<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 1997
REGISTRATION NO. 333-18097
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 4
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
WESTERN RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
--------------
<TABLE>
<S> <C> <C>
KANSAS 4911 48-0290150
(State or other jurisdiction
of
incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
</TABLE>
818 S. KANSAS AVENUE
TOPEKA, KANSAS 66612
(913) 575-6300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------
JOHN K. ROSENBERG
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
WESTERN RESOURCES, INC.
818 S. KANSAS AVENUE
TOPEKA, KANSAS 66612
(913) 575-6300
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
--------------
COPY TO:
NEIL T. ANDERSON
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
PROSPECTUS
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO DOWNWARD ADJUSTMENT ONLY IN THE CIRCUMSTANCES DESCRIBED BELOW)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, EASTERN TIME, ON
APRIL 15, 1997, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
Western Resources, Inc., a Kansas corporation ("Western Resources"), and
Westar Capital, Inc., a Kansas corporation and a wholly owned subsidiary of
Western Resources ("Westar Capital"), hereby offer, upon the terms and subject
to the conditions set forth herein and in the related Letter of Transmittal
(collectively, the "Offer"), to exchange $10.00 net in cash and $12.50 in
shares of common stock, par value $5.00 per share, of Western Resources
("Western Resources Common Stock"), subject to adjustment as described below,
for each outstanding common share, par value $ 0.10 per share (each, a "Share"
and collectively, the "Shares"), of ADT Limited, a company incorporated under
the laws of Bermuda ("ADT"), including (unless and until Western Resources and
Westar Capital declare that the Rights Condition (as defined below) is
satisfied) the associated preference share purchase rights (each, a "Right"
and collectively, the "Rights") issued pursuant to the Rights Agreement, dated
as of November 6, 1996, as amended, between ADT and Citibank, N.A., as Rights
Agent (the "Rights Agreement"), validly tendered on or prior to the Expiration
Date and not properly withdrawn. Unless the context otherwise requires and
unless and until the Rights are redeemed, all references to Shares shall
include the associated Rights. All references herein to Rights shall include
all benefits that may inure to holders of the Rights pursuant to the Rights
Agreement. Each Share validly tendered on or prior to the Expiration Date and
not properly withdrawn will be entitled to receive $10.00 net in cash (the
"Cash Consideration") and that number of shares of Western Resources Common
Stock equal to the Exchange Ratio (as defined below) (the "Stock
Consideration," and, together with the Cash Consideration, the "Offer
Consideration").
(Continued on following page)
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Dealer Managers for the Offer are:
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
SALOMON BROTHERS INC
The date of this Prospectus is March 14, 1997.
<PAGE>
(continued from previous page)
The term "Exchange Ratio" means the quotient (rounded to the nearest
1/100,000) determined by dividing $12.50 by the average of the high and low
sales prices of Western Resources Common Stock (as reported on the New York
Stock Exchange, Inc. (the "NYSE") Composite Transactions reporting system as
published in The Wall Street Journal or, if not published therein, in another
authoritative source) (the "Western Resources Average Price") on each of the
twenty consecutive trading days ending with the third trading day immediately
preceding the Expiration Date; provided that the Exchange Ratio shall not be
greater than 0.42017. Pursuant to the Exchange Ratio, each Share will be
exchanged for $10.00 net in cash and $12.50 of Western Resources Common Stock
as long as the Western Resources Average Price is $29.75 or higher. If the
Western Resources Average Price is less than $29.75, each Share will be
exchanged for $10.00 net in cash and less than $12.50 of Western Resources
Common Stock. See "Reasons for the Offer--The Exchange Ratio." Western
Resources Common Stock is listed for trading under the symbol "WR" on the
NYSE. On March 13, 1997, the closing price of Western Resources Common Stock
on the NYSE was $30.125. Based on such closing price, the Exchange Ratio would
be .41494 and each Share would be converted into $10.00 net in cash and $12.50
of Western Resources Common Stock. The Exchange Ratio will change as the
market price of the Western Resources Common Stock changes. Holders of
outstanding Shares ("ADT Shareholders") may call (800) 798-5675 any time on or
after the date hereof through the Expiration Date for the current Exchange
Ratio calculated based on the then-current Western Resources Average Price for
the twenty consecutive trading days ending with the third trading day
immediately preceding the date the call is placed. The actual Western
Resources Average Price and Exchange Ratio will be calculated as of the third
trading day immediately prior to the Expiration Date, as described above, and
a press release will be issued announcing the actual Exchange Ratio prior to
the opening of the second trading day prior to the Expiration Date (as it may
be extended from time to time).
WESTERN RESOURCES' OBLIGATION TO EXCHANGE THE OFFER CONSIDERATION FOR SHARES
PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE
SATISFACTION OR, WHERE APPLICABLE, WAIVER OF THE FOLLOWING CONDITIONS: (I)
THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A
NUMBER OF SHARES WHICH, TOGETHER WITH SHARES OWNED BY WESTERN RESOURCES AND
ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS (AS THOUGH ALL OPTIONS OR OTHER
SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR SHARES HAD BEEN
SO CONVERTED, EXERCISED OR EXCHANGED) AS OF THE DATE THE SHARES ARE ACCEPTED
FOR EXCHANGE BY WESTERN RESOURCES PURSUANT TO THE OFFER (THE "MINIMUM TENDER
CONDITION"), (II) APPROVAL OF THE ISSUANCE OF SHARES OF WESTERN RESOURCES
COMMON STOCK IN CONNECTION WITH THE OFFER AND THE AMALGAMATION AND APPROVAL OF
AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WESTERN
RESOURCES (THE "WESTERN RESOURCES ARTICLES") TO INCREASE THE NUMBER OF SHARES
OF WESTERN RESOURCES COMMON STOCK AUTHORIZED FOR ISSUANCE BY THE HOLDERS
(VOTING AS A SINGLE CLASS) OF A MAJORITY OF THE SHARES OF WESTERN RESOURCES
COMMON STOCK AND WESTERN RESOURCES PREFERRED STOCK OUTSTANDING ON THE
APPLICABLE RECORD DATE (THE "WESTERN RESOURCES SHAREHOLDER APPROVAL
CONDITION"), (III) THE APPROVAL BY A MAJORITY OF THOSE SHARES VOTED AT A
SPECIAL GENERAL MEETING OF ADT SHAREHOLDERS, WHICH HAS BEEN REQUISITIONED BY
WESTAR CAPITAL (THE "ADT SPECIAL MEETING") PURSUANT TO SECTION 74 OF THE
COMPANIES ACT 1981 OF BERMUDA, AS AMENDED (THE "COMPANIES ACT"), AND BYE-LAW
42 OF ADT'S BYE-LAWS (THE "ADT BYE-LAWS"), OF THE FOLLOWING ACTIONS: (A) THE
REMOVAL, PURSUANT TO SECTION 93 OF THE COMPANIES ACT AND BYE-LAW 71 OF THE ADT
BYE-LAWS, OF ALL OF THE PRESENT MEMBERS OF THE BOARD OF DIRECTORS OF ADT (THE
"ADT BOARD") AND ANY PERSON OR PERSONS ELECTED OR DESIGNATED BY ANY OF SUCH
DIRECTORS TO FILL ANY VACANCY OR NEWLY CREATED DIRECTORSHIP, (B) THE REDUCTION
OF THE NUMBER OF SEATS ON THE ADT BOARD TO TWO, AND (C) THE ELECTION OF STEVEN
L. KITCHEN AND STEVEN A. MILLSTEIN (THE "WESTERN RESOURCES NOMINEES") AS THE
DIRECTORS OF ADT (OR, IF EITHER WESTERN RESOURCES NOMINEE IS UNABLE TO SERVE
AS A DIRECTOR OF ADT DUE TO DEATH, DISABILITY OR OTHERWISE, ANY OTHER PERSON
DESIGNATED AS A WESTERN RESOURCES NOMINEE BY WESTERN RESOURCES) (COLLECTIVELY,
THE "ADT SHAREHOLDER APPROVAL CONDITION"), (IV) THE ADT BOARD HAVING REDEEMED
THE RIGHTS OR AMENDED THE RIGHTS AGREEMENT SO THAT THE RIGHTS ARE INAPPLICABLE
TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER, OR WESTERN RESOURCES BEING
OTHERWISE SATISFIED IN ITS REASONABLE DISCRETION THAT THE
ii
<PAGE>
RIGHTS ARE INVALID OR ARE NOT APPLICABLE TO THE ACQUISITION OF SHARES PURSUANT
TO THE OFFER (THE "RIGHTS PLAN CONDITION"), (V) WESTERN RESOURCES AND WESTAR
CAPITAL BEING SATISFIED, IN THEIR REASONABLE DISCRETION, THAT THE PROVISIONS
OF BYE-LAW 104 AND BYE-LAW 46 OF THE ADT BYE-LAWS (AS DESCRIBED HEREIN) DO NOT
AND WILL NOT APPLY TO WESTERN RESOURCES, WESTAR CAPITAL OR THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER SO AS (A) TO REQUIRE WESTERN RESOURCES OR WESTAR
CAPITAL TO COMPLY WITH THE PROVISIONS OF BYE-LAW 104 OF THE ADT BYE-LAWS OR
(B) TO PREVENT WESTERN RESOURCES, WESTAR CAPITAL OR ANY OF THEIR AFFILIATES
FROM VOTING SHARES OWNED BY ANY OF THEM AT ANY TIME (THE "ADT BYE-LAW
CONDITION"), (VI) THE RECEIPT BY WESTAR CAPITAL OF A FINAL JUDGMENT FROM A
COURT OF COMPETENT JURISDICTION DECLARING THE REPUBLIC WARRANT (AS DEFINED
HEREIN) INVALID OR THE EXPIRATION OF THE REPUBLIC WARRANT PRIOR TO THE
EXPIRATION DATE WITHOUT HAVING BEEN EXERCISED (THE "REPUBLIC WARRANT
CONDITION") AND (VII) ALL REGULATORY APPROVALS REQUIRED TO CONSUMMATE THE
OFFER HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT, ALL
STATUTORY WAITING PERIODS IN RESPECT THEREOF HAVING EXPIRED AND NO SUCH
APPROVAL CONTAINING ANY CONDITIONS OR RESTRICTIONS WHICH THE WESTERN RESOURCES
BOARD OF DIRECTORS (THE "WESTERN RESOURCES BOARD") DETERMINES WILL OR COULD BE
EXPECTED TO MATERIALLY IMPAIR THE STRATEGIC AND FINANCIAL BENEFITS EXPECTED TO
RESULT FROM THE OFFER (THE "REGULATORY APPROVAL CONDITION"). THE MINIMUM
TENDER CONDITION, THE WESTERN RESOURCES SHAREHOLDER APPROVAL CONDITION, THE
ADT SHAREHOLDER APPROVAL CONDITION, THE RIGHTS PLAN CONDITION, THE ADT BYE-LAW
CONDITION, THE REPUBLIC WARRANT CONDITION, THE REGULATORY APPROVAL CONDITION
AND THE OTHER CONDITIONS SET FORTH UNDER THE CAPTION "THE OFFER--CONDITIONS OF
THE OFFER--CERTAIN OTHER CONDITIONS OF THE OFFER" SHALL BE REFERRED TO
COLLECTIVELY AS THE "OFFER CONDITIONS." CAPITALIZED TERMS USED BUT NOT DEFINED
ABOVE ARE DEFINED HEREINAFTER.
THIS PROSPECTUS CONTAINS CERTAIN STATEMENTS WITH RESPECT TO THE FINANCIAL
CONDITION AND BUSINESS OF WESTERN RESOURCES FOLLOWING THE CONSUMMATION OF THE
OFFER (SEE "PROSPECTUS SUMMARY--REASONS FOR THE OFFER," "REASONS FOR THE
OFFER" AND "THE OFFER"). SUCH STATEMENTS INCLUDE FORWARD LOOKING STATEMENTS
WITH RESPECT TO, AMONG OTHER THINGS: (1) NORMAL WEATHER CONDITIONS; (2) FUTURE
INTERNATIONAL, NATIONAL AND REGIONAL ECONOMIC AND COMPETITIVE CONDITIONS; (3)
INFLATION RATES; (4) FUTURE REGULATORY DEVELOPMENTS; (5) WESTERN RESOURCES'
FUTURE RATES AND COSTS IN ITS UTILITY AND OTHER BUSINESSES; (6) FUTURE
FINANCIAL MARKET CONDITIONS; (7) INTEREST RATES; (8) FUTURE BUSINESS
DECISIONS; AND (9) OTHER UNCERTAINTIES, WHICH, THOUGH CONSIDERED REASONABLE BY
WESTERN RESOURCES, ARE BEYOND WESTERN RESOURCES' SOLE CONTROL AND DIFFICULT TO
PREDICT. FURTHER INFORMATION ON OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL
RESULTS OF WESTERN RESOURCES FOLLOWING THE COMBINATION OF THE BUSINESSES OF
ADT AND WESTERN RESOURCES IS INCLUDED IN THE SECURITIES AND EXCHANGE
COMMISSION FILINGS INCORPORATED BY REFERENCE HEREIN. THE FOREGOING FORWARD
LOOKING STATEMENTS ARE NOT WITHIN THE SAFE HARBOR PROVIDED BY SECTION 27A OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR SECTION 21E
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
SEE "RISK FACTORS" BEGINNING ON PAGE 26 FOR A DISCUSSION OF CERTAIN MATTERS
WHICH SHOULD BE CONSIDERED BY ADT SHAREHOLDERS WITH RESPECT TO THE OFFER.
----------------
Western Resources is unable to predict the amount of time necessary, among
other things, to obtain the shareholder, governmental and regulatory approvals
and consents required to complete the Offer and the transactions contemplated
herein. However, the time necessary to obtain such approvals and consents may
extend beyond the Expiration Date, and Western Resources reserves the right to
extend the Offer from time to time in its sole discretion.
----------------
iii
<PAGE>
On July 8, 1996, Western Resources made an offer (the "KCPL Offer") to the
shareholders of Kansas City Power & Light Company, a Missouri corporation
("KCPL"), to exchange each outstanding share of common stock, no par value per
share, of KCPL ("KCPL Common Stock"), for $31.00 of Western Resources Common
Stock, subject to adjustment. On February 7, 1997, Western Resources
terminated the KCPL Offer and announced that it had entered into a merger
agreement with KCPL pursuant to which KCPL will merge with and into Western
Resources (the "KCPL Merger") and each share of KCPL Common Stock will be
exchanged for $32.00 of Western Resources Common Stock, subject to adjustment.
For further details concerning, and recent developments with respect to, the
KCPL Merger, see "Prospectus Summary--The KCPL Merger" and "The KCPL Merger."
Western Resources currently intends to proceed with the Offer to ADT
Shareholders without regard to future developments with respect to the KCPL
Merger. Accordingly, this Prospectus presents financial information with
respect to both the combination of ADT and Western Resources and the
combination of ADT, Western Resources and KCPL. See "Prospectus Summary--
Selected Unaudited Pro Forma Combined Financial Information," "Unaudited Pro
Forma Combined Balance Sheet" and "Unaudited Pro Forma Combined Statement of
Income."
----------------
IMPORTANT
Any ADT Shareholder desiring to tender all or any portion of his or her
Shares and the associated Rights should either (a) complete and sign the
Letter of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, and mail or deliver the Letter of
Transmittal or such facsimile and any other required documents to Harris Trust
Company of New York (the "Exchange Agent") and either deliver the certificates
for such Shares and, if separate, certificates for the Rights to the Exchange
Agent along with the Letter of Transmittal, deliver such Shares (and Rights,
if applicable) pursuant to the procedures for book-entry transfer set forth
herein (in the case of Rights, only if such procedures are available) or
comply with the guaranteed delivery procedures set forth below or (b) request
his or her broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such ADT Shareholder. Any ADT Shareholder having
Shares and, if applicable, Rights registered in the name of a broker, dealer,
commercial bank, trust company or other nominee is urged to contact such
broker, dealer, commercial bank, trust company or other nominee if he or she
desires to tender such Shares and, if applicable, Rights.
ADT Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless and until Western
Resources declares that the Rights Plan Condition is satisfied. Unless and
until the ADT Distribution Date (as defined herein) occurs, a tender of Shares
will constitute a tender of the associated Rights.
An ADT Shareholder that desires to tender Shares and, if applicable, Rights
and whose certificates for such Shares and, if applicable, Rights are not
immediately available or who cannot comply with the procedures for book-entry
transfer on a timely basis or who cannot deliver all required documents to the
Exchange Agent prior to the Expiration Date, may tender such Shares and, if
applicable, Rights, by following the procedure for guaranteed delivery.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Prospectus. Requests for
additional copies of this Prospectus and the Letter of Transmittal may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
----------------
This Prospectus has been approved for the purposes of Section 57 of the
Financial Services Act 1986 of the United Kingdom by Salomon Brothers
International Limited ("Salomon Brothers International") which is regulated by
The Securities & Futures Authority Limited. Salomon Brothers Inc, an affiliate
of Salomon Brothers International, is advising Western Resources in connection
with the Offer and no other person and Salomon Brothers International will not
be responsible to any other person other than Western Resources for providing
the protections afforded to customers of Salomon Brothers International or for
providing advice in relation to the Offer.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION..................................................... vi
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... vii
ADT AND KCPL INFORMATION.................................................. viii
PROSPECTUS SUMMARY........................................................ 1
Western Resources....................................................... 1
ADT..................................................................... 2
Risk Factors............................................................ 3
Reasons for the Offer................................................... 5
Background of the Offer................................................. 7
Litigation.............................................................. 9
The ADT Special Meeting................................................. 11
The Offer............................................................... 12
The Amalgamation........................................................ 15
Certain Federal Income Tax Consequences................................. 16
Effect of Offer on Market for Shares; Registration Under the Exchange
Act.................................................................... 16
Appraisal Rights........................................................ 16
Comparison of the Rights of Holders of Shares and Western Resources
Common Stock........................................................... 17
The KCPL Merger......................................................... 17
Recent Developments..................................................... 18
Description of Western Resources Capital Stock.......................... 18
Market Prices........................................................... 19
The Exchange Agent...................................................... 19
Request for Assistance and Additional Copies............................ 19
Western Resources, ADT and KCPL Comparative Per Share Data.............. 20
Selected Financial Data................................................. 21
Selected Historical Financial Data of Western Resources................. 21
Selected Historical Financial Data of ADT............................... 22
Western Resources and ADT Selected Unaudited Pro Forma Combined
Financial Information.................................................. 23
Selected Historical Financial Data of KCPL.............................. 24
Western Resources, ADT and KCPL Selected Unaudited Pro Forma Combined
Financial Information.................................................. 25
RISK FACTORS.............................................................. 26
Regulatory Uncertainties; Changing Regulatory Environment; Approval of
the KCPL Merger........................................................ 26
Stranded Costs.......................................................... 26
Business Plan; Difficulty of Integrating Energy and Security
Businesses............................................................. 27
Comparatively Slower Growth than ADT.................................... 28
The Exchange Ratio...................................................... 28
Effect of the Offer and the Amalgamation on Western Resources' Financial
Status................................................................. 28
Certain Debt Instruments of ADT Operations.............................. 28
Financing of the Offer and the Amalgamation............................. 29
Future Dividends on Western Resources Common Stock...................... 29
Certain Tax Consequences of the Offer and the Amalgamation.............. 29
REASONS FOR THE OFFER..................................................... 30
Offer Premium and Dividend Impact....................................... 30
The Exchange Ratio...................................................... 31
Enhanced Business Opportunities......................................... 32
Growth Opportunities in the Security Industry........................... 33
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Expansion of Branded Energy Marketing................................... 33
BACKGROUND OF THE OFFER................................................... 35
LITIGATION................................................................ 38
THE ADT SPECIAL MEETING................................................... 40
The Requisition......................................................... 40
Matters to Be Brought Before the ADT Special Meeting.................... 40
THE OFFER................................................................. 42
General................................................................. 42
ADT Rights.............................................................. 43
Timing of the Offer..................................................... 43
Extension, Termination and Amendment.................................... 44
Exchange of Shares; Delivery of Western Resources Common Stock and Cash
Consideration.......................................................... 45
Cash in Lieu of Fractional Shares of Western Resources Common Stock..... 45
Withdrawal Rights....................................................... 45
Procedure for Tendering................................................. 46
Certain Federal Income Tax Consequences................................. 49
Effect of Offer on Market for Shares; Registration Under the Exchange
Act.................................................................... 50
Purpose of the Offer; The Amalgamation.................................. 51
ADT Bye-Laws and Provisions of the United Kingdom City Code............. 51
Conditions of the Offer................................................. 52
Source and Amount of Funds.............................................. 58
Certain Debt Instruments of ADT Operations.............................. 58
Relationships with ADT.................................................. 59
Fees and Expenses....................................................... 59
Accounting Treatment.................................................... 60
Stock Exchange Listing.................................................. 60
THE AMALGAMATION.......................................................... 61
General................................................................. 61
Appraisal Rights........................................................ 62
THE KCPL MERGER........................................................... 63
RECENT DEVELOPMENTS....................................................... 64
BUSINESS OF WESTERN RESOURCES............................................. 64
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION........................ 66
The Amalgamation........................................................ 66
The KCPL Merger......................................................... 67
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION............... 76
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK............................ 80
Western Resources Common Stock.......................................... 80
Western Resources Preferred Stock....................................... 81
Western Resources Preference Stock...................................... 82
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK.................................................................... 83
Voting Rights in Connection with Business Combinations.................. 89
MARKET PRICES AND DIVIDENDS............................................... 94
VALIDITY OF WESTERN RESOURCES COMMON STOCK................................ 95
EXPERTS................................................................... 95
</TABLE>
v
<PAGE>
AVAILABLE INFORMATION
Western Resources, ADT and KCPL are subject to the informational
requirements of the Exchange Act, and in accordance therewith file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by Western Resources, ADT and KCPL with the Commission may be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the public reference facilities in the Commission's Regional Offices at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of information may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Because Western Resources, ADT and KCPL each file certain documents
electronically with the Commission, reports, proxy and information statements
and other information regarding Western Resources and ADT may also be obtained
at prescribed rates from the Commission at the Commission's Web site,
http//:www.sec.gov. The Western Resources Common Stock, the Shares and the
KCPL Common Stock are listed and traded on the NYSE. The Shares are also
listed and traded on the London Stock Exchange (the "LSE"), the Frankfurt
Stock Exchange (the "FSE") and the Bermuda Stock Exchange (the "BSX") and the
KCPL Common Stock is also listed on the Chicago Stock Exchange (the "CSE").
Reports, proxy statements and other information filed by Western Resources,
ADT and KCPL with the Commission may be inspected at the offices of the NYSE,
20 Broad Street, New York, New York 10005 and, concerning KCPL only, at the
offices of the CSE, 440 South LaSalle Street, Chicago, Illinois 60605.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-4, as amended (the "Registration Statement"),
covering the Western Resources Common Stock offered hereby which has been
filed with the Commission, certain portions of which have been omitted
pursuant to the rules and regulations of the Commission, and to which portions
reference is hereby made for further information with respect to Western
Resources, ADT and KCPL and the securities offered hereby. Statements
contained herein concerning any documents are not necessarily complete and, in
each instance, reference is made to the copies of such documents filed as
exhibits to the Registration Statement. Each such statement is qualified in
its entirety by such reference.
Not later than the date of commencement of the Offer, Western Resources will
file with the Commission a statement on Schedule 14D-1 pursuant to Rule 14d-3
under the Exchange Act furnishing certain information with respect to the
Offer. Such Schedule and any amendments thereto should be available for
inspection and copying as set forth above (except that such Schedules and any
amendments thereto will not be available at the regional offices of the
Commission).
Pursuant to Rule 409 promulgated under the Securities Act, and Rule 12b-21
promulgated under the Exchange Act, Western Resources has requested that ADT
and its independent public accountants, Coopers & Lybrand L.L.P., provide to
Western Resources the information required for complete disclosure concerning
the business, operations, financial condition and management of ADT. Neither
ADT nor Coopers & Lybrand L.L.P. has yet provided any information in response
to such request. Western Resources will provide any and all information which
it receives from ADT or Coopers & Lybrand L.L.P. prior to the expiration of
the Offer and which Western Resources deems material, reliable and appropriate
in a subsequently prepared amendment or supplement hereto.
vi
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH DOCUMENTS
THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS) ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST TO CORPORATE SECRETARY, WESTERN
RESOURCES, INC., 818 S. KANSAS AVENUE, TOPEKA, KANSAS 66612. TELEPHONE
REQUESTS MAY BE DIRECTED TO THE CORPORATE SECRETARY'S DEPARTMENT AT (913) 575-
1950. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST FOR
DOCUMENTS SHOULD BE SUBMITTED NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE.
The following documents filed with the Commission by Western Resources (File
No. 1-3523) are incorporated herein by reference: (a) Western Resources'
Annual Report on Form 10-K for the year ended December 31, 1995 (the "Western
Resources 1995 Form 10-K"); (b) Western Resources' Proxy Statement for the
1996 Annual Meeting of Shareholders, dated March 27, 1996 (the "1996 Western
Resources Annual Meeting Proxy Statement"); (c) Western Resources' Quarterly
Reports on Form 10-Q for the periods ended March 31, 1996, June 30, 1996 and
September 30, 1996; (d) Western Resources' Registration Statement on Form S-4,
dated July 3, 1996 (Registration No. 333-02711), and Western Resources'
Prospectus, dated July 3, 1996, included therein (the "KCPL Prospectus"); (e)
Western Resources' Proxy Statement on Schedule 14A, dated March 14, 1997, to
ADT Shareholders; (f) Western Resources' Current Reports on Form 8-K, dated
April 15, 1996, April 23, 1996, April 25, 1996, April 26, 1996, April 29,
1996, May 3, 1996, May 6, 1996, May 7, 1996, May 13, 1996, May 24, 1996, June
17, 1996, July 23, 1996, July 26, 1996, October 24, 1996, December 18, 1996
and February 7, 1997; and (g) soliciting materials of Western Resources filed
pursuant to Rule 14a-12 and Rule 14a-6 of the Exchange Act from December 18,
1996 through the date hereof.
The following documents filed with the Commission by ADT (File No. 0-16979)
are incorporated herein by reference: (a) ADT's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "ADT 1995 Form 10-K"); (b) ADT's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996; (c) ADT's Proxy Statement for the 1996 Annual
Meeting of ADT Shareholders, dated March 12, 1996 (the "1996 ADT Proxy
Statement"); (d) ADT's Preliminary Proxy Statement on Schedule 14A, dated
March 4, 1997; (e) ADT's Current Reports on Form 8-K, dated June 29, 1996,
July 11, 1996, July 16, 1996, September 19, 1996, October 2, 1996, October 23,
1996 and November 13, 1996; (f) ADT's Registration Statement on Form 8-A,
dated as of November 12, 1996, as amended (the "ADT Form 8-A"), and (g)
soliciting materials of ADT filed pursuant to Rule 14a-12 and Rule 14a-6 of
the Exchange Act from December 18, 1996 through the date hereof.
The following documents filed with the Commission by KCPL (File No. 1-707)
are incorporated herein by reference: (a) KCPL's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "KCPL 1995 Form 10-K"); and (b)
KCPL's Quarterly Reports on Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996.
All documents filed by either Western Resources, ADT or KCPL pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the date the Offer is terminated or the Shares are
accepted for exchange shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of such filing. Any statement contained
herein or in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes hereof to
the extent that a statement contained herein or in any other subsequently
filed document which also is, or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part hereof, except
as so modified or superseded.
vii
<PAGE>
ADT AND KCPL INFORMATION
While Western Resources has included information concerning ADT and KCPL
insofar as it is known or reasonably available to Western Resources, neither
ADT nor KCPL is affiliated with Western Resources and ADT has not to date
permitted access by Western Resources to ADT's books and records for the
purpose of preparing this Prospectus. Therefore, information concerning ADT
which has not been made public was not available to Western Resources for the
purpose of preparing this Prospectus. Although Western Resources has no
knowledge that would indicate that statements relating to ADT or KCPL
contained or incorporated by reference in this Prospectus in reliance upon
publicly available information are inaccurate or incomplete, Western Resources
was not involved in the preparation of such information and statements and,
for the foregoing reasons, is not in a position to verify any such information
or statements.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WESTERN RESOURCES, SALOMON BROTHERS INC ("SALOMON"), BEAR,
STEARNS & CO. INC. ("BEAR STEARNS") OR CHASE SECURITIES INC. ("CHASE," AND
TOGETHER WITH SALOMON AND BEAR STEARNS, THE "DEALER MANAGERS"). THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE OFFER IS NOT
BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, ADT
SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER,
WESTERN RESOURCES MAY, IN ITS SOLE DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM
NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO
ADT SHAREHOLDERS IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY EXCHANGE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WESTERN RESOURCES
OR ADT SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED OR THE DATE HEREOF.
IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE
OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO
BE MADE ON BEHALF OF WESTERN RESOURCES BY SALOMON, BEAR STEARNS AND CHASE, AS
DEALER MANAGERS, OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
viii
<PAGE>
PROSPECTUS SUMMARY
The information below is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus,
including the documents incorporated in this Prospectus by reference. ADT
Shareholders are urged to read this Prospectus and the Annexes hereto, and the
documents incorporated herein by reference, in their entirety. As used in this
Prospectus, the terms "Western Resources," "ADT" and "KCPL" refer to such
entity and, unless the context otherwise requires, its subsidiaries.
WESTERN RESOURCES
Western Resources and its divisions and wholly owned subsidiaries include
KPL, a rate-regulated electric and gas division of Western Resources ("KPL"),
Kansas Gas and Electric Company ("KGE"), a rate-regulated utility and wholly
owned subsidiary of Western Resources, Westar Capital, Westar Security, Inc.
("Westar Security"), Westar Energy, Inc., The Wing Group, Ltd., non-utility
subsidiaries, and Mid-Continent Market Center, Inc., a regulated gas
transmission service provider ("MCMC"). KGE owns 47% of Wolf Creek Nuclear
Operating Corporation ("WCNOC"), the operating company for the Wolf Creek
Generating Station ("Wolf Creek"). Western Resources' non-utility subsidiaries
market natural gas primarily to large commercial and industrial customers,
provide electronic security services, engage in international large power
project development and provide other energy-related products and services.
Western Resources is engaged principally in the production, purchase,
transmission, distribution and sale of electricity and the delivery and sale of
natural gas. Western Resources serves approximately 606,000 electric customers
in eastern and central Kansas and approximately 650,000 natural gas customers
in Kansas and northeastern Oklahoma. On December 12, 1996, Western Resources
and ONEOK, Inc. ("ONEOK") announced a proposed strategic alliance pursuant to
which Western Resources will contribute its regulated local natural gas
distribution operations, MCMC and Westar Gas Marketing, Inc. ("Westar Gas
Marketing"), and will become the largest shareholder of ONEOK. See "Prospectus
Summary--Recent Developments" and "Recent Developments."
Westar Capital is a private investment company, wholly owned by Western
Resources, with investments in energy-related and technology-oriented
businesses. Westar Capital owns 38,287,111 Shares, or approximately 27% of the
outstanding Shares, including 14,115 Shares issuable upon exchange of 500
Liquid Yield Option Notes ("LYONs") of ADT Operations Inc., a subsidiary of ADT
("ADT Operations"), which are exchangeable for Shares at a rate of 28.23 Shares
per LYON.
Westar Security, which has been operated by Western Resources since December
1995, is a rapidly growing electronic security services business with over
400,000 customer accounts. On December 31, 1996, Western Resources acquired all
of the assets of Westinghouse Security Systems, Inc. ("Westinghouse Security"),
a national security system monitoring company and a subsidiary of Westinghouse
Electric Corporation ("Westinghouse"). Westar Security is now the third-largest
monitored security company in the United States with offices in many major U.S.
markets and direct access to customers in 44 states. See "Prospectus Summary--
Recent Developments" and "Recent Developments."
KCPL is a public utility engaged in the generation, transmission,
distribution and sale of electricity to approximately 430,000 customers in
western Missouri and eastern Kansas. On July 8, 1996, Western Resources made an
offer to the shareholders of KCPL to exchange each outstanding share of KCPL
Common Stock for $31.00 in Western Resources Common Stock, subject to
adjustment. On February 7, 1997, Western Resources terminated the KCPL Offer
and announced that it had entered into the KCPL Merger Agreement with KCPL,
pursuant to which KCPL will merge with and into Western Resources. For further
details concerning, and recent developments with respect to, the KCPL Merger,
see "Prospectus Summary--The KCPL Merger" and "The KCPL Merger."
1
<PAGE>
Western Resources was incorporated under the laws of the State of Kansas in
1924. Western Resources' corporate headquarters is located at 818 S. Kansas
Avenue, Topeka, Kansas 66612 and its telephone number is (913) 575-6300. Westar
Capital's corporate headquarters is located at 818 S. Kansas Avenue, Topeka,
Kansas 66612 and its telephone number is (913) 575-6300. See "Business of
Western Resources."
ADT
The following information concerning ADT is excerpted from the ADT 1995 Form
10-K and other publicly available information:
ADT was incorporated in Bermuda on September 28, 1984, under the name Hawley
Group Limited, and is an exempted company limited by shares, with its
registered office at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda. The
executive office of the subsidiary which supervises ADT's North American
activities is located in the United States at 1750 Clint Moore Road, Boca
Raton, Florida 33431, and its telephone number is (561) 988-3600.
ADT is currently engaged in two service businesses: electronic security
services in North America and Europe and vehicle auction and related services
in the United States. ADT is the largest provider of electronic security
services in North America and the largest provider in the United Kingdom,
providing continuous monitoring of commercial and residential security systems
for 1.6 million customers. ADT is also the second largest provider of vehicle
remarketing services in the United States, operating a network of 28 vehicle
auction centers.
ADT's principal activities in the electronic security services businesses are
the electronic monitoring of its installed base of security systems and the
installation of new, monitored security systems to add to its installed base.
Monitored systems may be sold or, as is most often the case, ADT may retain
ownership of installed systems. ADT receives contractual recurring fees for
monitoring security systems through its electronic monitoring centers and for
maintenance of security systems installed at customer premises and other
related services. ADT sells, installs and maintains monitored security systems,
integrated electronic security systems and other electronic security products
for additional fees. In 1995, approximately 60% of ADT's total electronic
security services revenues in North America and Europe were derived from
contractually recurring fees for electronic monitoring and maintenance of
security systems installed at customer premises and other related services. The
remainder of ADT's security revenues were derived from the sale and
installation of security systems, the installation of security systems in
accordance with a monitoring service agreement and the maintenance of security
systems on a non-contractual basis.
In September 1996, ADT acquired the entire equity interest in Automated
Security (Holdings) PLC, a United Kingdom company ("ASH"). ASH is engaged in
the provision of electronic security services in North America and Europe.
Under the terms of the transaction (the "ASH Transaction"), shareholders of ASH
received three Shares for every ninety-two ordinary shares of ASH and two
Shares for every thirty-one 5% convertible cumulative redeemable preference
shares and 6% convertible cumulative redeemable preference shares of ASH. The
total consideration paid by ADT in the ASH Transaction consisted of 7,034,940
Shares and ADT accounted for the ASH Transaction as a pooling of interests.
In a press release issued by ADT on November 6, 1996, ADT announced its
intention to sell its United States vehicle auction business. ADT's vehicle
auction business operates a network of large modern auction centers which
provide an organized wholesale marketplace for the sale and purchase of used
vehicles. Principal sellers, or consignors, include new and used vehicle
dealers, vehicle manufacturers, fleet operators, leasing companies, financial
institutions and government agencies. Principal purchasers include franchise
and non-franchise vehicle dealers and distributors who acquire vehicles to sell
in the retail market.
2
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, certain factors
should be considered by ADT Shareholders in evaluating the Offer and an
investment in Western Resources Common Stock. The factors summarized below
might cause Western Resources' actual results to differ significantly from the
results discussed in certain forward-looking statements contained in the
Prospectus. For a detailed description of the risks summarized below, see "Risk
Factors."
Regulatory Uncertainties; Changing Regulatory Environment; Approval of the
KCPL Merger. Electric and natural gas utilities have historically operated in a
rate-regulated environment. Federal and state regulatory agencies having
jurisdiction over the rates and services of Western Resources and other
utilities are in the process of initiating steps that are expected to result in
a more competitive environment for utilities' services. Increased competition
may create greater risks to the stability of utility earnings. Although Western
Resources has been planning for the eventual deregulation of the energy market,
increased competition for retail electricity sales may in the future reduce
Western Resources' earnings in its formerly regulated businesses. In addition,
Western Resources' plan to market together energy and security services is
dependent upon the pace of deregulation. While it is impossible to predict with
certainty the time period in which such deregulation will occur, if at all,
Western Resources presently anticipates that such deregulation will occur prior
to the end of 1999. However, if deregulation fails to occur or does not occur
as quickly as may be expected, Western Resources may be hindered in its ability
to market energy and security services and such hinderance may negatively
impact Western Resources' future earnings and cash flows. Consummation by
Western Resources of the KCPL Merger also requires the approval of certain
regulatory authorities and there can be no assurance that such approvals will
be obtained or that the KCPL Merger will be consummated.
Stranded Costs. The term "stranded costs" as it relates to capital intensive
utilities has been defined as the carrying costs associated with property,
plant and equipment and other regulatory assets at a level which, if fully
reflected in rates, would cause prices charged by the utility for delivering
energy to exceed those of competitive alternatives in the same market.
Regulatory changes, including the introduction of competition, could adversely
impact Western Resources' ability to recover its costs in these assets absent
the economic effects of rate regulation.
