<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
(AMENDMENT NO. 10)
----------------
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(AMENDMENT NO. 10)
----------------
UNDER THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATIONERS INC.
(NAME OF SUBJECT COMPANY)
ASSOCIATED HOLDINGS, INC.
(BIDDER)
COMMON STOCK, $0.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
913004 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
THOMAS W. STURGESS
CHAIRMAN OF THE BOARD
750 NORTH ST. PAUL STREET, SUITE 1200
DALLAS, TEXAS 75201
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE BIDDER)
COPY TO:
LAWRENCE D. STUART, JR., ESQ.
WEIL, GOTSHAL & MANGES
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201-6950
MARCH 30, 1995
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- ------------------------------------------------------------------------------
<S> <C>
$266,628,505 $53,426
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 17,201,839 shares of the common stock, $0.10
par value (the "Shares"), of United Stationers Inc., a Delaware corporation
(the "Company"), at a purchase price of $15.50 per share, net to the seller
in cash. Such number of Shares represents 92.5% of all the Shares
outstanding as of February 10, 1995, and assumes the buy-out of all existing
options to acquire Shares from the Company.
** Includes a fee of $100 with respect to the filing of Schedule 13D in
accordance with Rule 13d-7.
[X]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: $53,426 FILING PARTY: ASSOCIATED HOLDINGS, INC.
FORM OR REGISTRATION NO.: SCHEDULE 14D-1 DATE FILED: FEBRUARY 21, 1995
SCHEDULE 13D
Page 1 of 15 Pages
Exhibit Index is located on Page 5
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<PAGE>
This Statement amends and supplements the Tender Offer Statement on Schedule
14D-1 filed with the Securities and Exchange Commission on February 21, 1995
(as heretofore amended and further amended by this Amendment No. 10, the
"Schedule 14D-1") by Associated Holdings, Inc., a Delaware corporation
("Associated"), relating to the offer by Associated to purchase up to
17,201,839 shares of the common stock, $0.10 par value (the "Shares"), of the
Company, at a purchase price of $15.50 per share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated February 21, 1995 (the "Offer to Purchase"), the Supplement No. 1 to the
Offer to Purchase dated March 9, 1995 (the "Supplement"), and in the related
Letter of Transmittal (which, together with the Offer to Purchase, the
Supplement and any amendments or supplements thereto, collectively constitute
the "Offer"), filed as Exhibits (a)(1), (a)(12) and (a)(2), respectively.
This Statement also amends and supplements the Statement on Schedule 13D with
respect to the acquisition by Associated of beneficial ownership of 17,201,839
Shares which were accepted and paid for by Associated pursuant to the terms of
the Offer. The item numbers and responses thereto below are in accordance with
the requirements of Schedule 14D-1.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated February 21, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated February 21, 1995.
(a)(8) Text of Press Release, dated February 14, 1995.
(a)(9) Text of Press Release, dated February 21, 1995.
(a)(10) Text of Press Release, dated March 1, 1995.
(a)(11) Text of Press Release, dated March 3, 1995.
(a)(12) Supplement No. 1 to Offer to Purchase, dated March 9, 1995.
(a)(13) Text of Press Release, dated March 9, 1995.
(a)(14) Text of Press Release, dated March 15, 1995.
(a)(15) Text of Press Release, dated March 20, 1995.
(a)(16) Text of Press Release, dated March 22, 1995.
(a)(17) Text of Press Release, dated March 23, 1995.
(a)(18) Text of Press Release, dated March 30, 1995.
(b) Commitment Letter, dated February 13, 1995, from The Chase Manhattan
Bank (National Association) to Associated and Associated Stationers,
Inc. ("ASI"), a Delaware corporation and wholly owned subsidiary of
Associated.
(c)(1) Agreement and Plan of Merger, dated as of February 13, 1995, between
Associated and the Company.
2
<PAGE>
(c)(2) Agreement to Tender, dated as of February 13, 1995, among Associated
and certain stockholders of the Company.
(c)(3) Letter of Intent, dated December 21, 1994 among Associated and the
Company.
(c)(4) No-Hire Letter, dated November 16, 1994 among Associated, Wingate
Partners, L.P. ("Wingate Partners") and the Company.
(c)(5) Confidentiality Agreement, dated November 16, 1994 among Associated,
Wingate Partners and the Company.
