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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
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TRIANGLE PACIFIC CORP.
(NAME OF SUBJECT COMPANY)
TRIANGLE PACIFIC CORP.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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89591210
(CUSIP NUMBER OF CLASS OF SECURITIES)
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E. DWAIN PLASTER
VICE PRESIDENT, TREASURER AND CHIEF FINANCIAL OFFICER
TRIANGLE PACIFIC CORP.
16803 DALLAS PARKWAY
DALLAS, TX 75266
(214) 887-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF
THE PERSON FILING STATEMENT)
WITH A COPY TO:
JEFFREY J. ROSEN, ESQ.
O'MELVENY & MYERS LLP
153 EAST 53RD STREET, 53RD FLOOR
NEW YORK, NY 10022
(212) 326-2000
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This Amendment No. 2 amends and supplements the information set forth in the
Solicitation/ Recommendation Statement Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934 on Schedule 14D-9 originally filed on June 19,
1998, as amended by Amendment No. 1 thereto filed on June 29, 1998 (the
"Schedule 14D-9"), by Triangle Pacific Corp., a Delaware corporation (the
"Company"). The Schedule 14D-9 relates to the tender offer by Sapling
Acquisition, Inc. ("Merger Sub" or "Purchaser"), a Delaware corporation and a
wholly owned subsidiary of Armstrong Worldwide Industries, Inc., a
Pennsylvania corporation ("Armstrong" or "Parent"), disclosed in the Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") dated June 19, 1998,
as amended, to purchase all of the outstanding shares of common stock, par
value $.01 per share (the "Shares"), of the Company at a price of $55.50 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated June 19, 1998, as amended, and the
related Letter of Transmittal. Unless otherwise indicated, the capitalized
terms used herein shall have the meanings specified in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(B) BACKGROUND; REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF
DIRECTORS.
Item 4(b): "--Reasons for the Recommendation of the Company's Board of
Directors" of the Schedule 14D-9 is hereby amended by restating the paragraph
immediately following item (13) on page 17 of the Schedule 14D-9 as follows:
The foregoing factors were all of the material factors considered by the
Board in making its decision. The Board did not assign relative weights to the
above factors or determine that any factor was of particular or controlling
significance. The Board did consider each such material factor in arriving at
its decision, which was based on the totality of the information presented to
and considered by it. In addition, it is possible that different members of
the Board assigned different weights to different factors. With respect to the
financial condition, results of operation, cash flows and prospects of the
Company (item 2), the current status of the industries in which the Company
competes (item 7), and the Company's prospects if it were to remain
independent (item 3), the Board considered management's success in growing
revenues and earnings in previous years and also noted that present market
conditions were favorable for the Company because of a strong housing sector
and low interest rates. An increase in interest rates, perhaps accompanied by
a weakening housing or remodeling sector, the Board recognized, could pose
additional challenges for the Company. In light of increasing consolidation in
the flooring industry, the strength of the Company's performance in recent
years and the timing of the transactions in the business cycle, the Board felt
the transactions contemplated by the Merger Agreement provided a particularly
attractive opportunity for the Company's stockholders.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Item 5 of the Schedule 14D-9 is hereby amended by adding immediately
following the penultimate paragraph of such section the following paragraph:
Salomon Smith Barney is acting as one of two co-managing underwriters in a
secondary offering by Armstrong of its shares in a publicly traded company.
Salomon Smith Barney was not the managing underwriter in such offering and is
being compensated on customary terms for its services in connection therewith
(estimated to be less than $1 million). A related concurrent offering with
respect to which Salomon Smith Barney was also acting as a co-manager was
withdrawn.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
LITIGATION
On June 23, 1998 an amended purported class action complaint was filed in
the Court of Chancery of Delaware by Pinna Yosevitz in full substitution of
the purported class action complaint filed by Pinna Yosevitz on June 15, 1998.