Business Plan; Difficulty of Integrating Energy and Security
Businesses. Western Resources has developed a strategy to expand its business
in the deregulated marketplace for energy and has identified the security
business as a high-growth industry with a product that can be marketed with
energy. There can be no assurance that Western Resources' added commitment to
the security business will result in continued growth or profitability in such
business. Furthermore, there can be no assurance that Western Resources'
business plan to market together energy and security services will be
successful, nor is it certain that a viable market for marketing energy and
security will develop at all.
There can also be no assurance that Western Resources will be able to
integrate successfully the operations of its existing security business with
ADT. Difficulties of such assimilation will include the coordination of
security operations and the integration of personnel.
Comparatively Slower Growth than ADT. Western Resources' growth has
historically been slower than ADT's as such growth has been limited to the
growth of Western Resources' customer base within its franchised service
territory. Although Western Resources believes that its combination of security
with energy will provide Western Resources with an opportunity to achieve
higher growth than in the historically regulated energy market, there can be no
assurance that such growth will occur.
The Exchange Ratio. ADT Shareholders should consider that, depending upon the
Western Resources Average Price, the Stock Consideration paid to ADT
Shareholders in the Offer may be less than $12.50 in Western Resources Common
Stock.
3
<PAGE>
Effect of the Offer and the Amalgamation on Western Resources' Financial
Status. Expansion into the high-growth security business presents financial
risks to Western Resources. Western Resources' earnings and cash flow may
experience increased volatility due to additional business risks. Such risks
include possible slower than expected growth in the security business,
competitive pressures on prices and changes in technology. The Offer and the
Amalgamation are expected to have a dilutive effect on Western Resources'
reported earnings per share in the short term due to the amortization of
goodwill. There can also be no assurance that the Offer and the Amalgamation
will not have a negative impact on Western Resources' financial strength or
debt rating, including its ability to raise capital in the future and the cost
of capital on additional borrowings.
Certain Debt Instruments of ADT Operations. Satisfaction of the ADT
Shareholder Approval Condition and consummation of the Offer may constitute a
change of control in accordance with the terms of certain debt instruments of
ADT Operations under which the total amount of outstanding debt is
approximately $1 billion according to ADT. In certain circumstances, certain
holders of debt of ADT Operations may require the repurchase of their
securities by, or accelerate credit facilities of, ADT Operations. LYONs are
exchangeable for Shares and such exchange could potentially have a dilutive
impact on, among other things, earnings per share. See "Notes to Unaudited Pro
Forma Combined Financial Information."
Financing of the Offer and the Amalgamation. Western Resources has received a
letter from Chase Manhattan Bank and Chase in which they state that they are
highly confident that they can arrange credit facilities in the amount
necessary to fund payment of the Cash Consideration with Chase Manhattan Bank
and other lenders. There can be no assurance, however, that Chase Manhattan
Bank and Chase will be able to arrange such credit facilities. Definitive
documentation with respect to such credit facilities has not yet been
negotiated and there can be no assurance that, if definitively negotiated, it
will not contain restrictions on Western Resources' ability to pay dividends.
Future Dividends on Western Resources Common Stock. Although Western
Resources does not currently anticipate any significant change with respect to
its dividend practice as a result of the Offer or the Amalgamation, assuming
that Western Resources' dividend remains at or above the level of its current
annual indicated dividend, Western Resources presently expects that its
dividend pay-out ratio will increase to approximately 100% in the first full
year following consummation of the Amalgamation and will decline to
approximately 75% by the third year following the Amalgamation. Assuming
consummation of the Amalgamation and the KCPL Merger, Western Resources'
forecasted dividend pay-out ratio will be approximately 120%, including
transaction costs of the KCPL Merger charged to income following completion of
the KCPL Merger, or 100%, excluding such transaction costs, in the first full
year following the Amalgamation and will decline to approximately 80% by the
third year following the Amalgamation. Over the past five years, Western
Resources' dividend pay-out ratio has averaged approximately 77%.
On a pro forma combined basis assuming completion of the Offer, the
Amalgamation and the KCPL Merger, pro forma combined earnings plus
depreciation, amortization and restructuring and non-recurring charges for the
year ended December 31, 1995 and the nine months ended September 30, 1996 would
have been approximately $691,000,000 and $609,000,000, respectively. On a pro
forma combined basis assuming completion of the Offer, the Amalgamation and the
KCPL Merger, approximately 190,000,000 shares of Western Resources Common Stock
would have been outstanding during the year ended December 31, 1995 and the
nine months ended September 30, 1996, in which case the total amount of cash
required to pay Western Resources' annual indicated dividend of $2.10 would
have been approximately $400,000,000 and $300,000,000 for the twelve and nine
months, respectively. Based on publicly available information, on a pro forma
combined basis assuming completion of the Offer, the Amalgamation and the KCPL
Merger, pro forma combined capital expenditures for the year ended December 31,
1995 (excluding the effects of the ASH Transaction) and the nine months ended
September 30, 1996, respectively, would have been approximately $636,000,000
and $462,000,000. Historical pro forma combined earnings plus depreciation,
amortization and restructuring and non-recurring charges and historical pro
forma combined capital expenditures do not necessarily reflect future pro
4
<PAGE>
forma combined operating cash flows and future pro forma combined capital
expenditures. If, however, future pro forma combined operating cash flows and
future pro forma combined capital expenditures are similar to historical pro
forma combined earnings plus depreciation, amortization and restructuring and
non-recurring charges and historical pro forma combined capital expenditures,
there can be no assurance that Western Resources will be able, after paying
dividends consistent with historical levels, to maintain capital expenditures
at historical levels without moderating their timing or amount, or from time to
time funding such capital expenditures through external financing. See "Reasons
for the Offer--Offer Premium and Dividend Impact."
In the future, the Western Resources Board will set annual dividend payments
at amounts which are determined to be reasonable and consistent with Western
Resources' long-term strategy. However, there can be no assurance that Western
Resources will maintain its past practice with respect to the payment of
dividends since the declaration of future dividends will depend upon Western
Resources' future earnings, the financial condition of Western Resources and
other factors.
Certain Tax Consequence of the Offer and the Amalgamation. The exchange of
Shares for cash and Western Resources Common Stock pursuant to the Offer and
the Amalgamation will be a taxable transaction for U.S. federal income tax
purposes and may also be taxable under applicable state, local and foreign
laws. See "The Offer--Certain Federal Income Tax Consequences." ADT
Shareholders should be aware that depending upon, among other things, their
particular facts and circumstances, including their basis in Shares and tax
status, the value of the after-tax proceeds that they receive in the Offer and
the Amalgamation may be less than $22.50. Each ADT Shareholder is urged to, and
should, consult such holder's own tax advisor with respect to the specific tax
consequences of the Offer and the Amalgamation to such holder.
4--1
<PAGE>
REASONS FOR THE OFFER
Offer Premium and Dividend Impact. The purpose of the Offer is for Western
Resources to obtain control of ADT. Western Resources presently intends, as
soon as practicable after consummation of the Offer, to propose and seek to
have ADT effect an amalgamation of a newly created subsidiary of Western
Resources incorporated under the laws of Bermuda ("Bermuda Sub") with and into
ADT pursuant to the provisions of Sections 104 through 109 of the Companies
Act, with the amalgamated company operating under the name of ADT (the
"Amalgamation"). ADT has not agreed to provide Western Resources with
information that might be relevant to the structuring of the Amalgamation.
Western Resources therefore reserves the right to change the structure of the
Amalgamation upon receipt of such information.
Western Resources believes that the Offer is in the best interests of the ADT
Shareholders because, among other things, the Offer Consideration represents a
premium to the per Share closing price on the last trading day prior to the
public announcement of the Offer. In developing its belief that the Offer is in
the best interests of ADT Shareholders, Western Resources possessed limited
information with respect to the particular circumstances, from a tax
standpoint, of individual ADT Shareholders. Western Resources therefore cannot
make a conclusive determination as to the tax impact of the Offer and the
Amalgamation on all ADT Shareholders. The following table shows the premium of
the Offer Consideration over the closing per Share price on the NYSE on the
last trading day immediately prior to the public announcement of the Offer.
<TABLE>
<CAPTION>
ADT
OFFER SHARE PERCENT
PRICE* PRICE DIFFERENTIAL**
------ ------ --------------
<S> <C> <C> <C>
December 17, 1996, the last trading day before the
public
announcement of the Offer........................ $22.50 $20.13 11.8%
</TABLE>
- --------
* Assumes the Offer Consideration is $10.00 net in cash and $12.50 of Western
Resources Common Stock per Share. On March 13, 1997, the last trading day
before the date of this Prospectus, the closing price of Western Resources
Common Stock was $30.125. If the Western Resources Average Price is less than
$29.75, each Share will be exchanged for $10.00 net in cash and less than
$12.50 in Western Resources Common Stock as set forth more fully in "Reasons
for the Offer--The Exchange Ratio."
** Based on the closing prices of Western Resources Common Stock and Shares on
the indicated dates.
For further information regarding the premium available to ADT Shareholders
in the Offer, see "Reasons for the Offer--The Exchange Ratio."
In addition to the per Share premium, the Offer also provides ADT
Shareholders with the opportunity to receive an ongoing current cash return on
their ADT investment in the form of dividends on Western Resources Common
Stock. Western Resources' current annual indicated dividend totals $2.10 per
share of Western Resources Common Stock. Assuming that Western Resources'
dividend remains at or above the level of its current annual indicated
dividend, Western Resources presently expects that its dividend pay-out ratio
will increase to approximately 100% in the first full year following completion
of the Amalgamation and will decline to approximately 75% by the third year
following the Amalgamation. Assuming completion of the Amalgamation and the
KCPL Merger, Western Resources' forecasted dividend pay-out ratio will be
approximately 120%, including transaction costs of the KCPL Merger charged to
income following completion of the KCPL Merger, or 100%, excluding such
transaction costs, in the first full year following the Amalgamation and will
decline to approximately 80% by the third year following the Amalgamation. Over
the past five years. Western Resources' dividend pay-out ratio has averaged
approximately 77%.
Western Resources expects that following completion of the Offer, the
Amalgamation and the KCPL Merger its operating cash flows will exceed its
earnings in the short-term due to amortization of goodwill, depreciation, non-
recurring charges and one-time expenses related to such transactions. On a pro
forma combined basis assuming completion of the Offer and the Amalgamation, pro
forma combined earnings plus depreciation, amortization and restructuring and
non-recurring charges for the year ended December 31, 1995 and the nine
5
<PAGE>
months ended September 30, 1996 would have been approximately $463,000,000 and
$438,000,000, respectively. On a pro forma combined basis assuming completion
of the Offer and the Amalgamation, approximately 120,000,000 shares of Western
Resources Common Stock would have been outstanding during the year ended
December 31, 1995 and the nine months ended September 30, 1996, in which case
the total amount of cash required to pay Western Resources' annual indicated
dividend of $2.10 would have been approximately $252,000,000 and $189,000,000
for the twelve and nine months, respectively.
On a pro forma combined basis assuming completion of the Offer, the
Amalgamation and the KCPL Merger, pro forma combined earnings plus
depreciation, amortization and restructuring and non-recurring charges for the
year ended December 31, 1995 and the nine months ended September 30, 1996 would
have been approximately $691,000,000 and $609,000,000, respectively. On a pro
forma combined basis assuming completion of the Offer, the Amalgamation and the
KCPL Merger, approximately 190,000,000 shares of Western Resources Common Stock
would have been outstanding during the year ended December 31, 1995 and the
nine months ended September 30, 1996, in which case the total amount of cash
required to pay Western Resources' annual indicated dividend of $2.10 would
have been approximately $400,000,000 and $300,000,000 for the twelve and nine
months, respectively.
The historical pro forma combined earnings plus depreciation, amortization
and restructuring and non-recurring charges should not be considered an
accurate estimate of future pro forma combined operating cash flows. Historical
pro forma combined earnings plus depreciation, amortization and restructuring
and non-recurring charges do not include, among other things, the effects of
synergies and cost savings that Western Resources believes will result from the
Offer, the Amalgamation and the KCPL Merger.
Based on publicly available information, on a pro forma combined basis
assuming completion of the Offer and the Amalgamation, pro forma combined
capital expenditures for the year ended December 31, 1995 (excluding the
effects of the ASH Transaction) and the nine months ended September 30, 1996,
respectively, would have been approximately $502,000,000 and $385,000,000.
Based on publicly available information, on a pro forma combined basis assuming
completion of the Offer, the Amalgamation and the KCPL Merger, pro forma
combined capital expenditures for the year ended December 31, 1995 (excluding
the effects of the ASH Transaction) and the nine months ended September 30,
1996, respectively, would have been approximately $636,000,000 and
$462,000,000.
Historical pro forma combined capital expenditures do not necessarily reflect
future pro forma combined capital expenditure requirements. Given the
discretionary nature of many of such capital expenditures, the timing and
annual amount of future pro forma combined capital expenditures can be
controlled. Furthermore, such historical pro forma combined capital
expenditures include capital expenditures for the natural gas operations that
Western Resources plans to contribute to ONEOK and for ADT's U.S. auto auction
business which is expected to be sold, which in the year ended December 31,
1995 were approximately $54,000,000 and $32,000,000, respectively. As a result
of such proposed contribution and sale, capital expenditures for such
operations are not expected to be included in future pro forma combined capital
expenditures. Western Resources expects that it will fund future pro forma
combined capital expenditures out of remaining available cash flow after
dividend payments and, to the extent from time to time required, through
external financing. There can be no assurance as to the amount of available
future external financing or the associated cost.
In the future, the Western Resources Board will set annual dividend payments
at amounts which are determined to be reasonable and consistent with Western
Resources' long-term strategy. However, there can be no assurance that Western
Resources will maintain its past practice with respect to the payment of
dividends since the declaration of future dividends will depend upon Western
Resources' future earnings, cash flows, the financial condition of Western
Resources and other factors.
6
<PAGE>
Enhanced Business Opportunities. Western Resources believes that ADT
Shareholders will benefit in several ways in addition to the 12% premium above
the per Share closing price on December 17, 1996, the last trading day before
public announcement of the Offer. Upon consummation of the Offer, Western
Resources intends to build upon ADT's leading international presence and
quality brand equity in the security business, combining them with Western
Resources' fast growing security business, strong core utility business and
customer service expertise to become a leading provider of energy-related
products and services, including security, to homes and businesses. As the
energy market deregulates, Western Resources believes that there will be
opportunities for companies to capture market share based on sound utility
fundamentals and access to customers. Western Resources believes that this
proposed combination will provide ADT Shareholders with an opportunity to
leverage the ADT brand name to enter the rapidly expanding deregulated energy
market. Western Resources believes that combining the ADT brand name with
Western Resources' solid financial base and sound utility expertise will give
the combined entity a competitive advantage in the newly deregulated energy and
energy-related services market. It is Western Resources' belief that the
combination of Western Resources and ADT will provide a stable earnings base
and a sound foundation resulting in sustainable long-term growth in the
deregulated energy and energy-related services markets. This strategy is based
upon what Western Resources believes to be the compelling structural and
operational similarities between the energy and security businesses. From an
operational perspective, both businesses require expertise in constructing and
maintaining a highly reliable network with central service facilities and the
dispatch of trained personnel to customer locations to respond quickly to
disruptions in service. Western Resources believes that from the customer's
point of view, energy and security are both critical service streams which may
be viewed as necessities by homes and businesses. Rather than choosing a
different supplier for each service, Western Resources believes that customers
will appreciate the convenience of purchasing energy and security services as a
package and paying for them on one convenient customer statement. Western
Resources is currently putting this concept into practice in its utility
service area, offering many of its utility customers the convenience of one-
stop shopping for their energy and security needs. Following the Offer and the
Amalgamation, Western Resources plans to expand this successful concept by
selling security and unregulated energy services nationwide through a unified
sales and marketing effort under the ADT brand name. For further information
regarding Western Resources' analysis of the benefits of the Offer to ADT
Shareholders and Western Resources' proposal for the combination of ADT's and
Western Resources' businesses, see "Reasons for the Offer--Enhanced Business
Opportunities."
BACKGROUND OF THE OFFER
Following Western Resources' acquisition of Shares from Laidlaw (as described
below), ADT advised Western Resources that it was not interested in pursuing a
joint marketing relationship or any other type of business arrangement with
Western Resources despite the fact that Western Resources believes that such a
relationship could maximize ADT's potential both in its existing security
business and in the emerging market of deregulated retail energy distribution.
After careful study and consideration, Western Resources believes that the
potential benefits to ADT, Western Resources and the companies' respective
shareholders can be best realized through a combination of Western Resources
and ADT, and has, therefore, decided to proceed with the Offer.
On December 21, 1995, Western Resources entered into a stock purchase
agreement (the "Laidlaw Agreement") with Laidlaw Transportation, Inc.
("Laidlaw") and Laidlaw, Inc., pursuant to which Westar Capital subsequently
purchased a total of 30,800,000 Shares on or prior to March 18, 1996, at an
average price of $14.40 per Share. Since March 18, 1996, from time to time,
Westar Capital has purchased Shares in the open market at prevailing market
prices. Westar Capital owns 38,287,111 Shares, or approximately 27% of the
outstanding Shares, including 14,115 Shares issuable upon exchange of 500
LYONs, which are exchangeable for Shares at a rate of 28.23 Shares per LYON.
Also on December 21, 1995, Mr. John E. Hayes, Jr., Chairman of the Board and
Chief Executive Officer of Western Resources, delivered a letter to Mr. Michael
A. Ashcroft, Chairman of the Board, President and Chief Executive Officer of
ADT, informing Mr. Ashcroft of the Laidlaw Agreement.
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During January and February, 1996, conversations took place between Mr. Hayes
and Mr. Ashcroft and various representatives of the respective companies.
Messrs. Hayes and Ashcroft scheduled a meeting in Topeka, Kansas for March 13,
1996. On March 11, 1996, Mr. Hayes delivered a letter to Mr. Ashcroft
discussing Western Resources' proposed joint marketing efforts with ADT. On
March 13, 1996, Messrs. Hayes and Ashcroft held a meeting but failed to reach
any agreement concerning Western Resources' proposal. Later that month, Mr.
Ashcroft informed Mr. Hayes that ADT was not interested in pursuing a joint
marketing relationship with Western Resources.
On July 1, 1996, ADT entered into an Agreement and Plan of Amalgamation (the
"Republic Agreement"), by and among ADT, Republic Industries, Inc. ("Republic")
and Republic Sub. Ltd., a newly created wholly owned subsidiary of Republic
("Republic Sub"), pursuant to which Republic Sub was to be amalgamated with and
into ADT, with the amalgamated company operating under the name of ADT (the
"Republic Transaction"). The terms of the Republic Agreement contemplated that
ADT Shareholders would receive .92857 shares of Republic common stock in
exchange for each Share. The Republic Transaction was conditioned upon, among
other things, receipt by ADT of a fairness opinion from its financial advisor
at a later date (which fairness opinion was never obtained). Based on the
$26.75 closing price per share of Republic common stock on July 1, 1996, each
Share would have been exchangeable for approximately $24.84 worth of Republic
common stock, representing a premium of 31% to the closing price per Share of
$19.00 on June 28, 1996, the last trading day prior to public announcement of
the Republic Transaction. Following the public announcement of the Republic
Transaction, the closing price per share of Republic common stock fell as low
as $20.75 per share. Based on a closing price of $20.75, each Share would have
been exchangeable for approximately $19.27 worth of Republic common stock in
the Republic Transaction, representing a premium of just 1% to the closing
price per Share of $19.00 on June 28, 1996. On September 13, 1996, Westar
Capital disclosed that it had determined to oppose the Republic Transaction.
Based on the $28.81 closing price per share of Republic common stock on
September 12, 1996, each Share would have been exchangeable for approximately
$26.75 worth of Republic common stock, representing a premium of 41% to the
closing price per Share of $19.00 on June 28, 1996. Western Resources believes
that such significant fluctuations in the market price of Republic common stock
(i.e., from $28.81 to $20.75 in the course of a three-month period)
demonstrated volatility in Republic common stock (the consideration being
offered in the Republic Transaction).
Pursuant to the terms of the Republic Agreement, ADT granted to Republic a
warrant to subscribe for 15 million Shares at a purchase price of $20 per
Share, subject to adjustment (the "Republic Warrant"). The Republic Warrant was
to become exercisable for a period of six months following the termination of
the Republic Agreement. On September 30, 1996, ADT and Republic jointly
announced the termination of the Republic Agreement, citing uncertainty
attributable to market conditions, and amended the Republic Warrant to include
certain restrictions on the issuance of Shares pursuant thereto and the
transfer of such Shares by Republic to persons with interests in 10% or more of
ADT. As described below, Western Resources has commenced litigation challenging
the validity of the Republic Warrant. See "--Litigation."
On September 5, 1996, the waiting period expired with respect to Western
Resources' filing under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") to acquire ownership of in excess of 25% (but less than
50%) of the outstanding Shares.
On November 4, 1996, ADT declared a distribution of one Right for each
outstanding Share, payable to holders of record as of the close of business on
November 15, 1996, pursuant to the Rights Agreement. The Rights Agreement
provides, among other things, that after certain persons acquire 15% or more
(or, in certain limited situations, a greater percentage) of the issued and
outstanding Shares, holders of Shares (other than such persons), will be
entitled to purchase Shares at half of the current market value and that if,
after such an acquisition, ADT is involved in an amalgamation, other business
combination or certain sale transactions, holders of Shares (other than such
persons) will be entitled to purchase either Shares, or common stock of the
other
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party to such transaction, at half of the current market value of such
securities. See "The Offer--Conditions of the Offer--Rights Agreement" and "The
Offer--The ADT Rights."
On November 6, 1996, ADT announced its intention to sell its United States
vehicle auction business.
On December 17, 1996, the Western Resources Board met and determined to
proceed with the Offer. On December 18, 1996, in a letter to Mr. Ashcroft, Mr.
Hayes informed Mr. Ashcroft and the ADT Board of Western Resources' intention
to pursue the Offer and the Amalgamation and encouraged Mr. Ashcroft and the
ADT Board to meet with Western Resources to discuss the possibility of a
mutually beneficial negotiated transaction.
On December 18, 1996, Western Resources also publicly announced its intention
to commence the Offer and Western Resources filed a proxy statement (the
"Western Resources Proxy Statement") with the Commission for use in soliciting
proxies from ADT Shareholders for the ADT Special Meeting to remove the present
members of the ADT Board, elect the Western Resources Nominees to the ADT Board
and take certain other actions to facilitate the consummation of the Offer. On
December 18, 1996, Westar Capital deposited a requisition (the "Requisition")
with ADT requiring the ADT Board to convene the ADT Special Meeting. See "The
ADT Special Meeting."
On January 7, 1997, ADT announced that it had scheduled the ADT Special
Meeting date for July 8, 1997. Westar Capital has commenced litigation
challenging the July 8, 1997 meeting date. On January 8, 1997, ADT filed a
proxy statement (the "ADT Proxy Statement") with the Commission for use in
soliciting proxies from ADT Shareholders for the ADT Special Meeting against
the Western Resources Proposals.
On January 23, 1997, the waiting period expired with respect to Western
Resources' filing under the HSR Act to acquire ownership of up to 100% of the
outstanding Shares.
On March 3, 1997, the Western Resources Board met and determined to increase
the Cash Consideration by 33% and to decrease the Stock Consideration by 17%.
Also on March 3, 1997, Western Resources publicly announced its intention to
sell ADT's auto auction business following consummation of the Amalgamation. In
a letter to Mr. Ashcroft, Mr. Hayes informed Mr. Ashcroft of these
developments.
Also on March 3, 1997, ADT publicly announced the ADT Board's recommendation
that ADT Shareholders reject the Offer, and that the ADT Board had resolved to
effect certain amendments to the Rights Agreement (the "Rights Agreement
Amendments"). Such amendments prohibit persons elected to the ADT Board as a
result of a proxy solicitation or similar shareholder action which produces a
change in a majority of the directors on the ADT Board, in connection with a
proposed acquisition of ADT, from redeeming the Rights or amending the Rights
Agreement.
Western Resources believes that the Rights Agreement Amendments are illegal
under Bermuda law and that the Court (as defined below) will find such
amendments invalid. See "Litigation." Western Resources has requested that the
Court grant judicial relief with respect to the Rights Agreement Amendments
prior to the ADT Special Meeting. If such relief has not been granted prior to
the date of the ADT Special Meeting, it is possible that the Western Resources
Nominees, once elected, would be unable to redeem the Rights or amend the
Rights Agreement. In this circumstance, the Rights Plan Condition may not be
capable of satisfaction and the Offer may not be consummated.
LITIGATION
On December 18, 1996, Western Resources announced that Westar Capital had
commenced litigation in the United States District Court for the Southern
District of Florida (the "Court") charging ADT and the ADT Board with breaches
of their fiduciary duties to ADT and the ADT Shareholders. The complaint
alleged, among other things, that the ADT Board breached its fiduciary duty to
ADT and the ADT Shareholders by (i) adopting and
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continuing to deploy the ADT Rights Agreement, (ii) granting the Republic
Warrant in connection with the subsequently terminated Republic Transaction for
the purpose of making an unsolicited bid for ADT more expensive and placing a
block of votes under Mr. Ashcroft's control, and (iii) placing approximately
3,182,787 Shares in an ADT subsidiary to interfere with the voting rights of
ADT's other shareholders. Westar Capital also alleged that by agreeing to the
Republic Warrant and the amendments thereto, Republic aided and abetted
breaches of fiduciary duties by the ADT Board.
On January 3, 1997, Westar Capital filed an amended complaint alleging that
certain letters sent by ADT to Western Resources and Westar Capital interfered
with Westar Capital's voting rights as an ADT Shareholder.
On January 21, 1997, the Court granted Westar Capital's motion for leave to
file a Second Amended Complaint in which Westar Capital additionally alleged
that (i) ADT's January 7, 1997 announcement that the ADT Special Meeting was
scheduled for July 8, 1997 violated the ADT board's fiduciary and statutory
duties under Bermuda law and (ii) ADT's failure to file a Schedule 14D-9 Tender
Offer Statement violated Section 14(d) of the Exchange Act.
On January 23, 1997, Westar Capital filed a motion seeking to enjoin the ADT
Board from holding the ADT Special Meeting on July 8, 1997. That motion is
currently pending. On January 27, 1997, ADT and the ADT Board (collectively,
"ADT Defendants") filed a motion to dismiss Westar Capital's complaint on the
grounds that, among other things, Westar Capital had insufficiently pled a
"prima facie" case of personal jurisdiction over the ADT Defendants. On
February 21, 1997, the Court held that the Second Amended Complaint filed by
Westar Capital did not sufficiently plead a "prima facie" case that the Court
has jurisdiction over the ADT Defendants. The Court denied the ADT Defendants'
motion to dismiss the complaint without prejudice and granted Westar Capital
leave to file an amended complaint by March 3, 1997.
In response to the Court's February 21, 1997 order, on February 27, 1997,
Westar Capital filed a Third Amended Complaint asserting that jurisdiction
exists over the ADT Defendants because, among other things, ADT conducts
"substantial and not isolated activity" in Florida and the ADT Defendants had
committed a "tortious act" in Florida.
On February 6, 1997, Republic filed a motion to dismiss Westar Capital's
complaint arguing, among other things, that if the Court granted the ADT
Defendants' motion to dismiss, the complaint must also be dismissed as against
Republic for failure to join an indispensable party. On February 21, 1997, the
Court denied Republic's motion without prejudice.
On February 20, 1997, Westar Capital filed a motion requesting that the Court
schedule a trial on the merits of Westar Capital's claim that the Republic
Warrant is invalid and a breach of fiduciary duties, and that Republic be
required to give Westar Capital five (5) business days' notice prior to its
exercise of the Republic Warrant and the sale of Shares purchased pursuant to
the Republic Warrant.
On March 10, 1997, Westar Capital filed a motion for leave to file a Fourth
Amended Complaint arising out of ADT's adoption of certain changes to the
definition of "Continuing Directors" under the Rights Agreement. The Fourth
Amended Complaint alleges, among other things, that ADT's adoption of these so-
called "dead hand" provisions is a breach of fiduciary duty and was taken for
the improper and collateral purpose of entrenching ADT management in office and
interfering with the shareholder vote on the Western Resources Proposals. On
March 11, 1997, the Court granted Westar Capital's motion and ordered that the
ADT Defendants file a response to the Fourth Amended Complaint by March 17,
1997.
On March 12, 1997, the Court denied Westar Capital's motion to schedule a
trial on the merits with respect to Westar Capital's claims regarding the
Republic Warrant.
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On December 26, 1996, a shareholder of ADT filed a purported class action
complaint against ADT, the ADT Board, Western Resources and Westar Capital in
the Civil Division of the Circuit Court of the Fifteenth Judicial Circuit in
Palm Beach County, Florida. The complaint alleges, among other things, that
Western Resources and Westar Capital are breaching their fiduciary duties to
ADT Shareholders by failing to offer "an appropriate premium for the
controlling interest" in ADT and by holding "an effective blocking position"
that prevents independent parties from bidding for ADT. The complaint seeks
preliminary and permanent relief enjoining Western Resources from acquiring
outstanding Shares of ADT and unspecified damages. Western Resources does not
anticipate any material adverse effect on its assets or financial results
arising from the claims asserted.
On February 10, 1997, ADT Operations commenced litigation against The Chase
Manhattan Bank ("Chase Manhattan Bank") in the Supreme Court of the State of
New York, New York County, alleging that Chase Manhattan Bank breached
contractual obligations and fiduciary duties owed to ADT Operations by, among
other things, furnishing a "highly confident" letter to Western Resources
stating that Chase Manhattan Bank "expected to be able to arrange credit
facilities to fund" the Cash Consideration portion of the Offer. ADT Operations
seeks, among other things, damages and an order permanently enjoining Chase
Manhattan Bank from advising, funding, or otherwise participating in the Offer.
Neither Westar Capital nor Western Resources are named as defendants in the
action.
THE ADT SPECIAL MEETING
As more fully set forth in the Western Resources Proxy Statement, on December
18, 1996, Westar Capital deposited the Requisition with ADT, pursuant to
Section 74 of the Companies Act and Bye-Law 42 of the ADT Bye-Laws, requiring
the ADT Board to convene the ADT Special Meeting so that ADT Shareholders will
have the opportunity to satisfy the ADT Shareholder Approval Condition. Under
the Companies Act and the ADT Bye-Laws, the ADT Board is required to convene
the ADT Special Meeting. In the event that the ADT Board does not within
twenty-one days from the date of the deposit of the Requisition convene the ADT
Special Meeting, Westar Capital may itself convene the ADT Special Meeting.
Westar Capital originally requested that the date of the ADT Special Meeting be
February 18, 1997; however, on January 7, 1997, ADT announced that it had
scheduled the ADT Special Meeting for July 8, 1997. Westar Capital has
commenced litigation challenging the July 8, 1997 meeting date and is seeking
relief to compel the ADT Board to hold the ADT Special Meeting on a date 30
days subsequent to the date the Western Resources Proxy Statement is first
distributed to ADT Shareholders. See "Litigation" and "The ADT Special
Meeting."
In connection with the ADT Special Meeting, Western Resources is soliciting
ADT Shareholders' proxies in favor of (i) the removal of all of the present
members of the ADT Board and any person or persons elected or designated by any
such director to fill any vacancy or newly created directorship, pursuant to
Section 93 of the Companies Act and Bye-Law 71 of the ADT Bye-Laws, (ii) the
reduction of the number of seats on the ADT Board to two, and (iii) the
election of the Western Resources Nominees, Steven L. Kitchen and Steven A.
Millstein, as the directors of ADT (or, if either Western Resources Nominee is
unable to serve as a director of ADT due to death, disability or otherwise, any
other person designated as a Western Resources Nominee by Western Resources).
In order to comply with the requirement of Bye-Law 53 of the ADT Bye-Laws that
a director of ADT own one Share, each of the Western Resources Nominees will
own at least one Share at the time of the ADT Special Meeting. Each of the
foregoing actions (collectively, the "Western Resources Proposals") is designed
to facilitate the prompt consummation of the Offer and the Amalgamation.
Only persons entered in the register of members of ADT as holders of Shares
at the time of the ADT Special Meeting will be entitled to vote at such meeting
unless the ADT Board sets a record date for the ADT Special Meeting. In the
event the ADT Board sets a record date for the ADT Special Meeting, only
holders of Shares at the close of business on such record date will be entitled
to vote at the ADT Special Meeting. Each Share is entitled to one vote upon
each matter presented at the ADT Special Meeting. Holders of ADT preferred
stock, if
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any ("ADT Preferred Stock"), are not entitled to vote on any of the Western
Resources Proposals. Pursuant to Bye-Law 43 of the ADT Bye-Laws, at any general
meeting of ADT not less than two holders of Shares present either in person or
by proxy constitutes a quorum for the transaction of business. Each of the
Western Resources Proposals may be approved by the affirmative vote of a
majority of those Shares voted at the ADT Special Meeting.
THE OFFER
General. Western Resources hereby offers, upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange the Offer Consideration for each outstanding Share validly tendered on
or prior to the Expiration Date and not properly withdrawn. The Offer
Consideration consists of $10.00 net in cash and that number of shares of
Western Resources Common Stock equal to the Exchange Ratio. The term "Exchange
Ratio" means the quotient (rounded to the nearest 1/100,000) determined by
dividing $12.50 by the average of the high and low sales prices of Western
Resources Common Stock (as reported on the NYSE Composite Transactions
reporting system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the twenty consecutive
trading days ending with the third trading day immediately preceding the
Expiration Date; provided, that the Exchange Ratio shall not be greater than
0.42017. The term "Expiration Date" shall mean 5:00 p.m., Eastern time on April
15, 1997, unless and until Western Resources extends the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Western
Resources, shall expire. Pursuant to the Exchange Ratio, each Share will be
exchanged for $10.00 net in cash and $12.50 of Western Resources Common Stock,
as long as the Western Resources Average Price is $29.75 or higher. If the
Western Resources Average Price is less than $29.75, each Share will be
exchanged for $10.00 net in cash and less than $12.50 of Western Resources
Common Stock. See "Reasons for the Offer--The Exchange Ratio." No certificates
representing fractional shares of Western Resources Common Stock will be issued
pursuant to the Offer. Each tendering ADT Shareholder who would otherwise be
entitled to a fractional share of Western Resources Common Stock will receive
cash in lieu thereof. See "The Offer--Cash in Lieu of Fractional Shares of
Western Resources Common Stock." On March 13, 1997, the closing price of the
Western Resources Common Stock on the NYSE was $30.125. Based on such closing
price, each Share would be converted into $10.00 net in cash and $12.50 of
Western Resources Common Stock. The Exchange Ratio will change as the market
price of the Western Resources Common Stock changes. ADT Shareholders may call
(800) 798-5675 any time on or after the date hereof through the Expiration Date
for the current Exchange Ratio calculated, based on the then-current Western
Resources Average Price for the twenty consecutive trading days ending with the
third trading day immediately preceding the date the call is placed. The actual
Western Resources Average Price and Exchange Ratio will be calculated as of the
third trading day immediately prior to the Expiration Date, as described above,
and a press release will be issued announcing the actual Exchange Ratio prior
to the opening of the second trading day prior to the Expiration Date (as it
may be extended from time to time). A registration statement relating to the
Western Resources Common Stock to be exchanged in the Offer has been filed with
the Commission. The Offer will be made only by means of a final Prospectus and
the related Letter of Transmittal that will be delivered to ADT Shareholders as
soon as Western Resources' registration statement (of which this Preliminary
Prospectus is a part) has been declared effective by the Commission. See "The
Offer--General."
Conditions of the Offer. Western Resources' obligation to exchange the Offer
Consideration for Shares pursuant to the Offer is conditioned upon, among other
things, the satisfaction or, where applicable, waiver of each of the Offer
Conditions. Subject to the applicable rules and regulations of the Commission,
Western Resources expressly reserves the right, in its sole discretion, at any
time or from time to time, to delay acceptance for exchange or, regardless of
whether such Shares were theretofore accepted for exchange, exchange of any
Shares pursuant to the Offer or to amend or terminate the Offer and not accept
for exchange or exchange any Shares not theretofore accepted for exchange or
exchanged, upon the failure of any of the conditions to the Offer to be
satisfied. Western Resources reserves the absolute right to waive any defect or
irregularity in the tender of
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any securities and to waive any of the Offer Conditions (other than the Western
Resources Shareholder Approval Condition, the Regulatory Approval Condition and
the condition related to the effectiveness of the Registration Statement).
Although Western Resources reserves the right to do so, Western Resources does
not currently intend to waive the Minimum Tender Condition, the ADT Shareholder
Approval Condition, the ADT Bye-Law Condition or the Rights Plan Condition. See
"The Offer--Conditions of the Offer--Minimum Tender Condition," "--Western
Resources Shareholder Approval Condition," "--ADT Shareholder Approval
Condition," "--Rights Plan Condition," "--ADT Bye-Law Condition," "--Republic
Warrant Condition," "--Regulatory Approval Condition," and "--Certain Other
Conditions of the Offer." Waiver or amendment of any of these conditions may
require an extension of the Offer.
Regulatory Approvals. The acquisition of Shares by Western Resources pursuant
to the Offer is subject to the HSR Act, and the rules (the "Rules") that have
been promulgated thereunder. On December 23, 1996, Western Resources filed with
the Antitrust Division of the Department of Justice (the "Antitrust Division")
and the Federal Trade Commission (the "FTC") a Hart-Scott-Rodino Notification
and Report Form with respect to the Offer to acquire up to 100% of the
outstanding Shares. On January 23, 1997, the waiting period expired with
respect to Western Resources' filing under the HSR Act to acquire ownership of
up to 100% of the outstanding Shares. Western Resources is also subject to the
jurisdiction of the State Corporation Commission of the State of Kansas (the
"KCC") with respect to the issuance of certain securities and indebtedness. On
February 7, 1997, the KCC issued an order granting approval of the issuance of
Western Resources Common Stock and debt in connection with the Offer.