(c)(6) Amendment to Letter of Intent, dated as of January 6, 1995, between
Associated and the Company.
*(d) Opinion of Weil, Gotshal & Manges pertaining to the tax consequences
of the Offer, dated as of March 29, 1995 and delivered on April 7,
1995.
(e) Not applicable.
(f) None.
- --------
*Filed herewith
3
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, the undersigned
certifies that the information set forth in this statement is true, complete
and correct.
Dated: April 12, 1995
ASSOCIATED HOLDINGS, INC.
By: /s/ Thomas W. Sturgess
---------------------------------------
Thomas W. Sturgess,
Chairman of the Board and Chief
Executive Officer
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO.
------- ----
<C> <S> <C>
(a)(1) Offer to Purchase, dated February 21, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute
Form W-9.
(a)(7) Form of Summary Advertisement, dated February 21, 1995.
(a)(8) Text of Press Release, dated February 14, 1995.
(a)(9) Text of Press Release, dated February 21, 1995.
(a)(10) Text of Press Release, dated March 1, 1995.
(a)(11) Text of Press Release, dated March 3, 1995.
(a)(12) Supplement No. 1 to Offer to Purchase, dated March 9, 1995.
(a)(13) Text of Press Release, dated March 9, 1995.
(a)(14) Text of Press Release, dated March 15, 1995.
(a)(15) Text of Press Release, dated March 20, 1995.
(a)(16) Text of Press Release, dated March 22, 1995.
(a)(17) Text of Press Release, dated March 23, 1995.
(a)(18) Text of Press Release, dated March 30, 1995.
(b) Commitment Letter, dated February 13, 1995, from The Chase
Manhattan Bank (National Association) to Associated and ASI.
(c)(1) Agreement and Plan of Merger, dated as of February 13, 1995,
between Associated and the Company.
(c)(2) Agreement to Tender, dated as of February 13, 1995, among
Associated and the certain stockholders of the Company.
(c)(3) Letter of Intent, dated December 21, 1994 among Associated and
the Company.
(c)(4) No-Hire Letter, dated November 16, 1994 among Associated,
Wingate Partners, L.P. ("Wingate Partners") and the Company.
(c)(5) Confidentiality Agreement, dated November 16, 1994 among
Associated, Wingate Partners and the Company.
(c)(6) Amendment to Letter of Intent, dated as of January 6, 1995,
between Associated and the Company.
*(d) Opinion of Weil, Gotshal & Manges pertaining to the tax
consequences of the Offer, dated as of March 29, 1995 and
delivered on April 7, 1995.
(e) Not applicable.
(f) None.
</TABLE>
- --------
*Filed herewith
<PAGE>
EXHIBIT 99(d)
[LETTERHEAD OF WEIL, GOTSHAL & MANGES APPEARS HERE]
March 29, 1995
Associated Holdings, Inc.
1075 Hawthorn Drive
Itasca, Illinois 60143
Wingate Partners, L.P.
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
Attention: Thomas W. Sturgess
Re: Certain Federal Income Tax Consequences of
Mergers of Associated Holdings, Inc. into United
Stationers, Inc. and of Associated Stationers, Inc.
into United Stationers Supply Co.
---------------------------------------------------
Gentlemen:
We have acted as counsel for Associated Holdings, Inc., a Delaware
corporation ("AHI"), and its wholly-owned subsidiary, Associated Stationers,
Inc., a Delaware corporation ("ASI"), in connection with the transactions
described below. This opinion is being delivered to AHI and Wingate Partners,
L.P., a Delaware limited partnership ("Wingate"), pursuant to the Merger
Agreement described below, effective as of the date on which the Mergers
(defined below) are completed.
I. Statement of Facts and Factual Assumptions
------------------------------------------
A. The Tender Offer and Mergers. An agreement and plan of merger, dated
----------------------------
as of February 13, 1995 (the "Merger Agreement"), has been executed by, and
approved by the respective boards of directors and stockholders of AHI and ASI,
by the board of directors of
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 2
United Stationers, Inc., a Delaware corporation ("USI"), and by the board of
directors and stockholders of United Stationers Supply Co., an Illinois
corporation ("USSC") and wholly-owned subsidiary of USI.
