
As of April 24, 1995, the Company retained Merrill Lynch in connection with
either (i) a possible offering by the Company of equity or equity-linked
securities, (ii) a possible investment by the Purchaser in one of the Company's
operating facilities or businesses or in the Company or (iii) another
alternative strategic transaction involving the sale of an interest in, or all
of, the Company's stock or assets.
On April 28, 1995, the Company entered into a confidentiality agreement with
the Other Consumer Products Entity and subsequently provided such entity with
confidential information concerning the Company. The confidentiality agreement
provided for a two-week period ending May 15, 1995 during which the Company
agreed that it would not sell, or enter into discussions with any third party
regarding the sale of, stock of the Company. The confidentiality agreement
permitted the Company to continue
3
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discussions with the Purchaser with respect to a possible equity investment by
the Purchaser in the Company's picture tube operations. The confidentiality
agreement also contained "standstill" provisions which precluded such entity
for a period of 18 months from, among other things, acquiring shares of Common
Stock of the Company without the Company's consent, provided that such
provisions would terminate if the Company entered into negotiations with a
third party for the issue and sale of 25% or more of the Company's stock.
On May 8, 1995, the Company received a proposal from the Other Consumer
Products Entity which provided for a two-step transaction. The first step was
to consist of the purchase by a publicly traded subsidiary of the Other
Consumer Products Entity (the "Consumer Products Subsidiary") of 9,300,000
newly issued shares of Common Stock in exchange for newly issued shares of
common stock of the Consumer Products Subsidiary (the market value of the
9,300,000 shares of Common Stock and the shares of common stock of the Consumer
Products Subsidiary each being approximately $70,000,000). The second step of
the proposed transaction was to consist of (i) the purchase of 20,000,000 newly
issued shares of Common Stock by the Consumer Products Subsidiary at the
current market price for $150,000,000 in cash, (ii) the purchase of 13,300,000
newly issued shares of Common Stock (valued at the market price per share) by
the Consumer Products Subsidiary in exchange for newly issued shares of common
stock of the Consumer Products Subsidiary (valued at the market price per
share), and (iii) the execution of certain "strategic alliance agreements"
between the Company and the Consumer Products Subsidiary. In addition, the May
8, 1995 proposal provided that the Consumer Products Subsidiary could purchase
additional shares of Common Stock in the market until it owned at least 51% of
the outstanding shares of Common Stock on a fully diluted basis and that, if
the Other Consumer Products Entity subsequently proposed a merger or similar
transaction involving the Company, such transaction would require approval of
the independent directors of the Company.
Between May 8, 1995 and May 24, 1995, senior management and advisors of the
Company had numerous meetings and phone conversations with representatives of
the Other Consumer Products Entity concerning possible synergies between the
Consumer Products Subsidiary and the Company, the structure of the proposed
transaction between the Consumer Products Subsidiary and the Company, and the
premium above the market price per share of the Common Stock to be paid by the
Consumer Products Subsidiary. On May 24, 1995, senior management of the Company
met with a representative of the Other Consumer Products Entity. At such
meeting, the representative of the Other Consumer Products Entity proposed a
revised two-step transaction structured along the same lines as had been
discussed among senior management of the Company and representatives of the
Other Consumer Products Entity. The first step was to consist of the purchase
of 9,300,000 shares of newly issued Common Stock by the Consumer Products
Subsidiary for $7.50 per share in cash and the execution of certain operational
agreements. The second step was to consist of (i) the purchase of 8,900,000
newly issued shares of Common Stock by the Consumer Products Subsidiary for
$8.25 per share in cash, (ii) the purchase of 38,000,000 newly issued shares of
Common Stock (valued at $8.25 per share) by the Consumer Products Subsidiary in
exchange for newly issued shares of common stock of the Consumer Products
Subsidiary having an equivalent value (based on the market price per share),
(iii) an option, exercisable by either the Company or the Consumer Products
Subsidiary upon certain conditions, providing for the exchange of the
38,000,000 shares of Common Stock to be purchased by the Consumer Products
Subsidiary pursuant to clause (ii) above for the shares of common stock of the
Consumer Products Subsidiary to be issued to the Company as consideration
pursuant to such clause (ii), (iv) the issuance of warrants to purchase shares
of Common Stock to the Consumer Products Subsidiary at a price to be determined
by the parties, and (v) the lack of any limitation on additional acquisitions
of shares of Common Stock by the Consumer Products Subsidiary. The Company
responded to the May 24, 1995 proposal with a proposal with the same structure
but providing for a price per share of Common Stock of $10.25 for the first
step of the transaction and a value per share of Common Stock of $11.75 for
each of the second steps of the transaction.