The purported class action was brought individually and on behalf of other
stockholders of the
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Company similarly situated against the Company, its directors and Parent. The
lawsuit is styled Pinna Yosevitz v. Floyd F. Sherman et. al. (C.A.No. 16447-
NC) and seeks, among other things, a preliminary and permanent injunction
against the Offer and the Merger, rescission of the Offer and the Merger if
they are consummated, and compensatory damages. The complaint asserts, among
other things, that (i) the Company's stockholders cannot determine, based on
materials provided in the Offer, the intrinsic value of their Shares and
whether the acquisition by Parent is preferable over other alternatives or is
fair; (ii) the Company's stockholders are unable to rely upon the integrity of
the fairness opinion rendered by Salomon Smith Barney, the Company's financial
advisor, in light of alleged conflicts of interest; (iii) as a result of the
receipt of consideration for the cancellation of their outstanding options,
certain of the individual defendants have interests in the proposed
transaction that conflict with those of the public stockholders of the
Company; (iv) the individual defendants have not acted reasonably and in
compliance with their fiduciary duties to the Company's stockholders in a
manner designed to obtain the highest possible price for the Company's public
stockholders; (v) the intrinsic value of the Company is materially in excess
of the Offer Price giving due consideration to anticipated operating results,
net asset value, cash flow and profitability of the Company; (vi) the Offer
Price is not the result of an appropriate consideration of the value of the
Company's business because the board of directors of the Company approved the
Merger without undertaking appropriate steps to ascertain the Company's value;
(vii) by entering into the agreement with Parent, the individual defendants
have allowed the price of the Company's common stock to be capped, thereby
depriving the stockholders of an opportunity to realize any increase in the
value of their Shares; and (viii) the individual defendants did not appoint or
retain any truly independent person or entity to negotiate for or on behalf of
the Company's public stockholders to promote their best interests in the
Merger. The complaint alleges that the defendants' have participated in unfair
dealing toward the public stockholders and have engaged in and substantially
aided and abetted each other in breach of fiduciary duties owed by them to the
stockholders. The complaint further asserts that Parent has knowingly aided
and abetted the alleged breaches of fiduciary duty committed by the individual
defendants.
In connection with the purported class action lawsuit, on June 19, 1998, the
plaintiff served defendants with a first request for production of documents.
The Company, Parent and the other defendants have negotiated a proposed
settlement with the plaintiff in the purported class action. Pursuant to a
memorandum of understanding entered into by counsel for the defendants and the
plaintiff, (i) the Company has agreed to include in an amendment to its
Schedule 14D-9, which amendment will be mailed to stockholders of the Company,
the additional information with regard to Salomon Smith Barney's relationship
with Armstrong set forth above in Item 5 of this Amendment No. 2, (ii) Parent
and Merger Sub have agreed to include in a supplement to the Offer to
Purchase, certain additional information with respect to estimates of the
Company's projected results of operation that had been furnished to Parent,
and (iii) the defendants have agreed not to oppose an application for legal
fees and expenses by the plaintiff's attorneys in an amount of not more than
$275,000 and $25,000, respectively. Pursuant to the proposed settlement, the
action will be dismissed with prejudice and the defendants will be released
from claims that were or could have been asserted in such action. Because the
action is a putative class action, the proposed settlement is subject to
reasonable confirmatory discovery, certification of the plaintiff class of the
Company's stockholders, notice to the class and court approval. A copy of the
memorandum of understanding is filed as Exhibit P to this Statement and is
incorporated herein by reference.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
Exhibit P
Memorandum of Understanding dated July 1, 1998 among the plaintiff
and counsel for the plaintiff and the defendants.
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SIGNATURE
After reasonable 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.
Triangle Pacific Corp.
By: /s/ E. Dwain Plaster
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Name: E. Dwain Plaster
Title: Vice President, Treasurer and
Chief Financial Officer
Dated: July 1, 1998
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EXHIBIT INDEX
Exhibit P
Memorandum of Understanding dated July 1, 1998 among the plaintiff
and counsel for the plaintiff and the defendants
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EXHIBIT P
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
______________________________________________________x
:
PINNA YOSEVITZ, :
:
Plaintiff, :
:
v. :
:
FLOYD F. SHERMAN, M. JOSEPH McHUGH, : Civil Action No.16447-NC
BRUCE A. KARSH, DAVID R. HENKEL, KAREN :
GORDON MILLS, CARSON S. McKISSICK, :
B. WILLIAM BONNIVIER, CHARLES M. HANSEN :
JR., JACK L. McDONALD, TRIANGLE :
PACIFIC CORP., and ARMSTRONG WORLD :
INDUSTRIES, INC., :
:
Defendants. :
:
______________________________________________________x
MEMORANDUM OF UNDERSTANDING
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The undersigned parties to the action captioned Pinna Yosevitz v.