Timing of the Offer. The Offer is currently scheduled to expire on April 15,
1997; however, it is Western Resources' current intention to extend the Offer
from time to time as necessary until all conditions to the Offer have been
satisfied or waived. See "The Offer--Extension, Termination and Amendment."
Western Resources has received a letter from Chase Manhattan Bank and one of
its affiliates in which they state that they are highly confident that they can
arrange credit facilities in the amount necessary to fund payment of the Cash
Consideration. See "The Offer--Source and Amount of Funds." Western Resources
believes that it is highly unlikely that it will not have obtained financing
for the Cash Consideration prior to five business days before the Expiration
Date; however, in this unlikely event, Western Resources currently intends to
extend the Offer to ensure that five business days remain for ADT Shareholders
to tender their Shares in the Offer subsequent to obtaining such financing. See
"The Offer--Source and Amount of Funds." Western Resources expects that the
Western Resources Shareholder Approval Condition will be satisfied on or about
April 24, 1997, the date on which it plans to call a special meeting of its
shareholders (the "Western Resources Special Meeting"), to approve the issuance
of shares of Western Resources Common Stock in connection with the Offer and
the Amalgamation and to approve an amendment to the Western Resources Articles
to increase the number of shares of Western Resources Common Stock authorized
for issuance. ADT has notified ADT Shareholders that it plans to convene the
ADT Special Meeting on July 8, 1997. Westar Capital is seeking to enjoin ADT's
attempt to delay the ADT Special Meeting and has requested that the Court
compel the ADT Board to hold the ADT Special Meeting on a date 30 days
subsequent to the date the Western Resources Proxy Statement is first
distributed to ADT Shareholders. Western Resources currently anticipates that
all of the conditions to the Offer (other than the ADT Shareholder Approval
Condition, the Rights Plan Condition and the ADT Bye-Law Condition) will be
satisfied by the date of the ADT Special Meeting. Western Resources currently
anticipates that the ADT Shareholder Approval Condition will be satisfied at
the ADT Special Meeting and that the Rights Plan Condition and the ADT Bye-Law
Condition will be satisfied as soon as practicable thereafter. See "Litigation"
and "The Offer--Conditions of the Offer."
Extension, Termination and Amendment. Western Resources expressly reserves
the right (but will not be obligated), in its sole discretion, at any time or
from time to time, and regardless of whether any of the events set forth in
"The Offer--Conditions of the Offer" shall have occurred or shall have been
determined by Western Resources to have occurred, (a) to extend the period of
time during which the Offer is open by giving oral or
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written notice of such extension to the Exchange Agent, which extension will be
announced no later than 9:00 a.m., Eastern time, on the next business day after
the previously scheduled Expiration Date, and (b) to amend the Offer in any
respect (including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of Shares and/or by increasing or
decreasing the number of Shares being sought in the Offer) by giving oral or
written notice of such amendment to the Exchange Agent. The rights reserved by
Western Resources in this paragraph are in addition to Western Resources' right
to terminate the Offer as described in "The Offer--Extension, Termination and
Amendment." There can be no assurance that Western Resources will exercise its
right to extend the Offer. However, it is Western Resources' current intention
to extend the Offer until all Offer Conditions have been satisfied or waived.
See "The Offer--Extension, Termination and Amendment." During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering ADT Shareholder to withdraw
his or her Shares. See "The Offer--Withdrawal Rights."
Exchange of Shares; Delivery of Western Resources Common Stock and Cash
Consideration. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), Western Resources will accept for exchange,
and will exchange, Shares (and Rights, if applicable) validly tendered and not
properly withdrawn as promptly as practicable following the Expiration Date.
See "The Offer--Exchange of Shares; Delivery of Western Resources Common Stock
and Cash Consideration."
Withdrawal Rights. Tenders of Shares (and Rights, if applicable) made
pursuant to the Offer are irrevocable, except that Shares (and Rights, if
applicable) tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date, and, unless theretofore accepted for exchange and
exchanged by Western Resources for the Offer Consideration pursuant to the
Offer, may also be withdrawn at any time after May 16, 1997. See "The Offer--
Withdrawal Rights."
Procedure for Tendering Shares. For an ADT Shareholder validly to tender
Shares (and Rights, if applicable) pursuant to the Offer, (i) a properly
completed and duly executed Letter of Transmittal (or manually executed
facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined herein) in connection with a book-entry transfer,
and any other required documents, must be transmitted to and received by the
Exchange Agent at one of its addresses set forth on the back cover of this
Prospectus and either certificates for tendered Shares (and Rights, if
applicable) must be received by the Exchange Agent at such address or such
Shares (and Rights, if applicable) must be tendered pursuant to the procedures
for book-entry transfer (in the case of Rights, if available) set forth under
"The Offer--Procedure for Tendering" (and a confirmation of receipt of such
tender received), in each case, prior to the Expiration Date, or (ii) such ADT
Shareholder must comply with the guaranteed delivery procedure set forth under
"The Offer--Procedure for Tendering."
ADT Shareholders will be required to tender one Right for each Share tendered
in order to effect a valid tender of Shares, unless the Rights Plan Condition
has been satisfied or waived. Unless the ADT Distribution Date occurs, a tender
of Shares will constitute a tender of the associated Rights.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES (AND RIGHTS CERTIFICATES, IF
APPLICABLE) AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
14
<PAGE>
THE AMALGAMATION
The purpose of the Offer is to enable Western Resources to acquire control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect the Amalgamation, pursuant to which a
newly created subsidiary of Western Resources incorporated under the laws of
Bermuda will amalgamate with and into ADT, with the amalgamated company
operating under the name of ADT. In the Amalgamation, each then outstanding
Share (other than Shares owned by Western Resources or any of its affiliates,
Shares held in the treasury of ADT (if ADT is so authorized) or by any
subsidiary of ADT and Shares owned by ADT Shareholders who perfect appraisal
rights under Bermuda law) would be cancelled in exchange for the right to
receive the Offer Consideration. ADT has not agreed to provide Western
Resources with information that might be relevant to the structuring of the
Amalgamation. Western Resources therefore reserves the right to change the
structure of the Amalgamation upon receipt of such information.
If the ADT Shareholder Approval Condition is satisfied at the ADT Special
Meeting, the ADT Shareholders will have effectively approved the Offer and the
Amalgamation as the Western Resources Nominees are committed to taking, subject
to the fulfillment of the fiduciary duties they would have as directors of ADT,
all actions necessary and desirable to facilitate consummation of the Offer and
the Amalgamation including, among other things, (i) to the extent possible,
either redeeming the Rights or amending the Rights Agreement to make the Rights
inapplicable to the Offer, if necessary, in order to satisfy the Rights Plan
Condition, (ii) not invoking the provisions of Bye-Law 104 or 46 of the ADT
Bye-Laws (as described herein) in connection with the acquisition of Shares by
Western Resources pursuant to the Offer or otherwise, (iii) adopting and
approving an agreement and plan of amalgamation among ADT, Bermuda Sub and
Western Resources pursuant to which Bermuda Sub will amalgamate with and into
ADT, with the amalgamated company operating under the name of ADT, and ADT
Shareholders (other than Western Resources and ADT and their respective
affiliates, and ADT Shareholders who perfect appraisal rights under Bermuda
law) will receive the Offer Consideration in exchange for the cancellation of
each Share (the "Amalgamation Agreement") and (iv) proposing an amendment to
the ADT Bye-Laws providing that an amalgamation may be approved by the
affirmative vote of a majority of the votes cast at a general meeting of ADT
(the "Bye-Law Amendment"). Bye-Law 64 of the ADT Bye-Laws ("Bye-Law 64")
restricts the ability of an ADT director to vote on, or be counted in a quorum
to consider, proposals concerning any other company in which the director is
the holder of or is beneficially interested in one percent or more of the
equity share capital or the voting rights. Bye-Law 64 will not restrict the
ability of the Western Resources Nominees to facilitate the consummation of the
Offer and the Amalgamation because any interest of the Western Resources
Nominees in the equity share capital or voting rights of either Western
Resources or Bermuda Sub will be less than one percent.
Pursuant to the Companies Act, each of the Bye-Law Amendment and the
Amalgamation Agreement require the approval of ADT Shareholders in order to
take effect. Under the ADT Bye-Laws and Section 77(2) of the Companies Act,
approval of the Bye-Law Amendment requires the affirmative vote of a majority
of votes cast at a general meeting of ADT. Section 106(4A) of the Companies Act
provides in part that, unless a company's bye-laws specifically provide
otherwise, an amalgamation of a Bermuda company must be approved by a majority
vote of three-fourths of those ADT Shareholders voting at a duly called
meeting. The ADT Bye-Laws do not currently specify the vote required to approve
an amalgamation. Therefore, upon the adoption of the Bye-Law Amendment,
approval of the Amalgamation Agreement will also require the affirmative vote
of a majority of votes cast at a general meeting of ADT (including Shares owned
by Western Resources or its affiliates).
If the Minimum Tender Condition and other Offer Conditions are satisfied, and
the Offer is consummated, Western Resources and its affiliates will own a
majority of the outstanding Shares. Accordingly, Western Resources and its
affiliates will at such time have sufficient voting power in ADT to approve the
Bye-Law Amendment and the Amalgamation Agreement independently of the votes of
any other ADT Shareholders. Western Resources presently intends to vote any and
all Shares then owned by Western Resources and its affiliates to approve such
proposals.
15
<PAGE>
The Amalgamation will be subject to certain conditions, including the consent
of the Minister of Finance of Bermuda (the "Minister of Finance"). The Western
Resources Nominees are committed, subject to the exercise of their fiduciary
duties, as soon as practicable following the exchange of Shares by Western
Resources pursuant to the Offer, to causing all necessary actions to be taken
to seek the consent of the Minister of Finance to the Amalgamation. Western
Resources has no reason to believe that the Minister of Finance will not grant
approval for the Amalgamation; however, there can be no assurance that the
Minister of Finance would grant his consent to the Amalgamation. An adverse
decision by the Minister of Finance may not be subject to appeal or review in
any court. Western Resources also presently intends to condition the
Amalgamation upon holders of not more than 5% of the outstanding Shares at the
effective time of the Amalgamation perfecting appraisal rights with respect to
the Amalgamation pursuant to Section 106(6) of the Companies Act.
ADT Shareholders will have appraisal rights under Bermuda law in connection
with the Amalgamation. See "--Appraisal Rights" and "The Amalgamation--
Appraisal Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of Shares for Western Resources Common Stock and cash pursuant
to the Offer and Amalgamation will be a taxable transaction for U.S. federal
income tax purposes and may also be taxable under applicable state, local and
foreign tax laws.
All ADT Shareholders should carefully read the summary of the federal income
tax consequences of the Offer and the Amalgamation under "The Offer--Certain
Federal Income Tax Consequences" and are urged to consult with their own tax
advisors as to the federal, state, local and foreign tax consequences in their
particular circumstances.
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and, depending upon the number of Shares so purchased, could adversely affect
the liquidity and market value of the remaining Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also listed
on the LSE, FSE and the BSX. Depending upon the number of Shares acquired
pursuant to the Offer, following consummation of the Offer, the Shares may no
longer meet the requirements of such exchanges for continued listing and the
Shares may no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations, in which event the Shares would be
ineligible as collateral for margin loans made by brokers. For a description of
the treatment of Shares in the Amalgamation, see "The Amalgamation."
APPRAISAL RIGHTS
In connection with the Amalgamation and pursuant to Section 106(6) of the
Companies Act, a registered holder of Shares who does not vote in favor of the
Amalgamation, if it is proposed and submitted to a vote of ADT Shareholders,
and who is not satisfied that he or she has been offered fair value for his or
her Shares, may, within one month of the giving of the notice of the general
meeting of ADT Shareholders, apply to the Supreme Court of Bermuda (the
"Bermuda Supreme Court") to have the fair value of such dissenting ADT
Shareholder's Shares appraised by the Bermuda Supreme Court. Within one month
of the Bermuda Supreme Court's appraisal of the fair value of any Shares,
Western Resources shall be entitled either to pay to the dissenting ADT
Shareholder an amount equal to the value of his or her Shares as appraised by
the Bermuda Supreme Court or to terminate the Amalgamation if the agreement
with respect thereto so provides. The Bermuda Supreme Court has wide discretion
to assess the value of shares in appraisal proceedings. The Bermuda Supreme
Court would likely call on expert evidence and may assess the fair value based
on (a) the market value (i.e., the quoted stock market
16
<PAGE>
price) of the Shares; (b) a valuation of the net assets of ADT; (c) the
earnings or investment value method which would involve the capitalization of
maintainable earnings; and/or (d) a combination of these methods. Western
Resources presently intends to condition the Amalgamation upon, among other
things, holders of not more than 5% of the outstanding Shares having perfected
appraisal rights with respect to the Amalgamation. See "The Amalgamation--
Appraisal Rights."
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK
As a consequence of the exchange of Shares for shares of Western Resources
Common Stock in the Offer and the cancellation of Shares as a result of the
Amalgamation, shareholders of ADT, a corporation incorporated under the laws of
Bermuda, would become shareholders of Western Resources, a Kansas corporation.
Such holders would have certain rights as Western Resources shareholders that
are different from the rights they currently have in ADT, both because of the
differences between the Western Resources Articles and Western Resources' by-
laws (the "Western Resources Bylaws"), on the one hand, and the ADT Memorandum
of Association and the ADT Bye-Laws, on the other hand, and because of
differences between Kansas and Bermuda corporation law. For a comparison of the
charter and by-law provisions of Western Resources and ADT and of Kansas and
Bermuda law, see "Comparison of the Rights of Holders of Shares and Western
Resources Common Stock."
THE KCPL MERGER
On July 8, 1996, Western Resources commenced the KCPL Offer to exchange
shares of Western Resources Common Stock for each outstanding share of KCPL
Common Stock. See "The KCPL Merger." It was Western Resources' intent, as soon
as practicable after consummation of the KCPL Offer, to seek to merge KCPL with
and into Western Resources. Pursuant to the exchange ratio in the KCPL Offer,
KCPL shareholders would have received $31.00 of Western Resources Common Stock
in exchange for each share of KCPL Common Stock, subject to a maximum of 1.100
and a minimum of 0.933 shares of Western Resources Common Stock for each share
of KCPL Common Stock.
Beginning in November of 1996, members of the respective boards of directors
and managements of KCPL and Western Resources began discussions regarding a
negotiated transaction between the two companies. Negotiations continued for a
period of several weeks. On February 7, 1997, KCPL and Western Resources
announced that their respective boards of directors had approved a merger
agreement (the "KCPL Merger Agreement") pursuant to which KCPL will be merged
with and into Western Resources and KCPL shareholders will receive $32.00 of
Western Resources Common Stock per share of KCPL Common Stock, subject to a
maximum of 1.100 and a minimum of 0.917 shares of Western Resources Common
Stock per share of KCPL Common Stock (subject to upward adjustment as specified
in the KCPL Merger Agreement). As required by the KCPL Merger Agreement,
Western Resources terminated the KCPL Offer on February 7, 1997.
The KCPL Merger, which will be tax-free to KCPL shareholders and is intended
to be accounted for as a pooling of interests transaction, will create a
combined company with more than 2,000,000 security and energy customers, $9.5
billion in assets, $3 billion in annual revenues and more than 8,000 megawatts
of electric generation resources. The KCPL Merger is conditioned upon, among
other things, the approvals of each company's shareholders and the necessary
review and approvals of various regulatory agencies, principally the KCC, the
Missouri Public Service Commission (the "MPSC"), the Nuclear Regulatory
Commission (the "NRC") and the Federal Energy Regulatory Commission (the
"FERC"). Western Resources intends to seek the approval of its shareholders at
its annual meeting of shareholders, presently scheduled for May 6, 1997.
Subject to the receipt of necessary regulatory and other approvals, Western
Resources presently anticipates that the KCPL Merger will be completed in the
first half of 1998.
17
<PAGE>
According to a representation of KCPL contained in the Merger Agreement,
there were 61,908,726 shares of KCPL Common Stock outstanding on January 28,
1997. Upon consummation of the KCPL Merger, based on the closing share price of
Western Resources Common Stock on March 13, 1997, KCPL shareholders will
receive approximately 65,761,966 shares of Western Resources Common Stock in
the KCPL Merger. This number of shares would represent approximately 35% of the
total number of outstanding shares of Western Resources Common Stock, assuming
that the Offer and the Amalgamation had previously been completed at an
Exchange Ratio of .41494, based on the closing share price of Western Resources
Common Stock on March 13, 1997.
RECENT DEVELOPMENTS
On December 12, 1996, Western Resources and ONEOK announced that they had
entered into a proposed strategic alliance in which Western Resources will
contribute its regulated local natural gas distribution operations, MCMC, and
Westar Gas Marketing, and will become the largest shareholder of ONEOK. A
division of ONEOK, the Oklahoma Natural Gas Company, provides local natural gas
service to 75% of the state of Oklahoma. ONEOK also has interests in natural
gas marketing, processing and production.
In the transaction, which is expected to close in the second half of 1997,
Western Resources will receive a 45% equity interest in ONEOK. The equity
interest will consist of 2,996,702 shares of ONEOK common stock ("ONEOK Common
Stock") and 19,317,584 shares of a new series of convertible preferred stock of
ONEOK ("ONEOK Preferred Stock"). The ONEOK Preferred Stock will pay an annual
dividend of up to 1.5 times the ONEOK Common Stock dividend, with a minimum
dividend of $1.80 per share. The transaction is expected to be accretive to
Western Resources in the first full year.
As a result of its alliance with Western Resources, ONEOK will become the
eighth-largest gas distribution company in the United States, serving almost
1.4 million customers. The strategic alliance will also include a marketing
agreement under which Western Resources will provide electric energy products,
security products and other unregulated services to ONEOK's existing 735,000
customers. The transaction requires the approval of ONEOK's shareholders, the
Oklahoma Corporation Commission (the "OCC"), the KCC and the Commission.
Pursuant to the HSR Act, the transaction may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. Western Resources
shareholders will not vote on the transaction.
On December 31, 1996, Western Resources paid approximately $358 million,
subject to certain adjustments, and assumed certain liabilities and
obligations, for all of the assets used in, related to or necessary for the
operation of the security installation, monitoring and service business
currently operated by Westinghouse Security, a subsidiary of Westinghouse. As a
result of the acquisition, Westar Security is now the third-largest monitored
security company in the United States with over 400,000 customers, offices in
many major U.S. markets and direct access to customers in 44 states.
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK
The authorized capital stock of Western Resources consists of 85,000,000
shares of Western Resources Common Stock, par value $5.00 per share, 4,000,000
shares of preference stock, no par value, 6,000,000 shares of preferred stock,
no par value, and 600,000 shares of preferred stock, par value $100.00 per
share. As of March 13, 1997, there were 64,841,417 shares of Western Resources
Common Stock issued and outstanding. As of March 13, 1997, there were 138,576
shares of 4.5% preferred stock, par value $100.00 per share ("Western Resources
4.5% Preferred Stock"), 60,000 shares of 4.25% preferred stock, par value
$100.00 per share ("Western Resources 4.25% Preferred Stock"), and 50,000
shares of 5% preferred stock, par value $100.00 per share ("Western Resources
5% Preferred Stock," and together with the Western Resources 4.5% Preferred
Stock and the Western Resources 4.25% Preferred Stock, the "Western Resources
Preferred Stock"), issued and outstanding. As of March 13, 1997, there were
500,000 shares of 7.58% Series preference stock ("Western Resources Preference
Stock") outstanding.
18
<PAGE>
Holders of shares of Western Resources Common Stock and Western Resources
Preferred Stock are entitled to one vote per share for each share held (except
with respect to the election of directors, as described herein under
"Description of Western Resources Capital Stock"). Subject to the rights of
holders of shares of outstanding Western Resources Preferred Stock and Western
Resources Preference Stock, holders of shares of Western Resources Common Stock
have equal rights to participate in dividends when declared and, in the event
of liquidation, in the net assets of Western Resources available for
distribution to shareholders. Western Resources may not declare any dividends
on the Western Resources Common Stock unless full preferential amounts to which
holders of Western Resources Preferred Stock and Western Resources Preference
Stock are entitled have been paid or declared and set apart for payment. The
Western Resources Articles also contain restrictions on the payment of
dividends.
For information relating to ownership of Western Resources Common Stock by
certain beneficial owners and directors and executive officers of Western
Resources, see the 1996 Western Resources Annual Meeting Proxy Statement. For
information relating to ownership of Shares by certain beneficial owners and
directors and executive officers of ADT, see Schedule B. As of March 13, 1997,
as a group, Western Resources' directors, executive officers and their
affiliates beneficially owned approximately 0.19% of the outstanding shares of
Western Resources Common Stock. According to publicly available information,
ADT's directors, executive officers and their affiliates own approximately 4.5%
of the outstanding Shares.
For additional information concerning the capital stock of Western Resources,
see "Description of Western Resources Capital Stock."
MARKET PRICES
The following table sets forth the market price per share of Western
Resources Common Stock and ADT Shares, and the equivalent Offer Consideration
per ADT Share on (i) December 17, 1996, the last trading day prior to the
public announcement of the Offer and (ii) March 13, 1997, the last trading day
prior to the date of this Prospectus. The historical market prices represent
the closing prices per share on such dates on the NYSE Composite Tape. The
equivalent market prices per Share represent the closing price per share of
Western Resources Common Stock multiplied by the Exchange Ratio together with
the Cash Consideration which is exchangeable in the Offer for each Share. See
"Market Prices and Dividends."
<TABLE>
<CAPTION>
WESTERN
RESOURCES ADT
--------- --------------------
EQUIVALENT AT
OFFER
DATE ACTUAL ACTUAL CONSIDERATION
---- --------- ------ -------------
<S> <C> <C> <C>
December 17, 1996................................ $31.25 $20.13 $22.50
March 13, 1997................................... $30.13 $21.75 $22.50
</TABLE>
THE EXCHANGE AGENT
Harris Trust Company of New York has been appointed Exchange Agent in
connection with the Offer. The Letter of Transmittal (or facsimile copies
thereof) and certificates for Shares (and Rights, if applicable) should be sent
by each tendering ADT Shareholder or his or her broker, dealer, bank or nominee
to the Exchange Agent at the addresses set forth on the back cover of this
Prospectus.
REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES
Requests for information or assistance concerning the Offer may be directed
to the Dealer Managers or the Information Agent at their respective addresses
set forth on the back cover of this Prospectus. Requests for additional copies
of this Prospectus and the Letter of Transmittal should be directed to the
Information Agent.
19
<PAGE>
WESTERN RESOURCES, ADT AND KCPL COMPARATIVE PER SHARE DATA
The following table sets forth comparative per share data of Western
Resources, ADT and KCPL on both a historical and pro forma combined basis. This
table should be read in conjunction with the historical financial statements
and notes thereto contained in the Western Resources 1995 Form 10-K, the ADT
1995 Form 10-K, Western Resources' Quarterly Report on Form 10-Q for the nine
months ended September 30, 1996 (the "Western Resources September Form 10-Q"),
ADT's Quarterly Report on Form 10-Q for the nine months ended September 30,
1996 (the "ADT September Form 10-Q"), ADT's Current Reports on Form 8-K, dated
September 5, 1996, October 21, 1996 and November 12, 1996, the KCPL 1995 Form
10-K, and KCPL's Quarterly Report on Form 10-Q for the nine months ended
September 30, 1996 (the "KCPL September Form 10-Q"), each of which is
incorporated by reference herein, and in conjunction with the unaudited pro
forma combined financial information appearing elsewhere in this Prospectus.
See "Western Resources, ADT and KCPL Unaudited Pro Forma Combined Financial
Information."
The Amalgamation, pursuant to which Bermuda Sub will amalgamate with and into
ADT, will be accounted for as a purchase and the pro forma information set
forth below assumes the Amalgamation occurred as of January 1, 1995 and 1996,
respectively. The KCPL Merger is expected to be accounted for as a pooling of
interests. Accordingly, the historical results of Western Resources and KCPL
have been restated to reflect the KCPL Merger for all periods presented. Pro
forma combined information reflecting the Amalgamation and the KCPL Merger has
been presented for the nine months ended September 30, 1996 and the year ended
December 31, 1995. This information does not reflect the estimated cost savings
or revenue enhancements that Western Resources believes may result from the
Amalgamation or the KCPL Merger. The pro forma combined per share data is not
necessarily indicative of actual results had the Amalgamation and the KCPL
Merger occurred on such dates or of future expected results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
----------------- ------------
<S> <C> <C>
WESTERN RESOURCES
Book value per common share.................................... $25.14 $24.71
Earnings per common share...................................... 1.93 2.71
Dividends per common share..................................... 1.55 2.02
ADT(1)
Book value per common share.................................... $ 5.56 $10.26
Earnings (loss) per common share before extraordinary item..... (4.77) 0.22
PRO FORMA COMBINED (UNAUDITED)
Book value per common share(2)................................. $26.58 $25.98
Earnings (loss) per average common share before extraordinary
item.......................................................... (5.29) 0.24
Dividends per common share (5)................................. 1.575 2.10
EQUIVALENT PRO FORMA COMBINED (UNAUDITED) (3)
Book value per equivalent common share......................... $11.03 $10.78
Earnings (loss) per average equivalent common share before
extraordinary item............................................ (2.20) 0.10
Dividends per equivalent common share.......................... 0.65 0.87
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1996 ----------------------------
(UNAUDITED) 1995 1994(4) 1993(4)
----------------- ------- -------- --------
<S> <C> <C> <C> <C>
WESTERN RESOURCES
Book value per common share............................ $25.14 $ 24.71 $ 23.93 $ 23.08
Earnings per common share.............................. 1.93 2.71 2.82 2.76
Dividends per common share............................. 1.55 2.02 1.98 1.94
ADT(1)
Book value per common share............................ $ 5.56 $ 10.26 N/A N/A
Earnings (loss) per common share before extraordinary
item.................................................. (4.77) 0.22 N/A N/A
KCPL
Book value per common share............................ $14.81 $ 14.50 $14.13 $ 13.99
Earnings per common share.............................. 1.38 1.92 1.64 1.66
Dividends per common share............................. 1.19 1.54 1.50 1.46
PRO FORMA COMBINED (UNAUDITED)
Book value per common share(2)......................... $21.89 $ 21.68 $18.44 $ 17.96
Earnings (loss) per average common share before
extraordinary item.................................... (3.00) 0.79 2.16 2.13
Dividends per common share............................. 1.575(5) 2.10(5) 1.98 1.94
EQUIVALENT PRO FORMA COMBINED (UNAUDITED) (3)
Book value per equivalent common share................. $ 9.08 $ 9.00 N/A N/A
Earnings (loss) per average equivalent common share
before extraordinary item............................. (1.24) 0.33 N/A N/A
Dividends per equivalent common share.................. 0.65 0.87 N/A N/A
</TABLE>
- --------
(1) ADT has not declared dividends for the periods presented.
(2) Pro Forma Combined net book value per share reflects 60.1 million
additional shares of Western Resources' Common Stock at $30.125 per share
(based upon closing prices on March 13, 1997) needed to acquire the net
remaining outstanding Shares of ADT at September 30, 1996 and December 31,
1995.
(3) Reflects the exchange of one Share for Western Resources Common Stock at an
assumed Exchange Ratio of .41494.
(4) Periods prior to 1995 present only the combined amounts resulting from the
KCPL Merger and do not include amounts for ADT since the Amalgamation will
be accounted for as a purchase.
(5) Pro forma dividends for the nine months ended September 30, 1996 and the
year ended December 31, 1995 are calculated based on Western Resources'
current annual dividend of $2.10 per common share. Future dividends are
dependent upon future earnings and cash flows.
20
<PAGE>
SELECTED FINANCIAL DATA
The summary below sets forth selected historical financial data and selected
unaudited pro forma combined financial data. This financial data should be read
in conjunction with the historical financial statements and notes thereto
contained in the Western Resources 1995 Form 10-K, the ADT 1995 Form 10-K and
the KCPL 1995 Form 10-K, each of which is incorporated by reference herein, and
in conjunction with the unaudited pro forma combined financial information and
notes thereto appearing elsewhere in this Prospectus. See "Western Resources,
ADT and KCPL Unaudited Pro Forma Combined Financial Information."
SELECTED HISTORICAL FINANCIAL DATA OF WESTERN RESOURCES
The selected historical financial data of Western Resources set forth below
has been derived from financial statements of Western Resources as they
appeared in Western Resources' Annual Reports on Form 10-K filed with the
Commission for each of the five fiscal years in the period ended December 31,
1995, and Western Resources' Quarterly Reports on Form 10-Q for the periods
ended September 30, 1996, and September 30, 1995.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------------------
1996 1995 1995 1994(1) 1993 1992(3) 1991
---------- ----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
WESTERN RESOURCES
Income Statement Data:
Operating revenues..... $1,481,915 $ 1,285,959 $1,743,300 $1,764,769 $2,028,411 $1,639,422 $1,162,178
Operating income(2).... 300,364 294,648 369,906 370,672 370,338 281,721 129,621
Net income............. 136,484 135,196 181,676 187,447 177,370 127,884 89,645(5)
Earnings applicable to
common stock.......... 122,875 125,132 168,257 174,029 163,864 115,133 83,268(5)
Earnings per common
share................. 1.93 2.02 2.71 2.82 2.76 2.20 2.41(5)
Dividends declared per
common share.......... $ 1.545 $ 1.515 $ 2.02 $ 1.98 $ 1.94 $ 1.90 $ 2.04(4)
<CAPTION>
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
---------------------- ------------------------------------------------------
1996 1995 1995 1994(1) 1993 1992 1991
---------- ----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets........... $6,083,191 $ 5,265,749 $5,490,677 $5,371,029 $5,412,048 $5,438,906 $2,112,513
Long-term debt......... 1,466,526 1,341,198 1,391,263 1,357,028 1,523,988 1,926,026 586,579
Company-obligated
mandatorily redeemable
preferred securities.. 220,000 -- 100,000 -- -- -- --
Preferred and
preference stock...... 74,858 174,858 174,858 174,858 174,858 176,291 128,891
Common stock equity.... 1,615,060 1,532,267 1,553,110 1,474,455 1,422,175 1,248,367 642,449
Book value per common
share................. $ 25.14 $ 24.50 $ 24.71 $ 23.93 $ 23.08 $ 21.51 $ 18.59
</TABLE>
- --------
(1) Information reflects the sale of the Missouri natural gas properties on
January 31, 1994.
(2) For operating income presented for periods subsequent to 1991, income taxes
are presented as a separate line item after "Operating Income." For 1991, a
traditional utility income statement format is presented which includes
operating income, net of income taxes.
(3) Information reflects the merger with KGE on March 31, 1992.
(4) Includes special, one-time dividend of $0.18 per share paid February 28,
1991.
(5) Includes cumulative effect to January 1, 1991 of change in revenue
recognition, a $17,360,000 or $0.50 per share increase.
21
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF ADT
The selected historical financial data of ADT set forth below has been
derived from ADT's Quarterly Report on Form 10-Q for the period ended September
30, 1996 and ADT's Current Reports on Form 8-K, dated September 5, 1996,
October 21, 1996 and November 12, 1996 (the "ADT Form 8-Ks"). The ADT Form 8-Ks
restate ADT's financial statements to reflect the ASH Transaction which ADT
accounted for as a pooling of interests. The ADT 1995 Form 10-K should also be
read in conjunction with ADT's selected historical financial data. Income
statement data for 1992 and prior periods and balance sheet data for 1994 and
prior periods have been derived by combining publicly filed financial
information of ADT and ASH.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
ADT
Income Statement
Data:(3)
Operating revenues..... $1,261,600 (1) $1,325,800 $1,783,800 $1,629,400 $1,528,500 $1,585,231 $1,483,907
Operating income
(loss)................ (579,900)(2) 177,700 200,800 206,000 186,800 213,679 191,427
Net income (loss)
before extraordinary
items................. (651,700) 60,900 31,000 82,600 110,700 153,767 (508,903)
Earnings (loss) per
common share before
extraordinary item.... $ (4.77) $ 0.44 $ 0.22 $ 0.50 $ 0.74 $ 1.36 $ (4.49)
<CAPTION>
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
------------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:(3)
Total assets........... $2,644,700 N/A $3,419,700 $3,406,800 $3,488,379 $3,486,645 $3,817,891
Long-term debt......... 1,027,600 N/A 1,174,800 1,051,000 1,160,951 1,158,482 1,298,878
Preferred and
preference stock...... 4,900 N/A 4,900 5,200 442,200 470,700 562,400
Common stock equity.... 783,200 N/A 1,425,300 1,299,800 1,195,067 1,015,103 936,716
Book value per common
share................. $ 5.56 N/A $ 10.26 $ 9.59 $ 9.75 $ 8.95 $ 8.27
</TABLE>
- --------
(1) Operating revenue decreased for the nine months ended September 30, 1996,
compared to the same period in 1995, primarily due to the sale of the
European auto auction business in December 1995.
(2) Includes a non-cash charge of approximately $744.7 million to recognize the
impairment of certain long-lived assets, primarily existing goodwill.
(3) Includes historical results of operations and financial position related to
ADT's auto auction business which Western Resources intends to sell at, or
near, the closing date of the Amalgamation. In the unaudited pro forma
combined financial information, the income statement and balance sheet data
related to this business have been eliminated and presented as property
held for sale.
22
<PAGE>
WESTERN RESOURCES AND ADT SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION
The following selected unaudited pro forma combined financial information
combines the consolidated balance sheets and income statements of Western
Resources and ADT as if the Amalgamation had occurred for all periods
presented. These statements are prepared on the basis of accounting for the
Amalgamation as a purchase and are based on the assumptions set forth in the
notes thereto. These statements do not reflect the estimated cost savings and
revenue enhancements Western Resources believes will result from the
Amalgamation. Therefore, the following information is not necessarily
indicative of actual results that would have occurred had the Amalgamation
occurred on such dates or of expected future results. See "Western Resources
and ADT Unaudited Pro Forma Combined Financial Information."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
PRO FORMA COMBINED (UNAUDITED)
Income Statement Data:
Operating revenues................................ $ 2,520,715 $3,094,200
Operating income (loss)........................... (337,836) 472,406
Net income (loss) before extraordinary item....... (640,677) 42,919
Earnings (loss) applicable to common stock before
extraordinary item............................... (654,286) 29,500
Earnings (loss) per average common share before
extraordinary item............................... $ (5.29) $ 0.24
Dividends per average common share (1)............ $ 1.575 $ 2.10
Dividend pay-out ratio (2)........................ N/M 875.0%
<CAPTION>
SEPTEMBER 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
PRO FORMA COMBINED (UNAUDITED)
Balance Sheet Data:
Total assets...................................... $10,798,507
Long-term debt, net............................... 4,250,526
Company-obligated mandatorily redeemable preferred
securities....................................... 220,000
Preferred and preference stock.................... 79,758
Common stock equity............................... 3,304,943
</TABLE>
- --------
(1) Pro forma dividends are calculated based on Western Resources' current
annual dividend of $2.10 per common share. Future dividends are dependent
upon future earnings and cash flows.
(2) The net loss resulting from an impairment charge of $744.7 million recorded
by ADT in 1996 makes the calculation of a dividend pay-out ratio not
meaningful (N/M) for the nine months ended September 30, 1996. Excluding
the effect of the impairment charge, earnings applicable to common stock
before extraordinary item would have approximated $90 million or $0.73 per
common share resulting in a dividend pay-out ratio of 215.8%.
23
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF KCPL
The selected historical financial data of KCPL set forth below has been
derived from the financial statements of KCPL as they appeared in KCPL's Annual
Reports on Form 10-K filed with the Commission for each of the five fiscal
years in the period ended December 31, 1995 and KCPL's Current Reports on Form
10-Q for the periods ended September 30, 1996 and September 30, 1995.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1996 1995 1995 1994(3) 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
KCPL
Income Statement Data:
Operating revenues..... $ 703,031 $ 681,881 $ 885,955 $ 868,272 $ 857,450 $ 802,668 $ 825,101
Operating income(2).... 210,287 195,509 244,110 220,640 225,804 192,265 171,308
Net income............. 88,406 99,239 122,586 104,775 105,772 86,334 103,893
Earnings applicable to
common stock.......... 85,566 96,200 118,575 101,318 102,619 83,272 97,870
Earnings per common
share................. 1.38 1.55 1.92 1.64 1.66 1.35(1) 1.58(1)
Dividends declared per
common share.......... $ 1.185 $ 1.15 $ 1.54 $ 1.50 $ 1.46 $ 1.43(1) $ 1.37(1)
<CAPTION>
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
--------------------- ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets........... $2,895,872 $2,866,584 $2,882,506 $2,770,397 $2,755,068 $2,646,923 $2,615,039
Long-term debt......... 834,136 835,533 835,713 798,470 733,664 788,209 822,680
Preferred and
preference stock(5)... 90,276 90,436 90,436 90,596 90,756 90,916 41,076
Common stock
equity(4)............. 917,092 899,706 897,938 874,699 866,151 853,924 860,229
Book value per common
share................. $ 14.81 $ 14.53 $ 14.50 $ 14.13 $ 13.99 $ 13.79(1) $ 13.90(1)
</TABLE>
- --------
(1) Amounts have been restated to reflect the May 1992 two-for-one common stock
split.