4
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Between May 24, 1995 and June 15, 1995, senior management of the Company and
representatives of the Other Consumer Products Entity had several telephone
conversations relating to their respective proposals. On June 15, 1995, the
Company sent the Other Consumer Products Entity a letter proposing a revised
transaction again consisting of two steps. In the first step there would be (i)
the purchase by the Consumer Products Subsidiary of 9,300,000 newly issued
shares of Common Stock at a purchase price of $9.00 per share in cash, and (ii)
the execution of certain operational agreements between the Company and the
Consumer Products Subsidiary. The second step would involve (i) the purchase by
the Consumer Products Subsidiary of 10,600,000 newly issued shares of Common
Stock at a purchase price of $11.00 per share in cash, (ii) the purchase by the
Consumer Products Subsidiary of 36,300,000 newly issued shares of Common Stock
(valued at $11.00 per share) in exchange for newly issued shares of common
stock of the Consumer Products Subsidiary (valued at the market price per
share), (iii) an option, exercisable by either the Company or the Consumer
Products Subsidiary upon certain conditions, providing for the exchange of the
36,300,000 shares of Common Stock to be purchased by the Consumer Products
Subsidiary pursuant to clause (ii) above for the shares of capital stock of the
Consumer Products Subsidiary to be provided as consideration pursuant to such
clause (ii), (iv) the issuance of warrants to purchase shares of Common Stock
to the Consumer Products Subsidiary at a price to be agreed upon by the
parties, and (v) the lack of any limitation on additional acquisitions of
shares of Common Stock by the Consumer Products Subsidiary. The Company's June
15, 1995 proposal was not responded to by, and no further proposals were
received from the Other Consumer Products Entity.
None of the proposals received from the Other Consumer Products Entity
involved payment to the Company's stockholders, and each such proposal was at a
per share value less than the Offer Price (such per share value being
determined by blending the per share value of the first step of each proposed
transaction with the per share value to be received in the multiple second step
transactions pursuant to each such proposal).
On May 16, 1995, after the expiration of the two-week exclusivity period
afforded to the Other Consumer Products Entity, Mr. Moschner spoke with Mr. Koo
and advised him that the Company had been approached on an unsolicited basis by
another entity (not identified to Mr. Koo) about a possible transaction that
would involve a change of control of the Company and that because of the
Company's long relationship with the Purchaser, Mr. Moschner wanted to inform
Mr. Koo of that fact.
On May 20 and May 22, 1995, certain executives of the Company met with
certain executives of the Purchaser and representatives of its financial
advisor, Salomon Brothers Inc. The Purchaser indicated that it would consider
making a proposal to the Company concerning a possible investment in the
Company, as well as proceeding with the joint venture.
On May 23, 1995, the Executive Committee of the Company's Board met with
Company executives, Merrill Lynch and the Company's legal advisors to review
the status of negotiations with the Other Consumer Products Entity and the
discussions with the Purchaser. The Executive Committee authorized discussions
to continue with both parties and authorized Merrill Lynch to contact two
"financial buyers" to ascertain their interest in a private equity investment.
The two "financial buyers" contacted were recommended by Merrill Lynch as being
the most promising of the limited number of "financial buyers" likely to have
an interest in the Company. Both of the "financial buyers" contacted by Merrill
Lynch executed confidentiality agreements containing "standstill" provisions
precluding such entities from, among other things, acquiring, or agreeing,
offering, seeking or proposing to acquire, directly or indirectly, shares of
Common Stock without the Company's consent.
On May 31, June 1 and June 2, 1995, the Purchaser and its legal and financial
advisors met with various Company executives to discuss due diligence matters.
Following these meetings, the Company was advised that the Purchaser would need
several weeks before it could get back to the Company with any proposal. The
Company advised the Purchaser of its desire to have a proposal before the
Company's regularly scheduled board meeting on June 27, 1995.
5
<PAGE>
On June 20 and June 21, 1995, Mr. Moschner met with representatives of the
two financial buyers contacted by Merrill Lynch in early June. The
representatives of one of the entities indicated little interest in a
transaction at that time. The representatives of the other entity indicated
that they were unfamiliar with the consumer electronics industry and would
require a lengthy review of the industry and the Company before they could
decide whether they had any interest in a transaction involving the Company.
On June 22, 1995, legal and financial advisors for both the Company and the
Purchaser met to discuss the manner in which the Purchaser's proposal would be
presented to the Company.
