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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
------------------------------
HERCULES INCORPORATED
(Name of Issuer)
COMMON STOCK, $25/48 STATED VALUE PER SHARE 427056106
(Title of class of securities) (CUSIP number)
RICHARD A. WEINBERG, ESQ.
C/O ISP MANAGEMENT COMPANY, INC.
1361 ALPS ROAD
WAYNE, NEW JERSEY 07470
(973) 628-4000
(Name, address and telephone number of person authorized
to receive notices and communications)
WITH A COPY TO:
STEPHEN E. JACOBS, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
(212) 310-8000
OCTOBER 11, 2000
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act. (However, see the
Notes.)
(Continued on following pages)
(Page 1 of 8 Pages)
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NY2:\971895\01\KTX301!.DOC\54104.0016
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CUSIP No. 427056106 13D Page 2 of 8 Pages
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1 NAME OF REPORTING PERSON ISP OPCO HOLDINGS INC.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
---------------------- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
---------------------- -------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
---------------------- -------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
---------------------- -------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
---------------------- -------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
---------------------- -------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES ------------------- -------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 10,719,200
OWNED BY ------------------- -------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING ------------------- -------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 10,719,200
---------------------- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON:
10,719,200
---------------------- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES:
[ ]
---------------------- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.99%
---------------------- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
---------------------- -------------------------------------------------------------------------------------------------------
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CUSIP No. 427056106 13D Page 3 of 8 Pages
----------------------------------------------------------- --------------------------------------------------------
---------------------- -------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON ISP INVESTMENTS INC.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
---------------------- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
---------------------- -------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
---------------------- -------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: WC, OO
---------------------- -------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
---------------------- -------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
---------------------- -------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 10,719,200
SHARES ------------------- -------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY ------------------- -------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 10,719,200
REPORTING ------------------- -------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
---------------------- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON:
10,719,200
---------------------- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES:
[ ]
---------------------- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.99%
---------------------- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
---------------------- -------------------------------------------------------------------------------------------------------
<PAGE>
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CUSIP No. 427056106 13D Page 4 of 8 Pages
----------------------------------------------------------- --------------------------------------------------------
---------------------- -------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON INTERNATIONAL SPECIALTY PRODUCTS INC.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
---------------------- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
---------------------- -------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
---------------------- -------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
---------------------- -------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
---------------------- -------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
---------------------- -------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES ------------------- -------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 10,719,200
OWNED BY ------------------- -------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING ------------------- -------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 10,719,200
---------------------- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON:
10,719,200
---------------------- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES:
[ ]
---------------------- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.99%
---------------------- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
---------------------- -------------------------------------------------------------------------------------------------------
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This Amendment No. 1 ("Amendment No. 1") amends the
statement of beneficial ownership on Schedule 13D ("Schedule 13D") filed on July
24, 2000, by and on behalf of ISP Opco Holdings Inc. ("ISP Opco"), ISP
Investments Inc. ("ISP Investments"), and International Specialty Products Inc.
("ISP" and together with ISP Investments and ISP Opco, the "Reporting Persons")
with respect to their ownership of common stock, stated value $25/48 per share
("Common Stock"), of Hercules Incorporated (the "Company"). Capitalized terms
used herein and not defined herein have the meanings ascribed thereto in the
Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION
On October 11, 2000, Samuel J. Heyman, Chairman of the
Board of ISP, sent the following letter to the members of the Board of Directors
of the Company:
Board of Directors
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, DE 19894-0001
Dear Hercules Board member:
As you no doubt are aware, Vince Corbo and I have had a
number of discussions in recent weeks regarding Hercules' restructuring program.
In this regard, I was surprised to learn from Vince yesterday that,
notwithstanding the recent Moody's downgrade of the Company's debt as well as
other developments referred to below, Hercules does not intend to alter its
current course. Parenthetically, the downgrade, coming at a particularly
turbulent time in the high yield market (I am enclosing an October 10th, Wall
Street Journal article entitled, "Junk-Bond Prices Shrink As Investor Caution
Grows," regarding this subject), will now result in a very costly refinancing
for the Company -- thereby making it impossible for Hercules to achieve anywhere
near the interest savings previously projected.
While Hercules' game plan may have made good sense when
first adopted, we are convinced that adverse developments in recent months have
now overtaken it. Accordingly, for Hercules to proceed now with a "too little,
too late" program raises serious question as to whether the Company is pursuing
a strategy which discriminates in favor of its creditors at the expense of its
shareholders.