(2) For operating income presented for periods subsequent to 1991, income taxes
are presented as a separate line item after "Operating Income." For 1991, a
traditional utility income statement format is presented which includes
operating income, net of income taxes.
(3) In 1994, KCPL recorded a $22.5 million expense for a voluntary early
retirement program.
(4) In February 1997, KCPL paid UtiliCorp United Inc. ("UtiliCorp") $53 million
for agreeing to combine with Western Resources within two and one-half
years from the termination of KCPL's agreement to merge with UtiliCorp.
This agreement was terminated due to failure of KCPL shareholders to
approve the transaction with UtiliCorp.
(5) See note (n) to the Unaudited Pro Forma Combined Financial Information.
24
<PAGE>
WESTERN RESOURCES, ADT AND KCPL SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION
The following selected unaudited pro forma combined financial information
combines the consolidated balance sheets and income statements of Western
Resources, ADT and KCPL as if the Amalgamation occurred on January 1, 1995 and
the KCPL Merger had occurred for all periods presented. These statements are
prepared on the basis of accounting for the Amalgamation as a purchase and the
KCPL Merger as a pooling of interests and are based on the assumptions set
forth in the notes thereto. These statements do not reflect the estimated cost
savings and revenue enhancements Western Resources believes will result from
the KCPL Merger and the Amalgamation. Therefore, the following information is
not necessarily indicative of actual results that would have occurred had the
Amalgamation and the KCPL Merger occurred on such dates or of future expected
results. See "Western Resources, ADT and KCPL Unaudited Pro Forma Combined
Financial Information."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
PRO FORMA COMBINED (UNAUDITED)
Income Statement Data:
Operating revenues............................. $ 3,223,746 $3,980,155
Operating income (loss)........................ (127,549) 716,516
Net income (loss) before extraordinary item.... (552,271) 165,505
Earnings (loss) applicable to common stock
before extraordinary item..................... (568,720) 148,075
Earnings (loss) per average common share before
extraordinary item............................ $ (3.00) $ 0.79
Dividends per average common share (1)......... $ 1.575 $ 2.10
Dividend pay-out ratio (2)..................... N/M 265.8%
<CAPTION>
SEPTEMBER 30,
1996
-------------
(IN
THOUSANDS)
<S> <C>
PRO FORMA COMBINED (UNAUDITED)
Balance Sheet Data:
Total assets................................... $13,664,379
Long-term debt, net............................ 5,084,662
Company obligated mandatorily redeemable
preferred securities.......................... 220,000
Preferred and preference stock................. 170,034
Common stock equity............................ 4,162,035
</TABLE>
- --------
(1) Pro forma dividends are calculated based on Western Resources' current
annual dividend of $2.10 per common share. Future dividends are dependent
upon future earnings and cash flows.
(2) The net loss resulting from an impairment charge of $744.7 million recorded
by ADT in 1996 makes the calculation of a dividend pay-out ratio not
meaningful (N/M) for the nine months ended September 30, 1996. Excluding
the effect of the impairment charge, earnings applicable to common stock
before extraordinary item would have approximated $176 million or $0.93 per
common share resulting in a dividend pay-out ratio of 169.4%.
25
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following are
certain factors that should be considered by ADT Shareholders in evaluating
the Offer and an investment in Western Resources Common Stock. This Prospectus
contains forward-looking statements that involve risks and uncertainties.
Western Resources' actual results may differ significantly from the results
discussed in the forward looking statements. Factors that might cause such
differences are discussed below.
REGULATORY UNCERTAINTIES; CHANGING REGULATORY ENVIRONMENT; APPROVAL OF THE
KCPL MERGER
Electric and natural gas utilities have historically operated in a rate-
regulated environment. Federal and state regulatory agencies having
jurisdiction over the rates and services of Western Resources and other
utilities are in the process of initiating steps that are expected to result
in a more competitive environment for utilities services. Increased
competition may create greater risks to the stability of utility earnings. In
a deregulated environment, formerly regulated utility companies that are not
responsive to a competitive energy marketplace may suffer erosion in market
share, revenues and profits as competitors gain access to their service
territories. This anticipated increased competition for retail electricity
sales may in the future reduce Western Resources' earnings in its formerly
regulated businesses.
In addition, Western Resources' plan to market together energy and security
services is dependent upon the pace of deregulation. While it is impossible to
predict with certainty the time period in which such deregulation will occur,
if at all, Western Resources presently anticipates that such deregulation will
occur prior to the end of 1999. However, if deregulation fails to occur or
does not occur as quickly as may be expected, Western Resources may be
hindered in its ability to market energy and security services and such
hindrance may negatively impact Western Resources' future earnings and cash
flows.
ADT Shareholders should consider that through ownership of Western Resources
Common Stock they will participate in the vicissitudes of the evolving
electric and natural gas utility industries and the deregulation thereof.
There can be no assurance that future regulatory and legislative initiatives
will not constrain Western Resources' efforts to market together energy and
security services.
In addition, consummation by Western Resources of the KCPL Merger requires
the approval of certain regulatory authorities, including the FERC. Western
Resources currently contemplates that the KCPL Merger could be completed in
the first half of 1998; however, there can be no assurance that it will have
received all requisite regulatory approvals prior to such time. Nor can there
be any assurance that the KCPL Merger will be consummated or, if consummated,
that it will occur by the first half of 1998.
STRANDED COSTS
The term "stranded costs" as it relates to capital intensive utilities has
been defined as investment in and carrying costs associated with property,
plant and equipment and other regulatory assets in excess of the level which
can be recovered in the competitive market in which the utility operates.
Regulatory changes, including the introduction of competition, could adversely
impact Western Resources' ability to recover its costs in these assets. Based
upon its current evaluation of the various factors and conditions that are
expected to impact future cost recovery, Western Resources believes that
recovery of these costs is probable. However, there can be no assurance that
such recovery will occur as the effect of competition and the amount of
regulatory assets which could be recovered in a competitive environment cannot
be predicted with any certainty at this time.
The staff of the KCC has testified in Western Resources' electric rate
proceeding in 1996 that "stranded costs" are not presently quantifiable.
Western Resources, KCPL and ONEOK, collectively, have assets of approximately
$10.7 billion, including regulatory assets aggregating approximately $1.1
billion (10.3% of total combined assets). Of this amount, $166 million is
attributable to ONEOK, primarily related to take-or-pay settlements entered
into with natural gas suppliers. ONEOK has disclosed that this regulatory
asset is being recovered, pursuant to an order from the OCC, from a
combination of a customer surcharge and transportation
26
<PAGE>
revenues. ADT Shareholders should note, however, that Western Resources will
acquire only a 9.9% common equity ownership interest in ONEOK as a result of
Western Resources' proposed strategic alliance with ONEOK. Western Resources'
potential risk with respect to ONEOK's exposure would therefore be limited to
its equity ownership in ONEOK. Finally, unlike the electric utility industry
which is in the infant stages of deregulation, the natural gas distribution
industry, in which ONEOK is a participant, has already experienced significant
deregulation, thereby reducing the risk that stranded costs will occur.
Regulatory assets of Western Resources include approximately $300 million
relating to the acquisition premium paid in Western Resources' acquisition of
KGE in 1992, which is currently being recovered pursuant to an order from the
KCC, as well as a receivable for income tax benefits flowed through to Western
Resources' customers, debt issuance costs, deferred post employment/retirement
benefits and deferred contract settlement costs. Regulatory assets of KCPL
include approximately $126 million at December 31, 1996 for recoverable future
income taxes and a receivable from customers for income tax benefits which
have been flowed-through to customers.
Finally, Western Resources' ability to fully recover its utility plant
investments in, and decommissioning costs for, generating facilities,
particularly its 47% ownership interest in Wolf Creek, may be at risk in a
competitive environment. This risk will increase as a result of the KCPL
Merger as KCPL also presently owns a 47% undivided interest in Wolf Creek.
Amounts associated with Western Resources' recovery of environmental
remediation costs and long-term fuel contract costs cannot be estimated with
any certainty, but also represent items that could give rise to "stranded
costs" in a competitive environment. In the event that Western Resources was
not allowed to recover any of its "stranded costs," the accounting impact
would be a charge to its results of operations that would be material.
Certain states, including California, have either adopted rules or are
considering rules to address stranded costs, most of which provide for the
opportunity to recover stranded costs. Proposals in Connecticut, Illinois,
Maine, Massachusetts, Michigan and other states have been introduced that all
permit varying degrees of recovery of stranded costs, most allowing for
recovery during defined interim periods for all prudently incurred costs. The
Kansas legislature is presently reviewing potential proposals, but has not
advanced any specific plan. Western Resources believes any legislative or
regulatory plan adopted would, consistent with other state plans and the rules
adopted by the FERC, include a plan for recovering stranded costs.
BUSINESS PLAN; DIFFICULTY OF INTEGRATING ENERGY AND SECURITY BUSINESSES
As deregulation in the electric and natural gas utilities industries
continues, Western Resources believes that a provider that can market
additional services with energy-related services to provide customer
convenience will have a market advantage. Western Resources has developed its
strategy to expand its business in the deregulated marketplace and has
identified the security business as a high-growth industry with a product that
can be marketed with energy. There can, however, be no assurance that Western
Resources' business plan to market together energy and security services will
be successful. The fact that Western Resources' business plan involves a
market that is as yet undeveloped makes uncertain the extent to which a viable
market for marketing energy and security will develop at all.
To date, Western Resources has committed substantial capital and human
resources to the security industry through Westar Security and the recent
acquisition of Westinghouse Security. However, obtaining control of ADT would
significantly increase the relative amount of management time and resources
that Western Resources allocates to its security business. There can be no
assurance that this added commitment will result in continued growth or
profitability in Western Resources' security business. There can also be no
assurance that Western Resources will be able to integrate successfully the
operations of its existing security businesses with ADT. Difficulties of such
assimilation will include the coordination of security operations and the
integration of personnel.
27
<PAGE>
COMPARATIVELY SLOWER GROWTH THAN ADT
Western Resources' growth has historically been slower than ADT's as such
growth has been limited to the growth of Western Resources' customer base
within its franchised service territory. During the past few years Western
Resources' electric sales have grown at an annual rate of approximately 4%.
Prior to deregulation, the only opportunity for utilities to experience
significant growth was through business combinations with other regulated
utilities. Such combinations presented growth opportunities within a finite
market. As the energy industry deregulates, Western Resources believes that
its combination of security with energy will provide Western Resources with an
opportunity to achieve higher growth than could be expected in the
historically regulated energy market. However, there can be no assurance that
such growth will occur.
THE EXCHANGE RATIO
In considering whether to tender their Shares to Western Resources pursuant
to the Offer, ADT Shareholders should consider that, depending on the price of
Western Resources Common Stock prior to the Expiration Date, there may be
certain circumstances in which the Stock Consideration paid to ADT
Shareholders may be less than $12.50 in Western Resources Common Stock.
Pursuant to the Offer, each Share will be exchanged for $10.00 net in cash and
$12.50 of Western Resources Common Stock as long as the Western Resources
Average Price is $29.75 or higher. If the Western Resources Average Price is
less than $29.75, each Share will be exchanged for $10.00 net in cash and less
than $12.50 in Western Resources Common Stock. ADT Shareholders should be
aware that depending upon the Western Resources Average Price, the Offer
Consideration paid per Share may be less than $22.50 and, depending upon the
per Share price immediately prior to the Expiration Date, may represent a
discount to the price per Share at the Expiration Date.
EFFECT OF THE OFFER AND THE AMALGAMATION ON WESTERN RESOURCES' FINANCIAL
STATUS
Expansion into the high-growth security business presents financial risks to
Western Resources. Western Resources' earnings and cash flow may experience
increased volatility due to additional business risks. Such risks include
possible slower than expected growth in the security business, competitive
pressures on prices and changes in technology.
The Offer and the Amalgamation are expected to have a dilutive effect on
Western Resources' reported earnings per share in the short term due to the
amortization of goodwill. There can also be no assurance that the Offer and
Amalgamation will not have a negative impact on Western Resources' financial
strength or debt rating, including its ability to raise capital in the future.
Following public announcement of Western Resources' proposal to merge with
KCPL, debt of Western Resources was placed on CreditWatch with negative
implications, a practice that Western Resources believes is standard with
respect to companies involved in an announced merger proposal. Since public
announcement of the Offer, Standard & Poors has downgraded the credit rating
on Western Resources' senior secured debt from A- to BBB+. Moody's has placed
Western Resources' debt on review for possible downgrade following public
announcement of the Offer, but continues to rate Western Resources First
Mortgage Bonds A3. Western Resources does not believe that these changes in
its credit rating will materially and adversely impact the business and
operations of Western Resources following the Offer and the Amalgamation.
However, such changes may increase Western Resources' cost of capital on
additional borrowings.
CERTAIN DEBT INSTRUMENTS OF ADT OPERATIONS
It is Western Resources' current view that satisfaction of the ADT
Shareholder Approval Condition and the consummation of the Offer will (i)
enable the holders of certain debt instruments of ADT Operations to require
repurchase of the securities outstanding thereunder by ADT Operations and (ii)
result in the acceleration of certain credit facilities currently available to
ADT Operations. See "The Offer--Source and Amount of Funds." According to
ADT's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996,
the total amount
28
<PAGE>
of outstanding debt of ADT Operations under which satisfaction of the ADT
Shareholder Approval Condition could constitute a change of control was
approximately $1 billion. Since it does not presently appear to be financially
attractive for the holders of such debt to require the repurchase of their
securities, or to accelerate credit facilities of ADT Operations, Western
Resources does not currently believe that these obligations present a material
risk to the liquidity of Western Resources following consummation of the Offer
and the Amalgamation. Should interest rates increase, however, it may become
more financially attractive for certain debt holders of ADT Operations to
require the repurchase of their securities by, or to accelerate credit
facilities of, ADT Operations. LYONs are exchangeable for Shares and such
exchange could thereby potentially have a dilutive impact on, among other
things, earnings per share. See "Notes to Unaudited Pro Forma Combined
Financial Information."
FINANCING OF THE OFFER AND THE AMALGAMATION
Western Resources has received a letter from Chase Manhattan Bank and Chase
in which they state that they are highly confident that they can arrange
credit facilities in the amount necessary to fund payment of the Cash
Consideration with Chase Manhattan Bank and other lenders. Their view is
based, among other things, upon their review of the terms of the Offer, their
understanding of Western Resources and public information regarding ADT, and
current conditions in the banking and syndicated loan markets, and such view
is subject to certain customary conditions. See "The Offer--Source and Amount
of Funds." There can be no assurance, however, that Chase Manhattan Bank and
Chase will be able to arrange the credit facilities necessary to fund payment
of the Cash Consideration. Definitive documentation with respect to such
credit facilities has not yet been negotiated. There can be no assurance that
such documentation, if definitively negotiated, will not contain restrictions
on Western Resources' ability to pay dividends.
FUTURE DIVIDENDS ON WESTERN RESOURCES COMMON STOCK
Although Western Resources does not currently anticipate any significant
change with respect to its dividend practice as a result of the Offer or the
Amalgamation, assuming that Western Resources' dividend remains at or above
the level of its current annual indicated dividend, Western Resources
presently expects that its dividend pay-out ratio will increase to
approximately 100% in the first full year following consummation of the
Amalgamation and will decline to approximately 75% by the third year following
the Amalgamation. Assuming consummation of the Amalgamation and the KCPL
Merger, Western Resources' forecasted dividend pay-out ratio will be
approximately 120%, including transaction costs of the KCPL Merger charged to
income following consummation of the KCPL Merger, or 100%, excluding such
transaction costs, in the first full year following the Amalgamation and will
decline to approximately 80% by the third year following the Amalgamation.
Over the past five years, Western Resources' dividend pay-out ratio has
averaged approximately 77%.
On a pro forma combined basis assuming completion of the Offer, the
Amalgamation and the KCPL Merger, pro forma combined earnings plus
depreciation, amortization and restructuring and non-recurring charges for the
year ended December 31, 1995 and the nine months ended September 30, 1996
would have been approximately $691,000,000 and $609,000,000, respectively. On
a pro forma combined basis assuming completion of the Offer, the Amalgamation
and the KCPL Merger, approximately 190,000,000 shares of Western Resources
Common Stock would have been outstanding during the year ended December 31,
1995 and the nine months ended September 30, 1996, in which case the total
amount of cash required to pay Western Resources' annual indicated dividend of
$2.10 would have been approximately $400,000,000 and $300,000,000 for the
twelve and nine months, respectively. Based on publicly available information,
on a pro forma combined basis assuming completion of the Offer, the
Amalgamation and the KCPL Merger, pro forma combined capital expenditures for
the year ended December 31, 1995 (excluding the effects of the ASH
Transaction) and the nine months ended September 30, 1996, respectively, would
have been approximately $636,000,000 and $462,000,000. Historical pro forma
combined earnings plus depreciation, amortization and restructuring and non-
recurring charges and historical pro forma combined capital expenditures do
not necessarily reflect future pro
29
<PAGE>
forma combined operating cash flows and future pro forma combined capital
expenditures. If, however, future pro forma combined operating cash flows and
future pro forma combined capital expenditures are similar to historical pro
forma combined earnings plus depreciation, amortization and restructuring and
non-recurring charges and historical pro forma combined capital expenditures,
there can be no assurance that Western Resources will be able, after paying
dividends consistent with historical levels, to maintain capital expenditures
at historical levels without moderating their timing or amount, or from time
to time funding such capital expenditures through external financing. See
"Reasons for the Offer--Offer Premium and Dividend Impact."
In the future, the Western Resources Board will set annual dividend payments
at amounts which are determined to be reasonable and consistent with Western
Resources' long-term strategy. However, there can be no assurance that Western
Resources will maintain its past practice with respect to the payment of
dividends since the declaration of future dividends will depend upon Western
Resources' future earnings, the financial condition of Western Resources and
other factors.
CERTAIN TAX CONSEQUENCES OF THE OFFER AND THE AMALGAMATION
The exchange of Shares for cash and Western Resources Common Stock pursuant
to the Offer and the Amalgamation will be a taxable transaction for U.S.
federal income tax purposes and may also be taxable under applicable state,
local and foreign tax laws. See "The Offer--Certain Federal Income Tax
Consequences." ADT Shareholders should be aware that depending upon, among
other things, their particular facts and circumstances, including their basis
in Shares and tax status, the value of the after-tax proceeds that they
receive in the Offer and the Amalgamation may be less than $22.50. Each ADT
Shareholder is urged to, and should, consult such holder's own tax advisor
with respect to the specific tax consequences of the Offer and the
Amalgamation to such holder.
REASONS FOR THE OFFER
OFFER PREMIUM AND DIVIDEND IMPACT
Western Resources believes that the Offer is in the best interests of ADT
Shareholders because, among other things, the Offer Consideration represents a
premium to the closing price per Share on the last trading day prior to the
public announcement of the Offer. In developing its belief that the Offer is
in the best interests of ADT Shareholders, Western Resources possessed limited
information with respect to the particular circumstances, from a tax
standpoint, of individual ADT Shareholders. Western Resources therefore cannot
make a conclusive determination as to the tax impact of the Offer and the
Amalgamation on all ADT Shareholders. The following table shows the premium of
the Offer Consideration over the closing per Share price on the NYSE on the
last trading day immediately prior to the public announcement of the Offer.
<TABLE>
<CAPTION>
ADT
OFFER SHARE PERCENT
PRICE* PRICE DIFFERENTIAL**
------ ------ --------------
<S> <C> <C> <C>
December 17, 1996, the last trading day before
the public announcement of the Offer............ $22.50 $20.13 11.8%
</TABLE>
- --------
* Assumes the Offer Consideration is $10.00 net in cash and $12.50 of Western
Resources Common Stock per Share. On March 13, 1997, the last trading day
before the date of this Prospectus, the closing price of Western Resources
Common Stock was $30.125. If the Western Resources Average Price is less
than $29.75, each Share will be exchanged for $10.00 net in cash and less
than $12.50 in Western Resources Common Stock as set forth more fully below
under "--The Exchange Ratio."
** Based on the closing prices of Western Resources Common Stock and Shares on
the indicated dates.
In addition to the per Share premium, the Offer also provides ADT
Shareholders with the opportunity to receive an ongoing current cash return on
their ADT investment in the form of dividends on Western Resources Common
Stock. Western Resources' current annual indicated dividend totals $2.10 per
share of Western Resources Common Stock. Assuming that Western Resources'
dividend remains at or above the level of its current annual indicated
dividend, Western Resources presently expects that its dividend pay-out ratio
will
30
<PAGE>
increase to approximately 100% in the first full year following completion of
the Amalgamation and will decline to approximately 75% by the third year
following the Amalgamation. Assuming completion of the Amalgamation and the
KCPL Merger, Western Resources' forecasted dividend pay-out ratio will be
approximately 120%, including transaction costs of the KCPL Merger charged to
income following completion of the KCPL Merger, or 100%, excluding such
transaction costs, in the first full year following the Amalgamation and will
decline to approximately 80% by the third year following the Amalgamation.
Over the past five years, Western Resources' dividend pay-out ratio has
averaged approximately 77%.
Western Resources expects that following completion of the Offer, the
Amalgamation and the KCPL Merger its operating cash flows will exceed its
earnings in the short-term due to amortization of goodwill, depreciation, non-
recurring charges and one-time expenses related to such transactions. On a pro
forma combined basis assuming completion of the Offer and the Amalgamation,
pro forma combined earnings plus depreciation, amortization and restructuring
and non-recurring charges for the year ended December 31, 1995 and the nine
months ended September 30, 1996 would have been approximately $463,000,000 and
$438,000,000, respectively. On a pro forma combined basis assuming completion
of the Offer and the Amalgamation, approximately 120,000,000 shares of Western
Resources Common Stock would have been outstanding during the year ended
December 31, 1995 and the nine months ended September 30, 1996, in which case
the total amount of cash required to pay Western Resources' annual indicated
dividend of $2.10 would have been approximately $252,000,000 and $189,000,000
for the twelve and nine months, respectively.
On a pro forma combined basis assuming completion of the Offer, the
Amalgamation and the KCPL Merger, pro forma combined earnings plus
depreciation, amortization and restructuring and non-recurring charges for the
year ended December 31, 1995 and the nine months ended September 30, 1996
would have been approximately $691,000,000 and $609,000,000, respectively. On
a pro forma combined basis assuming completion of the Offer, the Amalgamation
and the KCPL Merger, approximately 190,000,000 shares of Western Resources
Common Stock would have been outstanding during the year ended December 31,
1995 and the nine months ended September 30, 1996, in which case the total
amount of cash required to pay Western Resources' annual indicated dividend of
$2.10 would have been approximately $400,000,000 and $300,000,000 for the
twelve and nine months, respectively.
The historical pro forma combined earnings plus depreciation, amortization
and restructuring and non-recurring charges should not be considered an
accurate estimate of future pro forma combined operating cash flows.
Historical pro forma combined earnings plus depreciation, amortization and
restructuring and non-recurring charges do not include, among other things,
the effects of synergies and cost savings that Western Resources believes will
result from the Offer, the Amalgamation and the KCPL Merger.
Based on publicly available information, on a pro forma combined basis
assuming completion of the Offer and the Amalgamation, pro forma combined
capital expenditures for the year ended December 31, 1995 (excluding the
effects of the ASH Transaction) and the nine months ended September 30, 1996,
respectively, would have been approximately $502,000,000 and $385,000,000.
Based on publicly available information, on a pro forma combined basis
assuming completion of the Offer, the Amalgamation and the KCPL Merger, pro
forma combined capital expenditures for the year ended December 31, 1995
(excluding the effects of the ASH Transaction) and the nine months ended
September 30, 1996, respectively, would have been approximately $636,000,000
and $462,000,000.
Historical pro forma combined capital expenditures do not necessarily
reflect future pro forma combined capital expenditure requirements. Given the
discretionary nature of many of such capital expenditures, the timing and
annual amount of future pro forma combined capital expenditures can be
controlled. Furthermore, such historical pro forma combined capital
expenditures include capital expenditures for the natural gas operations that
Western Resources plans to contribute to ONEOK and for ADT's U.S. auto auction
business which is expected to be sold, which in the year ended December 31,
1995 were approximately $54,000,000 and $32,000,000, respectively. As a result
of such proposed contribution and sale, capital expenditures for such
operations are not expected to be included in future pro forma combined
capital expenditures. Western Resources
31
<PAGE>
expects that it will fund future pro forma combined capital expenditures out of
remaining available cash flow after dividend payments and, to the extent from
time to time required, through external financing. There can be no assurance as
to the amount of available future external financing or the associated cost.
In the future, the Western Resources Board will set annual dividend payments
at amounts which are determined to be reasonable and consistent with Western
Resources' long-term strategy. However, there can be no assurance that Western
Resources will maintain its past practice with respect to the payment of
dividends since the declaration of future dividends will depend upon Western
Resources' future earnings, cash flows, the financial condition of Western
Resources and other factors.
THE EXCHANGE RATIO
The per Share price premium which ADT Shareholders will receive in the Offer,
and the dividend which ADT Shareholders will receive as holders of Western
Resources Common Stock, will depend on the Exchange Ratio at the time of
consummation of the Offer. Such Exchange Ratio will be determined based on the
Western Resources Average Price; provided that the Exchange Ratio will not be
more than 0.42017 shares of Western Resources Common Stock per Share. The
amount of cash provided in the Offer will be $10.00 net per Share, regardless
of the level of the Exchange Ratio. Pursuant to the Offer, each Share will be
exchanged for $10.00 net in cash and $12.50 of Western Resources Common Stock
as long as the Western Resources Average Price is $29.75 or higher. If the
Western Resources Average Price is less than $29.75, then each Share will be
exchanged for $10.00 net in cash and less than $12.50 of Western Resources
Common Stock.
The following chart sets forth a range of possible Western Resources Average
Prices and the corresponding (i) Exchange Ratio, (ii) the dollar value of the
Stock Consideration to be received per Share, (iii) the dollar value of the
Cash Consideration to be received per Share, (iv) the total dollar value of the
Offer Consideration to be received per Share, and (v) Share price premium over
the closing Share price on the last trading day prior to the public
announcement of the Offer. The Western Resources Average Prices set forth below
are for illustrative purposes only and are not intended to be an exhaustive
list of Western Resources Average Prices. There can be no assurance that the
actual Western Resources Average Price will be in the range set forth below.
<TABLE>
<CAPTION>
PREMIUM
TO ADT
WESTERN SHAREHOLDERS
RESOURCES VALUE OF TOTAL VALUE (DECEMBER
AVERAGE EXCHANGE STOCK VALUE OF CASH OF OFFER 17, 1996
PRICE RATIO CONSIDERATION CONSIDERATION CONSIDERATION CLOSING PRICE)
--------- -------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$25.00 0.42017 $10.50 $10.00 $20.50 1.9%
25.50 0.42017 10.71 10.00 20.71 2.9%
26.00 0.42017 10.92 10.00 20.92 4.0%
26.50 0.42017 11.13 10.00 21.13 5.0%
27.00 0.42017 11.34 10.00 21.34 6.0%
27.50 0.42017 11.55 10.00 21.55 7.1%
28.00 0.42017 11.76 10.00 21.76 8.1%
28.50 0.42017 11.97 10.00 21.97 9.2%
29.00 0.42017 12.18 10.00 22.18 10.2%
Collar 29.50 0.42017 12.39 10.00 22.39 11.3%
------------------------------------------------------------------------------------
29.75 0.42017 12.50 10.00 22.50 11.8%
30.00 0.41667 12.50 10.00 22.50 11.8%
30.50 0.40984 12.50 10.00 22.50 11.8%
31.00 0.40323 12.50 10.00 22.50 11.8%
31.50 0.39683 12.50 10.00 22.50 11.8%
32.00 0.39063 12.50 10.00 22.50 11.8%
32.50 0.38462 12.50 10.00 22.50 11.8%
33.00 0.37879 12.50 10.00 22.50 11.8%
33.50 0.37313 12.50 10.00 22.50 11.8%
34.00 0.36765 12.50 10.00 22.50 11.8%
34.50 0.36232 12.50 10.00 22.50 11.8%
35.00 0.35714 12.50 10.00 22.50 11.8%
</TABLE>
32
<PAGE>
ENHANCED BUSINESS OPPORTUNITIES
In addition to the per Share price premium and dividend return provided by
the Offer, Western Resources believes that the ADT Shareholders will also
benefit from the Offer as a result of becoming shareholders of Western
Resources. Western Resources has carefully studied the potential benefits of
the combination of the businesses of Western Resources and ADT and, as a
result, believes that such a combination will provide a solid financial base to
support continued growth in the security business as well as a strong
foundation for sustainable long-term growth in the deregulating energy and
energy-related products and services markets. As deregulation continues for
electric and natural gas utilities, individual homes and businesses will have
the opportunity to choose their energy providers. As this process unfolds,
companies with nationally recognized brand names will have a significant
advantage in marketing energy and energy-related products and services.
Consummation of the Offer and the Amalgamation will position Western Resources
to take advantage of this emerging market, as Western Resources intends to
leverage ADT's strong brand name by marketing energy and energy-related
products and services to existing ADT customers and to new customers who know
and trust the ADT brand name. In the new era of deregulation, formerly
regulated utility companies that do not respond to the new realities of the
competitive energy marketplace may suffer erosion in market share, revenues and
profits as competitors enter their service territories. Although Western
Resources has been planning for the deregulation of the energy market,
increased competition for retail electricity sales may in the future reduce
Western Resources' earnings from its formerly regulated businesses. During
1995, however, Western Resources' average retail electric rates were over 9%
below the national average. In 1997, Western Resources further reduced its
retail rates and expects to be able to retain a substantial portion of its
current sales volume in a competitive environment. Finally, Western Resources
believes that the deregulation of the energy market will prove beneficial to
Western Resources, since any potential competitive pressure in its formerly
regulated business is expected to be more than offset by the nationwide markets
which Western Resources expects to enter by bundling energy and security
services together in one package.
GROWTH OPPORTUNITIES IN THE SECURITY INDUSTRY
The U.S. security business is a growth industry with annual revenues of $13
billion that Western Resources believes is growing at approximately 10% per
year. Many opportunities for further growth exist, particularly in the
residential segment.
Currently, the security industry serves approximately 17.4 million
residential customers in the U.S. Western Resources believes that the number of
households purchasing security alarm services each year has grown at a 13% rate
in recent years, with growth expected at an annual rate of 10% through the year
2000. This sustained growth will be driven by a combination of increased demand
for security alarm services and the low current penetration rate. Today, only
22% of single family households and 18% of total U.S. households have the
protection provided by an electronic security alarm system. With the advent of
more reliable, less costly equipment which is easier to install, the price of
the average alarm system has decreased dramatically, permitting a significantly
larger segment of the population to afford this service. The average price of a
residential alarm system was $1,500 in 1990, compared with only $1,200 in 1995.
This decrease has coincided with an increased awareness and concern over the
incidence of crime and a stronger general desire on the part of consumers to
protect their families and property. Industry estimates project the penetration
rate of the residential market segment to at least double its current level to
approximately 40% by the year 2005, which would result in the creation of 17.6
million new residential customers.
Western Resources believes that the commercial market penetration rate is
currently 50-60%, with a continued opportunity for growth driven by the same
demand factors affecting the residential market. In addition, a large segment
of the existing customer base requires the upgrading of older systems with
newer technology, and the integration of security enhancements such as access
control and closed circuit television equipment. The cost of these technologies
has decreased dramatically and now offers an economical and reliable
alternative to security guards and outdated methods of controlling and
documenting activities within the workplace.
In order to maximize these growth opportunities, successful industry
participants would ideally utilize sophisticated mass marketing techniques to
reach consumers, develop and leverage strong brand names and fully
33
<PAGE>
achieve the available economies of scale. This maximization is unlikely within
the current industry structure due to its high fragmentation of providers.
There are presently approximately 9,000-11,000 alarm companies in the U.S.
Although over 85% of such companies have less than $1,000,000 in annual
revenue, companies of this size currently have a 75% share of the market. Only
13% of the U.S. market is controlled by larger companies, with ADT having the
largest share at 7%, which is more than three times the size of the next
largest provider.
Western Resources believes that the security industry's characteristics of
rapid growth and provider fragmentation offer a unique opportunity for the
emergence of a dynamic, growth-oriented market leader. Western Resources
believes it is one of the first, and most successful, energy companies to
pursue the opportunities presented by the security business. Western Resources'
wholly owned security subsidiary, Westar Security, has grown through
acquisitions and internal growth and, with the addition of Westinghouse
Security's customers, Westar Security now has over 400,000 accounts in 44
states, making it the third-largest security service provider in the country.
The combination of Westar Security and Westinghouse Security with ADT will
increase ADT's current U.S. customer base of 1.6 million accounts by 25%, a
highly significant increase in the competitive and highly fragmented security
business. Western Resources believes that a combination of ADT's leading
position in the security industry with Western Resources' financial strength
and energy businesses will expand and strengthen ADT's current industry
leadership in the security business. Western Resources intends to take full
advantage of the new technologies that are available to ADT, which will not be
limited as a result of the Offer and the Amalgamation. ADT has indicated in its
publicly filed documents that during the past few years it has been offering
energy management products and services to regulate the temperature and
lighting of customers' premises. Such services are a natural fit with the
energy and related services that Western Resources intends to provide on a
national basis through the ADT name.
EXPANSION OF BRANDED ENERGY MARKETING
The electric and natural gas utility industry in the United States is rapidly
evolving from a historically regulated monopolistic market to a dynamic and
competitive integrated marketplace. The 1992 Energy Policy Act began the
process of deregulation of the electricity industry by permitting the FERC to
order electric utilities to allow third parties to sell electric power to
wholesale customers over their transmission systems. Since that time the
wholesale electricity market has become increasingly competitive as companies
begin to engage in nationwide power brokerage. In addition, various states
including California and New York have taken active steps towards allowing
retail customers to purchase electric power from third-party providers. The
natural gas industry has been substantially deregulated, with the FERC and many
state regulators requiring local natural gas distribution companies to allow
wholesale and retail customers to purchase gas from third-party providers. The
successful providers of energy in a deregulated market will not only provide
electric or natural gas service but also a variety of other services, including
security. Western Resources believes that in the newly deregulated environment,
more sophisticated consumers will continue to demand new and innovative options
and insist on the development of more efficient products and services to meet
their energy-related needs. Western Resources believes that its strong core
utility business provides it with the platform to offer the more efficient
products and energy services that customers will desire. Furthermore, Western
Resources believes it is necessary to continuously seek new ways to add value
to its customers' lives and businesses. Recognizing that its current customer
base must expand beyond its existing service area, Western Resources views
every person, whether in the United States or abroad, as a potential customer.
Western Resources also recognizes that its potential to emerge as a leading
national energy and energy-related services provider is enhanced by having a
strong brand name. Western Resources has been establishing its brand identity
through the Westar Security name. The combination of Western Resources and ADT
would immediately provide an ideal brand name to capitalize on the emerging
security and energy marketplaces.
In 1995, the U.S. electric industry had retail revenues of approximately $200
billion, serving approximately 117 million homes and businesses, and the U.S.
natural gas retail industry had revenues of approximately $100 billion, serving
approximately 58 million homes and businesses. In Western Resources' view, the
deregulation of the energy business will result in a model similar to that used
by the long-distance telecommunications industry, with low-cost providers
serving customers throughout the country. However, unlike the long-distance
telecommunications market which is dominated by large companies with powerful
brands, today's energy market
34
<PAGE>
is highly fragmented. No utility company has a market share in the U.S. greater
than 6%. It is Western Resources' view that this market fragmentation presents
a superior opportunity for national industry leaders to emerge. Western
Resources believes that a combination with ADT will give it the brand name
recognition and complementary services to excel in the emerging deregulated
electric and natural gas markets.
The combination of Western Resources and ADT will allow the combined company
to integrate energy, energy-related products and services, and security, into a
packaged group of products and services to homes and businesses under the
internationally recognized ADT brand name. This strategy is based upon what
Western Resources believes to be the compelling structural and operational
similarities between the energy and security businesses. From an operational
perspective, both businesses require expertise in constructing and maintaining
a highly reliable network with central service facilities and the dispatch of
trained personnel to customer locations to respond quickly to disruptions in
service. Western Resources believes that from the customer's point of view,
energy and security are both critical service streams which may be viewed as
necessities by homes and businesses. Rather than choosing a different supplier
for each service, Western Resources believes that customers will appreciate the
convenience of purchasing energy and security services as a package and paying
for them on one convenient customer statement. Western Resources is currently
putting this concept into practice in its utility service area, offering many
of its utility customers the convenience of one-stop shopping for their energy
and security needs. Following the Offer and the Amalgamation, Western Resources
plans to expand this successful concept by selling security and unregulated
energy services to ADT's customers nationwide through a unified sales and
marketing effort under the ADT brand name.
To date, ADT's management has not recognized the opportunities presented by
the deregulation of the energy market. Western Resources believes that a
combination of the strong core utility business and customer service skills of
Western Resources and the brand name, customer base and support infrastructure
of ADT will provide both the Western Resources and ADT shareholders with an
invaluable opportunity to succeed in the security and energy markets. As the
retail electric and natural gas markets become fully open to competition,
substantial opportunities exist to increase market share and to sell a menu of
integrated services which enhance the comfort and security of energy customers.