On June 27, 1995, Mr. Pyong Won (Peter) Suh, Executive Vice President and
Chief Technology Officer of the Purchaser, two other officers of the Purchaser,
and representatives of Salomon Brothers Inc and the Purchaser's legal advisors
appeared at a regular meeting of the Company's Board of Directors. Mr. Suh
presented two alternative proposals--the first proposal being a tender offer by
the Purchaser to the Company's stockholders for 17,863,000 shares of Common
Stock at $10.00 per share in cash, the purchase of 7,882,000 shares of Common
Stock from the Company at $7.875 per share in cash and the purchase of
10,118,000 shares of Common Stock from the Company at $10.00 per share in cash;
the second proposal being the establishment of a joint venture to own the
Melrose Park color picture tube plant in which the Purchaser agreed to pay the
Company an aggregate of $150 million for its 49.9% ownership interest in the
joint venture, of which $100 million would be contributed directly to the joint
venture and the balance paid directly to the Company. In addition, under the
joint venture proposal, the Purchaser would require a right of first refusal if
the Company sought to license its name. Following a discussion with Merrill
Lynch and the Company's legal advisors, the Board of Directors authorized the
Company's officers to commence negotiations with the Purchaser concerning the
first proposal. In giving this authorization, the Board of Directors recognized
that the joint venture proposal did not provide stockholders of the Company
with the opportunity to obtain cash from the Purchaser for a portion of their
shares and that entering into a joint venture with respect to the Melrose Park
color picture tube plant could discourage potential purchasers of the Company
from seeking control of the Company or otherwise adversely affect a potential
purchaser's valuation of the Company. The Board of Directors also considered
Merrill Lynch's preliminary analysis and comparison of the two alternative
proposals. The Board of Directors was advised that a number of material terms
and conditions of the joint venture proposal had not been resolved and that the
value attributed to the joint venture proposal by Merrill Lynch would vary
depending on resolution of those issues. The Company then notified the Other
Consumer Products Entity that its obligations under the standstill provisions
contained in the April 28, 1995 confidentiality agreement were terminated as a
result of negotiations and offered to provide updated financial information to
the extent such entity continued to have an interest in pursuing discussions.
No such information has been requested.
Following the June 27 Board meeting, Mr. Moschner and Mr. Suh and their
respective financial advisors met to discuss the terms of the Purchaser's
proposal. On June 28, 1995, certain executives of the Company and of the
Purchaser met to discuss the synergies that could be expected to result from a
closer relationship between the Company and the Purchaser, including synergies
relating to management of North American sales and marketing, consolidation of
North American warehousing, order processing and distribution, globalization of
the Company's brand name, globalization of the Company's Network Systems
business, consolidation of North American manufacturing and sourcing of
products, reduction of material costs, mutually beneficial commercial
transactions between the Company and the Purchaser, product development and
technology sharing, and the Company provided the Purchaser with updated
financial information about the Company.
On July 11, 1995, the Purchaser delivered a revised proposal to the Company
wherein it proposed to make a tender offer to the Company's stockholders for
18,619,000 shares of Common Stock at $10.00 per share in cash and to purchase
16,500,000 shares of Common Stock from the Company for $10.00 per share in
cash.
6
<PAGE>
On July 12, 1995, the Company's Board of Directors held a special meeting to
consider the revised proposal. Following a presentation by Merrill Lynch, the
Board authorized the Company's officers to commence the negotiation of a
definitive agreement with the Purchaser. During the next several days,
discussions were held on a range of legal issues, including, without
limitation, the conditions to the consummation of the purchase of the Offer
Shares and the issuance and sale of the Issue Shares and the exceptions to the
representations and warranties and covenants of the Company contained in the
Stock Purchase Agreement, and the terms and conditions of the definitive
agreement were negotiated subject to approval by the Company's Board of
Directors.
On July 17, 1995, a special meeting of the Board of Directors was held at
which the Board reviewed the definitive agreement in detail and also considered
various factors, Merrill Lynch delivered its written opinion to the Board to
the effect that, as of such date, the proposed consideration to be received by
the Company and the stockholders in the Proposed Transaction, taken as a whole,
is fair to the Company and such stockholders from a financial point of view,
and the Board unanimously approved the terms of the Offer and the Purchaser's
investment as described above. On the same day, following such Board approval,
the Company and the Purchaser entered into the Stock Purchase Agreement and
publicly announced their agreement. The Board was aware that Merrill Lynch
became entitled to certain of the fees in connection with its engagement by the
Company upon the consummation of such transactions.
The "Contacts with the Company; Background of the Offer" section set forth
above was supplied to the Purchaser by the Company and replaces Section 13--
"Contacts with the Company; Background of the Offer" in the Offer to Purchase.
RECENT DEVELOPMENTS
The waiting period has expired under the Hart-Scott Rodino Antitrust
Improvements Act of 1976 ("HSR Act") in connection with the Stock Purchase
Agreement. The termination of the HSR Act waiting period satisfies one of the
conditions to the Offer.
The required filings pursuant to the Defense Production Act of 1950, as
amended (the "Exon-Florio Amendment") were delivered by the Purchaser and the
Company and accepted by the Committee on Foreign Investment in the United
States ("CFIUS") on September 7, 1995. On September 29, 1995, the Purchaser
received a written request from CFIUS for additional information relating to
the Company's high definition television technology. Notwithstanding this
request, this condition to the Offer will be satisfied if CFIUS has not advised
Purchaser and the Company prior to October 11, 1995 of the commencement of such
an investigation.
The Purchaser has made the required filings with the Bank of Korea and other
instrumentalities of the Republic of Korea and is awaiting final approval of
the Purchase of the Offer Shares and the Issue Shares by such entities.
LITIGATION RELATING TO THE OFFER
On July 18, 1995, a purported stockholder class action suit was filed in the
Court of Chancery of the State of Delaware in and for New Castle County against
the Company, the members of the Board of Directors of the Company and the
Purchaser (Horwits v. Beckner, et al., C.A. No. 14424). On July 27, 1995, the
plaintiff filed an amended complaint (as so amended, the "Complaint"). The
Complaint alleges that the Company's directors breached their fiduciary duties
and failed to exercise loyalty, good faith, due care and complete disclosure
toward the Company and the stockholders of the Company in connection with (i)
the Company's 1995 annual meeting and (ii) the subsequent proposal by the
Purchaser to acquire a controlling interest in the Company pursuant to the
Proposed Transaction.