Pursuant to the Merger Agreement and subject to customary conditions,
the following transactions were and/or are mandated:
1. AHI made a tender offer to purchase, for cash, more than 50%, but
not more than 92.5%, of the issued and outstanding common stock of USI (the
"Tender Offer"). AHI was obligated to consummate the Tender Offer and
purchase the shares of USI common stock (the "USI Common") tendered to AHI
only if more than 50% of the USI Common has been tendered, thereby assuring
AHI of sufficient votes to complete the AHI Merger described below. AHI is
purchasing 92.5% of the USI Common tendered in the Tender Offer.
2. After the successful Tender Offer, the following transactions
(collectively referred to herein as the "Mergers") will occur in the
following temporal order:
a. First, AHI will merge with and into USI, with USI surviving
(the "AHI Merger"). Pursuant to the AHI Merger, (i) each share of the
Class A common stock of AHI (the "AHI Common") will be converted into
shares of USI Common; (ii) each share of each class of preferred stock
of AHI (the "AHI Preferred") will be converted into one share of a
similar class of USI preferred stock (collectively, the "USI
Preferred" or, separately, the "Series A USI Preferred," the "Series B
USI Preferred," and the "Series C USI Preferred") having identical
terms to the AHI Preferred exchanged therefor, which Series A USI
Preferred will be redeemable in August 2000, which Series B USI
Preferred will be redeemable in July 1999, and which Series C USI
Preferred will be redeemable in January 2002; and (iii) each share of
USI Common will represent a number of shares of USI Common equal to
that number required to insure that the total number of shares of USI
Common retained by old USI Stockholders equals 20% of the total
outstanding USI Common following the AHI Merger, on a fully diluted
basis.
b. Immediately after the effective time of the AHI Merger under
Delaware law (but on the same day as the AHI Merger), ASI will merge
with
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 3
and into USSC, with USSC surviving (the "ASI Merger"). Before and
after the ASI Merger, USI will own all of the issued and outstanding
stock of USSC, and there will not be any warrants, options,
convertible securities or other instruments convertible into, or
representing a right to acquire, stock of USSC. Section 6.16 of the
Merger Agreement provides that, pursuant to Treasury Regulation (S)
1.1502-76(b)(l)(ii)(B),/1/ the ASI Merger will be treated as occurring
on the day following the date on which the AHI Merger is consummated.
B. Pre-Merger Transactions. In order to raise the cash necessary to
-----------------------
complete the Tender Offer and Mergers, the following transactions either have
occurred or will occur:
1. ASI borrowed funds from The Chase Manhattan Bank (National
Association)("Chase") and certain other lenders ("Lenders") pursuant to a
Credit Agreement, dated as of the completion of the Tender Offer, by and
among Lenders, AHI and ASI. ASI secured its obligations under the Credit
Agreement with liens on its assets. A portion of the proceeds received from
the Lenders was loaned by ASI to AHI in exchange for an unsecured AHI note.
In connection with this bank loan, AHI will transfer to the Lenders a
number of shares of AHI Common that, after the AHI Merger, will represent
2% of the USI Common on a fully diluted basis.
2. ASI also borrowed funds from Chase and certain other lenders
("Bridge Lenders") pursuant to a Senior Subordinated Credit Agreement,
dated as of the completion of the Tender Offer, by and between Bridge
Lenders, ASI and AHI. Like the bank debt, a portion of these proceeds was
loaned by ASI to AHI in exchange for an unsecured AHI note. In connection
with this loan and with the contemplated transaction pursuant to which this
loan is to be repaid, Chase Securities, Inc., Chase Manhattan Investment
Holdings, Inc. and/or and the Bridge Lenders were granted contingent rights
to purchase from the AHI common stockholders, at a price of $0.0001 per
share, a number of shares of AHI Common that will be converted into up to
20% of the USI Common on a fully diluted basis (the "Contingent Options").
- -------------------------
1. All "section" references in this letter are to the Internal Revenue Code of
1986, as amended, and all "Treasury Regulation (S)" references are to the
Treasury Regulations promulgated thereunder, unless otherwise expressly stated
herein.
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 4
To facilitate the exercise of the Contingent Options, the AHI common
stockholders deposited a portion of their AHI Common into escrow.
3. Wingate and one or more other purchasers contributed $12 million
in cash to the capital of AHI in exchange for 340,158 shares of AHI Common
(the "New AHI Common").