BACKGROUND OF THE OFFER
Following Western Resources' acquisition of Shares from Laidlaw, ADT advised
Western Resources that it was not interested in pursuing a joint marketing
relationship or any other type of business arrangement with Western Resources
despite the fact that Western Resources believes that such a relationship could
maximize ADT's potential both in its existing security business and in the
emerging market of deregulated retail energy distribution. After careful study
and consideration, Western Resources believes that the potential benefits to
ADT, Western Resources and the companies' respective shareholders can be best
realized through a combination of Western Resources and ADT, and has,
therefore, decided to proceed with the Offer.
On December 21, 1995, Western Resources entered into the Laidlaw Agreement
with Laidlaw and Laidlaw, Inc., pursuant to which Westar Capital subsequently
purchased a total of 30,800,000 Shares, on or prior to March 18, 1996, from
Laidlaw at an average price of $14.40 per Share. Since March 18, 1996, from
time to time, Westar Capital has purchased Shares in the open market at
prevailing market prices. Westar Capital owns 38,287,111 Shares, or
approximately 27% of the outstanding Shares, including 14,115 Shares issuable
upon exchange of 500 LYONs, each of which is exchangeable for Shares at a rate
of 28.23 Shares per LYON. Also on December 21, 1995, Mr. Hayes delivered a
letter to Mr. Ashcroft informing Mr. Ashcroft of the Laidlaw Agreement.
During January and February, 1996, conversations took place between Mr. Hayes
and Mr. Ashcroft and various representatives of the respective companies.
Messrs. Hayes and Ashcroft scheduled a meeting in Topeka, Kansas for March 13,
1996. On March 11, 1996, Mr. Hayes delivered a letter to Mr. Ashcroft
discussing Western Resources' proposed joint marketing efforts with ADT. On
March 13, 1996, Messrs. Hayes and Ashcroft held a
35
<PAGE>
meeting but failed to reach any agreement concerning Western Resources'
proposal. Later that month, Mr. Ashcroft informed Mr. Hayes that ADT was not
interested in pursuing a joint marketing relationship with Western Resources.
On July 1, 1996, ADT entered into the Republic Agreement, pursuant to which
Republic Sub was to be amalgamated with and into ADT, with the amalgamated
company operating under the name of ADT. The terms of the Republic Agreement
contemplated that ADT Shareholders would receive .92857 shares of Republic
common stock in exchange for each Share. The Republic Transaction was
conditioned upon, among other things, receipt by ADT of a fairness opinion from
its financial advisor at a later date (which fairness opinion was never
obtained). Based on the $26.75 closing price per share of Republic common stock
on July 1, 1996, each Share would have been exchangeable for approximately
$24.84 worth of Republic common stock, representing a premium of 31% to the
closing price per Share of $19.00 on June 28, 1996, the last trading day prior
to public announcement of the Republic Transaction. Following the public
announcement of the Republic Transaction, the closing price per share of
Republic common stock fell as low as $20.75 per share. Based on a closing price
of $20.75, each Share would have been exchangeable for approximately $19.27
worth of Republic common stock in the Republic Transaction, representing a
premium of just 1% to the closing price per Share of $19.00 on June 28, 1996.
On September 13, 1996, Westar Capital disclosed that it had determined to
oppose the Republic Transaction. Based on the $28.81 closing price per share of
Republic common stock on September 12, 1996, each Share would have been
exchangeable for approximately $26.75 worth of Republic common stock,
representing a premium of 41% to the closing price per Share of $19.00 on June
28, 1996. Western Resources believes that such significant fluctuations in the
market price of Republic common stock (i.e., from $28.81 to $20.75 in the
course of a three-month period) demonstrated volatility in Republic common
stock (the consideration being offered in the Republic Transaction).
Pursuant to the terms of the Republic Agreement, ADT granted to Republic a
warrant to purchase 15 million Shares at a purchase price of $20 per share,
subject to adjustment. The Republic Warrant was to become exercisable for a
period of six months following the termination of the Republic Agreement. On
September 30, 1996, ADT and Republic jointly announced the termination of the
Republic Agreement citing uncertainty attributable to market conditions, and
amended the Republic Warrant to include certain restrictions on the issuance of
Shares pursuant thereto and the transfer of such Shares by Republic to persons
with interest in 10% or more of ADT. As described herein, Western Resources has
commenced litigation challenging the validity of the Republic Warrant. See
"Litigation."
On September 5, 1996, the waiting period expired with respect to Western
Resources' filing under the HSR Act to acquire ownership of in excess of 25%
(but less than 50%) of the outstanding Shares.
On November 4, 1996, ADT declared a distribution of one Right for each
outstanding Share, payable to holders of record as of the close of business on
November 15, 1996, pursuant to the Rights Agreement. The Rights Agreement
provides, among other things, that after certain persons acquire 15% or more
(or, in certain limited situations, a greater percentage) of the issued and
outstanding Shares, holders of Shares (other than such persons) will be
entitled to purchase Shares at half of the current market value and that if,
after such an acquisition, ADT is involved in an amalgamation, other business
combination or certain sale transactions, holders of Shares (other than such
persons) will be entitled to purchase either Shares or common stock of the
other party to such transaction at half of the current market value of such
securities. See "Conditions of the Offer--Rights Agreement" and "The Offer--The
ADT Rights."
On November 6, 1996, ADT announced its intention to sell its United States
vehicle auction business.
On December 17, 1996, the Western Resources Board met and determined to
proceed with the Offer. On December 18, 1996, in the letter set forth below to
Mr. Ashcroft, Mr. Hayes informed Mr. Ashcroft and the ADT Board of Western
Resources' intention to pursue the Offer and the Amalgamation and encouraged
Mr. Ashcroft and the ADT Board to meet with Western Resources to discuss the
possibility of a mutually beneficial negotiated transaction.
36
<PAGE>
December 18, 1996
Mr. Michael A. Ashcroft
ADT Limited
Cedar House
41 Cedar Avenue
Hamilton HM12
Bermuda
Dear Michael:
We have demonstrated our belief in ADT's future by investing $589
million to purchase 27% of ADT's outstanding common shares, making us
ADT's largest shareowner. In the past you and your board have advised us
that you are not interested in discussing a business arrangement between
our companies that could maximize ADT's potential, both in its existing
security business and in the emerging market of deregulated retail energy
distribution.
Now, after careful study and consideration, we have determined that the
potential benefits to ADT, Western Resources and ADT's other shareowners
from a combination of Western Resources and ADT are simply too compelling
to ignore. We firmly believe that this combination will provide
significant benefits to our respective shareowners, customers and
employees not available to either company on its own.
We believe ADT's full potential can only be realized in a strategic
business combination. In our proposed transaction, ADT shareowners will
become a part of one of the most innovative and dynamic companies in the
business of making people's lives safer and more comfortable. Our
subsidiary, Westar Security, is one of the fastest growing security
companies in the nation. Combined with ADT, the leading brand name in the
security industry, Western Resources will serve the energy and security
needs of customers across the country and around the world.
Western Resources, therefore, will file with the Securities and Exchange
Commission a preliminary prospectus for an offer by Western Resources to
ADT shareowners. Under our proposed offer, ADT shareowners (other than
Western Resources and its affiliates) will receive $7.50 net in cash and
$15.00 of Western Resources common stock in exchange for each ADT common
share, up to a maximum of 0.50420 shares of Western Resources common
stock. Based upon the closing price of ADT common shares on December 17,
1996, our proposal represents a 12% premium above ADT's market price.
In order to ensure ADT's other shareowners receive the chance to
consider our proposal for themselves, we will also demand a special
general meeting of ADT shareowners for the purposes of (i) removing the
present members of the ADT board, (ii) reducing the number of seats on the
ADT board from eight to two, and (iii) electing Western Resources'
nominees to the ADT board. We will also file preliminary proxy materials
relating to such special meeting. Once the Western Resources nominees are
elected to the ADT board, Western Resources intends to consummate the
exchange offer and a subsequent amalgamation pursuant to which Western
Resources will acquire 100% of ADT's equity.
We trust that you and the other members of ADT's board will consider the
best interests of ADT's shareowners, customers and employees and agree to
meet with us to achieve a mutually beneficial transaction that ensures
that ADT executives and employees will enjoy exciting opportunities for
career growth with the combined company. We are, however, committed to
achieving the strategic benefits of a business combination of ADT and
Western Resources and prepared to take all necessary steps to ensure that
we and ADT's other shareowners have the opportunity to decide the future
of our investment in ADT.
I look forward to hearing from you soon.
Sincerely,
/s/ John
37
<PAGE>
On December 18, 1996, Western Resources also publicly announced its intention
to commence the Offer and filed the Western Resources Proxy Statement with the
Commission for use in soliciting proxies from ADT Shareholders to approve the
Western Resources Proposals at the ADT Special Meeting. On December 18, 1996
Westar Capital deposited the Requisition with ADT requiring the ADT Board to
convene the ADT Special Meeting. See "The ADT Special Meeting."
On January 7, 1997, ADT announced that it had scheduled the ADT Special
Meeting date for July 8, 1997. Westar Capital has commenced litigation
challenging the July 8, 1997 meeting date and is seeking relief to compel the
ADT Board to hold the ADT Special Meeting on a date thirty days subsequent to
the date the Western Resources Proxy Statement is first distributed to ADT
Shareholders. On January 8, 1997, ADT filed the ADT Proxy Statement with the
Commission for use in soliciting proxies from ADT Shareholders for the ADT
Special Meeting against the Western Resources Proposals.
On January 23, 1997, the waiting period expired with respect to Western
Resources' filing under the HSR Act to acquire ownership of up to 100% of the
outstanding Shares.
On March 3, 1997, the Western Resources Board met and determined to increase
the Cash Consideration by 33% and to decrease the Stock Consideration by 17%.
Also on March 3, 1997, Western Resources publicly announced its intention to
sell ADT's auto auction business following consummation of the Amalgamation. In
the letter set forth below to Mr. Ashcroft, Mr. Hayes informed Mr. Ashcroft of
these developments.
March 3, 1997
Mr. Michael A. Ashcroft
ADT Limited
1750 Clint Moore Road
Boca Raton, FL 33431
Dear Michael,
We continue to be disappointed by your unwillingness to meet with us to
discuss a combination of Western Resources and ADT.
Consistent with your publicly announced plan, Western Resources intends,
upon completion of our offer, to sell ADT's auto auction business. It is
our view that such a sale would generate proceeds of approximately $500
million (approximately $450 million on an after-tax basis). We are also
aware, based on ADT's press release last week, that ADT will receive $77.5
million in additional cash in connection with the settlement of its
lawsuit with Binder Hamlyn.
As a result of these facts, Western Resources is increasing the cash
component of our offer by 33%. Based on the terms of our revised offer,
ADT shareowners (other than Western Resources and its affiliates) will
receive $10.00 net in cash and $12.50 of Western Resources common stock in
exchange for each ADT common share, up to a maximum of 0.42017 shares of
Western Resources common stock.
We continue to desire to meet with you so that we can discuss a mutually
beneficial combination of Western Resources and ADT. As you are aware, our
offer is based solely on publicly available information. Western Resources
will continue to evaluate our offer in light of any new information that
becomes available to us.
To ensure that ADT's full potential is realized, we believe that it is
imperative that we get together to discuss our offer. I look forward to
hearing from you soon.
Sincerely,
/s/ John
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Also on March 3, 1997, ADT publicly announced the ADT Board's recommendation
that ADT Shareholders reject the Offer, and that the ADT Board had resolved to
effect the Rights Agreement Amendments. Such amendments prohibit persons
elected to the ADT Board as a result of a proxy solicitation or similar
shareholder action which produces a change in a majority of the directors on
the ADT Board, in connection with a proposed acquisition of ADT, from redeeming
the Rights or amending the Rights Agreement.
Western Resources believes that the Rights Agreement Amendments are illegal
under Bermuda law and that the Court will find such amendments invalid. See
"Litigation." Western Resources has requested that the Court grant judicial
relief with respect to the Rights Agreement Amendments prior to the ADT Special
Meeting. If such relief has not been granted prior to the date of the ADT
Special Meeting, it is possible that the Western Resources Nominees, once
elected, would be unable to redeem the Rights or amend the Rights Agreement. In
this circumstance, the Rights Plan Condition may not be capable of satisfaction
and the Offer may not be consummated.
LITIGATION
On December 18, 1996, Western Resources announced that Westar Capital had
commenced litigation in the United States District Court for the Southern
District of Florida charging ADT and the ADT Board with breaches of their
fiduciary duties to ADT and the ADT Shareholders. The complaint alleged, among
other things, that the ADT Board breached its fiduciary duty to ADT and the ADT
Shareholders by (i) adopting and continuing to deploy the ADT Rights Agreement,
(ii) granting the Republic Warrant in connection with the subsequently
terminated Republic Transaction for the purpose of making an unsolicited bid
for ADT more expensive and placing a block of votes under Mr. Ashcroft's
control, and (iii) placing approximately 3,182,787 Shares in an ADT subsidiary
to interfere with the voting rights of ADT's other shareholders. Westar Capital
also alleged that by agreeing to the Republic Warrant and the amendments
thereto, Republic aided and abetted breaches of fiduciary duties by the ADT
board.
On January 3, 1997, Westar Capital filed an amended complaint alleging that
certain letters sent by ADT to Western Resources and Westar Capital interfered
with Westar Capital's voting rights as an ADT Shareholder.
On January 21, 1997, the Court granted Westar Capital's motion for leave to
file a Second Amended Complaint in which Westar Capital additionally alleged
that (i) ADT's January 7, 1997 announcement that the ADT Special Meeting was
scheduled for July 8, 1997 violated the ADT Board's fiduciary and statutory
duties under Bermuda law and (ii) ADT's failure to file a Schedule 14D-9 Tender
Offer Statement violated Section 14(d) of the Exchange Act.
On January 23, 1997, Westar Capital filed a motion seeking to enjoin the ADT
Board from holding the ADT Special Meeting on July 8, 1997. That motion is
currently pending. On January 27, 1997, the ADT Defendants filed a motion to
dismiss Westar Capital's complaint on the grounds that, among other things,
Westar Capital had insufficiently pled a "prima facie" case of personal
jurisdiction over the ADT Defendants. On February 21, 1997, the Court held that
the Second Amended Complaint filed by Westar Capital did not sufficiently plead
a "prima facie" case that the Court has jurisdiction under the Florida
jurisdictional statute over the ADT Defendants. The Court denied the ADT
Defendants' motion to dismiss the complaint without prejudice and granted
Westar Capital leave to file an amended complaint by March 3, 1997.
In response to the Court's February 21, 1997 order, on February 27, 1997,
Westar Capital filed a Third Amended Complaint asserting that jurisdiction
exists over the ADT Defendants under the Florida jurisdictional statute
because, among other things, ADT conducts "substantial and not isolated
activity" in Florida and the ADT Defendants had committed a "tortious act" in
Florida.
On February 6, 1997, Republic filed a motion to dismiss Westar Capital's
complaint arguing, among other things, that if the Court granted the ADT
Defendants' motion to dismiss, the complaint must also be dismissed
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as against Republic for failure to join an indispensable party. On February 21,
1997, the Court denied Republic's motion without prejudice.
On February 20, 1997, Westar Capital filed a motion requesting that the Court
schedule a trial on the merits of Westar Capital's claim that the Republic
Warrant is invalid and a breach of fiduciary duties, and that Republic be
required to give Westar Capital five (5) business days' notice prior to its
exercise of the Republic Warrant and the sale of Shares purchased pursuant to
the Republic Warrant.
On March 10, 1997, Westar Capital filed a motion for leave to file a Fourth
Amended Complaint arising out of ADT's adoption of certain changes to the
definition of "Continuing Directors" under the Rights Agreement. The Fourth
Amended Complaint alleges, among other things, that ADT's adoption of these so-
called "dead hand" provisions is a breach of fiduciary duty and was taken for
the improper and collateral purpose of entrenching ADT management in office and
interfering with the shareholder vote on the Western Resources Proposals. On
March 11, 1997, the Court granted Westar Capital's motion and ordered that the
ADT Defendants file a response to the Fourth Amended Complaint by March 17,
1997.
On March 12, 1997, the Court denied Westar Capital's motion to schedule a
trial on the merits with respect to Westar Capital's claims regarding the
Republic Warrant.
On December 26, 1996, a shareholder of ADT filed a purported class action
complaint against ADT, the ADT Board, Western Resources and Westar Capital in
the Civil Division of the Circuit Court of the Fifteenth Judicial Circuit in
Palm Beach County, Florida. The complaint alleges, among other things, that
Western Resources and Westar Capital are breaching their fiduciary duties to
ADT Shareholders by failing to offer "an appropriate premium for the
controlling interest" in ADT and by holding "an effective blocking position"
that prevents independent parties from bidding for ADT. The complaint seeks
preliminary and permanent relief enjoining Western Resources from acquiring the
outstanding shares of ADT and unspecified damages. Western Resources does not
anticipate any material adverse effect on its assets or financial results
arising from the claims asserted.
On February 10, 1997, ADT Operations commenced litigation against Chase
Manhattan Bank in the Supreme Court of the State of New York, New York County,
alleging that Chase Manhattan Bank breached contractual obligations and
fiduciary duties owed to ADT Operations by, among other things, furnishing a
"highly confident" letter to Western Resources stating that Chase Manhattan
Bank "expected to be able to arrange credit facilities to fund" the Cash
Consideration portion of the Offer. ADT Operations seeks, among other things,
damages and an order permanently enjoining Chase Manhattan Bank from advising,
funding, or otherwise participating in the Offer. Neither Westar Capital nor
Western Resources are named as defendants in the action.
THE ADT SPECIAL MEETING
THE REQUISITION
As more fully set forth in the Western Resources Proxy Statement, on December
18, 1996, Westar Capital deposited the Requisition with ADT, pursuant to
Section 74 of the Companies Act and Bye-Law 42 of the ADT Bye-Laws, requiring
the ADT Board to convene the ADT Special Meeting so that the ADT Shareholders
will have the opportunity to vote on the Western Resources Proposals and
thereby satisfy the ADT Shareholder Approval Condition. Under the Companies Act
and the ADT Bye-Laws, the ADT Board is required to convene the ADT Special
Meeting. In the event that the ADT Board does not within twenty-one days from
the date of the deposit of the Requisition convene the ADT Special Meeting,
Westar Capital may itself convene the ADT Special Meeting. Westar Capital
originally requested that the date of the ADT Special Meeting be February 18,
1997; however, on January 7, 1997, ADT announced that it had scheduled the ADT
Special Meeting date for July 8, 1997. Western Resources has commenced
litigation challenging the July 8, 1997 meeting date and is seeking relief to
compel the ADT Board to hold the ADT Special Meeting on a date 30 days
subsequent to the date the Western Resources Proxy Statement is first
distributed to ADT Shareholders. See "Litigation."
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MATTERS TO BE BROUGHT BEFORE THE ADT SPECIAL MEETING
In connection with the ADT Special Meeting, Western Resources is soliciting
ADT Shareholders' proxies in favor of (i) the removal of all of the present
members of the ADT Board and any person or persons elected or designated by any
such director to fill any vacancy or newly created directorship pursuant to
Section 93 of the Companies Act and Bye-Law 71 of the ADT Bye-Laws, (ii) the
reduction of the number of seats on the ADT Board to two, and (iii) the
election of the Western Resources Nominees, Steven L. Kitchen and Steven A.
Millstein, as the directors of ADT (or, if either Western Resources Nominee is
unable to serve as a director of ADT due to death, disability or otherwise, any
other person designated as a Western Resources Nominee by Western Resources).
In order to comply with the requirement of Bye-Law 53 of the ADT Bye-Laws that
a director of ADT own one Share, each of the Western Resources Nominees will
own at least one Share at the time of the ADT Special Meeting. Each of the
Western Resources Proposals is designed to facilitate the prompt consummation
of the Offer and the Amalgamation.
Only persons entered in the register of members of ADT as holders of Shares
at the time of the ADT Special Meeting will be entitled to vote at such meeting
unless the ADT Board sets a record date for the ADT Special Meeting. In the
event the ADT Board sets a record date for the ADT Special Meeting, only
holders of Shares at the close of business on such record date will be entitled
to vote at the ADT Special Meeting. Each Share is entitled to one vote upon
each matter presented at the ADT Special Meeting. Holders of ADT Preferred
Stock are not entitled to vote on any of the Western Resources Proposals.
Pursuant to Bye-Law 43 of the ADT Bye-Laws, at any general meeting of ADT not
less than two holders of Shares present either in person or by proxy
constitutes a quorum for the transaction of business. Each of the Western
Resources Proposals may be approved by the affirmative vote of a majority of
those Shares voted at the ADT Special Meeting.
Western Resources and Westar Capital intend to vote Westar Capital's Shares
and those Shares for which Western Resources or its representatives hold valid
proxies at the ADT Special Meeting for each of the Western Resources Proposals.
It is not expected that any matter other than those referred to herein will be
brought before the ADT Special Meeting.
The effect of the Western Resources Proposals will be to replace the current
directors of ADT, Michael A. Ashcroft, John E. Dannenberg, Alan B. Henderson,
James S. Pasman, Jr., Stephen J. Ruzika, W. Peter Slusser, William W. Stinson
and Raymond S. Troubh, with the Western Resources Nominees. If the ADT
Shareholders approve the Western Resources Proposals at the ADT Special
Meeting, the ADT Shareholders will have effectively approved the Offer and the
Amalgamation as the Western Resources Nominees are committed to taking, subject
to the fulfillment of the fiduciary duties they would have as directors of ADT,
all action necessary and desirable to facilitate consummation of the Offer and
the Amalgamation including, among other things, (i) to the extent possible,
either redeeming the Rights or amending the Rights Agreement to make the Rights
inapplicable to the Offer, if necessary, in order to satisfy the Rights Plan
Condition, (ii) not invoking the provisions of Bye-Law 104 or 46 of the ADT
Bye-Laws (as described herein) in connection with the acquisition of Shares by
Western Resources pursuant to the Offer or otherwise, (iii) adopting and
approving the Amalgamation Agreement pursuant to which Bermuda Sub will
amalgamate with and into ADT, with the amalgamated company operating under the
name of ADT, and ADT Shareholders (other than Western Resources and ADT and
their respective affiliates, and ADT Shareholders who perfect appraisal rights
under Bermuda law) will receive the Offer Consideration in exchange for the
cancellation of each Share, and (iv) proposing the Bye-Law Amendment providing
that an amalgamation may be approved by the affirmative vote of a simple
majority of the votes cast at a general meeting of ADT. For a more complete
description of the Western Resources Proposals and for more information
regarding the Western Resources Nominees, see the Western Resources Proxy
Statement, which is being mailed separately to ADT Shareholders.
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THE OFFER
GENERAL
Western Resources hereby offers, upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange the Offer Consideration for each outstanding Share validly tendered
on or prior to the Expiration Date and not properly withdrawn. The Offer
Consideration consists of $10.00 net in cash and that number of shares of
Western Resources Common Stock equal to the Exchange Ratio. The term "Exchange
Ratio" means the quotient (rounded to the nearest 1/100,000) determined by
dividing $12.50 by the average of the high and low sales prices of Western
Resources Common Stock (as reported on the NYSE Composite Transactions
reporting system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the twenty consecutive
trading days ending with the third trading day immediately preceding the
Expiration Date; provided that the Exchange Ratio shall not be greater than
0.42017. Pursuant to the Exchange Ratio, each Share will be exchanged for
$10.00 net in cash and $12.50 of Western Resources Common Stock, as long as
the Western Resources Average Price is $29.75 or higher. If the Western
Resources Average Price is less than $29.75, each share will be exchanged for
$10.00 net in cash and less than $12.50 of Western Resources Common Stock. On
March 13, 1997, the closing price of Western Resources Common Stock on the
NYSE was $30.125. Based on such closing price, each Share would be converted
into $10.00 net in cash and $12.50 of Western Resources Common Stock. The
Exchange Ratio will change as the market price of the Western Resources Common
Stock changes. ADT Shareholders may call (800) 798-5675 any time on or after
the date hereof through the Expiration Date for the current Exchange Ratio
calculated based on the then-current Western Resources Average Price for the
twenty consecutive trading days ending with the third trading day immediately
preceding the date the call is placed. The actual Western Resources Average
Price and Exchange Ratio will be calculated as of the third trading day
immediately prior to the Expiration Date, as described above, and a press
release will be issued announcing the actual Exchange Ratio prior to the
opening of the second trading day prior to the Expiration Date (as it may be
extended from time to time).
Tendering shareholders will not be obligated to pay any charges or expenses
of the Exchange Agent. Except as set forth in the Instructions to the Letter
of Transmittal, transfer taxes on the exchange of Shares pursuant to the Offer
will be paid by or on behalf of Western Resources.
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, as soon as practicable after
consummation of the Offer, to propose and seek to have ADT effect the
Amalgamation. In the Amalgamation, each outstanding Share (other than Shares
owned by Western Resources or any of its affiliates, Shares held in the
treasury of ADT (if ADT is so authorized) or by any subsidiary of ADT and
Shares owned by ADT Shareholders who perfect appraisal rights under Bermuda
law) would be cancelled in exchange for the right to receive the Offer
Consideration. See "The Amalgamation."
Western Resources and Westar Capital believe that the Offer constitutes a
scheme or contract for the purpose of Section 102 of the Companies Act and
that holders of Shares which are validly tendered and not withdrawn prior to
the Expiration Date will have assented to the Offer in accordance therewith.
In certain circumstances, Section 102 would enable Westar Capital to purchase,
upon notice, Shares not tendered pursuant to the Offer. See "Comparison of
Rights of Holders of Shares and Western Resources Common Stock--Voting Rights
in Connection with Business Combinations--Section 102 of the Companies Act."
In the event that Western Resources obtains all of the Shares pursuant to
the Offer and/or the Amalgamation, former holders of Shares (other than Westar
Capital) would own approximately 48% of the outstanding shares of Western
Resources Common Stock, based on the number of shares of Western Resources
Common Stock outstanding on February 28, 1997 and stock prices as of March 13,
1997 (the last trading day prior to the date of this Prospectus). Such
calculation does not give effect to the KCPL Merger.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is subject to the Minimum Tender Condition, the Western
Resources Shareholder Approval Condition, the ADT Shareholder Approval
Condition, the Rights Plan Condition, the ADT Bye-Law Condition and the
Regulatory
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Approval Condition (in each case as defined on the cover page of this
Prospectus) and the other conditions set forth under "--Certain Conditions of
the Offer."
According to the ADT Proxy Statement, as of February 28, 1997, there were
141,688,697 Shares outstanding, including 3,182,787 Shares which are owned by
a subsidiary of ADT. Westar Capital beneficially owns 38,287,111 Shares, or
approximately 27% of the outstanding Shares, including 14,115 Shares issuable
upon exchange of 500 LYONs, which are exchangeable for Shares at a rate of
28.23 Shares per LYON.
Requests have been made to ADT pursuant to Section 66 of the Companies Act,
and may be made to ADT pursuant to Rule 14d-5 promulgated under the Exchange
Act, for the use of ADT's shareholder lists and security position listings for
the purpose of communications with ADT Shareholders and disseminating the
Offer to holders of Shares. A Prospectus and the related Letter of Transmittal
and other relevant materials will be mailed to registered holders of Shares
and will be furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on
such shareholder lists, the register of members of ADT or, if applicable, who
are listed as participants in a clearing agency's security position listing
for subsequent transmittal to beneficial owners of Shares by Western Resources
following receipt of such list or listings from ADT.
ADT RIGHTS
No separate payment will be made by Western Resources or Westar Capital for
the Rights pursuant to the Offer. The Rights are presently evidenced by the
certificates for the Shares and the tender by an ADT Shareholder of his or her
Shares prior to the Distribution Date (as defined below) will also constitute
a tender of the associated Rights. Upon the earlier to occur of (i) 10 days
(or such later date as may be designated by a majority of the Continuing
Directors (as defined below)) following a public announcement that a person
has acquired beneficial ownership of 15% or more of the outstanding Shares (an
"Acquiring Person") or (ii) ten business days (or such later date as may be
designated by a majority of the Continuing Directors) following the
commencement of a tender offer or exchange offer which would result in the
person making the offer becoming an Acquiring Person (the earlier of such
dates being called the "Distribution Date"), separate certificates evidencing
the Rights will be mailed to holders of record of the Shares as of the close
of business on the Distribution Date and such separate Rights certificates
alone will evidence the Rights.
If the Distribution Date occurs and separate certificates representing the
Rights are distributed by ADT or the Rights Agent to holders of Shares prior
to the time a holder's Shares are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of Shares tendered must be
delivered to the Exchange Agent, or, if available, a book-entry confirmation
received by the Exchange Agent with respect thereto, in order for such Shares
to be validly tendered. If a Distribution Date occurs and separate
certificates representing the Rights are not distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to an
ADT Shareholder receiving the certificates for Rights by use of the guaranteed
delivery procedure described under "--Procedure for Tendering" below.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is conditioned upon satisfaction of the Offer
Conditions. See "--Conditions of the Offer."
TIMING OF THE OFFER
The Offer is currently scheduled to expire on April 15, 1997; however, it is
Western Resources' current intention to extend the Offer from time to time as
necessary until all conditions to the Offer have been satisfied or waived. See
"--Extension, Termination and Amendment." Western Resources has received a
letter from Chase Manhattan Bank and one of its affiliates in which they state
that they are highly confident that they can arrange credit facilities in the
amount necessary to fund payment of the Cash Consideration. See "--Source and
Amount of Funds." Western Resources believes that it is highly unlikely that
it will not have obtained financing for the Cash Consideration prior to five
business days before the Expiration Date; however, in this unlikely event,
Western Resources currently intends to extend the Offer to ensure that five
business days remain for ADT Shareholders to tender their Shares in the Offer
subsequent to obtaining financing. See "--Source and Amount
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of Funds." Western Resources expects that the Western Resources Shareholder
Approval Condition will be satisfied on or about April 24, 1997, the date on
which it plans to call the Western Resources Special Meeting, to approve the
issuance of shares of Western Resources Common Stock in connection with the
Offer and the Amalgamation and an amendment to the Western Resources Articles
to increase the number of shares of Western Resources Common Stock authorized
for issuance. ADT has notified ADT Shareholders that it plans to convene the
ADT Special Meeting on July 8, 1997. Westar Capital is seeking to enjoin ADT's
attempt to delay the ADT Special Meeting and has requested that the Court
compel the ADT Board to convene the ADT Special Meeting on a date 30 days
subsequent to the date the Western Resources Proxy Statement is first
distributed to ADT Shareholders. Western Resources currently anticipates that
all of the conditions to the Offer (other than the ADT Shareholder Approval
Condition, the Rights Plan Condition and the ADT Bye-Law Condition) will be
satisfied by the date of the ADT Special Meeting. Western Resources currently
anticipates that the ADT Shareholder Approval Condition will be satisfied at
the ADT Special Meeting and that the Rights Plan Condition and the ADT Bye-Law
Condition will be satisfied as soon as practicable thereafter. See
"Litigation" and "--Conditions of the Offer."
EXTENSION, TERMINATION AND AMENDMENT
Western Resources expressly reserves the right (but will not be obligated),
in its sole discretion, at any time or from time to time, and regardless of
whether any of the events set forth in "--Conditions of the Offer" shall have
occurred or shall have been determined by Western Resources to have occurred,
to extend the period of time during which the Offer is to remain open by
giving oral or written notice of such extension to the Exchange Agent, which
extension will be announced no later than 9:00 a.m., Eastern time, on the next
business day after the previously scheduled Expiration Date. There can be no
assurance that Western Resources will exercise its right to extend the Offer.
However, it is Western Resources' current intention to extend the Offer until
all Offer Conditions have been satisfied or waived. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering ADT Shareholder to withdraw his or
her Shares. See "--Withdrawal Rights."
Subject to the applicable rules and regulations of the Commission, Western
Resources also reserves the right, in its sole discretion, at any time or from
time to time, (i) to delay acceptance for, exchange of, or, regardless of
whether such Shares (and Rights, if applicable) were theretofore accepted for
exchange, exchange of any Shares (and Rights, if applicable) pursuant to the
Offer, or to terminate the Offer and not accept for exchange or exchange any
Shares (and Rights, if applicable) not theretofore accepted for exchange, or
exchanged, upon the failure of any of the conditions of the Offer to be
satisfied and (ii) to waive any condition (other than the Western Resources
Shareholder Approval Condition, the Regulatory Approval Condition and the
condition relating to the effectiveness of the Registration Statement) or
otherwise amend the Offer in any respect, by giving oral or written notice of
such delay, termination or amendment to the Exchange Agent and by making a
public announcement thereof. Any such extension, termination, amendment or
delay will be followed as promptly as practicable by public announcement
thereof, such announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c)
and 14d-6(d) under the Exchange Act, which require that any material change in
the information published, sent or given to ADT Shareholders in connection
with the Offer be promptly disseminated to ADT Shareholders in a manner
reasonably designed to inform ADT Shareholders of such change) and without
limiting the manner in which Western Resources may choose to make any public
announcement, Western Resources shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
Western Resources confirms that if it makes a material change in the terms
of the Offer or the information concerning the Offer, or if it waives a
material condition of the Offer, Western Resources will extend the Offer to
the extent required under the Exchange Act. If, prior to the Expiration Date,
Western Resources shall increase or decrease the percentage of Shares being
sought or the consideration offered to holders of Shares, such increase or
decrease shall be applicable to all holders whose Shares are accepted for
exchange pursuant to the Offer, and, if at the time notice of any such
increase or decrease is first published, sent or given to holders of Shares,
the Offer is scheduled to expire at any time earlier than the tenth business
day from and including the date that such
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notice is first so published, sent or given, the Offer will be extended until
the expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal
holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern time.
EXCHANGE OF SHARES; DELIVERY OF WESTERN RESOURCES COMMON STOCK AND CASH
CONSIDERATION
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Western Resources will accept for exchange, and will exchange,
Shares (and Rights, if applicable) validly tendered and not properly withdrawn
as promptly as practicable following the Expiration Date. In addition, subject
to applicable rules of the Commission, Western Resources expressly reserves
the right to delay acceptance of or the exchange of Shares (and Rights, if
applicable) in order to comply with any applicable law. In all cases, exchange
of Shares (and Rights, if applicable) tendered and accepted for exchange
pursuant to the Offer will be made only after receipt by the Exchange Agent of
certificates for such Shares (and Rights, if applicable) (or a confirmation of
a book-entry transfer of such Shares (and Rights, if applicable) in the
Exchange Agent's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities")), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, Western Resources will be deemed to have accepted
for exchange Shares (and Rights, if applicable) validly tendered and not
withdrawn as, if and when Western Resources gives oral or written notice to
the Exchange Agent of its acceptance of the tenders of such Shares (and
Rights, if applicable) pursuant to the Offer. Delivery of Western Resources
Common Stock and Cash Consideration in exchange for Shares (and Rights, if
applicable), pursuant to the Offer and cash in lieu of fractional shares of
Western Resources Common Stock will be made by the Exchange Agent as soon as
practicable after receipt of such notice. The Exchange Agent will act as agent
for tendering ADT Shareholders for the purpose of receiving Western Resources
Common Stock, the Cash Consideration and cash to be paid in lieu of fractional
shares of Western Resources Common Stock from Western Resources and
transmitting such Western Resources Common Stock and cash to tendering ADT
Shareholders. Under no circumstances will interest with respect to fractional
shares be paid by Western Resources by reason of any delay in making such
exchange.
If any tendered Shares are not accepted for exchange pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unexchanged Shares
will be returned without expense to the tendering ADT Shareholder or, in the
case of Shares tendered by book-entry transfer of such Shares into the
Exchange Agent's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth below under "--Procedure for Tendering," such Shares will
be credited to an account maintained within such Book-Entry Transfer Facility
as soon as practicable following expiration or termination of the Offer.
CASH IN LIEU OF FRACTIONAL SHARES OF WESTERN RESOURCES COMMON STOCK
No certificates representing fractional shares of Western Resources Common
Stock will be issued pursuant to the Offer. In lieu thereof, each tendering
shareholder who would otherwise be entitled to a fractional share of Western
Resources Common Stock will receive cash in an amount equal to such fraction
(expressed as a decimal and rounded to the nearest 0.01 of a share) times the
closing price for shares of Western Resources Common Stock on the NYSE
Composite Tape on the date such ADT Shareholder's Shares are accepted for
exchange by Western Resources.
WITHDRAWAL RIGHTS
Tenders of Shares (and Rights, if applicable) made pursuant to the Offer are
irrevocable, except that Shares (and Rights, if applicable) tendered pursuant
to the Offer may be withdrawn pursuant to the procedures set forth below at
any time prior to the Expiration Date, and, unless theretofore accepted for
exchange and exchanged by Western Resources for the Offer Consideration
pursuant to the Offer, may also be withdrawn at any time after May 16, 1997.
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For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth on the back cover of this Prospectus,
and must specify the name of the person having tendered the Shares (and
Rights, if applicable) to be withdrawn, the number of Shares (and Rights, if
applicable) to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares (and Rights, if
applicable).
The signature(s) on the notice of withdrawal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (an "Eligible Institution") unless such
Shares (and Rights, if applicable) have been tendered for the account of any
Eligible Institution. If Shares (and Rights, if applicable) have been tendered
pursuant to the procedures for book-entry tender as set forth below under "--
Procedure for Tendering," any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares (and Rights, if applicable) and must otherwise comply
with such Book-Entry Transfer Facility's procedures. If certificates have been
delivered or otherwise identified to the Exchange Agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Shares (and Rights, if applicable) withdrawn must also be
furnished to the Exchange Agent as aforesaid prior to the physical release of
such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Western Resources, in its sole
discretion, which determination shall be final and binding. Neither Western
Resources, the Exchange Agent, the Information Agent, the Dealer Managers nor
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any Shares (and Rights, if applicable)
properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares (and Rights, if applicable)
may be retendered by following one of the procedures described under "--
Procedure for Tendering" at any time prior to the Expiration Date.