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Floyd F. Sherman, et al., Civil Action No. 16447-NC (the "Action"), now pending
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in the Court of Chancery of the State of Delaware, by their respective
attorneys, have reached an agreement in principle providing for the settlement
of the Actions on the terms and subject to the conditions set forth below.
W H E R E A S:
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On June 15, 1998, Armstrong World Industries, Inc. ("Armstrong") and
Triangle Pacific Corp. ("Triangle") announced that they had entered into a
definitive agreement (the "Merger Agreement") whereby Armstrong will acquire
Triangle in a transaction (the "Acquisition") valued at approximately $1.15
billion. Under the terms of
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the transaction, Armstrong will commence a tender offer for all shares of
Triangle at a price of $55.50 per share cash. Any remaining shares will be
purchased at the same price in a subsequent merger.
Thereafter, the Action was filed in the Delaware Court of Chancery,
New Castle County, challenging the Acquisition.
The complaint in the Action was brought as a class action on behalf of
all holders of the common stock of Triangle (except defendants in the Action and
any person, firm, trust, corporation or other entity related to or affiliated
with any of the defendants in the Action) and named as defendants Triangle and
the members of its Board of Directors, as well as Armstrong.
The Action alleged, inter alia, that the Triangle directors, as aided
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by Armstrong, were breaching their fiduciary duty by agreeing to the Acquisition
and employing unfair procedures which resulted in an unfair price.
On June 19, 1998, Armstrong filed a Schedule 14D-1 and Triangle filed
a Schedule 14D-9 with the Securities and Exchange Commission in connection with
the Acquisition.
On June 23, 1998, plaintiff filed an Amended Complaint attacking the
Acquisition, and the adequacy of the disclosures in the tender offer documents
filed with the Securities and Exchange Commission.
Plaintiff's counsel have negotiated at arms length with counsel for
defendants to settle the Action on the terms set forth below.
Plaintiff's counsel have determined that a settlement of the Action in
principle on the terms reflected in this Memorandum of Understanding is fair,
reasonable and adequate and in the best interests of the Triangle public
stockholders.
The parties having reached an agreement in principle providing for the
settlement of the Action against defendants, the parties set forth their
agreement:
NOW, THEREFORE, IT IS STIPULATED AND AGREED, by and among the parties
hereto:
1. Based upon a review of the Schedule 14D-1 and Schedule 14D-9 that
have been sent to the common stockholders of Triangle in connection with
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Armstrong's Offer to Purchase, plaintiff's counsel proposed that Triangle and
Armstrong make certain additional disclosures. In settlement of the Action,
Triangle and Armstrong have agreed to include in supplements to Triangle's
Schedule 14D-9 and Armstrong's Schedule 14D-1 disclosures concerning (i) the
projected revenue and operating income growth rates underlying the projections
provided by Triangle to Armstrong, and (ii) a description of the historic
relationship between Salomon Smith Barney, Triangle's financial advisor, and
Armstrong (the "Disclosures"). Triangle and Armstrong have further agreed that,
no later than ten days before the scheduled expiration of the tender offer, they
will mail a copy of such supplements to each Triangle stockholder to whom the
Schedule 14D-9 and Schedule 14D-1 were previously mailed.
2. Plaintiff's counsel agree to supply to the Court for an award of
attorneys' fees of $275,000 and disbursements reasonably incurred in the
prosecution of this action, in an amount not to exceed $25,000, as the Court may
allow. Defendants agree that they will not oppose such application, and
Triangle will pay to plaintiff's counsel the amounts awarded by the Court.