The Complaint alleges that the Company's proxy statement for its 1995 annual
meeting failed to disclose (i) discussions regarding a possible change of
control transaction, (ii) the Company's retention
7
<PAGE>
of Merrill Lynch, (iii) the halting of a proposed public equity offering in
April, 1995 and (iv) the amendment of agreements providing "change in control"
benefits to certain of the Company's executives. In addition, the Complaint
alleges that, in executing the Stock Purchase Agreement and recommending
that the stockholders approve the Proposed Transaction, the Company's directors
failed to adequately explore the availability of alternatives to maximize
stockholder value or otherwise conduct a process to obtain the highest value
reasonably available to stockholders in a sale of control. The Complaint
alleges that the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated July 21, 1995 (the "Schedule 14D-9"), fails to disclose (i)
material facts relating to Merrill Lynch's fairness opinion, (ii) the factual
basis or rationale for the Company's management and financial advisors' views
as to the unlikelihood of a superior transaction, (iii) the factual basis for
the Company's Board of Directors' conclusion that alternative financing of a
similar magnitude was not reasonably available and (iv) the basis for the
Company's Board of Directors' apparent rejection of the Purchaser's June 27,
1995 joint venture proposal in favor of a sale of control. The Complaint
alleges that the Purchaser's Tender Offer Statement on Schedule 14D-1 dated
July 21, 1995 (the "Schedule 14D-1") and the Schedule 14D-9 also fail to
disclose (i) a schedule of "change of control" payments required to be made,
stock options which vest and shares of restricted Common Stock which vest in
connection with the transaction, (ii) the structure, terms or timing of any
proposals from the Purchaser prior to the two alternative proposals presented
by the Purchaser on June 27, 1995, (iii) the terms and structure of the joint
venture proposal made by the Purchaser on June 27, 1995, (iv) the structure,
terms or timing of the proposed transaction or counter-proposal of the Other
Consumer Products Entity or whether the counter-proposal was affirmatively
rejected by the Other Consumer Products Entity and (v) the specific dates of
certain developments regarding the Other Consumer Products Entity. The
Complaint further alleges that the Purchaser aided and abetted the Company's
directors' alleged breach of their fiduciary duties. The Complaint seeks (i) a
declaration that the action may be maintained as a class action, (ii) a
declaration that the Proposed Transaction is unfair, unjust and inequitable,
(iii) invalidation of the stockholder vote, including the election of
directors, at the Company's 1995 annual meeting, (iv) invalidation of the Stock
Purchase Agreement, (v) an order compelling the Company's directors to conduct
a proper process to explore the availability of alternatives to maximize
stockholder value and to disseminate completely all material information
relating to the Proposed Transaction, (vi) to enjoin further steps necessary to
accomplish or implement the Proposed Transaction, (vii) to compensate the
plaintiff and members of the class for all losses and damages allegedly
suffered and to be suffered by them and (viii) to award plaintiff costs,
including reasonable attorneys', accountants' and experts' fees.
On or about August 2, 1995, defendants agreed to proceed to provide plaintiff
with discovery on an expedited basis which would permit plaintiff, if
necessary, to seek preliminary injunctive relief prior to the Special Meeting
from the Delaware Court of Chancery in connection with plaintiff's claims.
On August 17, 1995, plaintiff filed a motion for preliminary injunctive
relief seeking an order (i) invalidating the April 25, 1995 shareholder vote,
(ii) enjoining the Offer or any further action in connection with consummation
of the Stock Purchase Agreement, (iii) enjoining the Special Meeting, (iv)
invalidating the Stock Purchase Agreement, (v) enjoining the Company and the
Board of Directors to disseminate complete disclosure of all material
information, (vi) enjoining the Board of Directors to conduct a proper process
to explore the availability of alternatives to maximize Company shareholder
value.
Commencing in August 1995 and continuing into September 1995, plaintiff's
counsel conducted a review of tens-of-thousands of pages of documents from the
Company, the Purchaser and certain third parties.
Following meetings, discussions and negotiations among counsel for the
Company and the Board of Directors and counsel for the plaintiff, on October 6,
1995, the Company, the Purchaser, the members of the Board of Directors, and
the plaintiff entered a Memorandum of Understanding setting forth the terms of
an agreement in principle to settle and terminate the litigation (the "Proposed
Settlement").
8
<PAGE>
Under the Proposed Settlement, the Company agreed to include certain additional
information in the Proxy Statement that was not contained in the offer
documents or the preliminary copies of the Proxy Statement which the Company
filed with the Securities and Exchange Commission. In exchange for
the Company's agreement to include these additional disclosures, the plaintiff
agreed not to take any action to enjoin or take other legal action to prevent
the stockholder vote on or consummation of the Proposed Transaction; to release
any and all claims against the defendants, including all state and federal
claims arising out of the events described in the Complaint; and to dismiss,
with prejudice, the Complaint to effect termination of this litigation.