A withdrawal of Shares shall also constitute a withdrawal of the associated
Rights. Rights may not be withdrawn unless the associated Shares are also
withdrawn.
PROCEDURE FOR TENDERING
For an ADT Shareholder validly to tender Shares (and Rights, if applicable)
pursuant to the Offer, (i) a properly completed and duly executed Letter of
Transmittal (or manually executed facsimile thereof), together with any
required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer, and any other required documents, must
be transmitted to and received by the Exchange Agent at one of its addresses
set forth on the back cover of this Prospectus and either certificates for
tendered Shares (and Rights, if applicable) must be received by the Exchange
Agent at such address or such Shares (and Rights, if applicable) must be
tendered pursuant to the procedures for book-entry transfer set forth below
(and a confirmation of receipt of such tender received (such confirmation, a
"Book-Entry Confirmation")), in each case prior to the Expiration Date, or
(ii) such ADT Shareholders must comply with the guaranteed delivery procedure
set forth below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Exchange Agent, and forming a part
of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares (and Rights, if applicable)
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that Western Resources may enforce such agreement
against such participant.
ADT Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless the Rights Plan
Condition has been satisfied or waived. Unless the ADT Distribution Date
occurs, a tender of Shares will constitute a tender of the associated Rights.
If the ADT Distribution Date
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occurs and separate certificates representing the Rights are distributed by
ADT or the Rights Agent to holders of Shares prior to the time a holder's
Shares are tendered pursuant to the Offer, certificates representing a number
of Rights equal to the number of Shares tendered must be delivered to the
Exchange Agent, or, if available, a Book-Entry Confirmation received by the
Exchange Agent with respect thereto, in order for such Shares to be validly
tendered. If the ADT Distribution Date occurs and separate certificates
representing the Rights are not distributed prior to the time Shares are
tendered pursuant to the Offer, Rights may be tendered prior to a shareholder
receiving the certificates for Rights by use of the guaranteed delivery
procedure described below. If Rights certificates are distributed but are not
available to a shareholder prior to the time Shares are tendered pursuant to
the Offer, a tender of Shares constitutes an agreement by the tendering
shareholder to deliver to the Exchange Agent pursuant to the guaranteed
delivery procedure described below, prior to the expiration of the period to
be specified in the Notice of Guaranteed Delivery and the related Letter of
Transmittal for delivery of Rights certificates or a Book-Entry Confirmation
for Rights (the "Rights Delivery Period"), Rights certificates representing a
number of Rights equal to the number of Shares tendered. Western Resources
reserves the right to require that it receive such Rights certificates (or a
Book-Entry Confirmation with respect to such Rights) prior to accepting Shares
for exchange.
Nevertheless, Western Resources will be entitled to accept for exchange
Shares tendered by a shareholder prior to receipt of the Rights certificates
required to be tendered with such Shares or a Book-Entry Confirmation with
respect to such Rights and either (i) subject to complying with applicable
rules and regulations of the Commission, withhold payment for such Shares
pending receipt of the Rights certificates or a Book-Entry Confirmation for
such Rights or (ii) exchange Shares accepted for exchange pending receipt of
the Rights certificates or a Book-Entry Confirmation for such Rights in
reliance upon the guaranteed delivery procedure described below. In addition,
after expiration of the Rights Delivery Period, Western Resources may instead
elect to reject as invalid a tender of Shares with respect to which Rights
certificates or a Book-Entry Confirmation for an equal number of Rights have
not been received by the Exchange Agent. Any determination by Western
Resources to make payment for Shares in reliance upon such guaranteed delivery
procedure or, after expiration of the Rights Delivery Period, to reject as
invalid, shall be made, subject to applicable law, in the sole and absolute
discretion of Western Resources.
The Exchange Agent will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of the mailing of the final Prospectus, and any financial
institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of the Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Exchange Agent's
account in accordance with such Book-Entry Transfer Facility's procedure for
such transfer. However, although delivery of Shares may be effected through
book-entry at the Book-Entry Transfer Facilities, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message in connection with a book-entry transfer, and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at one or more of its addresses set forth on the back cover of this
Prospectus prior to the Expiration Date, or the guaranteed delivery procedure
described below must be complied with. No assurance can be given, however,
that book-entry delivery of Rights will be available. If book-entry delivery
is not available, a tendering shareholder will be required to tender Rights by
means of delivery of Rights certificates or pursuant to the guaranteed
delivery procedure set forth below.
No signature guarantee is required on the Letter of Transmittal in cases
where (a) the Letter of Transmittal is signed by the registered holder(s) of
the Shares (including any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner of
Shares) tendered therewith and such holder(s) have not completed the
instruction entitled "Special Issuance Instructions" on the Letter of
Transmittal or (b) such Shares are tendered for the account of an Eligible
Institution. Otherwise, all signatures on the Letter of Transmittal must be
guaranteed by an Eligible Institution. If the certificates for Shares or
Rights (if any) are registered in the name of a person other than the signer
of the Letter of Transmittal, or if certificates for unexchanged Shares or
Rights (if any) are to be issued to a person other than the registered
holder(s), the certificates must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the certificates, with the signature(s)
on the certificates or stock powers guaranteed as aforesaid.
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THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
CONSIDERATION AND CASH RECEIVED IN LIEU OF FRACTIONAL SHARES OF WESTERN
RESOURCES COMMON STOCK, A SHAREHOLDER MUST PROVIDE THE EXCHANGE AGENT WITH HIS
OR HER CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER SUCH
SHAREHOLDER IS SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
CERTAIN SHAREHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN
FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE BACKUP WITHHOLDING AND REPORTING
REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT
RECIPIENT, THE SHAREHOLDER MUST SUBMIT A FORM W-8, SIGNED UNDER PENALTIES OF
PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
If an ADT Shareholder desires to tender Shares (and Rights, if applicable)
pursuant to the Offer and such shareholder's certificates are not immediately
available or such shareholder cannot deliver the certificates and all other
required documents to the Exchange Agent prior to the Expiration Date or such
shareholder cannot complete the procedure for book-entry transfer on a timely
basis, such Shares (and Rights, if applicable) may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Western Resources, is received
by the Exchange Agent as provided below on or prior to the Expiration Date;
and
(c) the certificates for all tendered Shares (or a confirmation of a
book-entry transfer of such securities into the Exchange Agent's account at
a Book-Entry Transfer Facility as described above), in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and all
other documents required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
In all cases, exchanges of Shares (and Rights, if applicable) tendered and
accepted for exchange pursuant to the Offer will be made only after timely
receipt by the Exchange Agent of certificates for Shares (and Rights, if
applicable) (or timely confirmation of a book-entry transfer of such
securities into the Exchange Agent's account at a Book-Entry Transfer Facility
as described above), properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), or an Agent's Message in connection
with a book-entry transfer, and any other required documents. Accordingly,
tendering ADT Shareholders may be paid at different times depending upon when
certificates for Shares (and Rights, if applicable) or confirmations of book-
entry transfers of such Shares (and Rights, if applicable) are actually
received by the Exchange Agent.
By executing a Letter of Transmittal as set forth above, the tendering ADT
Shareholder irrevocably appoints designees of Western Resources as such
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Shares (and Rights, if applicable)
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tendered by such shareholder and accepted for exchange by Western Resources
and with respect to any and all other Shares (and Rights, if applicable) and
other securities issued or issuable in respect of the Shares (and Rights, if
applicable) on or after March 17, 1997. Such appointment is effective, and
voting rights will be affected, when and only to the extent that Western
Resources deposits the shares of Western Resources Common Stock and Cash
Consideration for Shares tendered by such shareholder with the Exchange Agent.
All such proxies shall be considered coupled with an interest in the tendered
Shares and therefore shall not be revocable. Upon the effectiveness of such
appointment, all prior proxies given by such shareholder will be revoked, and
no subsequent proxies may be given (and, if given, will not be deemed
effective). Western Resources' designees will, with respect to the Shares for
which the appointment is effective, be empowered, among other things, to
exercise all voting and other rights of such shareholder as they, in their
sole discretion, deem proper at any annual, special or adjourned meeting of
ADT Shareholders, by written consent in lieu of any such meeting or otherwise.
Western Resources reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Western Resources' exchange of
such Shares, Western Resources must be able to exercise full voting rights
with respect to such Shares.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Shares (and Rights, if
applicable) will be determined by Western Resources, in its sole discretion,
which determination shall be final and binding. Western Resources reserves the
absolute right to reject any and all tenders of Shares (and Rights, if
applicable) determined by it not to be in proper form or the acceptance of or
exchange for which may, in the opinion of Western Resources' counsel, be
unlawful. Western Resources also reserves the absolute right to waive any of
the conditions of the Offer (other than the Western Resources Shareholder
Approval Condition, the Regulatory Approval Condition and the condition
relating to the effectiveness of the Registration Statement), or any defect or
irregularity in the tender of any Shares (and Rights, if applicable). No
tender of Shares (and Rights, if applicable) will be deemed to have been
validly made until all defects and irregularities in tenders of Shares have
been cured or waived. Neither Western Resources, the Exchange Agent, the
Information Agent, the Dealer Managers nor any other person will be under any
duty to give notification of any defects or irregularities in the tender of
any Shares or will incur any liability for failure to give any such
notification. Western Resources' interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and instructions thereto) will
be final and binding.
The tender of Shares and Rights (if any) pursuant to any of the procedures
described above will constitute a binding agreement between the tendering ADT
Shareholder and Western Resources upon the terms and subject to the conditions
of the Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of the
Offer and the Amalgamation and represents the opinion of Sullivan & Cromwell,
counsel to Western Resources. It does not address any tax consequences of the
Offer and the Amalgamation to persons who exercise dissenters' rights, if any,
to the Amalgamation. This summary may not apply to certain classes of persons
subject to special tax treatment, such as foreign persons, insurance
companies, tax-exempt organizations, financial institutions, dealers in
securities, persons who acquired Shares pursuant to the exercise of employee
stock options or rights or otherwise as compensation and persons who hold
Shares as part of a straddle or conversion transaction. This summary is based
upon laws, regulations, rulings and decisions, all of which are subject to
change (possibly with retroactive effect), and no ruling has been or will be
requested from the Internal Revenue Service (the "Service") on the tax
consequences of the Offer and the Amalgamation.
The exchange of Shares for Western Resources Common Stock and cash pursuant
to the Offer and Amalgamation will be a taxable transaction for U.S. federal
income tax purposes and may also be taxable under applicable state, local and
foreign tax laws. In general, for U.S. federal income purposes, each ADT
Shareholder will realize gain or loss equal to the difference between (x) the
amount of cash and the fair market value of the shares Western Resources
Common Stock received and (y) the ADT Shareholder's adjusted tax basis in the
Shares exchanged therefor. Such gain or loss will be capital gain or loss if
the ADT Shareholder holds the Shares as a capital asset and will be long-term
gain or loss if the ADT Shareholder's holding period for the Shares is
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more than one year. The ADT Shareholder will have a tax basis in the Western
Resources Common Stock received equal to the fair market value thereof and the
shareholder's holding period for the Western Resources Common Stock will begin
on the day following the date of the exchange.
This summary does not address state, local or foreign tax consequences of
the Offer and the Amalgamation. Consequently, each holder should consult such
holder's own tax advisor as to the specific tax consequences of the Offer and
the Amalgamation to such holder.
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and, depending upon the number of Shares so purchased, could adversely affect
the liquidity and market value of the remaining Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also listed
on the LSE, the BSX and the FSE. Depending upon the number of Shares acquired
pursuant to the Offer, following consummation of the Offer, the Shares may no
longer meet the requirements of such exchanges for continued listing. For
example, published guidelines of the NYSE indicate that the NYSE would
consider delisting the outstanding Shares if, among other things, (i) the
number of publicly held Shares (exclusive of holdings of officers, directors
and members of their immediate families and other concentrated holdings of 10%
or more) should fall below 600,000, (ii) the number of record holders of 100
or more Shares should fall below 1,200 or (iii) the aggregate market value of
publicly held Shares should fall below $5 million.
According to the ADT Proxy Statement, there were, as of February 28, 1997,
141,688,697 Shares outstanding, including 3,182,787 Shares which were owned by
a subsidiary of ADT. According to the ADT 1995 Form 10-K, there were, as of
February 29, 1996, 15,519 holders of record of Shares.
If such exchanges were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through the National
Association of Securities Dealers, Inc., Automated Quotations System
("Nasdaq") or by other sources. The extent of the public market for the Shares
and the availability of such quotations would, however, depend upon the number
of holders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of Shares under the
Exchange Act, as described below, and other factors.
The Shares are presently "margin securities" under the regulations of the
Federal Reserve Board, which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending on
factors similar to those described above with respect to listing and market
quotations, following consummation of the Offer the Shares may no longer
constitute "margin securities" for the purposes of the Federal Reserve Board's
margin regulations, in which event the Shares would be ineligible as
collateral for margin loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated by ADT upon application to the Commission if
the outstanding Shares are not listed on a national securities exchange and if
there are fewer than 300 holders of record of Shares. Termination of
registration of the Shares under the Exchange Act would reduce the information
required to be furnished by ADT to its shareholders and to the Commission and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirement of furnishing
a proxy statement in connection with shareholders' meetings pursuant to
Section 14(a) and the related requirement of furnishing an annual report to
shareholders, no longer applicable with respect to the Shares. Furthermore,
the ability of "affiliates" of ADT and persons holding "restricted securities"
of ADT to dispose of such securities pursuant to Rule 144 under the Securities
Act may
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be impaired or eliminated. If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be eligible for Nasdaq
reporting or for continued inclusion on the Federal Reserve Board's list of
"margin securities."
According to the ADT Form 8-A, the Rights currently are registered under the
Exchange Act and are listed on the NYSE and the LSE, but currently are
attached to the outstanding Shares and are not separately transferable.
PURPOSE OF THE OFFER; THE AMALGAMATION
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect the Amalgamation. In the Amalgamation,
each outstanding Share (other than Shares owned by Western Resources or any of
its affiliates, Shares held in the treasury of ADT (if ADT is so authorized)
or by any subsidiary of ADT and Shares owned by ADT Shareholders who perfect
appraisal rights under Bermuda law) would be cancelled in exchange for the
right to receive the Offer Consideration. Assuming the Minimum Tender
Condition and the Rights Plan Condition are satisfied and Western Resources
consummates the Offer, Western Resources believes it would have sufficient
voting power to effect the Amalgamation without the vote of any other
shareholder of ADT. See "The Amalgamation--Appraisal Rights."
The Amalgamation will be subject to certain conditions, including the
consent of the Minister of Finance. As soon as practicable following the
acceptance of Shares by Western Resources pursuant to the Offer, the newly
elected ADT Board presently intends to cause all necessary actions to be taken
to seek the consent of the Minister of Finance to the Amalgamation. Western
Resources has no reason to believe that the Minister of Finance will not grant
approval for the Amalgamation; however, there can be no assurance that the
Minister of Finance would grant his consent to the Amalgamation. An adverse
decision by the Minister of Finance may not be subject to appeal or review in
any court. Western Resources also presently intends to condition the
Amalgamation upon holders of not more than 5% of the outstanding Shares at the
effective time of the Amalgamation perfecting appraisal rights with respect to
the Amalgamation pursuant to Section 106(6) of the Companies Act. See
"Appraisal Rights."
ADT BYE-LAWS AND PROVISIONS OF THE UNITED KINGDOM CITY CODE
Following their election, the Western Resources Nominees do not currently
intend to serve notice pursuant to Bye-Law 104 or Bye-Law 46 of the ADT Bye-
Laws upon Western Resources or any affiliate of Western Resources who,
following consummation of the Offer, owns 30% or more of the Shares. Thus, in
the event that the Western Resources Nominees are elected at the ADT Special
Meeting, Western Resources believes that Bye-Law 104 and Bye-Law 46 should not
apply to Western Resources or its affiliates and the ADT Bye-Law Condition
should, therefore, be satisfied.
Pursuant to Bye-Law 104(1)(A) of the ADT Bye-Laws, where any person is or
becomes "interested" in Shares, whether as a result of one transaction or a
series of transactions, in circumstances in which such person would be
obligated to make an offer to shareholders of ADT or to the holders of every
class of securities convertible into, or of rights to subscribe for, share
capital of ADT under the Rules of the City Code on Take-overs and Mergers of
the United Kingdom of Great Britain and Northern Ireland, as amended (the
"City Code"), the ADT Board may require such person to make an offer under the
City Code as if the City Code applied to ADT but so references in the City
Code to the "Panel" are construed as if they were references to the ADT Board.
Rule 9 of the City Code, as it is applied by the ADT Bye-Laws, provides that,
except with the consent of the ADT Board, when any person (and persons acting
"in concert" with such person) acquires shares which carry 30% or more of the
voting rights of a company, such person must make an offer for all shares of
that class (whether voting or non-voting). The offer must be for cash or offer
a cash alternative, in each case at not less than the highest price paid (in
cash or otherwise) for shares of the same class by the offeror, or anyone
acting in concert with the offeror, during the offer period and within the 12
months prior to commencement of the offer.
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Pursuant to Bye-Law 104(3) of the ADT Bye-Laws, where any person is
interested, whether as a result of a series of transactions over a period of
time or not, in 30% or more of the outstanding Shares, the ADT Board may
demand that a cash offer for all of the outstanding voting or non-voting
securities of ADT be made if the ADT Board determines that an offer pursuant
to Bye-Law 104(1)(A) of the ADT Bye-Laws is not expedient or if a person
required to make such an offer fails to do so. Pursuant to Bye-Law 104(4) of
the ADT Bye-Laws, if the ADT Board serves a notice under Bye-Law 104(3) of the
ADT Bye-Laws, the ADT Board may also require that the offeror offer to
purchase securities of ADT convertible into voting or non-voting shares of ADT
on terms considered "fair and reasonable" by the ADT Board in its sole
discretion. Such offer must be made within 30 days of the demand.
Unless the ADT Board otherwise agrees, an offer for each class of ADT
capital stock under Bye-Laws 104(3) and 104(4) of the ADT Bye-Laws must be for
cash or must offer a cash alternative at not less than the highest price paid
by the offeror or any person acting in concert with it for shares of such
class within the preceding 12 months. Such offer must remain open for at least
14 days after the date on which it becomes unconditional as to acceptances,
and in the case of an offer under Bye-Law 104(3), must provide that all shares
will be purchased within 21 days of the offer becoming unconditional in all
respects.
Subject to any rights or restrictions attached to any class of capital stock
of ADT, at any meeting of ADT, an ADT Shareholder present in person or by
proxy is entitled, on a poll, to one vote for each Share held by such ADT
Shareholder. Pursuant to Bye-Law 46 of the ADT Bye-Laws, an ADT Shareholder is
not entitled (except as a proxy for another ADT Shareholder) to be present or
to vote at any meeting if such ADT Shareholder received a notice under Bye-Law
104 stating that upon failure to make an offer pursuant to Bye-Law 104 before
a period of not less than 28 days from the date of service of such notice the
ADT Shareholder would not be entitled to vote and the ADT Shareholder upon
whom such notice was served (i) fails to make such an offer within the period
so specified, or (ii) having made such an offer or acquired shares of ADT in
contravention of a notice served under Bye-Law 104 of the ADT Bye-Laws, fails
to remedy such noncompliance.
Neither Western Resources nor any of its subsidiaries are presently
"interested" in 30% or more of the outstanding Shares of ADT. Therefore, the
provisions of Bye-Law 104 do not presently apply to Western Resources or its
subsidiaries. If elected, the Western Resources Nominees intend to take all
actions necessary and desirable to facilitate consummation of the Offer and
the Amalgamation, including, among other things, not invoking the provisions
of Bye-Law 104 or Bye-Law 46 of the ADT Bye-Laws in connection with the
acquisition of Shares by Western Resources pursuant to the Offer or otherwise.
The foregoing does not purport to be a complete description of Bye-Law 104
or Bye-Law 46 of the ADT Bye-Laws. ADT Shareholders are urged to, and should,
read Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws, copies of which are
included herein as Schedules C and D, respectively.
CONDITIONS OF THE OFFER
Minimum Tender Condition. The Offer is conditioned upon, among other things,
there being validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which, together with Shares owned by Western Resources and
its affiliates, will constitute at least a majority of the total number of
outstanding Shares on a fully diluted basis (as though all options or other
securities convertible into or exercisable or exchangeable for Shares had been
so converted, exercised or exchanged) as of the date the Shares are accepted
for exchange by Western Resources pursuant to the Offer. Based upon
information set forth in the ADT Proxy Statement, as of February 28, 1997,
there were 141,688,697 Shares outstanding, including 3,182,787 Shares which
were owned by a subsidiary of ADT. Assuming conversion of all of the LYONs and
the exercise of 18,572,518 options for Shares (disclosed in the 1996 ADT Proxy
Statement), approximately 182,174,753 Shares are expected to be outstanding
immediately prior to the consummation of the Offer. Westar Capital owns
38,287,111 Shares, or approximately 27% of the outstanding Shares, including
14,115 Shares issuable upon exchange of 500 LYONs, which are exchangeable for
Shares at a rate of 28.23 Share per LYON. Based on the foregoing, Western
Resources believes that the Minimum Tender Condition would be satisfied if at
least an
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aggregate of 52,800,267 Shares (or 29%) of the Shares expected to be
outstanding immediately prior to the consummation of the Offer had been
validly tendered pursuant to the Offer and not withdrawn. Western Resources
reserves the right (but shall not be obligated), subject to the rules and
regulations of the Commission, to waive or amend the Minimum Tender Condition
and to exchange fewer than such number of Shares as would satisfy the Minimum
Tender Condition pursuant to the Offer; provided, however, that, in the event
of such waiver or amendment, the Offer shall expire no sooner than ten
business days from the date of such waiver or amendment.
Western Resources Shareholder Approval Condition. The Offer is conditioned,
among other things, upon the satisfaction of the Western Resources Shareholder
Approval Condition. Pursuant to the rules of the NYSE (on which the Western
Resources Common Stock is listed), the issuance of Western Resources Common
Stock pursuant to the Offer and the Amalgamation must be approved by the
holders of a majority of the shares of Western Resources Common Stock and
Western Resources Preferred Stock ("Western Resources Voting Stock"), voting
as a single class, voted at a meeting of such holders at which the total
number of votes cast represents over 50% in interest of all shares of Western
Resources Voting Stock outstanding on the applicable record date. In addition,
pursuant to the Western Resources Articles, approval by the holders of a
majority of the shares of Western Resources Voting Stock, voting as a single
class, is required to amend the Western Resources Articles to increase the
number of shares of Western Resources Common Stock authorized for issuance
taking into account the terms of the Offer. Western Resources intends to seek
such approvals at the Western Resources Special Meeting to be held on or about
April 24, 1997.
ADT Shareholder Approval Condition. The Offer is conditioned upon, among
other things, the satisfaction of the ADT Shareholder Approval Condition. As
more fully set forth in the Western Resources Proxy Statement, on December 18,
1996, Westar Capital deposited the Requisition with ADT, pursuant to Section
74 of the Companies Act and Bye-Law 42 of the ADT Bye-Laws, requiring the ADT
Board to convene the ADT Special Meeting so that ADT Shareholders will have
the opportunity to vote on the Western Resources Proposals and thereby satisfy
the ADT Shareholder Approval Condition. Under the Companies Act and the ADT
Bye-Laws, the ADT Board is required to convene the ADT Special Meeting. In the
event that the ADT Board does not within twenty-one days from the date of the
deposit of the Requisition convene the ADT Special Meeting, Westar Capital may
itself convene the ADT Special Meeting. Westar Capital originally requested
that the date of the ADT Special Meeting be February 18, 1997; however, on
January 7, 1997, ADT announced that it had scheduled the ADT Special Meeting
for July 8, 1997. Westar Capital has commenced litigation challenging the July
8, 1997 meeting date and is seeking relief to compel the ADT Board to hold the
ADT Special Meeting on a date 30 days subsequent to the date the Western
Resources Proxy Statement is first distributed to ADT Shareholders. See "The
ADT Special Meeting" and "Litigation."
At the ADT Special Meeting, ADT Shareholders will vote on each of the
Western Resources Proposals, as more fully described herein. See "The ADT
Special Meeting." Only persons entered in the register of members of ADT as
holders of Shares at the time of the ADT Special Meeting will be entitled to
vote at such meeting unless the ADT Board sets a record date for the ADT
Special Meeting. In the event the ADT Board sets a record date for the ADT
Special Meeting, only holders of Shares at the close of business on such
record date will be entitled to vote at the ADT Special Meeting. Each Share is
entitled to one vote upon each matter presented at the ADT Special Meeting.
Holders of ADT Preferred Stock, if any, are not entitled to vote on any of the
Western Resources Proposals. Pursuant to Bye-Law 43 of the ADT Bye-Laws, at
any general meeting of ADT not fewer than two holders of Shares present,
either in person or by proxy, constitute a quorum for the transaction of
business. Each of the Western Resources Proposals may be approved by the
affirmative vote of a majority of Shares voted at the ADT Special Meeting.
Rights Plan Condition. The Offer is conditioned upon, among other things,
the satisfaction of the Rights Plan Condition. The Rights Plan Condition may
be satisfied in several ways, including the following: (i) the current ADT
Board may (a) redeem the Rights or (b) amend the Rights Agreement (x) so that
the Rights would not be triggered by the Offer and the Amalgamation or (y) to
eliminate the effects of the Rights Agreement Amendments so that, following
the satisfaction of the ADT Shareholder Approval Condition, the newly elected
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ADT Board may, subject to its fiduciary obligations, take such actions as may
be necessary with respect to the Rights so that they would not be triggered by
the Offer and the Amalgamation, (ii) Western Resources may be successful in
its litigation seeking, among other things, the invalidation of the Rights or
an injunction requiring the ADT Board to redeem the Rights, or (iii) Western
Resources may be successful in its litigation seeking invalidation of the
Rights Agreement Amendments and, following satisfaction of the ADT Shareholder
Approval Condition, the newly elected ADT Board may, subject to its fiduciary
obligations, take such actions as may be necessary with respect to the Rights
so that they would not be triggered by the Offer and the Amalgamation. See
"Litigation."
Western Resources believes that the Rights Agreement Amendments are illegal
under Bermuda law and that the Court will find such amendments invalid.
Western Resources has requested that the Court grant judicial relief with
respect to the Rights Agreement Amendments prior to the ADT Special Meeting.
If such relief has not been granted prior to the date of the ADT Special
Meeting, it is possible that the Western Resources Nominees, once elected,
would be unable to redeem the Rights or amend the Rights Agreement. In this
circumstance, the Rights Plan Condition may not be capable of satisfaction and
the Offer may not be consummated.
Set forth below is certain additional information concerning the Rights.
Rights Agreement
On November 4, 1996, the ADT Board declared a dividend of one Series A First
Preference Share Purchase Right for each Share in issue at the close of
business on November 15, 1996 and the issuance of one Right with respect to
each Share issued after such date but prior to the Distribution Date (as
defined below).
The terms of the Rights are set forth in the Rights Agreement. The following
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement which is further described
and filed as an exhibit to the ADT Form 8-A.
After the Distribution Date, each Right entitles the holder thereof to
purchase from ADT one hundredth of a Series A First Preference Share at a
price of $90 (the "Purchase Price"), subject to adjustment for dilution. The
Rights are not exercisable and will not separate from the Shares until the
Distribution Date which occurs on the earlier to occur of (i) the close of
business on the tenth day (or such later date as may be designated by a
majority of the Continuing Directors (as defined below)) following the date of
the first public announcement that a person (other than certain persons
described below) has become an Acquiring Person (such date of public
announcement being a "Share Acquisition Date") or (ii) the close of business
on the tenth business day (or such later date as may be designated by a
majority of the Continuing Directors) following the commencement of a tender
or exchange offer which would result in the person making the tender or
exchange offer becoming an Acquiring Person. None of ADT, a subsidiary of ADT,
an employee benefit plan of ADT or of any of its subsidiaries or any person
organized, appointed or established by ADT or any of its subsidiaries for or
pursuant to such a plan may be considered an Acquiring Person. In addition, a
person (together with its affiliates and associates) (a "Grandfathered
Person") owning 15% or more of the issued and outstanding Shares (such
person's share percentage being a "Grandfathered Percentage") is not an
Acquiring Person if such person acquired its Shares prior to 5:00 p.m.,
Eastern time, on November 4, 1996, provided that such Grandfathered Person
will become an Acquiring Person if its Grandfathered Percentage increases.
Under this formulation, each of Western Resources and Westar Capital is a
"Grandfathered Person."
A "Continuing Director" was originally defined under the Rights Agreement to
be any member of the ADT Board who, while such person is a member of the ADT
Board, is not an Acquiring Person (or an affiliate or associate thereof) or a
representative or nominee of an Acquiring Person or of any such affiliate or
associate and either (i) was a member of the ADT Board immediately prior to
the time any person becomes an Acquiring Person or (ii) subsequently becomes a
member of the ADT Board, if such person's nomination for election or election
to the ADT Board is recommended or approved by a majority of the Continuing
Directors.
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The Rights Agreement Amendments change the "Continuing Directors" definition
under the Rights Agreement to exclude any person elected to the ADT Board as a
result of a proxy solicitation or similar shareholder initiative.
After any person becomes an Acquiring Person, each Right (other than Rights
beneficially owned by an Acquiring Person and its affiliates and associates,
or transferees thereof) will entitle the holder thereof to purchase, for the
Purchase Price, Shares having a market value equal to twice the Purchase
Price.
In the event that, after a Share Acquisition Date, (i) ADT consolidates,
amalgamates, or otherwise combines with any other person and ADT is either not
the continuing or surviving corporation or the Shares are changed or exchanged
or (ii) ADT or one of its subsidiaries sell, or otherwise transfer, assets or
earning power aggregating more than 50% of the assets or earning power of ADT
and its subsidiaries taken as a whole, each Right will entitle the holder
thereof to purchase, for the Purchase Price, a number of shares of common
stock of the other party to such business combination or sale having a market
value equal to twice the Purchase Price.
The Rights may be redeemed at a redemption price of $.01 per Right at any
time prior to the earlier of (i) the close of business on the tenth day
following the Share Acquisition Date (or such later date as a majority of the
Continuing Directors may designate prior to such time as the Rights are no
longer redeemable) and (ii) November 14, 2005. If the Rights are to be
redeemed on or after the Share Acquisition Date or after there has been a
change in the majority of the directors on the ADT Board as a result of a
proxy or consent solicitation and a participant in such solicitation has
stated that such person intends to take, or may consider taking, any action
which would result in such person becoming an Acquiring Person or would result
in the occurrence of any of the events specified in the immediately preceding
paragraph, a majority of the Continuing Directors will be required to
authorize such redemption.
The Rights Agreement may be amended in any respect prior to the Distribution
Date. After the Distribution Date, the Rights Agreement may be amended in
certain respects, if such amendments would not adversely affect the interest
of the holders of Rights (other than the Acquiring Person and any of its
affiliates or associates). After an Acquiring Person has become such, to be
effective, any amendment must be approved by a majority of the Continuing
Directors.
Unless previously redeemed in accordance with terms of its Agreement, the
Rights will expire on November 14, 2005.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group of persons that attempts to acquire
ADT in a manner which causes the Rights to become exercisable.
ADT Bye-Law Condition. The Offer is conditioned upon Western Resources and
Westar Capital being satisfied, in their reasonable discretion, that the
provisions of Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws do not and will
not apply to Western Resources, Westar Capital or the acquisition of Shares
pursuant to the Offer so as (a) to require Western Resources or Westar Capital
to comply with the provisions of Bye-Law 104 of the ADT Bye-Laws or (b) to
prevent Western Resources, Westar Capital or any of their affiliates from
voting Shares owned by any of them at any time. Neither Western Resources nor
any of its subsidiaries are presently "interested" in 30% or more of the
outstanding Shares of ADT. Therefore, the provisions of Bye-Laws 104 do not
presently apply to Western Resources or its subsidiaries. The ADT Bye-Law
Condition will be satisfied following the election of the Western Resources
Nominees at the ADT Special Meeting, as the newly elected ADT Board (subject
to their fiduciary duties under Bermuda law) will not serve notice pursuant to
Bye-Law 104 or Bye-Law 46 of the ADT Bye-Laws upon Western Resources or any
affiliate of Western Resources who becomes interested, following consummation
of the Offer, in 30% or more of the Shares. Thus, Western Resources believes
that in the event the Western Resources Nominees are elected at the ADT
Special Meeting, Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws should not
apply to Western Resources or its affiliates and the ADT Bye-Law Condition
should be satisfied.
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For a description of Bye-Law 104 and Bye-Law 46, see "The Offer--ADT Bye-
Laws and Provisions of the United Kingdom City Code" and "Comparison of the
Rights of Holders of Shares and Western Resources Common Stock." ADT
Shareholders are urged to, and should, read Bye-Law 104 and Bye-Law 46, copies
of which are included herein as Schedules C and D, respectively.
Republic Warrant Condition. The Offer is conditioned upon, among other
things, the receipt by Westar Capital of a final judgment from a court of
competent jurisdiction declaring the Republic Warrant invalid or the
expiration of the Republic Warrant prior to the Expiration Date without having
been exercised. On December 18, 1996, Western Resources announced that Westar
Capital had commenced litigation in the United States District Court for the
Southern District of Florida, charging ADT and the ADT Board with breaches of
their fiduciary duties to ADT and the ADT Shareholders. Specifically, the
complaint alleges, among other things, that the ADT Board breached its
fiduciary duty to ADT and the ADT Shareholders when it granted the Republic
Warrant without receiving adequate consideration from Republic. Republic is
also joined in the lawsuit. See "Litigation."
Regulatory Approval Condition. The Offer is conditioned upon, among other
things, all regulatory approvals required to consummate the Offer (the
"Requisite Regulatory Approvals") having been obtained and remaining in full
force and effect, all statutory waiting periods in respect thereof having
expired and no such approval containing any conditions or restrictions which
the Western Resources Board determines will or reasonably could be expected to
materially impair the strategic and financial benefits expected to result from
the Offer. Western Resources will use its reasonable best efforts to obtain
the Requisite Regulatory Approvals. As described below, applications and
notices seeking the Requisite Regulatory Approvals have been or will be
promptly filed. The Offer cannot proceed in the absence of the Requisite
Regulatory Approvals. Although no assurances can be given, Western Resources
anticipates that it will receive all regulatory approvals on a timely basis.
Antitrust. Under the HSR Act, and the Rules that have been promulgated
thereunder, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the FTC
and certain waiting period requirements have been satisfied. The acquisition
of Shares by Western Resources pursuant to the Offer is subject to the
expiration of the statutory waiting period under the HSR Act. On December 23,
1996, Western Resources filed with the Antitrust Division and the FTC a Hart-
Scott-Rodino Notification and Report Form with respect to the Offer to acquire
up to 100% of the outstanding Shares. On January 23, 1997, the waiting period
expired with respect to Western Resources' filing under the HSR Act to acquire
ownership of up to 100% of the outstanding Shares.
Federal and state antitrust enforcement agencies frequently scrutinize,
under the antitrust laws, transactions such as Western Resources' acquisition
of Shares pursuant to the Offer. At any time before or after Western
Resources' acquisition of Shares, any such agency could take such action under
the antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the acquisition of Shares pursuant to the Offer or
otherwise or seeking divestiture of Shares acquired by Western Resources or
divestiture of substantial assets of Western Resources and/or ADT. Private
parties may also bring legal action under the antitrust laws under certain
circumstances.
Based upon an examination of publicly available information relating to the
businesses in which both Western Resources and ADT are engaged, Western
Resources believes that the Offer will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or that, if such a challenge is made,
Western Resources will prevail.
The State Corporation Commission of the State of Kansas. Western Resources
is subject, as an operating electric and natural gas utility, to the
jurisdiction of the KCC with respect to the issuance of certain securities and
indebtedness. On February 7, 1997, the KCC issued an order granting approval
of the issuance of Western Resources Common Stock and debt in connection with
the Offer.
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The Antitrust Division, the FTC and the KCC are referred to herein as the
"Regulatory Commissions."
General. Except as set forth above, based upon an examination of publicly
available information filed by ADT with the Commission and other publicly
available information with respect to ADT, Western Resources is not aware of
(a) any license or regulatory permit which appears to be material to the
business of ADT and its subsidiaries, taken as a whole, and which is likely to
be adversely affected by Western Resources' acquisition of Shares pursuant to
the Offer or (b) any approval or other action by any state, federal or foreign
governmental administrative or regulatory agency or authority that would be
required prior to the acquisition of Shares pursuant to the Offer. Western
Resources presently intends to take such actions with respect to any approvals
as will enable it to consummate the Offer. In this regard, Western Resources
expressly reserves the right to challenge the validity and applicability of
any state, foreign or other statutes or regulations purporting to require
approval of the consummation of the Offer.
There can be no assurance that any license, permit, approval or other
action, if needed, would be obtained, or would be obtained without substantial
conditions, or, if so obtained, when it would be obtained, or that adverse
consequences might not result to ADT, Western Resources or their respective
businesses in the event of adverse regulatory action or inaction.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, WESTERN RESOURCES HAVING
RECEIVED ALL NECESSARY OR DESIRABLE GOVERNMENTAL AND REGULATORY APPROVALS AND
CONSENTS FOR THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE OTHER
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING APPROVALS AND CONSENTS FROM THE
REGULATORY COMMISSIONS AND SUCH APPROVALS AND CONSENTS HAVING BECOME FINAL
ORDERS AND SUCH FINAL ORDERS NOT HAVING IMPOSED TERMS OR CONDITIONS WHICH, IN
THE AGGREGATE, WOULD HAVE OR, INSOFAR AS REASONABLY CAN BE FORESEEN, COULD
HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS, ASSETS, FINANCIAL CONDITION,
OR RESULTS OF OPERATIONS OF WESTERN RESOURCES, ADT AND THEIR RESPECTIVE
SUBSIDIARIES TAKEN AS A WHOLE.
