SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Date of Report
(Date of earliest event reported): October 26, 1995
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-4718 74-1244795
(State of incorporation) Commission File (I.R.S. Employer
Number Identification No.)
530 McCullough Avenue, San Antonio, Texas 78215
(Address of principal executive offices) (Zip Code)
(210) 246-2000
(Registrant's telephone number)
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Item 5. Other Events.
On October 26, 1995, the Board of Directors of Valero Energy
Corporation (the "Company") declared a dividend distribution of one preference
share purchase right (a "Right") for each outstanding share of Common Stock,
par value $1.00 per share (the "Common Shares"), of the Company. The
distribution is payable on November 25, 1995 to shareholders of record on that
date. Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Junior Participating Serial Preference Stock,
Series III, par value $1.00 per share (the "Preference Shares"), of the
Company at a price of $75.00 per one one-hundredth of a Preference Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of October 26, 1995 (the
"Rights Agreement"), between the Company and Harris Trust and Savings Bank, as
Rights Agent (the "Rights Agent"), which is attached as Exhibit 1 hereto and
incorporated herein by reference.
The dividend distribution of the Rights coincides with the
expiration pursuant to their terms of a prior series of preference share
purchase rights (the "Expiring Rights") distributed by the Company on November
25, 1985 pursuant to a prior Rights Agreement, dated as of November 15, 1985,
as amended (the "Expiring Rights Agreement"), between the Company and Texas
Commerce Bank, National Association, as successor rights agent thereunder.
Pursuant to the terms of the Expiring Rights Agreement, the Expiring Rights
will expire on November 25, 1995.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a
copy of a summary of the terms of the Rights ("Summary of Rights") attached
thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such notation or a
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 25, 2005 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion
price, less than the then-current market price of the Preference Shares or
(iii) upon the distribution to holders of the Preference Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Preference Shares) or
of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares
or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.
Preference Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preference Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preference Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preference Share will have 100 votes, voting together with
the Common Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preference Share
will be entitled to receive 100 times the amount received per Common Share.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preference Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in
a Preference Share purchasable upon exercise of each Right should approximate
the value of one Common Share.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that any
person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will thereafter
be void), will thereafter have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of the
Right.
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share,
or one one-hundredth of a Preference Share (or of a share of a class or series
of the Company's Serial Preference Stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preference
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preference Shares on the last trading day prior to the
date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at
such time on such basis with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, except that from
and after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
As of September 30, 1995, there were 43,713,809 Common Shares
outstanding, 2,966 Common Shares held in treasury and 31,283,225 authorized
but unissued Common Shares. Also as of September 30, 1995, 126,500 and
3,450,000 shares of Preferred Stock, $8.50 Cumulative Series A, and $3.125
Convertible Preferred Stock, respectively, were issued and outstanding, and no
shares of any series of the Company's Preferred Stock, $1.00 par value, or
Serial Preference Stock, $1.00 par value (other than the Preference Shares)
were reserved for issuance. On October 26, 1995 the Board of Directors by
resolution authorized the issuance of the Preference Stock and reserved
1,000,000 shares for issuance upon exercise of the Rights.
The Rights will have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be deemed
by the Company at $.01 per Right prior to the public announcement that a
person or group has acquired beneficial ownership of 20% or more of the Common
Stock.
The Rights Agreement between the Company and Harris Trust and
Savings Bank, specifying the terms of the Rights, the press release announcing
the declaration of the Rights and a letter to the Company's stockholders, to
be dated November 25, 1995, explaining the Rights, are attached hereto as
exhibits and are incorporated herein by reference. The foregoing description
of the Rights is qualified by reference to such exhibits.
Item 7. Exhibits.
1. Rights Agreement, dated as of October 26, 1995, between
Valero Energy Corporation and Harris Trust and Savings
Bank--incorporated by reference from Exhibit 1 to the
Valero Energy Corporation Registration Statement on
Form 8-A (Commission File No. 1-4718, filed October 27,
1995).