The Proposed Settlement is expressly conditioned on (a) the parties'
execution of a definitive Stipulation of Settlement; (b) the plaintiff's
completion of certain discovery designed to confirm that the settlement is fair
and reasonable and in the best interests of the Company's stockholders; (c) the
court's certification of a class of the Company's stockholders during the
period from March 23, 1995 through the date of the Special Meeting who do not
exclude themselves from the class, for purposes of settlement only; (d) the
court's preliminary and final approval of the settlement; and (e) the entry of
a final judgment dismissing the litigation. The Company also has the right, in
its sole discretion, to terminate the settlement if putative class members who
collectively hold more than a specified total number of shares elect to opt out
of the class.
The Company, the members of the Board of Directors, and the Purchaser denied,
and continue to deny, that they committed any violations of law or breaches of
duty as alleged in the Complaint, but entered the Memorandum of Understanding
and contemplate entering into the Stipulation of Settlement solely because the
Proposed Settlement would eliminate the burden and expense of further
litigation and would facilitate the consummation of the Proposed Transaction.
In agreeing to disclose additional information, the Company does not admit the
materiality of that information or that the materials previously filed with the
Securities and Exchange Commission were in any way deficient. In connection
with the Proposed Settlement, it is anticipated that counsel for the plaintiff
will apply to the court for an aggregate award of attorneys' fees and expenses
in an amount not to exceed $300,000. As a condition of settlement, the Company
has agreed to pay plaintiff's counsel the amount awarded by the court. Before
the Proposed Settlement is finally approved by the court, notice of the
proposed terms and conditions of the settlement will be mailed to all members
of any class certified by the court, who will be afforded an opportunity to opt
out of and object to the settlement.
SOURCE AND AMOUNT OF FUNDS
Although the Offer is being made solely by the Purchaser, the Purchaser will
direct, pursuant to its rights under the Stock Purchase Agreement, that 80% of
the Offer Shares and the Issue Shares purchased, if the transactions
contemplated by the Stock Purchase Agreement are consummated, will be acquired
by the Purchaser's majority owned subsidiary, LG Semicon Co., Ltd., a
corporation organized under the laws of the Republic of Korea ("LG Semicon").
The total amount of funds required by the Purchaser to purchase the Offer
Shares and the Issue Shares and to pay related fees and expenses will be
approximately $360 million. The Purchaser will obtain 80% of such funds from LG
Semicon for the 80% of the Offer Shares and the Issue Shares to be acquired by
LG Semicon. The Purchaser expects to obtain the remaining 20% of the required
funds from a new U.S. $70 million bank term loan facility. Of the funds to be
provided by LG Semicon, approximately 25% will be from internal sources and
approximately 75% is expected to be obtained from a new U.S. $210 million term
loan facility. The terms of the term loan facilities have not been finalized.
The Purchaser has not conditioned the Purchase of the Offer Shares or the Issue
Shares on obtaining financing.
9
<PAGE>
CERTAIN ADDITIONAL INFORMATION CONCERNING PURCHASER
The following is certain financial information for the Purchaser for the six
months ended June 30, 1995. The official accounting records of the Purchaser
are maintained in Korean Won in accordance with the laws and regulations of the
Republic of Korea. The financial data for the six months ended June 30, 1995
have been translated into U.S. Dollars at the rate of 758 Won per U.S. Dollar,
which was the official rate on June 30, 1995.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1995
--------------
(IN THOUSANDS
OF U.S.$)
<S> <C>
Net Sales
Domestic................................................. $1,928,723
Overseas................................................. 2,223,723
----------
Total.................................................. $4,152,446
==========
Operating Results
Revenue.................................................. $4,298,207
Expenses................................................. 4,186,985
Net income............................................... 90,161
<CAPTION>
AT JUNE 30,
1995
--------------
<S> <C>
Financial Position
Total assets............................................. $7,343,653
Shareholders' equity..................................... 1,669,694
</TABLE>
The Offer to Purchase dated July 21, 1995 incorrectly stated that the
Purchaser had net income in the year ended December 31, 1993, of
U.S.$81,226,000. In fact, the Purchaser had net income of U.S.$81,227,000 in
the year ended December 31, 1993.
The information above should be read in connection with Section 11--Certain
Information Concerning the Purchaser--of the Offer to Purchase.
CERTAIN INFORMATION CONCERNING LG SEMICON
LG Semicon is a 54.1% owned subsidiary of the Purchaser with its principal
offices at 1, Hyang- jeong-dong, Hungduk-gu, Cheongju, Chungchong Buk Do 360-
481, Republic of Korea. LG Semicon changed its name from Goldstar Electron Co.,
Ltd. on February 1, 1995.
LG Semicon is engaged in the manufacture and sale of semiconductor products.