C. Factual Assumptions and Representations. In rendering our opinion, we
---------------------------------------
have relied upon the following factual representations and assumptions:
1. Immediately before the consummation of the Tender Offer, the fair
market value of the issued and outstanding stock of AHI (without taking
into account the New AHI Common) was at least 25% of the aggregate fair
market value of the issued and outstanding USI Common.
2. Each of the Mergers will satisfy all of the requirements of
Delaware corporate law.
3. The business reasons for the Mergers as set forth in the Tender
Offer were true and correct when made and will continue to be true and
correct through the date of effective time of the ASI Merger.
4. The aggregate fair market value on the date of the effective time
of the AHI Merger of the shares of USI Common (excluding any and all shares
of USI Common that are subject to the Contingent Options) and USI Preferred
to be issued to Historic AHI Shareholders in exchange for their AHI stock
pursuant to the AHI Merger will exceed 45% of the sum of the aggregate fair
market value on the date of the effective time of the AHI Merger of such
USI stock plus the amount of cash and fair market value of other property
transferred to the AHI stockholders in exchange for, or with respect to,
their AHI stock pursuant to, or in contemplation of, the AHI Merger
(including, without limitation, cash or other property distributed to any
dissenting AHI stockholders pursuant to the AHI Merger, any cash or other
property distributed to AHI stockholders prior to but in anticipation of
the AHI Merger, USI Common issued to a non-Historic AHI Shareholder (other
than in exchange for his New AHI Common), and USI Common subject to the
Contingent Options). For this purpose, the term "Historic AHI Shareholder"
means a holder of AHI Common or AHI Preferred who has not acquired such AHI
stock with the intention of
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 5
participating in the AHI Merger or pursuant to a plan, agreement or
arrangement that includes or contemplates the AHI Merger. The term
"Historic AHI Shareholder" does not include a purchaser of New AHI Common
to the extent of such purchaser's New AHI Common; however, the term does
include such purchaser in its capacity as a holder of previously-owned AHI
Common or AHI Preferred, provided the purchaser satisfies the definition of
"Historic AHI Shareholder" with respect to such previously-owned AHI Common
or AHI Preferred.
5. None of the Historic AHI Shareholders has any present plan or
intention, and none is subject to any obligation or commitment, to sell or
otherwise dispose of any of the shares of USI Common (other than the
shares of USI Common subject to the Contingent Options) or USI Preferred
received by such Historic AHI Shareholder pursuant to the AHI Merger.
6. USI has no plan or intention, and is not subject to any obligation
or commitment, to redeem, repurchase or otherwise acquire any shares of USI
Common or USI Preferred issued pursuant to the AHI Merger prior to the
tenth anniversary of the date on which such stock was issued, subject to
the redemption provisions of each class of the USI Preferred.
7. The aggregate fair market value at the effective time of the AHI
Merger of the USI Common and USI Preferred issued in exchange for the AHI
Common and AHI Preferred will equal the aggregate fair market value at the
effective time of such AHI Common and AHI Preferred.
8. At all times from January 31, 1992 to and including the effective
time of the AHI Merger, AHI has owned and will own, directly and
beneficially, all of the issued and outstanding capital stock of ASI, and
there are and will be no warrants, options, convertible securities or other
instruments convertible into, or representing a right to acquire, stock of
ASI.
9. As of the date of this letter, ASI has continued to actively
conduct the same trade or business conducted by ASI after its acquisition
of such business on January 31, 1992 (such trade or business being
hereinafter referred to as the "AHI Historic Business").
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 6
10. At all times from August 30, 1981 to and including the effective
time of the AHI Merger, USI has owned and will own, directly and
beneficially, all of the issued and outstanding capital stock of USSC, and
there are and will be no warrants, options, convertible securities or other
instruments convertible into, or representing a right to acquire, stock of
USSC.
11. As of the date of this letter, USSC has continued to actively
conduct the same trade or business conducted by USSC prior to January 1,
1992.
12. Pursuant to the Mergers, USI will acquire all of the assets of
AHI (and will succeed to all of the liabilities of USI), and USSC will
acquire all of the assets of ASI (and will succeed to all of the
liabilities of ASI).
13. USSC will continue to actively conduct the AHI Historic Business
following the Mergers, and none of AHI, USI, ASI and USSC has any plan or
intention to sell or otherwise dispose of any of the assets currently used
by ASI in the conduct of the AHI Historic Business, other than dispositions
in the ordinary course of business.