2. Press Release, dated October 26, 1995.
3. Form of letter to Valero Energy Corporation stockholders,
dated November 25, 1995--incorporated by reference from
Exhibit 2 to the Valero Energy Corporation Registration
Statement on Form 8-A (Commission File No. 1-4718, filed
October 27, 1995).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: October 27, 1995
VALERO ENERGY CORPORATION
By: /s/ Rand C. Schmidt
Rand C. Schmidt
Corporate Secretary
Valero Energy Corporation Declares Dividend
Distribution of Preference Share Purchase Rights
SAN ANTONIO, TEXAS, October 26, 1995 -- The Board of Directors of Valero
Energy Corporation (NYSE:VLO) declared today a dividend of one preference
share purchase right for each share of Valero common stock held. Each right
will entitle shareholders to buy one one-hundredth (1/100) of a share of a
newly issued series of junior participating serial preference stock at an
exercise price of $75. The dividend distribution of the rights coincides with
the scheduled expiration of the company's currently outstanding preference
share purchase rights, which were distributed in 1985 and will expire on
November 25, 1995.
The new rights will be exercisable only if a person or group acquires 20
percent of Valero's common stock, or announces a tender offer which, if
consummated, would result in ownership by a person or group of 20 percent or
more of the common stock. Prior to the acquisition by a person or group of
beneficial ownership of 20 percent or more of the company's common stock, the
rights are redeemable for one cent per right at the option of the Board of
Directors. The Board also has the authority to reduce the 20 percent
threshold to not less than 10 percent.
"The new rights are designed to assure that all of Valero's stockholders
continue to receive fair and equal treatment in the event of any proposed
takeover of the company, and to guard against partial tender offers,
squeeze-outs, open market accumulations and other abusive tactics to gain
control of Valero without paying all stockholders a control premium," said
Bill Greehey, Valero's Chairman of the Board and Chief Executive Officer.
"The plan is a precautionary measure and not in response to any specific
effort to acquire control of the company. Rather, it is being adopted to
assure the ability of the Board to safeguard and serve the best interests of
our shareholders."
If a person or group acquires 20 percent or more of Valero's outstanding
stock, each right will entitle its holder (other than the aforementioned
person or group) to purchase, at the right's then-current exercise price, a
number of Valero's common shares having a market value of twice the exercise
price. In addition, if Valero is acquired in a merger or other business
combination transaction after a person or group acquires 20 percent or more of
the company's outstanding common stock, each right will entitle its holder to
purchase, at the right's then-current exercise price, a number of the
acquiring company's common shares having a market value of twice such price.
This results in the rights' holders being able to purchase a certain amount of
the acquiring company's stock at half price. The rights may also be exchanged
for common stock, at the election of the Board of Directors, under certain
circumstances.
"The rights are intended to enable all Valero stockholders to realize the
long-term value of their investment in the company," said Greehey. "They will
not prevent a takeover, but should encourage anyone seeking to acquire the
company to negotiate with the Board prior to such an attempt."
The dividend distribution will be made on November 25, 1995, payable to
stockholders of record on that date. The rights will expire on November 25,
2005. The rights distribution is not taxable to stockholders.
Valero Energy is a diversified energy company engaged in the production,
transportation and marketing of environmentally clean fuels and products. The
company's three core businesses are specialized refining, natural gas and
natural gas liquids. Valero refines high-sulfur atmospheric residual oil into
premium products, primarily reformulated gasoline, at its refinery in Corpus
Christi, Texas, and markets those products. In addition, the company has an
8,000-mile network of natural gas transmission and gathering lines throughout
Texas; purchases natural gas for resale to distribution companies, electric
utilities, other pipelines and industrial customers throughout the United
States and Mexico; and provides gas transportation services to third parties.
Valero also owns eight natural gas processing plants and is one of the
nation's largest producers and marketers of natural gas liquids.