In terms of sales, LG Semicon ranked 20th in the world semiconductor market in
1994 with total sales of Won 1,415 billion (US$ 1,794 million) and had a market
share of 1.64%. It is also the 7th largest Dynamic Random Access Memory
("DRAM") computer chip maker in the world with total DRAM computer chip sales
of Won 1,097 billion (US$ 1,391) in 1994.
Set forth below is a summary of certain financial data with respect to LG
Semicon for its fiscal years ended December 31, 1994, December 31, 1993 and
December 31, 1992, and for the six months ended June 30, 1995. The financial
information set forth below was prepared in accordance with Korean generally
accepted accounting principles ("Korean GAAP"), which differ in certain
respects from United States generally accepted accounting principles. For
example, under Korean GAAP, property, plant and equipment are recorded at cost,
except for upward revaluation to give accounting recognition to some extent to
the loss in purchasing power of the Korean Won. Such revaluation presents
production facilities and buildings at their depreciated replacement cost and
land at the prevailing market value, as of the effective date of the
revaluation.
Investment in a subsidiary over which LG Semicon has significant influence on
the financial and operating decisions is reported at cost in conformity with
accounting practices prevailing in the Republic of Korea. In accordance with
generally accepted financial accounting standards in the Republic of Korea,
neither consolidation of the subsidiary nor the equity method of accounting for
a minority-owned company is applied in the financial statements of LG Semicon.
10
<PAGE>
The official accounting records of LG Semicon are maintained in Korean Won in
accordance with the laws and regulations of the Republic of Korea. The
financial data for LG Semicon fiscal years ended December 31, 1994, 1993 and
1992 and for the six months ended June 30, 1995, respectively, have been
translated into U.S. Dollars at the respective rates of 789, 808, 788 and 758
Won per U.S. Dollar, which were the respective official rates on December 31,
1994, 1993 and 1992 and June 30, 1995.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 31, SIX MONTHS ENDED
-------------------- JUNE 30,
1992 1993 1994 1995
------ ------ ------ ----------------
(IN MILLIONS OF U.S.$)
<S> <C> <C> <C> <C>
Net Sales................................. $ 759 $1,085 $1,794 $1,408
Overseas................................ 703 995 1,626 1,280
Domestic................................ 56 87 160 128
Operating Results
Revenue................................. $ 783 $1,144 $1,872 $1,509
Expenses................................ 711 1,018 1,282 934
Net income.............................. 72 115 472 432
<CAPTION>
AT DECEMBER 31,
-------------------- AT JUNE 30,
1992 1993 1994 1995
------ ------ ------ ----------------
<S> <C> <C> <C> <C>
Financial Position
Total assets............................ $1,376 $1,513 $2,498 $3,536
Shareholders' equity.................... 275 381 846 1,294
</TABLE>
Other
The name, business address, present principal occupation or employment and
citizenship of each of the executive officers of LG Semicon and each of the
persons carrying out functions in LG Semicon similar to that of a director
and/or executive officer in a United States corporation are set forth in Annex
I hereto.
Except as described in this Supplement (i) none of LG Semicon or, to the best
knowledge of LG Semicon, any of the persons listed in Annex I hereto, or any
associate or majority-owned subsidiary of LG Semicon or any of the persons so
listed, beneficially owns any security of the Company or has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss, or
the giving or withholding of proxies, and (ii) none of LG Semicon or, to the
best knowledge of LG Semicon, any of the other persons referred to above, or
any of the respective directors, executive officers or subsidiaries of any of
the foregoing, has effected any transaction in any security of the Company
during the past 60 days.
11
<PAGE>
PLANS FOR THE COMPANY
The following identifies the Purchaser's designees to serve as directors of
the Company. It is expected that Mr. Hun Jo Lee will serve as Chairman of the
Board of the Company and Mr. Cha Hong (John) Koo will serve as the Chairman of
the Executive Committee of the Board of the Company.
<TABLE>
<CAPTION>
NAME AGE BACKGROUND INFORMATION
---- --- ----------------------
<C> <C> <S>
Hun Jo Lee.......... 63 Chairman and Chief Executive Officer of LG
Electronics Inc. since 1994. Vice-Chairman and Chief
Executive Officer from 1993 to 1994. President and
Chief Executive Officer from 1989 to 1993.
Cha Hong (John) Koo. 48 President of LG Electronics Inc. since 1995.
Executive Vice President from 1991 to 1994. Senior
Managing Director from 1988 to 1991.
Yong Nam............ 47 Senior Officer of LG Electronics Inc. since 1993.
Officer from 1989 to 1993.
Nam K. Woo.......... 46 President LG Electronics Inc., North American
Operations and LG Electronics U.S.A., Inc. since
January 1995. Managing Director of LG Electronics
Inc. since 1994. President of LG Electronics Inc.,
European Operations from 1989 to 1995.
Ki-song Cho......... 45 Managing Director, Corporate Planning & Coordination,
LG Electronics Inc. since March 1995. Executive
Director, Strategic Planning Division, LG Electronics
Inc. from 1992 to 1995. Employed by the Strategic
Planning Division, LG Electronics Inc. from 1989 to
1992.