3. Triangle will bear the cost of notice to the class members in
connection with the settlement of the Action and the settlement hearing.
4. The undersigned parties will attempt in good faith to agree upon
and to execute an appropriate stipulation of settlement and such other
documentation as may be required in order to obtain court approval of the
settlement of the Action upon the terms set forth in this Memorandum of
Understanding. The stipulation of settlement will expressly provide, inter
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alia, that all defendants have denied, and continue to deny, that they have
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committed any violations of law, and that they are entering into the stipulation
solely because the proposed settlement would eliminate the risk, burden and
expense of further litigation. The stipulation of settlement will provide for a
release of all claims of the stockholders of Triangle against defendants and any
of their present or former officers, directors, agents, attorneys, financial
advisors, commercial bank lenders, investment bankers, representatives,
affiliates, associates, parents, subsidiaries, general and limited partners and
partnerships, heirs, executors, administrators, successors and assigns, whether
under state or federal law, and whether directly, derivatively,
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representatively or in any other capacity, in connection with, or that arise out
of the subject matter of the Action, the Acquisition, the negotiation and
consideration of these transactions and all actions taken in furtherance
thereof, including without limitation the fiduciary or disclosure obligations
under either state or federal law of any of the defendants with respect to any
of the foregoing.
5. For purposes of settlement of the Action consistent with the terms
of this Memorandum of Understanding, plaintiff will petition the Court in
connection with the stipulation of settlement for certification of a class (the
"Class") pursuant to Chancery Court Rules 23(b)(1) and (b)(2), consisting of
Triangle shareholders (exclusive of defendants and their affiliates) who owned
Triangle shares as of June 15, 1998 (the date that the Acquisition was publicly
announced), or at any time through the date of completion of the Acquisition, or
their successors in interest or tranferees, immediate and remote (the "Class").
Defendants will consent to such petition solely in connection with the
Settlement.
6. The undersigned parties will present the settlement agreement to
the Court for approval as soon as practicable and will use their best efforts to
obtain final court approval of the settlement and the dismissal of the action
with prejudice and without cost to any party, except as provided in paragraphs 2
and 3 above.
7. The settlement contemplated herein shall be conditioned upon the
satisfactory completion of confirmatory discovery, and upon the consummation of
the Acquisition.
8. Consummation of the settlement is subject to the drafting and
execution of an appropriate stipulation of settlement and such other
documentation as may be required, final court approval of the settlement (as to
be defined in the stipulation of settlement), and dismissal of the Action with
prejudice, each party to bear its own costs (except for the costs set forth in
paragraphs 2 and 3 above). The settlement contemplated by this Memorandum of
Understanding will not be binding upon any party until an appropriate
stipulation of settlement has been signed and final court approval of the
settlement and the dismissal of the Action with prejudice has been obtained.
This Memorandum of Understanding shall be null and void and of no force
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and effect should any of these conditions not be met and, in that event, this
agreement shall not be deemed to prejudice in any way the positions of the
parties with respect to the Action.
Dated: July 1 , 1998
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ROSENTHAL, MONHAIT, GROSS MORRIS, NICOLS, ARSHT
& GODDESS, P.A. & TUNNELL
/s/ Joseph A. Rosenthal /s/ Alan J. Stone
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Joseph A. Rosenthal A. Gilchrist Sparks, III
Mellon Bank Center, Suite 1401 Alan J. Stone
919 N. Market Street 1201 N. Market Street
P.O. Box 1070 P.O. Box 1347
Wilmington, DE 19801 Wilmington, DE 19899
(302) 656-4433 (302) 658-9200
on Behalf of Plaintiff Attorneys for Defendants
Floyd F. Sherman; M. Joseph McHugh;
Bruce A. Karsh; David R. Henkel;
Karen Gordon Mills; Carson S.
McKissick; B. William Bonnivier;
Charles M. Hansen, Jr.; Jack L.
McDonald and Triangle Pacific Corp.
RICHARDS, LAYTON & FINGER
/s/ Stephen E. Herrmann
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Stephen E. Herrmann
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 651-7730
Attorneys for Defendant
Armstrong World Industries,
Inc.
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