14. Immediately after the Mergers, USI will own, directly and
beneficially, all of the issued and outstanding capital stock of USSC, and
there are and will be no warrants, options, convertible securities or other
instruments convertible into, or representing a right to acquire, stock of
USSC.
15. At the effective time of the Mergers, there will be no plan,
intention, obligation or commitment on the part of USI to sell or otherwise
dispose of any of the capital stock of USSC.
16. There are no liabilities owed by AHI (or any of its
subsidiaries) to USI (or any of its subsidiaries) or by USI (of any of
its subsidiaries) to AHI (or any of its subsidiaries) other than small
amounts of trade receivables arising in the ordinary course of business
which will not be paid or otherwise satisfied at a discount.
17. Pursuant to the Credit Agreement and the Senior Subordinated
Credit Agreement, AHI and ASI will be obligated to consummate the Mergers
if the Tender Offer is consummated. Upon the consummation of the Tender
Offer, such
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 7
obligation will be subject only to remote and unforeseeable contingencies,
such as an intervening law suit successfully seeking an injunction to
prevent the Mergers.
18. Immediately before the effective time of the AHI Merger, the
fair market value of the USI Common owned by AHI will equal the adjusted
tax basis of such USI Common in the hands of AHI.
19. At the effective time of the Mergers, all of the factual
statements, representations and assumptions set forth in this letter will
be true and complete.
20. There are no agreements, understandings, or arrangements
affecting any of the factual matters relevant to the opinions expressed
herein other than the Merger Agreement, agreements relating to the
Contingent Options, the Credit Agreement and the Senior Subordinated
Credit Agreement, and the copies of those documents that have been provided
to this firm are conformed copies of the originals, and any amendments or
supplements thereto, executed by the parties thereto.
21. There are no dividends in arrears with respect to the AHI Common
or the AHI Preferred.
22. None of AHI, ASI, USI or USSC is a regulated investment company
or a real estate investment trust. Less than 50% of the assets of each of
ASI and USSC are stock and securities.
23. The liabilities of ASI on the date of the ASI Merger will not
exceed the aggregate adjusted basis of the assets of ASI on such date.
24. The Historic AHI Shareholders will own more than 50% of the fair
market value of the issued and outstanding stock of USI immediately after
the AHI Merger.
II. Opinions
--------
Based on the facts, factual assumptions and representations set forth
above, but particularly subject to the succeeding discussion, we are of the
following opinions as to certain of the federal income tax consequences
incident to the Mergers:
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 8
1. Each of the AHI Merger and ASI Merger will constitute a
reorganization described in section 368(a)(1). In the case of the AHI
Merger, each of AHI and USI will be a "party to the reorganization" within
the meaning of section 354(a)(1) and, in the case of the ASI Merger, each
of ASI and USSC will be a "party to the reorganization" within the meaning
of section 354(a)(1).
2. Pursuant to section 354(a)(1), no gain or loss will be recognized
by holders of AHI Common in connection with their receipt of shares of USI
Common in exchange for such AHI Common pursuant to the AHI Merger, and no
gain or loss will be recognized by holders of AHI Preferred in connection
with their receipt of shares of USI Preferred in exchange for such AHI
Preferred pursuant to the AHI Merger. Pursuant to section 358, the adjusted
tax basis of shares of USI Common or USI Preferred received in exchange for
shares of AHI Common or AHI Preferred pursuant to the AHI Merger will equal
the adjusted tax basis of the shares of AHI Common or AHI Preferred
exchanged therefor.
3. Pursuant to sections 361(a) and 357(a) and Treasury Regulation (S)
1.1502-80(d), (a) no gain or loss will be recognized by AHI in connection
with its transfer of all of its assets to USI pursuant to the AHI Merger,
and (b) no gain or loss will be recognized by ASI in connection with its
transfer of all of its assets to USSC pursuant to the ASI Merger.