Eugene B. Connolly.. 63 Chairman and Chief Executive Officer of USG
Corporation and employed in varying capacities with
USG Corporation and its affiliates since 1958. Member
of the Boards of Directors of USG Corporation, CGS
Inc., U.S. Can Corporation, the Pepper Companies,
Inc. and LaSalle National Bank. Advisory Board member
of Good Shepherd Hospital, J. L. Kellogg Graduate
School of Management, Northwestern University and
Indiana University School of Business. USG
Corporation implemented a "prepackaged" plan of
reorganization under federal bankruptcy laws on May
6, 1993.
</TABLE>
----------------
October 10, 1995 LG Electronics Inc.
12
<PAGE>
ANNEX I
INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS OF LG SEMICON
The following table set forth the names and addresses, present principal
occupations or employment, and material occupations, positions, offices or
employment during the last five years of the executive officers of LG Semicon
and the persons carrying out functions in LG Semicon similar to those of a
director in a United States corporation. Unless otherwise indicated, all
occupations, offices or positions of employment listed opposite an individual's
name are or were with LG Semicon. All of the persons listed below are citizens
of the Republic of Korea. The address of each of the persons listed below is 1,
Hyangjeong-dong, Hungduk-gu, Cheongju, Chungchong Buk Do 360-481, Republic of
Korea.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <S>
Ja-Hak Koo.......... Chairman and Chief Executive Officer of LG Semicon since
1989. Mr. Koo has also been employed as Chairman and
Chief Executive Officer of LG Construction Co., Ltd. and
LG Engineering Co., Ltd. since 1995.
Hun Jo Lee.......... Executive Director of LG Semicon since 1990. Chairman and
Chief Executive Officer of LG Electronics Inc. since
1994. Vice Chairman and Chief Executive Officer of LG
Electronics Inc. from 1993 to 1994. President and Chief
Executive Officer of LG Electronics Inc. from 1989 to
1993.
Cha Hong (John) Koo. Executive Director of LG Semicon since 1991. President of
LG Electronics Inc. since 1995. Executive Vice President
of LG Electronics Inc. from 1991 to 1994. Senior Managing
Director of LG Electronics Inc. from 1988 to 1991.
Chung-Hwan Mun...... President and Chief Executive Officer of LG Semicon since
1989.
Jang-Ho Chung....... Executive Director of LG Semicon since 1991. President of
LG Information & Communications, Ltd. since 1990.
Suk-Joo Shim........ Vice President of LG Semicon since 1995. Prior to that,
Mr. Shim had been employed by LG Construction Co., Ltd.
as Vice President since 1989.
Byeong-Don Sun...... Vice President of LG Semicon since 1992. Mr. Sun has been
employed by LG Semicon in varying capacities since 1989.
Kwang-Sun Baek...... Senior Managing Director of LG Semicon since 1995. Mr.
Baek has been employed by LG Semicon in varying
capacities since 1989.
Young-Pyo Bae....... Executive Director--Planning & Finance of LG Semicon
since 1993. Mr. Bae has been employed by LG Semicon as
Director since 1993. Prior to that, Mr. Bae had been
employed by LG Electronics Inc. since 1989.
Byung-Sung Lee...... Statutory Auditor of LG Semicon since 1995. Prior to
that, Mr. Lee had been employed by LG Electronics Inc. in
varying capacities since 1976.
Byung-Chul Jung..... Statutory Auditor of LG Semicon since 1994. Prior to
that, Mr. Jung had been employed by LG Semicon in varying
capacities since 1989.
Yu-Sik Kang......... Senior Managing Director of LG Semicon and President of
LG Semicon America Inc. ("LGSA") since 1995. Mr. Kang has
been employed by LGSA as Executive Director and President
since 1991. Prior to that, Mr. Kang had been employed by
LG Semicon in varying capacities since 1990.
Min-Sung Choi....... Managing Director of LG Semicon and Head of Technology
Lab since 1995. Mr. Choi has been employed by LG Semicon
in varying capacities since 1990.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <S>
Hee-Gook Lee..... Managing Director of LG Semicon and Head of ULSI Lab
since 1995. Mr. Lee has been employed by LG Semicon in
varying capacities since 1990.
Jae-Sun Kim...... Managing Director of LG Semicon and President of LGS--
Japan since 1990. Mr. Kim has been employed by LG Semicon
in varying capacities since 1990.
Choon-Kyung Kim.. Managing Director of LG Semicon and Head of DACTR since
1995. Mr. Kim has been employed by LG Semicon in varying
capacities since 1990.
Dae-Ho Song...... Managing Director of LG Semicon and Head of Manufacturing
Technology Center since 1995. Mr. Song has been employed
by LG Semicon in varying capacities since 1990.
Whee-Kook Cho.... Managing Director--Micom Business of LG Semicon since
1995. Mr. Cho has been employed by LG Semicon in varying
capacities since 1990.
Moon-Woong Oh.... Executive Director--Administration of LG Semicon since
1991. Mr. Oh has been employed by LG Semicon in varying
capacities since 1990.