Certain Other Conditions of the Offer. Notwithstanding any other provision
of the Offer and subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Western Resources' obligation to exchange or return tendered Shares promptly
after the termination or withdrawal of the Offer), Western Resources shall not
be required to accept for exchange or exchange any Shares, may postpone the
acceptance for exchange or exchange for tendered Shares and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then exchanged
if at the Expiration Date any of the Offer Conditions have not been satisfied
or waived or if on or after the date of this Prospectus and on or prior to the
Expiration Date any of the following events shall not have occurred:
(a) The shares of Western Resources Common Stock which shall be issued to
the ADT Shareholders in the Offer and the Amalgamation shall have been
authorized for listing on the NYSE, subject to official notice of issuance.
(b) The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(c) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Offer and/or the Amalgamation or any of the other
transactions contemplated by this Prospectus shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any court, administrative
agency or commission or other governmental authority or instrumentality
which prohibits, restricts or makes illegal the consummation of the Offer
and/or the Amalgamation.
(d) All required material governmental authorizations, permits, consents,
orders or approvals which do not impose terms or conditions that could
reasonably be expected to have a material adverse effect on Western
Resources and/or ADT have been received.
(e) There shall not have occurred or been threatened (i) any general
suspension of trading in, or limitation on times or prices for, securities
on any national securities exchange or in the over-the-counter
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market in the United States, (ii) any significant adverse change in
interest rates, the financial markets or major stock exchange indices in
the United States or abroad or in the market price of Shares, including,
without limitation, a decline of at least 10% in either the Dow Jones
Average of Industrial Stocks or the Standard & Poor's 500 Index from that
existing at the close of business on March 13, 1997, (iii) any change in
the general political, market, economic, regulatory or financial conditions
in the United States or abroad that could, in the reasonable judgment of
Western Resources, have a material adverse effect upon the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of ADT or any of its subsidiaries or the
trading in, or value of, the Shares, (iv) any material change in United
States currency exchange rates or any other currency exchange rates or a
suspension of, or limitation on, the markets therefor, (v) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (vi) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or governmental entity on,
or other event that in the reasonable judgment of Western Resources might
affect, the extension of credit by banks or other lending institutions,
(vii) a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (viii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof.
(f) Western Resources shall be satisfied, in its reasonable discretion,
that consummation of the Offer and the Amalgamation will not adversely
effect Western Resources' status as an exempt holding company under the
Public Utility Holding Company Act of 1935.
The foregoing conditions are for the sole benefit of Western Resources and
may be asserted by Western Resources regardless of the circumstances giving
rise to any such conditions (including any action or inaction by Western
Resources) or may be waived by Western Resources in whole or in part (other
than the Western Resources Shareholder Approval Condition, the Regulatory
Approval Condition and the condition relating to effectiveness of the
Registration Statement). The determination as to whether any condition has
been satisfied shall be in the reasonable judgment of Western Resources and
will be final and binding on all parties. The failure by Western Resources at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, and each such right shall be deemed a continuing right
which may be asserted at any time and from time to time. Notwithstanding the
fact that Western Resources reserves the right to assert the failure of a
condition following acceptance for exchange but prior to exchange in order to
delay exchange or cancel its obligation to exchange properly tendered Shares,
Western Resources will either promptly exchange such Shares or promptly return
such Shares.
SOURCE AND AMOUNT OF FUNDS
Western Resources estimates that the total amount of funds required pursuant
to the Offer to purchase for the Cash Consideration the number of Shares
outstanding on a fully diluted basis and to pay fees and expenses related to
the Offer will be approximately $1.5 billion. See "The Offer--Fees and
Expenses." Western Resources plans to obtain the outside funds necessary to
finance the Cash Consideration pursuant to credit facilities to be arranged by
Chase. Western Resources has received a letter from Chase Manhattan Bank and
Chase, dated as of December 17, 1996, as amended and restated as of March 3,
1997, in which they state that they are highly confident that they can arrange
credit facilities in the amount necessary to fund payment of the Cash
Consideration with Chase Manhattan Bank and other lenders. Their view is
based, among other things, upon their review of the terms of the Offer, their
understanding of Western Resources and public information regarding ADT, and
current conditions in the banking and syndicated loan markets, and such view
is subject to certain customary conditions.
CERTAIN DEBT INSTRUMENTS OF ADT OPERATIONS
It is Western Resources' current view that satisfaction of the ADT
Shareholder Approval Condition and the consummation of the Offer would
constitute a "change of control" under (a) the LYONs, (b) ADT Operations'
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8 1/4% Senior Notes due 2000 (the "8 1/4% Notes"), (c) ADT Operations' 9 1/4%
Senior Subordinated Notes due 2003 (the "9 1/4% Notes" and, together with the
8 1/4% Notes, the "Notes"), and (d) the $300,000,000 Credit Agreement, dated
as of August 23, 1995, by and among ADT Operations and the Lenders named
therein (the "Credit Agreement"). Upon a change of control, (i) a holder of
LYONs can require that ADT Operations repurchase such holder's LYON at its
accrued value, which at March 13, 1997 was approximately $431.00, (ii) a
holder of the Notes can require that ADT Operations repurchase such holder's
Note at 101% of its principal amount, and (iii) required lenders under the
Credit Agreement can declare borrowings outstanding thereunder due and
payable. Additionally, the date on which certain options outstanding under
ADT's stock option plans become exercisable may be accelerated by satisfaction
of the ADT Shareholder Approved Condition and consummation of the Offer.
Although Western Resources and Westar Capital do not believe that these events
would materially and adversely impact the financial condition of ADT, the
actual impact of such events cannot be presently ascertained and will depend,
among other things, on interest rates and future conditions in the credit
markets.
RELATIONSHIPS WITH ADT
Except as set forth herein under the captions "Prospectus Summary--
Background of the Offer" and "Background of the Offer," neither Western
Resources nor, to the best of its knowledge, any of the persons listed on
Schedule A hereto nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any equity securities
of ADT. Except as set forth herein, neither Western Resources nor to the best
of its knowledge, any of the persons or entities referred to above, nor any
director, executive officer or subsidiary of any of the foregoing, has
effected any transaction in such equity securities during the last 60 days.
Except as described herein, neither Western Resources nor, to the best of
its knowledge, any of the persons listed on Schedule A hereto has any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of ADT, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer
or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as described herein, there have
been no contacts, negotiations or transactions between Western Resources or,
to the best of its knowledge, any of the persons listed on Schedule A hereto,
on the one hand, and ADT or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets. Neither Western Resources nor, to the best of its
knowledge, any of the persons listed on Schedule A hereto, has had any
transaction with ADT or any of its executive officers, directors or affiliates
that would require disclosure under the rules and regulations of the
Commission applicable to the Offer.
FEES AND EXPENSES
Western Resources has retained MacKenzie Partners, Inc. ("MacKenzie") to act
as Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee shareholders to
forward the Offer materials to beneficial owners of Shares. The Information
Agent will be paid a customary fee of up to $250,000 for such services, plus
reimbursement of out-of-pocket expenses, and Western Resources will indemnify
the Information Agent against certain liabilities and expenses in connection
with the Offer, including liabilities under federal securities laws.
Salomon is acting as financial advisor to Western Resources in connection
with its effort to acquire ADT, for which services, and for assistance
rendered by Salomon in connection with prior purchases of Shares by Westar
Capital, Western Resources has agreed to pay Salomon aggregate fees up to a
maximum of $5 million (a substantial portion of which is contingent upon the
consummation of an acquisition of 50% or more of the Shares of ADT or upon
consummation of the Amalgamation).
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Bear Stearns is acting as financial advisor to Western Resources in
connection with its effort to acquire ADT, for which services, and for
assistance rendered by Bear Stearns in connection with prior purchases of
Shares by Westar Capital, Western Resources has agreed to pay Bear Stearns
aggregate fees up to a maximum of $4.3 million (a substantial portion of which
is contingent upon the consummation of an acquisition of 50% or more of the
Shares of ADT or upon consummation of the Amalgamation).
Chase is acting as financial advisor to Western Resources in connection with
its effort to acquire ADT, for which services Western Resources has agreed to
pay Chase aggregate fees up to a maximum of $1.5 million (a substantial
portion of which is contingent upon the consummation of an acquisition of 50%
or more of the Shares of ADT or upon consummation of the Amalgamation).
In addition to the compensation set forth above, Western Resources has
agreed to reimburse each of the Dealer Managers for its reasonable travel and
other out-of-pocket expenses. Western Resources has also agreed to reimburse
each of the Financial Advisors for necessary and reasonable attorney's fees
incurred in connection with its engagement, and has agreed to indemnify each
of Salomon, Bear Stearns, Chase and certain related persons and entities
against certain liabilities and expenses in connection with each Dealer
Manager's engagement, including certain liabilities under the federal
securities laws. In connection with each of Salomon's, Bear Stearns' and
Chase's engagement as financial advisor, Western Resources anticipates that
certain employees of Salomon, Bear Stearns and Chase may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are ADT Shareholders for the purpose of assisting
in the Proxy Solicitation. Neither Salomon, Bear Stearns or Chase will receive
any fee for or in connection with such solicitation activities by its
employees apart from the fees it is otherwise entitled to receive as described
above.
In addition to the fees to be received by each of Salomon, Bear Stearns and
Chase in connection with its engagement as financial advisor to Western
Resources, each of Salomon, Bear Stearns and Chase has in the past rendered
various investment banking and financial advisory services for Western
Resources for which each has received customary compensation.
Western Resources will pay the Exchange Agent reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Exchange Agent against
certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Western Resources will not pay
any fees or commissions to any broker or dealer or other person (other than
the Dealer Managers and the Information Agent) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Western Resources for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
ACCOUNTING TREATMENT
Western Resources will account for the acquisition of Shares pursuant to the
Offer and the Amalgamation using the purchase method of accounting.
Accordingly, the purchase price will be allocated to assets acquired and
liabilities assumed based on their estimated fair values at the acquisition
date. ADT's financial position and results of operations will not be included
in Western Resources' consolidated accounts prior to the consummation date of
the Amalgamation.
STOCK EXCHANGE LISTING
The Western Resources Common Stock is listed on the NYSE. Application will
be made to list the Western Resources Common Stock to be issued pursuant to
the Offer and the Amalgamation on the NYSE. As described above under "The
Offer--Conditions of the Offer--Western Resources Shareholder Approval
Condition," pursuant to the rules of the NYSE, the issuance of Western
Resources Common Stock in the Offer and the Amalgamation must be approved by
the holders of a majority of the shares of Western Resources Voting Stock,
voting as a single class, voted at a meeting of such holders at which the
total number of votes cast represents over 50% in interest of all shares of
Western Resources Voting Stock outstanding on the applicable record date.
60
<PAGE>
THE AMALGAMATION
GENERAL
If the Western Resources Offer is consummated following the ADT Special
Meeting, then it is also presently intended that the newly elected ADT Board
will, in accordance with its fiduciary duties, (i) propose an amendment to the
ADT Bye-Laws providing that an amalgamation of ADT may be approved by the
affirmative vote of a simple majority of those Shares voted at a general
meeting of ADT, (ii) propose and approve the Amalgamation Agreement,
containing customary terms and conditions, pursuant to which a newly created
subsidiary of Western Resources incorporated under the laws of Bermuda will
amalgamate with and into ADT, with the amalgamated company operating under the
name of ADT, and ADT Shareholders (other than Western Resources and ADT and
their respective affiliates and ADT Shareholders who perfect appraisal rights
under Bermuda law) will receive the Offer Consideration in exchange for the
cancellation of each Share, and (iii) take all other actions as may be
necessary to effect the Amalgamation. ADT has not agreed to provide Western
Resources with information that might be relevant to the structuring of the
Amalgamation. Western Resources therefore reserves the right to change the
structure of the Amalgamation upon receipt of such information. See "--
Appraisal Rights." Bye-Law 64 restricts the ability of an ADT director to vote
on, or be counted in a quorum to consider, proposals concerning any other
company in which the director is the holder of or is beneficially interested
in one percent or more of the equity share capital or the voting rights. Bye-
Law 64 will not restrict the ability of the Western Resources Nominees to
facilitate the consummation of the Offer and the Amalgamation because any
interest of the Western Resources Nominees in the equity share capital or
voting rights of either Western Resources or Bermuda Sub will be less than one
percent.
Pursuant to the Companies Act, each of the Bye-Law Amendment and the
Amalgamation Agreement require the approval of ADT Shareholders in order to
take effect. Under Section 77(2) of the Companies Act, approval of the Bye-Law
Amendment requires the affirmative vote of a majority of votes cast at a
general meeting of ADT. Section 106(4A) of the Companies Act provides in part
that, unless a company's bye-laws specifically provide otherwise, an
amalgamation of a Bermuda company must be approved by a majority vote of
three-fourths of those shareholders voting at a duly called meeting. The ADT
Bye-Laws do not currently specify the vote required to approve an
amalgamation. Therefore, upon the adoption of the Bye-Law Amendment, approval
of the Amalgamation Agreement will also require the affirmative vote of a
majority of votes cast at a general meeting of ADT (including Shares owned by
Western Resources or its affiliates).
If the Minimum Tender Condition and other Offer Conditions are satisfied and
the Offer is consummated, Western Resources and its affiliates will own a
majority of the outstanding Shares. Accordingly, Western Resources and its
affiliates will at such time have sufficient voting power in ADT to approve
the Bye-Law Amendment and the Amalgamation Agreement independently of the
votes of any other ADT Shareholders, and Western Resources presently intends
to vote any and all Shares then owned by Western Resources and its affiliates
to approve such proposals.
The Amalgamation will be subject to certain conditions, including the
consent of the Minister of Finance. The Western Resources Nominees are
committed, subject to the exercise of their fiduciary duties, as soon as
practicable following the exchange of Shares by Western Resources pursuant to
the Offer, to causing all necessary actions to be taken to seek the consent of
the Minister of Finance to the Amalgamation. Western Resources has no reason
to believe that the Minister of Finance will not grant approval for the
Amalgamation; however, there can be no assurance that the Minister of Finance
would grant his consent to the Amalgamation. An adverse decision by the
Minister of Finance may not be subject to appeal or review in any court.
Western Resources also presently intends to condition the Amalgamation upon
holders of not more than 5% of the outstanding Shares at the effective time of
the Amalgamation perfecting appraisal rights with respect to the Amalgamation
pursuant to Section 106(6) of the Companies Act. See"--Appraisal Rights."
Rule 13e-3 of the General Rules and Regulations under the Exchange Act,
which Western Resources does not believe would be applicable to the
Amalgamation as long as the Amalgamation occurred within one year of
consummation of the Offer, would require, among other things, that certain
financial information concerning
61
<PAGE>
ADT, and certain information relating to the fairness of the proposed
transaction and the consideration offered to ADT Shareholders therein, be
filed with the Commission and disclosed to ADT Shareholders prior to
consummation of the Amalgamation.
In addition, Western Resources reserves the right to acquire, following the
consummation or termination of the Offer, additional Shares through open-
market purchases, privately negotiated transactions, a tender offer or
exchange offer, or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less favorable than those of the Offer.
Western Resources and its affiliates also reserve the right to dispose of any
or all Shares acquired by them pursuant to the Offer or otherwise, upon such
terms and at such prices as they shall determine.
In connection with the Offer, Western Resources has reviewed, and will
continue to review, on the basis of available information, various possible
business strategies that it might consider in the event that it acquires all
or substantially all of the common equity interest in ADT. Western Resources
also intends to conduct a detailed review of ADT and its assets, corporate
structure, capitalization, operations, properties, policies, management and
personnel and consider which changes, if any, would be desirable in light of
the circumstances which then exist. Such strategies could include, among other
things, changes in ADT's business, corporate structure, Memorandum of
Association, Bye-Laws, capitalization, the ADT Board or management, and
consideration of disposition of certain assets or lines of business of ADT.
Except as noted herein, Western Resources does not have any present plans or
proposals that would result in an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, or sale or transfer of a material
amount of assets, involving ADT or any of its subsidiaries, or any material
changes in ADT's corporate structure or business. However, because Western
Resources has not had access to ADT's books and records, additional changes
may be made after a full review of ADT's operations is completed.
APPRAISAL RIGHTS
ADT Shareholders do not have appraisal rights with respect to the Offer.
However, pursuant to Section 106(6) of the Companies Act, a registered
holder of Shares who does not vote in favor of the Amalgamation, if it is
proposed and submitted to a vote of ADT Shareholders, and who is not satisfied
that he or she has been offered fair value for his or her Shares may, within
one month of the giving of the notice of the meeting of ADT Shareholders,
apply to the Bermuda Supreme Court to have the fair value of such Shares
appraised by the Bermuda Supreme Court. Within one month of the Bermuda
Supreme Court appraising the fair value of any Shares, Western Resources shall
be entitled either to pay to the dissenting ADT Shareholder an amount equal to
the value of his or her Shares as appraised by the Bermuda Supreme Court or to
terminate the Amalgamation if the agreement with respect thereto so provides.
The Bermuda Supreme Court has wide discretion to assess the value of shares in
appraisal proceedings. The Bermuda Supreme Court would likely call on expert
evidence and may assess the fair value based on (a) the market value (i.e.,
the quoted stock market price) of the Shares; (b) a valuation of the net
assets of ADT; (c) the earnings or investment value method which would involve
the capitalization of maintainable earnings; and/or (d) a combination of these
methods.
A beneficial owner of Shares who is not the registered holder may not assert
appraisal rights. If the stock is owned in a fiduciary capacity, such as by a
trustee, guardian or custodian, or by a nominee, the notice asserting
appraisal rights must be executed by the fiduciary or nominee as the
registered holder of the Shares. If the Shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the notice must
be executed by all joint owners. An authorized agent, including an agent for
two or more joint owners, may execute the notice for a registered shareholder;
however, the agent must identify the registered holder, disclose the fact
that, in executing the notice, he is acting as agent for the registered holder
and provide evidence of his authority.
The right of a dissenting shareholder to be paid the fair value of his or
her Shares shall cease if the shareholder fails to comply with the procedures
set forth in Section 106(6) of the Companies Act, or if the Amalgamation is
abandoned for any reason.
62
<PAGE>
Western Resources presently intends to condition the Amalgamation upon,
among other things, holders of not more than 5% of the outstanding Shares
perfecting appraisal rights with respect to the Amalgamation.
The foregoing does not purport to be a complete statement of the procedures
to be followed by ADT Shareholders desiring to exercise dissenters' rights
and, in view of the fact that exercise of such rights requires adherence to
the relevant provisions of the Companies Act, shareholders who desire to
exercise appraisal rights are advised to review with care all applicable
provisions of law and to obtain legal counsel in Bermuda concerning proper
compliance with applicable provisions of the Companies Act. ADT Shareholders
are urged to, and should, read Section 106 of the Companies Act, a copy of
which is included herein as Schedule E.
THE KCPL MERGER
KCPL is a public utility engaged in the generation, transmission,
distribution and sale of electricity to approximately 430,000 customers in
western Missouri and eastern Kansas.
On July 8, 1996, Western Resources commenced the KCPL Offer to exchange
shares of Western Resources Common Stock for each outstanding share of KCPL
Common Stock. See "The KCPL Merger." It was Western Resources' intent, as soon
as practicable after consummation of the KCPL Offer, to seek to merge KCPL
with and into Western Resources. Pursuant to the exchange ratio in the KCPL
Offer, KCPL shareholders would have received $31.00 of Western Resources
Common Stock in exchange for each share of KCPL Common Stock, subject to a
maximum of 1.100 and a minimum of 0.933 shares of Western Resources Common
Stock for each share of KCPL Common Stock.
Beginning in November of 1996, members of the respective boards of directors
and managements of KCPL and Western Resources began discussions regarding a
negotiated transaction between the two companies. Negotiations continued for a
period of several weeks. On February 7, 1997, KCPL and Western Resources
announced that their respective boards of directors had approved the KCPL
Merger Agreement, pursuant to which KCPL will be merged with and into Western
Resources and KCPL shareholders will receive $32.00 of Western Resources
Common Stock per share of KCPL Common Stock, subject to a maximum of 1.100 and
a minimum of 0.917 shares of Western Resources Common Stock per share of KCPL
Common Stock (subject to upward adjustment as specified in the KCPL Merger
Agreement). As required by the KCPL Merger Agreement, Western Resources
terminated the KCPL Offer on February 7, 1997.
The KCPL Merger, which will be tax-free to KCPL shareholders and is intended
to be accounted for as a pooling of interests transaction, will create a
combined company with more than 2,000,000 security and energy customers, $9.5
billion in assets, $3 billion in annual revenues and more than 8,000 megawatts
of electric generation resources. The KCPL Merger is conditioned upon, among
other things, the approvals of each company's shareholders and the necessary
review and approvals of various regulatory agencies, principally the KCC, the
MPSC, the NRC and the FERC. Western Resources intends to seek the approval of
its shareholders at its annual meeting of shareholders, presently scheduled
for May 6, 1997. Subject to the receipt of necessary regulatory and other
approvals, Western Resources presently anticipates that the KCPL Merger will
be completed in the first half of 1998.
According to a representation of KCPL contained in the Merger Agreement,
there were 61,908,726 shares of KCPL Common Stock outstanding on January 28,
1997. Upon consummation of the KCPL Merger, based on the closing share price
of Western Resources Common Stock on March 13, 1997, KCPL shareholders will
receive approximately 65,761,966 shares of Western Resources Common Stock in
the KCPL Merger. This number of shares would represent approximately 35% of
the total number of outstanding shares of Western Resources Common Stock,
assuming that the Offer and the Amalgamation had previously been completed at
an Exchange Ratio of .41494, based on the closing share price of Western
Resources Common Stock on March 13, 1997.
63
<PAGE>
RECENT DEVELOPMENTS
On December 12, 1996, Western Resources and ONEOK announced that they had
entered into a proposed strategic alliance in which Western Resources will
contribute its regulated local natural gas distribution operations, MCMC, and
Westar Gas Marketing, and will become the largest shareholder of ONEOK. A
division of ONEOK, the Oklahoma Natural Gas Company, provides local natural
gas service to 75% of the state of Oklahoma. ONEOK also has interests in
natural gas marketing, processing and production.
In the transaction, which is expected to close in the second half of 1997,
Western Resources will receive a 45% equity interest in ONEOK. The equity
interest will consist of 2,996,702 shares of ONEOK Common Stock and 19,317,584
shares of ONEOK Preferred Stock. The ONEOK Preferred Stock will pay an annual
dividend of up to 1.5 times the ONEOK Common Stock dividend, with a minimum
dividend of $1.80 per share. The transaction is expected to be accretive to
Western Resources in the first full year.
As a result of its alliance with Western Resources, ONEOK will become the
eighth-largest gas distribution company in the United States, serving almost
1.4 million customers. The strategic alliance will also include a marketing
agreement under which Western Resources will provide electric energy products,
security products and other unregulated services to ONEOK's existing 735,000
customers. The transaction requires the approval of ONEOK's shareholders, the
OCC, the KCC and the Commission. Pursuant to the HSR Act, the transaction may
not be consummated unless certain information has been furnished to the
Antitrust Division and the FTC and certain waiting period requirements have
been satisfied. Western Resources shareholders will not vote on the
transaction.
On December 31, 1996, Western Resources paid approximately $358 million,
subject to certain adjustments, and assumed certain liabilities and
obligations, for all of the assets used in, related to or necessary for the
operation of the security installation, monitoring and service business
currently operated by Westinghouse Security, a subsidiary of Westinghouse. As
a result of the acquisition, Westar Security is now the third-largest
monitored security company in the United States with over 400,000 customers,
offices in many major U.S. markets and direct access to customers in 44
states.
BUSINESS OF WESTERN RESOURCES
Western Resources and its divisions and wholly owned subsidiaries include
KPL, a rate-regulated electric and natural gas division of Western Resources,
KGE, a rate-regulated utility and wholly owned subsidiary of Western
Resources, Westar Capital, Westar Security, Westar Energy, Inc., The Wing
Group, Ltd., non-utility subsidiaries, and MCMC, a regulated gas transmission
service provider. KGE owns 47% of WCNOC, the operating company for Wolf Creek.
Western Resources' non-utility subsidiaries market natural gas primarily to
large commercial and industrial customers, provide electronic security
services, engage in international large power project development and provide
other energy-related products and services.
Western Resources is engaged principally in the production, purchase,
transmission, distribution and sale of electricity and the delivery and sale
of natural gas. Western Resources serves approximately 606,000 electric
customers in eastern and central Kansas and approximately 650,000 natural gas
customers in Kansas and northeastern Oklahoma. On December 12, 1996, Western
Resources and ONEOK announced a strategic alliance pursuant to which Western
Resources will contribute its regulated local natural gas distribution
operations, and MCMC and Westar Gas Marketing, and will become the largest
shareholder of ONEOK. See "Prospectus Summary--Recent Developments" and
"Recent Developments."
Westar Capital is a private investment company, wholly owned by Western
Resources, with investments in energy-related and technology-oriented
businesses. Westar Capital owns 38,287,111 Shares, or approximately 27% of the
outstanding Shares, including 500 LYONs exchangeable for Shares at a ratio of
28.23 Shares per LYON.
64
<PAGE>
Westar Security, which has been operated by Western Resources since December
1995, is a rapidly growing electronic security services business with over
400,000 customer accounts. On December 31, 1996, Western Resources acquired
all of the assets of Westinghouse Security. Westar Security is now the third-
largest monitored security company in the United States with offices in many
major U.S. markets and direct access to customers in 44 states. See
"Prospectus Summary--Recent Developments" and "Recent Developments."
KCPL is a public utility engaged in the generation, transmission,
distribution and sale of electricity to approximately 430,000 customers in
western Missouri and eastern Kansas. On July 8, 1996, Western Resources made
an offer to the shareholders of KCPL to exchange each outstanding share of
KCPL Common Stock for $31.00 in Western Resources Common Stock, subject to
adjustment. On February 7, 1997, Western Resources terminated the KCPL Offer
and announced that it had entered into the KCPL Merger Agreement with KCPL
pursuant to which KCPL will merge with and into Western Resources. For further
details concerning, and recent developments with respect to, the KCPL Merger,
see "Prospectus Summary--The KCPL Merger" and "The KCPL Merger."
Western Resources was incorporated under the laws of the State of Kansas in
1924. Western Resources' corporate headquarters is located at 818 S. Kansas
Avenue, Topeka, Kansas 66612 and its telephone number is (913) 575-6300.
65
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information presents
the consolidated balance sheets and statements of income for the following:
(i) Western Resources and ADT, assuming the Amalgamation is accounted for as a
purchase; and (ii) Western Resources, ADT and KCPL, assuming the Amalgamation
is accounted for as a purchase and the KCPL Merger is accounted for as a
pooling of interests.
ADT's results of operations have been presented for the interim period ended
September 30, 1996 and the year ended December 31, 1995, as if the purchase
was consummated on September 30, 1996. The unaudited pro forma combined
statements of income adjust the historical amounts to reflect the Amalgamation
as if it had occurred at the beginning of each respective period. ADT's
financial position and operating results reflect the ASH Transaction, which
was accounted for by ADT as a pooling of interests. The combined results of
Western Resources and KCPL have been presented for each of the last three
fiscal years and the most recent interim period ended September 30, 1996.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Western Resources, ADT and
KCPL, including ADT's restated financial statements which reflect the ASH
Transaction as a pooling of interests, which are incorporated by reference in
this Prospectus and the KCPL Prospectus (as defined herein). The following
information is being presented for illustrative purposes only and is not
necessarily indicative of the financial position or operating results that
would have occurred had the Amalgamation and the KCPL Merger been consummated
at the beginning of the periods for which the Amalgamation and the KCPL Merger
are being given effect, nor is it necessarily indicative of future operating
results or financial position.
THE AMALGAMATION
Western Resources currently owns approximately 38.3 million Shares, or
approximately 27% of the outstanding Shares. This represents a $589.4 million
investment, at cost, in ADT. Western Resources proposes to acquire the
remaining common equity interest of ADT for $22.50 per Share, subject to
adjustment as described herein, and account for such acquisition as a
purchase. ADT Shareholders would receive $12.50 of value in Western Resources
Common Stock, subject to certain limitations, and the balance of the purchase
price ($10.00 per Share) would be paid in cash. The pro forma combined balance
sheet assumes the recorded amounts of ADT's assets and liabilities approximate
their fair values. The preliminary purchase price allocation was made using
only publicly available information for ADT and is subject to change. The pro
forma combined financial statements do not give effect to any anticipated cost
savings or revenue enhancements that may result from the Amalgamation.
During the first quarter of 1996, ADT recorded a non-cash charge of
approximately $744.7 million to recognize the impairment of certain long-lived
assets. The impairment charge was largely attributable to reducing the amount
of recorded goodwill and had no significant tax effect.
In September 1996, ADT consummated the ASH Transaction, which is to be
accounted for as a pooling of interests. In connection with the ASH
Transaction, ADT exchanged 7,034,940 Shares for the entire equity interest in
ASH. The unaudited pro forma combined financial statements were prepared
utilizing the historical audited financial statements and the unaudited
interim financial statements, including the notes thereto, of KCPL and ADT.
Certain information was derived from the audited consolidated financial
statements of ADT contained in the ADT 1995 Form 10-K, and the unaudited
interim financial statements, including the notes thereto, contained in ADT's
Quarterly Report on Form 10-Q for the period ended September 30, 1996, and
ADT's Current Reports on Form 8-K, dated September 5, 1996, October 21, 1996
and November 12, 1996, relating to the ASH Transaction.
ADT recently announced that it will record a $60 million net of tax charge
to income during the fourth quarter of 1996. The charge is related to an
after-tax restructuring charge resulting from its transaction in 1996
66
<PAGE>
with ASH, totaling approximately $110 million and an after-tax gain of
approximately $50 million on the sale of a non-strategic asset.
In November 1996, ADT's Chairman announced a plan to sell ADT's auto auction
business. Consistent with ADT's announcement, Western Resources also plans to
sell this business following consummation of the Amalgamation since it does
not fit into Western Resources' long-term strategic plans and such sale will
allow management to focus on the delivery of security and energy services.
According to ADT's 1995 Annual Report on Form 10-K, the auto auction business
of ADT operates approximately 30 auction centers in the United States.
Substantially all of the vehicles sold at ADT auction centers are passenger
cars and light trucks. Heavy trucks and industrial vehicles comprise the
balance of its sales. Western Resources estimates the sale of these assets
should generate approximately $450 million in after-tax proceeds based on an
estimated sales price of approximately $500 million.
This cash sale is assumed to be completed following the closing of the
Amalgamation. The estimated fair value of the net proceeds to be received as a
result of this sale have been presented as property held for sale on the
unaudited pro forma combined balance sheet and a pro forma adjustment to
eliminate the operating results of the auto auction business is reflected in
the unaudited pro forma combined statements of income. Estimated amounts have
been disclosed based on Western Resources' expectation of value. Actual
amounts could differ substantially from these estimates.
THE KCPL MERGER
Terms of the KCPL Merger permit holders of shares of KCPL Common Stock to
exchange each share of KCPL Common Stock held for $32.00 of Western Resources
Common Stock, subject to certain limitations. Pro forma shares outstanding and
related earnings and dividends per share information have been calculated
assuming an exchange ratio of 1.06224 based on Western Resources' March 13,
1997 closing stock price of $30.125.
The KCPL Merger is assumed to generate substantial cost savings. The assumed
cost savings have not been reflected in the pro forma combined balance sheet
and statements of income. Transaction costs associated with the KCPL Merger
including fees for advisors, attorneys and other consultants and incremental
direct costs of completing the KCPL Merger are estimated to approximate $60
million. These costs are expected to be expensed in the first reporting period
subsequent to the closing of the KCPL Merger to the extent they are required
to be paid.
There are no anticipated changes in either Western Resources' or KCPL's
accounting policies as a result of the KCPL Merger. Both companies accrue
unbilled revenue for energy delivered at the end of each reporting period, use
composite depreciation methods at group rates specified pursuant to regulation
and have certain other accounting policies which differ from each other as
well as from other commercial enterprises due to the nature of how regulators
have allowed certain costs to be recovered from customers.
Western Resources has joint interests with KCPL in the LaCygne Station and
Wolf Creek. These generating facilities represent approximately 23% of Western
Resources' total generating capacity, 39% of KCPL's total generating capacity
and 29% of the combined company's total generating capacity.