Consider these recent developments:
(1) Significant delays in asset dispositions, including the real
possibility that FiberVisions will not be sold at this time;
(2) Decline in growth forecasts for core operations;
(3) Reduction in size of acquisition program;
(4) Significant decline in projected interest rate savings;
(5) Adverse impact of the euro, which is especially significant
for Hercules given its substantial European presence.
(6) Decline in overall earnings projections; and
(7) Drastic dividend reduction.
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In the face of these developments, it has become all too
apparent to us that the course Hercules is now pursuing will not enhance
shareholder value but erode it instead. What justification can there be for
making asset divestitures which are earnings dilutive, and which in the end,
because of the credit downgrade as well as other factors, will not be sufficient
to enable Hercules to achieve sufficient financial flexibility to grow its
remaining businesses at anywhere near the targets the Company established only
several months ago? Under all the circumstances and given the fact that private
sale values of specialty chemicals businesses are still robust and well above
public trading values, we have come to the conclusion that the only practicable
option for realizing Hercules' underlying values must involve the sale of the
Company, in whole or in parts.
Also of serious concern to us is Hercules' apparent
disregard for the interest of its shareholders, as demonstrated by its adoption
of a "poison pill" on August 7th, which provides for a 10% trigger point.
Significantly, the Board adopted this anti-shareholder provision little more
than 2 weeks after we had notified Vince that we had acquired 9.9% of Hercules'
shares, informing him at the same time that we wished to increase our ownership
position and were filing a Hart-Scott Rodino application seeking permission to
do so. Moreover, Hercules' refusal to eliminate or modify its "poison pill" in
the face of our offer of a standstill agreement is further indicative of
Hercules' anti-shareholder bias.
We are therefore requesting that the Hercules Board abandon
its "too little, too late" approach and promptly entertain a sale of the Company
while the time is still propitious. And the timing here is all the more
important in light of the fact that Hercules is about to embark on a major
refinancing, which we anticipate could become extremely expensive to unwind
should Hercules decide to pursue a sale of the Company at a later time.
In the meantime, as an expression of our confidence in this
proposed course of action and to provide those Hercules shareholders who wish to
sell their shares now with an opportunity to do so at a 25% premium above the
current market price, we are prepared to commence a tender offer for 25 million
shares of Hercules common stock at $17.50 per share in cash. While we believe
that Hercules' shares should be worth more, in a sale of the Company, than our
tender offer price, this price represents an almost 50% premium over Hercules'
closing price of $11.75 per share on July 21st, the day before ISP's 13D filing
providing notice for the first time that it had acquired a 9.9% interest in
Hercules. ISP's tender offer will not be subject to financing but will obviously
require that the Hercules Board exempt our offer from the "poison pill" and
approve ISP's purchase of shares for purposes of Section 203 of the Delaware
General Corporation Law.
We are prepared to commence the tender offer promptly
should you inform us that you will meet the above conditions. We would
appreciate your timely response.
Sincerely,
/s/ Samuel J. Heyman
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ISP INTENDS TO FILE A TENDER OFFER STATEMENT WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION RELATING TO ISP'S OFFER TO PURCHASE UP TO 25
MILLION SHARES OF COMMON STOCK OF THE COMPANY, IF THE COMPANY INFORMS
ISP THAT IT WILL SATISFY THE CONDITIONS INDICATED IN MR. HEYMAN'S
LETTER ABOVE. ALL COMPANY SHAREHOLDERS SHOULD READ THE TENDER OFFER
STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION RELATING TO THE OFFER. WHEN COMPLETED, THE TENDER OFFER
STATEMENT WILL BE AVAILABLE AT NO CHARGE ON THE SEC WEBSITE AT
HTTP:\\ WWW.SEC.GOV AND COPIES WILL ALSO BE MADE AVAILABLE AT NO
CHARGE BY ISP OR ITS DESIGNATED INFORMATION AGENT.
[The remainder of this page intentionally left blank.]
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SIGNATURES
After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Dated: October 11, 2000
ISP OPCO HOLDINGS INC.
ISP INVESTMENTS INC.
INTERNATIONAL SPECIALTY PRODUCTS INC.
By: /s/ Richard A. Weinberg
----------------------------------
Richard A. Weinberg
Executive Vice President,
General Counsel and
Secretary
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