Chung-Sei Yun.... Executive Director--Personnel & General Affairs of LG
Semicon since 1991. Mr. Yun has been employed by LG
Semicon in varying capacities since 1990.
Jae-Chang Choe... Executive Director--Worldwide Marketing & Trade Affairs
of LG Semicon since 1993. Mr. Choe has been employed by
LG Semicon in varying capacities since 1990.
Sun H. Choi...... Executive Director--R&D Planning of LG Semicon since
1994. Mr. Choi has been employed by LG Semicon in varying
capacities since 1990.
Hyoung-Joon Chun. Executive Director--Manufacturing of LG Semicon since
1995. Mr. Chun has been employed by LG Semicon in varying
capacities since 1990.
Duck-Ki Lee...... Executive Director--Package R&D of LG Semicon since 1994.
Mr. Lee has been employed by LG Semicon in varying
capacities since 1990.
Yang-Kyu Kim..... Executive Director--Domestic Sales & Marketing of LG
Semicon since 1995. Mr. Kim has been employed by LG
Semicon in varying capacities since 1990.
Jae-Koo Ro....... Executive Director--Human Resources of LG Semicon since
1995. Mr. Ro has been employed by LG Semicon in varying
capacities since 1990.
Dong-Chan Kim.... Executive Director--MICRO Manufacturing of LG Semicon
since 1995. Mr. Kim has been employed by LG Semicon in
varying capacities since 1990.
Ja-Min Goo....... Executive Director of LG Semicon and President of LG
Semicon H.K., Ltd. since 1995. Mr. Goo has been employed
by LG Semicon in varying capacities since 1990.
Jeong-Mo Hwang... Executive Director--ULSI Lab of LG Semicon since 1995.
Mr. Hwang has been employed by LG Semicon in varying
capacities since 1990.
Chul-Ho Lim...... Executive Director--ASIC Group of LG Semicon since 1994.
Mr. Lim has been employed by LG Semicon in varying
capacities since 1990.
</TABLE>
14
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder in the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (For Eligible Tender & Exchange
P.O. Box 11248 Institutions Only) Department
Church Street Station (212) 815-6213 101 Barclay Street
New York, NY 10286-1248 Receive and Deliver
Confirm Facsimile by Window
Telephone: New York, NY 10286
(For Confirmation Only)
(800) 507-9357
----------------
Any questions or requests for assistance may be directed to the Information
Agent or Dealer Manager at their respective addresses and telephone numbers set
forth below. Requests for additional copies of the Offer to Purchase, this
Supplement and the Letter of Transmittal may be directed to the Information
Agent, the Dealer Manager or the Depositary. Stockholders may also contact
their brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
8700 Sears Tower
Chicago, Illinois 60606
(312) 876-8478
(call collect)
<PAGE>
EXHIBIT 99(a)(11)
FOR IMMEDIATE RELEASE
LG ELECTRONICS INC. EXTENDS EXPIRATION OF
TENDER OFFER FOR ZENITH COMMON STOCK
Seoul, Korea, October 10, 1995 -- LG Electronics Inc. has extended the
expiration of its tender offer to purchase up to 18,619,000 shares of common
stock, par value $1.00 per share of Zenith Electronics Corporation for $10.00
per share. The tender offer, previously scheduled to expire on October 19,
1995, is now scheduled to expire at 12:00 midnight, New York City time, on
Tuesday, November 7, 1995. The tender offer is being extended in order to allow
additional time for satisfaction of the conditions to the tender offer and the
direct purchase from Zenith of an additional 16,500,000 newly issued shares at
$10.00 per share. LG Electronics will extend the tender offer from time to time
as necessary until all of the conditions to the tender offer have been
satisfied, or until the Stock Purchase Agreement with Zenith is terminated.
Zenith has scheduled its special stockholders' meeting seeking stockholder
approval of the transactions for 9:00 a.m. Chicago time on Tuesday November 7,
1995.
Approximately 20,244,000 shares have been tendered and not withdrawn in
response to the tender offer to date.
LG Electronics Inc. is a leading manufacturer of consumer electronics,
multimedia and magnetic media products, including televisions, VCRs, VCPs, VHS
(registered trademark), VCR/double decks, ViewMax (trademark) TVCRs, camcorders,
CD-i, 3DO (trademark) and other multimedia products, compact disc
player/changers, portable and home audio products, including facsimile machines,
a complete line of computer monitors and
CD-ROM drives, audio/video tape and floppy discs.
Zenith Electronics Corporation, based in Glenview, Ill., has been a leader
in electronics for more than 75 years. Zenith's core business--Consumer
Electronics and Network Systems--is at the center of the company's digital
strategy, which includes interactive television, digital video disc (DVD)
players, digital and wireless cable, video dial-tone, data communication and
HDTV systems.
Media Contacts: Matt Afflixio--LGE (Access Public Relations)
415/904-7070 ext. 278 or 1-800-501-2945
John Taylor--Zenith Electronics Corporation
708/391-8181
Investor Contact: Bill McNitt--Zenith Electronics Corporation
708/391-7713