4. No gain or loss will be recognized by USI in connection with its
actual or deemed receipt of shares of USI and ASI pursuant to the AHI
Merger or of USSC stock in exchange for shares of ASI stock cancelled
pursuant to the ASI Merger. Furthermore, pursuant to section 358 and
Treasury Regulation (S) 1.1502-19, the adjusted tax basis of the USSC stock
owned by USI after the Mergers will be increased (or decreased) by the
adjusted tax basis (or excess loss account) of the ASI stock in the hands
of AHI immediately before the Mergers. Finally, if an excess loss account
exists in the stock of either or both ASI and USSC at the time of the
Mergers, such excess loss account will not be taken into income pursuant to
Treasury Regulation (S) 1.1502-19 as a result of the Mergers; rather, such
excess loss account will be reflected as a negative adjustment to the basis
of the USSC stock in the hands of USI immediately following the Mergers.
III. Discussion
----------
Our opinions concerning the tax consequences of the AHI Merger are
based in part on the legal conclusion that, under the facts and factual
assumptions described above, the Tender
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 9
Offer and the Mergers should be treated for federal income tax purposes as
component parts of a single plan of reorganization in which (i) AHI merges into
USI principally in exchange for USI stock, followed by the merger of ASI into
USSC; (ii) the cash purchasers of the New AHI Common are treated in substance as
purchasing shares of USI Common from the historic USI stockholders; and (iii)
the balance of the shares of USI Common that are not retained by historic USI
stockholders in connection with the AHI Merger are redeemed by USI for cash
funded under the Credit Agreement and Senior Subordinated Credit Agreement to
USSC. We believe this legal conclusion is supported by the recent Tax Court
decision in J.E. Seagram Corp. v. Commissioner, 104 T.C. ___ No. 4 (January 24,
----------------------------------
1995), as well as by other relevant authorities. See, e.g., King Enterprises,
----------------------------
Inc. v. United States, 418 F.2d 511 (1969); Proposed Treasury Regulation (s)
- ---------------------
1.338-2(c)(3)(iv)(E).
In light of the inherently factual nature of the issue as the whether a
series of transactions is properly integrated for federal tax purposes, there
can be no assurance that the Internal Revenue Service (the "Service") or a
court considering the issue would agree with our conclusion. See, e.g.,
----------
American Potash & Chemical Corp. v. U.S., 399 F.2d 194 (Ct. Cl.), motion for
- --------------------------------------- ----------
rehearing denied, 402 F.2d 1000 (Ct. Cl. 1968)(creeping acquisition of target
- ----------------
stock in exchange for acquiring company stock over a period of more than 12
months initially not treated as single transaction). However, even were the
Tender Offer viewed as an independent transaction separate and apart from the
AHI Merger, because AHI acquired more than 80% of the USI Common pursuant to
the Tender Offer and because the two Mergers each separately satisfy the
statutory and extra-statutory requirements, the AHI Merger and the ASI Merger
each would qualify as a reorganization described in section 368(a)(1)(A). Cf.,
--
Rev. Proc. 94-76, 1994-52 I.R.B. 30, as restated in Rev. Proc. 95-3, (s) 5.15,
1995-1 I.R.B. 85.
In view of the absence of directly relevant authority, we express no
opinion regarding the federal income tax consequence to the former holders of
AHI Common of any sale of shares of USI Common pursuant to the Contingent
Options or release from escrow of such shares of USI Common, whether pursuant
to the exercise, lapse or termination of the Contingent Options.
In addition to the specific risks noted above, our opinion could become
inapplicable should there be any unforeseen future change in the applicable
federal income tax law or if any of our assumptions ultimately prove incorrect.
We expressly do not undertake to update our opinion or otherwise advise you if
any event should occur which renders our opinion inapplicable after the Mergers
are consummated.
<PAGE>
WEIL, GOTSHAL & MANGES
Associated Holdings, Inc.
Wingate Partners, L.P.
March 29, 1995
Page 10
The opinion herein is limited to the federal income tax laws of the United
States, and we express no opinion as to the effect on the matters covered by our
opinion of the laws of any other jurisdiction. Furthermore, our opinion is
limited to the federal income tax questions set forth in Part II. above, and we
express no opinion as to any other legal issue.
Our opinion is rendered solely for your benefit in connection with the
transactions described above and may not be used or relied upon by any other
person. Furthermore, our opinion may not be disclosed, quoted, filed with a
governmental agency or otherwise referred to without our prior written consent.
We do, however, consent to the filing of our opinion with the Securities and
Exchange Commission as an exhibit to the Schedule 14D-1 relating to the Tender
Offer.
Very truly yours,
/s/ Weil, Gotshal & Manges