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<PAGE>
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
WESTERN -----------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equiva-
lents................ $ 969 $ 141,800 $ 236,485 (a)(j) $ 379,254
Accounts receivable
and unbilled revenues
(net)................ 232,682 261,900 (30,000)(l) 464,582
Other current assets.. 192,024 84,400 -- 276,424
---------- ---------- ---------- -----------
Total current as-
sets............... 425,675 488,100 206,485 1,120,260
---------- ---------- ---------- -----------
Property, Plant and
Equipment, net:
Utility plant......... 4,349,167 -- -- 4,349,167
Subscriber-systems
(m).................. -- 1,230,000 -- 1,230,000
Other................. -- 315,000 (170,000)(l) 145,000
---------- ---------- ---------- -----------
Total property,
plant and equip-
ment, net.......... 4,349,167 1,545,000 (170,000) 5,724,167
---------- ---------- ---------- -----------
Deferred Charges and
Other Assets:
Goodwill, net......... -- 448,600 2,184,200 (b) 2,632,800
Deferred future income
taxes................ 282,476 -- -- 282,476
Property held for
sale................. -- -- 450,000 (l) 450,000
Other assets.......... 1,025,873 163,000 (600,069)(h) 588,804
---------- ---------- ---------- -----------
Total deferred
charges and other
assets............. 1,308,349 611,600 2,034,131 3,954,080
---------- ---------- ---------- -----------
Total Assets............ $6,083,191 $2,644,700 $2,070,616 $10,798,507
========== ========== ========== ===========
LIABILITIES AND CAPITALIZATION
<CAPTION>
PRO FORMA
WESTERN -----------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Current Liabilities:
Short-term debt....... $ 646,400 $ 44,400 $ (589,400)(h) $ 101,400
Accounts payable...... 111,878 160,000 -- 271,878
Other current liabili-
ties................. 205,457 203,100 -- 408,557
---------- ---------- ---------- -----------
Total current lia-
bilities........... 963,735 407,500 (589,400) 781,835
---------- ---------- ---------- -----------
Other Liabilities and
Deferred Credits:
Deferred income tax-
es................... 1,167,550 147,800 (3,067)(f) 1,312,283
Deferred investment
tax credits.......... 127,218 -- -- 127,218
Other................. 448,244 273,700 -- 721,944
---------- ---------- ---------- -----------
Total other liabili-
ties and deferred
credits............ 1,743,012 421,500 (3,067) 2,161,445
---------- ---------- ---------- -----------
Capitalization:
Long-term debt, net... 1,466,526 1,027,600 1,756,400 (c) 4,250,526
Company-obligated
mandatorily
redeemable preferred
securities........... 220,000 -- -- 220,000
Preferred and prefer-
ence stock........... 74,858 4,900 -- 79,758
Common stock equity... 1,615,060 783,200 906,683 (g)(j)(l) 3,304,943
---------- ---------- ---------- -----------
Total capitaliza-
tion............... 3,376,444 1,815,700 2,663,083 7,855,227
---------- ---------- ---------- -----------
Total Liabilities and
Capitalization......... $6,083,191 $2,644,700 $2,070,616 $10,798,507
========== ========== ========== ===========
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
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<PAGE>
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
WESTERN -------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Operating Revenues...... $1,481,915 $1,261,600 $(222,800)(l) $2,520,715
Operating Expenses:
Cost of Sales......... 463,102 674,200 (202,400)(l) 934,902
Operations, adminis-
trative and selling.. 573,697 257,500 -- 831,197
Depreciation and amor-
tization............. 144,752 165,100 37,900 (d) 347,752
Restructuring and
other non-recurring
charges.............. -- 744,700 -- 744,700
---------- ---------- --------- ----------
Operating Income
(Loss)................. 300,364 (579,900) (58,300) (337,836)
---------- ---------- --------- ----------
Interest Expense........ 108,514 78,600 63,515 (e) 250,629
Other Income
(Expenses)............. 15,734 21,300 (14,669)(h) 22,365
---------- ---------- --------- ----------
Income (Loss) Before
Income Taxes........... 207,584 (637,200) (136,484) (566,100)
Income Taxes............ 71,100 14,500 (11,023)(f)(l) 74,577
---------- ---------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 136,484 (651,700) (125,461) (640,677)
Preferred and Preference
Dividends.............. 13,609 -- -- 13,609
---------- ---------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 122,875 $ (651,700) $(125,461) $ (654,286)
========== ========== ========= ==========
Average Common Shares
Outstanding............ 63,599 136,824 (76,699)(i)(j) 123,724
Earnings (Loss) per
Average Common Share
Before Extraordinary
Item................... $ 1.93 $ (4.77) $ (5.29)
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
69
<PAGE>
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
WESTERN -------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
Operating Revenues...... $1,743,300 $1,783,800 $(432,900)(l) $3,094,200
Operating Expenses:
Cost of sales......... 510,948 990,400 (362,700)(l) 1,138,648
Operations,
administrative and
selling.............. 684,616 365,100 1,049,716
Depreciation and
amortization......... 177,830 193,300 28,100 (d) 399,230
Restructuring and
other non-recurring
charges.............. -- 34,200 -- 34,200
---------- ---------- --------- ----------
Operating Income
(Loss)................. 369,906 200,800 (98,300) 472,406
---------- ---------- --------- ----------
Interest Expense........ 122,095 116,300 145,370 (e) 383,765
Other Income
(Expenses)............. 17,257 (25,400) -- (8,143)
---------- ---------- --------- ----------
Income (Loss) Before
Income Taxes........... 265,068 59,100 (243,670) 80,498
Income Taxes............ 83,392 28,100 (73,913)(f)(l) 37,579
---------- ---------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 181,676 31,000 (169,757) 42,919
Preferred and Preference
Dividends.............. 13,419 -- -- 13,419
---------- ---------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 168,257 $ 31,000 $(169,757) $ 29,500
========== ========== ========= ==========
Average Common Shares
Outstanding............ 62,157 138,283 (78,158)(i)(j) 122,282
Earnings per Average
Common Share Before
Extraordinary Item..... $ 2.71 $ 0.22 $ 0.24
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
70
<PAGE>
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
WESTERN PRO FORMA
RESOURCES ADT KCPL ------------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equiva-
lents................. $ 969 $ 141,800 $ 23,229 $ 236,485 (a)(j)(k) $ 402,483
Accounts receivable
and unbilled
revenues (net)........ 232,682 261,900 70,156 (30,000)(l) 534,738
Other current assets... 192,024 84,400 69,766 -- 346,190
---------- ---------- ---------- ---------- -----------
Total current as-
sets................ 425,675 488,100 163,151 206,485 1,283,411
---------- ---------- ---------- ---------- -----------
Property, Plant and
Equipment, net:
Utility plant......... 4,349,167 -- 2,349,785 -- 6,698,952
Subscriber-
systems(m)........... -- 1,230,000 -- -- 1,230,000
Other................. -- 315,000 -- (170,000)(l) 145,000
---------- ---------- ---------- ---------- -----------
Total property, plant
and equipment, net... 4,349,167 1,545,000 2,349,785 (170,000) 8,073,952
---------- ---------- ---------- ---------- -----------
Deferred Charges and
Other Assets:
Goodwill, net.......... -- 448,600 -- 2,184,200 (b) 2,632,800
Deferred future income
taxes................. 282,476 -- 123,000 -- 405,476
Property held for
sale.................. -- -- -- 450,000 (l) 450,000
Other assets........... 1,025,873 163,000 259,936 (630,069)(h)(k) 818,740
---------- ---------- ---------- ---------- -----------
Total deferred
charges and other
assets.............. 1,308,349 611,600 382,936 2,004,131 4,307,016
---------- ---------- ---------- ---------- -----------
Total Assets............ $6,083,191 $2,644,700 $2,895,872 $2,040,616 $13,664,379
========== ========== ========== ========== ===========
</TABLE>
LIABILITIES AND CAPITALIZATION
<TABLE>
<CAPTION>
WESTERN PRO FORMA
RESOURCES ADT KCPL ---------------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Current Liabilities:
Short-term debt........ $ 646,400 $ 44,400 $ 35,000 $ (589,400)(h) $ 136,400
Long-term debt due
within one year....... -- -- 46,591 -- 46,591
Accounts payable....... 111,878 160,000 45,982 -- 317,860
Other current liabili-
ties.................. 205,457 203,100 118,498 30,000 (k) 557,055
---------- ---------- ---------- ---------- -----------
Total current liabil-
ities............... 963,735 407,500 246,071 (559,400) 1,057,906
---------- ---------- ---------- ---------- -----------
Other Liabilities and
Deferred Credits:
Deferred income tax-
es.................... 1,167,550 147,800 650,056 (3,067) (f) 1,962,339
Deferred investment
tax credits........... 127,218 -- 68,164 -- 195,382
Other.................. 448,244 273,700 90,077 -- 812,021
---------- ---------- ---------- ---------- -----------
Total other
liabilities and
deferred credits.... 1,743,012 421,500 808,297 (3,067) 2,969,742
---------- ---------- ---------- ---------- -----------
Capitalization:
Long-term debt, net.... 1,466,526 1,027,600 834,136 1,756,400 (c) 5,084,662
Company-obligated
mandatorily
redeemable preferred
securities............ 220,000 -- -- -- 220,000
Preferred and
preference stock...... 74,858 4,900 90,276 -- 170,034
Common stock equity.... 1,615,060 783,200 917,092 846,683 (g)(j)(k)(l) 4,162,035
---------- ---------- ---------- ---------- -----------
Total
capitalization...... 3,376,444 1,815,700 1,841,504 2,603,083 9,636,731
---------- ---------- ---------- ---------- -----------
Total Liabilities and
Capitalization......... $6,083,191 $2,644,700 $2,895,872 $2,040,616 $13,664,379
========== ========== ========== ========== ===========
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
71
<PAGE>
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
----------------------------
WESTERN
RESOURCES ADT KCPL TOTAL
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Operating Revenues...... $1,481,915 $1,261,600 $703,031 $(222,800)(1) $3,223,746
Operating Expenses:
Cost of sales......... 463,102 674,200 144,921 (202,400)(1) 1,079,823
Operations, adminis-
trative and selling.. 573,697 257,500 262,542 -- 1,093,739
Depreciation and amor-
tization............. 144,752 165,100 85,281 37,900 (d) 433,033
Restructuring and
other non-recurring
charges.............. -- 744,700 -- -- 744,700
---------- ---------- -------- --------- ----------
Operating Income
(Loss)................. 300,364 (579,900) 210,287 (58,300) (127,549)
---------- ---------- -------- --------- ----------
Interest Expense........ 108,514 78,600 43,056 63,515 (e) 293,685
Other Income (Ex-
penses)................ 15,734 21,300 (42,200) (14,669)(h) (19,835)
---------- ---------- -------- --------- ----------
Income (Loss) Before In-
come Taxes............. 207,584 (637,200) 125,031 (136,484) (441,069)
Income Taxes............ 71,100 14,500 36,625 (11,023)(f)(1) 111,202
---------- ---------- -------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 136,484 (651,700) 88,406 (125,461) (552,271)
Preferred and Preference
Dividends.............. 13,609 -- 2,840 -- 16,449
---------- ---------- -------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 122,875 $ (651,700) $ 85,566 $(125,461) $ (568,720)
========== ========== ======== ========= ==========
Average Common Shares
Outstanding............ 63,599 136,824 61,902 (72,846)(i)(j) 189,479
Earnings (Loss) per
Average Common Share
Before Extraordinary
Item................... $ 1.93 $ (4.77) $ 1.38 $ (3.00)
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
72
<PAGE>
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WESTERN PRO FORMA
RESOURCES ADT KCPL --------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Operating Revenues...... $1,743,300 $1,783,800 $885,955 $(432,900)(l) $3,980,155
Operating Expenses:
Cost of sales......... 510,948 990,400 178,154 (362,700)(l) 1,316,802
Operations,
administrative and
selling.............. 684,616 365,100 353,859 -- 1,403,575
Depreciation and
amortization......... 177,830 193,300 109,832 28,100 (d) 509,062
Restructuring and
other non-recurring
charges.............. -- 34,200 -- -- 34,200
---------- ---------- -------- --------- ----------
Operating Income
(Loss)................. 369,906 200,800 244,110 (98,300) 716,516
---------- ---------- -------- --------- ----------
Interest Expense........ 122,095 116,300 54,522 145,370 (e) 438,287
Other Income
(Expenses)............. 17,257 (25,400) (199) -- (8,342)
---------- ---------- -------- --------- ----------
Income (Loss) Before
Income Taxes........... 265,068 59,100 189,389 (243,670) 269,887
Income Taxes............ 83,392 28,100 66,803 (73,913)(f)(l) 104,382
---------- ---------- -------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 181,676 31,000 122,586 (169,757) 165,505
Preferred and Preference
Dividends.............. 13,419 -- 4,011 -- 17,430
---------- ---------- -------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 168,257 $ 31,000 $118,575 $(169,757) $ 148,075
========== ========== ======== ========= ==========
Average Common Shares
Outstanding............ 62,157 138,283 61,902 (74,305)(i)(j) 188,037
Earnings per Average
Common Share Before
Extraordinary Item..... $ 2.71 $ 0.22 $ 1.92 $ 0.79
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
73
<PAGE>
WESTERN RESOURCES AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WESTERN PRO FORMA
RESOURCES KCPL -----------------------
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Operating Revenues............ $1,764,769 $868,272 $ -- $2,633,041
Operating Expenses:
Cost of sales............... 562,342 169,035 -- 731,377
Operations, administrative
and selling................ 656,813 371,134 -- 1,027,947
Depreciation and
amortization............... 174,942 107,463 -- 282,405
---------- -------- ------ ----------
Operating Income.............. 370,672 220,640 -- 591,312
---------- -------- ------ ----------
Interest Expense.............. 118,917 47,416 -- 166,333
Other Income (Expenses)....... 35,643 (2,072) -- 33,571
---------- -------- ------ ----------
Income Before Income Taxes.... 287,398 171,152 -- 458,550
Income Taxes.................. 99,951 66,377 -- 166,328
---------- -------- ------ ----------
Net Income.................... 187,447 104,775 -- 292,222
Preferred and Preference Divi-
dends........................ 13,418 3,457 -- 16,875
---------- -------- ------ ----------
Earnings Applicable to Common
Stock........................ $ 174,029 $101,318 $ -- $ 275,347
========== ======== ====== ==========
Average Common Shares Out-
standing..................... 61,618 61,903 3,853(i) 127,374
Earnings Per Average Common
Share........................ $ 2.82 $ 1.64 $ 2.16
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
74
<PAGE>
WESTERN RESOURCES AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WESTERN PRO FORMA
RESOURCES KCPL -----------------------
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Operating Revenues............ $2,028,411 $857,450 $ -- $2,885,861
Operating Expenses:
Cost of sales............... 766,913 161,520 -- 928,433
Operations, administrative
and selling................ 709,251 358,842 -- 1,068,093
Depreciation and
amortization............... 181,909 111,284 -- 293,193
---------- -------- ------ ----------
Operating Income.............. 370,338 225,804 -- 596,142
---------- -------- ------ ----------
Interest Expense.............. 140,175 52,439 -- 192,614
Other Income (Expenses)....... 25,962 360 -- 26,322
---------- -------- ------ ----------
Income Before Income Taxes.... 256,125 173,725 -- 429,850
Income Taxes.................. 78,755 67,953 -- 146,708
---------- -------- ------ ----------
Net Income.................... 177,370 105,772 -- 283,142
Preferred and Preference Divi-
dends........................ 13,506 3,153 -- 16,659
---------- -------- ------ ----------
Earnings Applicable to Common
Stock........................ $ 163,864 $102,619 $ -- $ 266,483
========== ======== ====== ==========
Average Common Shares Out-
standing..................... 59,294 61,909 3,853(i) 125,056
Earnings Per Average Common
Share........................ $ 2.76 $ 1.66 $ 2.13
</TABLE>
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
75
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The pro forma adjustments have been made to the unaudited Pro Forma Combined
Financial Statements to reflect the following:
(a) To record the net effect of the following:
(i)
the reduction in cash resulting from interest paid on short- and
long-term debt as described in note (e) below.
(ii)
the receipt of approximately $300 million from the exercise of the
Republic Warrant.
(iii)
the receipt of interest income earned on excess cash balances
primarily resulting from the exercise of the Republic Warrant at a
market-based, short-term rate of 4.5% on an annual basis.
(b) To record goodwill resulting from the Amalgamation. Other than the auto
auction assets discussed in (l) below, the net tangible assets of ADT
are expected to approximate their fair value. Goodwill is based upon the
total consideration paid in excess of the estimated fair value of the
net assets acquired. Goodwill is calculated assuming Western Resources
acquires all the outstanding Shares which Western Resources and its
affiliates do not presently hold, the conversion of the LYONs to Shares,
the exercise of the Republic Warrant and the exercise of all outstanding
options held principally by ADT management, in each case for $22.50 per
Share. (See note (j) for a discussion of the Republic Warrant and ADT
anti-takeover devices.)
Calculation of outstanding Shares, and Shares to be purchased:
<TABLE>
<CAPTION>
(MILLIONS EXCEPT
PRICE PER SHARE)
----------------
<S> <C>
Shares outstanding......................................... 141.1
Treasury shares (shares held by ADT Subsidiary)............ (3.2)
LYONs convertible debt (i)................................. 21.9
Conversion of option shares (ii)........................... 8.4
Assumed exercise of Republic Warrant (iii)................. 15.0
--------
Total Shares outstanding................................. 183.2
Shares already owned..................................... (38.3)
--------
Net Shares to be purchased............................... 144.9
Purchase price per share................................. $ 22.50
--------
Total cost of Shares not presently held.................... $3,260.3
Plus: Basis in 38.3 million Shares currently owned......... 589.4
Plus: Estimated transaction costs.......................... 40.0
--------
Total purchase price..................................... $3,889.7
Less: Estimated fair value of net assets acquired (iv)..... 1,206.6
--------
Estimated Goodwill....................................... $2,683.1
Less: Existing ADT goodwill, net........................... 448.6
Less: Incremental goodwill amortization for 1996........... 50.3
--------
Adjustment............................................... $2,184.2
========
</TABLE>
- --------
(i)
LYONs are exchangeable for Shares of ADT or redeemable for cash at the
option of the holder upon a change of control. Conversion terms allow the
holder to exchange each LYON for 28.23 Shares. The pro forma calculation of
total Shares outstanding assumes the LYONs are converted to Shares.
(ii) Conversion of approximately 18.6 million outstanding option shares held by
management has been calculated using the treasury stock method.
(iii) Exercise of the Republic Warrant to purchase 15.0 million common shares
of ADT. The pro forma calculation of total Shares outstanding assumes that
Republic exercises the Republic Warrant for 15.0 million shares at $20 per
share. (See note (j) for a related discussion.)
(iv) Includes estimated fair value of auto auction business of $450 million.
76
<PAGE>
(c) To record the additional long-term debt to be incurred for the Cash
Consideration and to refinance short-term debt used to acquire existing
Shares, less the elimination of the LYONs convertible debt securities
which are expected to be converted to Shares.
<TABLE>
<CAPTION>
(MILLIONS)
Additional long-term debt: ----------
<S> <C>
144.9 million Shares times $10.00 per Share Cash Consideration.. $1,449.0
Plus: Permanent financing of Western Resources' existing inter-
est ........................................................... 589.4
Estimated transaction costs................................... 40.0
Less: Estimated LYONs debt outstanding at acquisition date...... (322.0)
--------
Net additional debt........................................... $1,756.4
========
</TABLE>
(d) To record the amortization of goodwill created in the purchase of ADT
over a 40-year period. The annual goodwill amortization is expected to
approximate $67.1 million. The adjustment represents the difference
between this amount, the historical amount recorded by ADT and the
amounts recognized by Western Resources related to its investment in
ADT.
(e) To record the net effect of interest expense resulting from the
following:
(i) The reduction of interest expense associated with the short-term
debt incurred by Western Resources to acquire its initial equity
interest in ADT and the increase in interest expense in connection
with the issuance of additional long-term debt as detailed in note
(c) above to finance the exchange of Shares for the Cash
Consideration and refinance short-term debt used to acquire Shares.
(See note (c).) The interest rate on such borrowings is expected to
be approximately 8%. The assumed interest rate is reasonable given
current corporate bond rates for companies with credit ratings
similar to Western Resources.
A one-eighth percent change in interest on the net additional debt
used to finance the Amalgamation would impact the combined pro forma
net income by approximately $2.6 million on an annual basis. Pro
forma earnings per share would be impacted by approximately $0.01
per share on an annual basis.
(ii) The interest expense savings resulting from the conversion of
the LYONs, which accreted interest at a rate of 6.5%.
(iii) The interest income earned on excess cash balances primarily
resulting from the exercise of the Republic Warrant at a market-
based, short-term rate of 4.5% on an annual basis.
(f) To adjust the income tax provision. The income tax provision exceeds the
federal statutory rate of 35% primarily due to the non-deductible
goodwill amortization and state income taxes.
(g) To reflect the net increase to common equity resulting from Western
Resources issuing additional common shares needed to acquire the net
remaining Shares, to reflect the impact of the pro forma adjustments and
eliminate ADT's stand-alone equity.
(h) To reflect the elimination of the equity investment and related equity
earnings recorded by Western Resources for the 38.3 million Shares
presently held as an equity investment and the related short-term debt
incurred to finance this equity investment which is to be refinanced
with long-term debt. (See note (c).)
(i) To reflect the issuance of Western Resources Common Stock in connection
with the Offer and the Amalgamation, assuming the Republic Warrant is
exercised:
<TABLE>
<CAPTION>
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
----------------
<S> <C>
Stock Consideration to be paid in Western Resources
Common Stock.......................................... $ 12.50
Divided by the price per share of Western Resources
Common Stock as of March 12, 1997..................... $ 30.125
--------
Exchange Ratio........................................ .41494
Multiplied by Net Shares to be purchased by Western Re-
sources............................................... 144,900
--------
Shares of Western Resources Common Stock needed to ac-
quire Net Shares...................................... 60,125
========
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
ADT Average Common Shares Outstanding........ 136,824 138,283
Less: Shares of Western Resources Common
Stock to be issued.......................... 60,125 60,125
------- -------
Adjustment................................... (76,699) (78,158)
======= =======
</TABLE>
Terms of the KCPL Offer allow KCPL shareholders to exchange each KCPL
Share held for $32.00 of Western Resources Common Stock, subject to
certain limitations as set forth more fully in the KCPL Prospectus. Pro
forma shares and related earnings per share have been calculated
assuming an exchange ratio of 1.06224 based on Western Resources' March
13, 1997 closing stock price of $30.125. This exchange ratio increases
common shares outstanding by approximately 3,853,000 shares for the nine
months ended September 30, 1996 and the twelve month period ended
December 31, 1995.
(j) On July 1, 1996, ADT entered into the Republic Agreement, pursuant to
which Republic Sub was to be amalgamated with and into ADT with ADT
being the surviving company. Under the terms of the Republic Agreement,
ADT granted to Republic the Republic Warrant to purchase 15,000,000
Shares at a purchase price of $20 per Share, subject to adjustment. The
Republic Warrant was to become exercisable for a period of six months
following the termination of the Republic Agreement. On September 30,
1996, ADT and Republic jointly announced the termination of the Republic
Agreement, citing uncertainty attributable to market conditions, and
amended the Republic Warrant to include certain restrictions on the
issuance of Shares pursuant thereto and the transfer of such Shares by
Republic to persons with an interest in 10% or more of ADT. As described
herein, Western Resources has commenced litigation challenging the
validity of the Republic Warrant. See "Litigation." The unaudited pro
forma combined financial information assumes the Republic Warrant is
exercised for a payment of approximately $300 million prior to its
expiration.
As described herein, Western Resources is initiating steps to hold a
special meeting of the ADT Shareholders, and among other matters,
Western Resources will be soliciting proxies in favor of the removal of
the present members of the ADT Board and the election of the Western
Resources Nominees to the ADT Board, who will then take steps needed to
either redeem or amend the Rights Agreement to make it inapplicable to
the Offer.
(k) To reflect Western Resources' and KCPL's anticipated direct merger costs
of $60 million as a reduction to equity.
(l) To reflect the following:
(i) presentation of assets related to ADT's auto auction business as
property held for sale as Western Resources intends to sell such
business at, or near, the closing date of the Amalgamation. These assets
have been assigned a value of $450 million, equal to the estimated sales
proceeds, net of tax. The following accounts have been reclassified to
properly reflect the fair value of assets following the sale of ADT's
auto auction business:
<TABLE>
<CAPTION>
(IN
MILLIONS)
---------
<S> <C>
Estimated sales proceeds, net of tax.......................... $450.0
Less: Estimated existing account balances;
Accounts receivable, net.................................... (30.0)
Property, plant and equipment, net.......................... (170.0)
------
Estimated fair value of property held for sale in excess of
recorded amounts............................................. $250.0
======
</TABLE>
(ii)Elimination of historical amounts recorded for operating revenues,
operating expenses and income taxes related to ADT's auto auction
business. Operating results of the auto auction business have been
eliminated from the unaudited pro forma combined income statement since
it is expected that these assets will be sold.
78
<PAGE>
(m) Amounts related to ADT's subscriber systems represent the historical
cost of equipment, installation labor and direct overheads capitalized upon
acquiring a new customer. In accordance with the provisions specified in APB
No. 16, "Accounting for Business Combinations" Western Resources has allocated
value to the subscriber systems purchased from ADT at amounts that are
believed to approximate the fair value of the acquired customer base. Western
Resources believes the estimated fair value of ADT's historical balance for
subscriber systems assets approximate the fair value of the acquired customer
base. This amount will be amortized over the average customer life, which is
estimated at approximately 10 years.
(n) Prior to the consummation of the KCPL Merger, KCPL must redeem its
preferred stock outstanding pursuant to the KCPL Merger Agreement. Because the
basis of accounting for the KCPL Merger is a pooling of interests, the effect
of this redemption is not required to be reflected in the unaudited pro forma
combined financial statements. The required redemption price, as of December
31, 1996, is approximately $90 million applicable to KCPL preferred stock. The
ongoing effect of this redemption is anticipated to be immaterial.
(o) Intercompany transactions among Western Resources, KCPL and ADT are
immaterial.
79
<PAGE>
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK
The authorized capital stock of Western Resources consists of 85,000,000
shares of Western Resources Common Stock, par value $5.00 per share, 4,000,000
shares of Western Resources Preference Stock, 600,000 shares of Western
Resources Preferred Stock, par value $100.00 per share (the "Par Value
Preferred Stock") and 6,000,000 shares of preferred stock, without par value
(the "No Par Value Preferred Stock"). The Par Value Preferred Stock and the No
Par Value Preferred Stock are referred to herein together as the "Western
Resources Preferred Stock."
WESTERN RESOURCES COMMON STOCK
As of March 13, 1997, there were 64,841,417 shares of Western Resources
Common Stock issued and outstanding. The holders of Western Resources Common
Stock and Western Resources Preferred Stock, voting as one class, are entitled
to one vote per share on all matters requiring stockholder action (except for
the election of directors) subject to the special voting rights of holders of
Western Resources Preferred Stock and Western Resources Preference Stock
described below. In all elections for directors, each holder of Western
Resources Preferred Stock or Western Resources Common Stock has the right to
cast as many votes in the aggregate as equals the number of shares held by him
multiplied by the number of directors to be elected; provided, however, that
if the holders of the Western Resources Preferred Stock or the holders of the
Western Resources Preference Stock are entitled to vote separately as a class
for the election of certain directors, the holders of the Western Resources
Common Stock shall be entitled to vote separately as a class for the remaining
directors. The holders of Western Resources Preferred Stock are entitled to
elect a majority of the board of directors if, and so long as, dividends
payable on outstanding Western Resources Preferred Stock are in default in an
amount equal to four or more quarterly dividends, whether or not consecutive.
The holders of Western Resources Preference Stock are entitled to elect two
directors if, and so long as, dividends payable on outstanding Western
Resources Preference Stock are in default in an amount equal to six or more
quarterly dividends, whether or not consecutive. The holders of the Western
Resources Common Stock participate ratably in liquidation, subject to the
payment to the holders of the Western Resources Preferred Stock and Western
Resources Preference Stock of the preferential amounts to which they are
respectively entitled.
Dividends on the Western Resources Common Stock may be declared and paid
only out of surplus or net profits legally available for the payment of
dividends and only when the full dividends on the Western Resources Preferred
Stock and the Western Resources Preference Stock have been paid or declared
and a sum sufficient for the payment thereof shall have been set apart. In
addition, in the event the Capitalization Ratio (as defined below) is less
than 20%, dividends (including the proposed payment) on the Western Resources
Common Stock and the Western Resources Preference Stock during the twelve
month period ending with and including the date of the proposed payment of
such dividends may not exceed 50% of the net income available for dividends
during the twelve calendar month period ending with and including the second
calendar month immediately preceding the date of the proposed payment of
dividends on such shares of capital stock. Similarly, if the Capitalization
Ratio is 20% or more, but less than 25%, then the payment of dividends on the
Western Resources Common Stock and the Western Resources Preference Stock
(including the proposed payment) during the twelve-month period ending with
and including the date of the proposed payment of such dividends may not
exceed 75% of the net income of Western Resources available for dividends for
the twelve calendar months ending with and including the second calendar month
immediately preceding the date of the proposed payment of dividends on such
shares of capital stock. Except as permitted by the provisions of the Western
Resources Articles summarized in this paragraph, Western Resources may not pay
dividends on the Western Resources Common Stock and the Western Resources
Preference Stock which would reduce the Capitalization Ratio to less than 25%.
"Capitalization Ratio" is defined to mean the ratio of the capital represented
by the Western Resources Common Stock and the Western Resources Preference
Stock, including premiums on the capital stock of Western Resources, plus the
surplus accounts of Western Resources, to the total capital of Western
Resources, plus the surplus accounts of Western Resources, at the end of the
second calendar month immediately preceding the date of the proposed payment
of dividends, adjusted to reflect the proposed payment of dividends.
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WESTERN RESOURCES PREFERRED STOCK
Western Resources is authorized to issue 6,600,000 shares of Western
Resources Preferred Stock, which may be issued from time to time in one or
more series, each such series to have such distinctive designation or title as
may be fixed by the Western Resources board of directors prior to the issuance
of any shares thereof. Each series may differ from each other series already
outstanding as may be declared from time to time by the Western Resources
Board in the following respects: (i) the rate of dividend; (ii) the amount per
share, if any, which the Western Resources Preferred Stock shall be entitled
to receive upon redemption, liquidation, distribution or sale of assets,
dissolution or winding up of Western Resources; (iii) terms and conditions of
conversions, if any; and (iv) terms of sinking fund, redemption or purchase
account, if any. As of March 13, 1997, Western Resources had three series of
Par Value Preferred Stock outstanding: the 4.5% Series (138,576 shares
outstanding); the 4.25% Series (60,000 shares outstanding); and the 5% Series
(50,000 shares outstanding), and no shares of No Par Value Preferred Stock
were outstanding.
The Western Resources Preferred Stock has special voting rights which are
triggered when dividends on the stock are in default in an amount equal to
four or more quarterly dividends, whether or not consecutive. If dividends are
not paid for four or more dividend periods on all series of Western Resources
Preferred Stock then outstanding, the holders of the Western Resources
Preferred Stock are entitled to elect the smallest number of directors
necessary to constitute a majority of the full Western Resources board of
directors until such unpaid dividends shall be paid. In addition, Western
Resources may not, without the consent of the holders of at least two-thirds
of the Western Resources Preferred Stock then outstanding, (i) define or
specify preferences, qualifications, limitations or other rights for
authorized but unissued shares of Western Resources Preferred Stock superior
to those of outstanding shares of such stock (except for differences
attributable to variations in dividend rates, liquidation preferences and
redemption prices) or amend, alter, change or repeal any of the express terms
or provisions of the then outstanding Western Resources Preferred Stock in a
manner substantially prejudicial to the holders thereof, or (ii) issue or sell
any Western Resources Preferred Stock or any class of stock ranking prior to
or on a parity with the Western Resources Preferred Stock other than in
exchange for or for the purpose of effecting the retirement of not less than a
like number of shares of Western Resources Preferred Stock or shares of stock
ranking prior to or on a parity therewith or securities convertible into not
less than a like number of such shares unless (a) aggregate capital applicable
to Western Resources Common Stock and Western Resources Preference Stock plus
surplus equals the involuntary liquidation preference of all Western Resources
Preferred Stock and any such other stock ranking prior thereto or on a parity
therewith and (b) Western Resources' net earnings (as defined) for a period of
twelve consecutive calendar months within the fifteen calendar months
preceding the date of issuance, available for the payment of dividends, shall
have been at least two times the annual dividend requirements on the Western
Resources Preferred Stock and on any such other stock ranking prior thereto or
on a parity therewith after giving effect to the proposed issuance, and the
net earnings (as defined), for the same period, available for payment of
interest shall have been at least one and one-half times the sum of annual
interest requirements and dividend requirements on Western Resources Preferred
Stock and such other stock ranking prior thereto or on a parity therewith
after giving effect to the proposed issuance.
The Western Resources Articles also provide that without the consent of the
holders of at least a majority of the Western Resources Preferred Stock then
outstanding, voting as a class, or if more than one-third shall vote
negatively, Western Resources shall not: (i) merge or consolidate with or into
any other corporation; (ii) sell, lease or exchange all or substantially all
of its property or assets unless the fair value of the net assets of Western
Resources after completion of such transaction shall at least equal the
liquidation value of all outstanding shares of Western Resources Preferred
Stock; or (iii) reacquire or pay any dividends or make any other distribution
upon shares of the Western Resources Preference Stock or the Western Resources
Common Stock or any other class of the stock of Western Resources over which
the Western Resources Preferred Stock has preference with respect to the
payment of dividends or the distribution of assets, unless after any such
action the sum of (a) the capital of Western Resources represented by the
outstanding Western Resources Preference Stock, Western Resources Common Stock
or other stock over which the Western Resources Preferred Stock has
preference, (b) Western Resources' earned surplus, and (c) any capital surplus
of Western Resources, shall not be less than
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the sum of $10,500,000 plus an amount equal to twice the annual dividend
requirement on all outstanding shares of the Western Resources Preferred Stock
and on any such other stock ranking prior thereto or on a parity therewith.
At Western Resources' 1996 Annual Shareholders Meeting, a proposal was
approved to amend the Western Resources Articles by removing the voting rights
of the holders of Western Resources Preferred Stock relating to the issuance
of unsecured indebtedness.
WESTERN RESOURCES PREFERENCE STOCK
Western Resources is authorized to issue 4,000,000 shares of Western
Resources Preference Stock, which may be issued from time to time in one or
more series, each such series to have such distinctive designation or title as
may be fixed by the board prior to the issuance of any shares thereof. Each
series may differ from each other series already outstanding, as may be
declared from time to time by the Western Resources Board, in the following
respects: (i) the rate of dividend; (ii) whether shares of Western Resources
Preference Stock are subject to redemption, and if so, the amount or amounts
per share which the shares of such series would be entitled to receive in case
of redemption, and the terms on which such shares may be redeemed; (iii) the
amounts payable in the case of the liquidation, distribution or sale of
assets, dissolution or winding up of Western Resources; (iv) terms and
conditions of conversion, if any; (v) terms of sinking fund, redemption or
purchase account, if any; and (vi) any designations, preferences and relative
participating, optional or other special rights and qualifications,
limitations or restrictions thereof. As of March 13, 1997, Western Resources
had 500,000 shares of 7.58% Series Preference Stock outstanding.
The Western Resources Preference Stock has voting rights which are triggered
when dividends on the stock are in default in an amount equal to six or more
quarterly dividends, whether or not consecutive. If dividends are not paid for
six or more dividend periods, the holders of the Western Resources Preference
Stock are entitled to elect two directors to the Western Resources board of
directors until such unpaid dividends shall be paid. In addition, Western
Resources may not, without the consent of the holders of at least two-thirds
of the Western Resources Preference Stock then outstanding, voting as a class,
(i) amend, alter, change or repeal any of the express terms and conditions of
the then outstanding Western Resources Preference Stock in a manner
substantially prejudicial to the holders thereof, or (ii) create any class of
stock ranking prior to the Western Resources Preference Stock as to dividends
or upon liquidation, or securities convertible into shares ranking prior to
the Western Resources Preferred Stock in such respects; provided that no such
consent shall be required with respect to the taking of any such action
relating to the Western Resources Preferred Stock.
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COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK
As a consequence of the exchange of Shares for shares of Western Resources
Common Stock in the Offer and the cancellation of Shares as a result of the
Amalgamation, shareholders of ADT, a company incorporated under the laws of
Bermuda, would become shareholders of Western Resources, a Kansas corporation.
The rights of ADT Shareholders are currently governed by Bermuda law
(including the Companies Act), the ADT Memorandum of Association and the ADT
Bye-Laws. Upon the exchange of Shares for Western Resources Common Stock, the
rights of ADT Shareholders will be governed by Kansas law (including the
KGCC), the Western Resources Articles and the Western Resources Bylaws. The
following is a summary of certain similarities and material differences
between the rights of holders of Shares and the rights of holders of Western
Resources Common Stock.
The following summary does not purport to be a complete statement of the
rights of ADT Shareholders under Bermuda law, the ADT Memorandum of
Association, the ADT Bye-Laws and the Rights Agreement as compared with the
rights of Western Resources shareholders under Kansas law, the Western
Resources Articles and the Western Resources Bylaws, or a complete description
of the specific provisions referred to herein. The summary discusses certain
material aspects of the above-mentioned corporate laws and instruments but is
qualified in its entirety by reference to such laws and instruments, including
the aforementioned instruments of ADT and Western Resources. Complete copies
of all such laws and instruments may be obtained in the manner set forth above
under the caption "Available Information."
Voting at Meetings. Pursuant to Section 77 of the Companies Act, any
question proposed for consideration at a general meeting shall be decided on a
simple majority of votes or by such majority as the bye-laws of a company may
prescribe. Section 77 of the Companies Act provides that it is lawful for any
question proposed for consideration at a general meeting to be decided on a
show of hands in which each shareholder present in person or by proxy is
entitled to one vote and casts such vote by raising his hand. However, before
or on the declaration of the result of a show of hands, a poll may be demanded
by (i) the Chairman of the meeting, (ii) at least three shareholders present
in person or represented by proxy, (iii) any shareholder or shareholders
present in person or represented by proxy holding between them one-tenth of
the total voting rights of all the shareholders entitled to vote at such
meeting, or (iv) a shareholder or shareholders present in person or
represented by proxy holding shares in such company conferring the right to
vote at such meeting and on which an aggregate sum has been paid up equal to
not less than one-tenth of the total sum paid up on all such shares conferring
such right. Where a poll has been demanded, every shareholder present in
person or by proxy is entitled to one vote for each share held by him.
Section 17-6502 of the KGCC provides that unless otherwise provided in the
articles of incorporation of a Kansas corporation and subject to K.S.A. 17-
6503, each shareholder of a Kansas corporation is entitled to one vote for
each share of capital stock held by such shareholder. The KGCC makes no
provision for voting by a show of hands.
Special Meetings of Shareholders. Pursuant to Section 74 of the Companies
Act and Bye-Law 42 of the ADT Bye-Laws, the ADT Board is required, on the
written requisition of shareholders of ADT holding at the date of the deposit
of the requisition not less than one-tenth of the paid-up capital of ADT as at
the date of the deposit carries the right of voting at general meetings of
ADT, to convene a special general meeting of ADT. If the directors do not
within twenty-one days from the date of the deposit of the requisition convene
a meeting, the requisitionists, or any of them representing more than one-half
of the total voting rights of all of them, may themselves convene a meeting,
but any meeting so convened may not be held after the expiration of three
months from the date of deposit of the requisition.
Section 17-6501(e) of the KGCC provides that special meetings of
shareholders may be called by the board of directors or by such person or
persons as may be authorized by the articles of incorporation or bylaws. The
Western Resources Bylaws provide that a special meeting of shareholders may be
called by the Western Resources Board, or by the Chairman or the President of
Western Resources.
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Number of Directors. Section 91(1) of the Companies Act provides that the
affairs of a company shall be managed by not less than two directors, who
shall be individuals elected in the first place at the statutory meeting and
thereafter at each annual general meeting of the company or elected or
appointed by the shareholders in such other manner and for such term as may be
provided in the company's bye-laws. Section 91(2) of the Companies Act
provides that shareholders at a general meeting of a company may authorize the
directors of the company to elect or appoint on their behalf an individual or
individuals to act as additional directors up to a maximum determined by the
shareholders in general meeting. Bye-Law 52(A) of the ADT Bye-Laws provides
that the number of directors shall be such number, not less than two, as the
shareholders in general meeting may from time to time determine.
Section 17-6301(b) of the KGCC provides that the board of directors of a
corporation shall consist of one or more members. The number of directors
shall be fixed by, or in the manner provided in, the bylaws, unless the
articles of incorporation establish the number of directors, in which case a
change in the number of directors shall be made only by amendment of the
articles of incorporation. The Western Resources Articles provide that the
number of directors shall not be less than seven nor more than fifteen, the
precise number to be set by the Western Resources Board, provided that unless
approved by a majority of shareholders entitled to vote, the number of
directors shall not be reduced if such reduction will shorten the term of an
existing director.
Advance Notice of Shareholder Nominations of Directors. Under Bye-Law 52(B)
of the ADT Bye-Laws, no person, other than a director retiring at a general
meeting of shareholders, shall, unless recommended by the ADT Board, be
eligible for election to the office of director at any general meeting unless
not less than six and not more than twenty-eight clear days before the day
appointed for the meeting there has been given to the Secretary of ADT notice
in writing by some shareholder (not being the person to be proposed) entitled
to attend and vote at the meeting for which such notice is given of such
shareholder's intention to propose such person for election and also notice in
writing signed by the person to be proposed of such person's willingness to be
elected.
The Western Resources Articles provide a similar advance notice provision.
Nominations of persons for election to the Western Resources Board may be made
at a meeting of shareholders by any shareholder, provided that the Secretary
of Western Resources receives written notice not less than thirty-five days
nor more than fifty days prior to the meeting. In the event that less than
forty-five days' notice or prior public disclosure of the date of the meeting
is given or made by Western Resources to shareholders, the notice of
nomination must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was
mailed or public disclosure was made. For notice by the shareholder to be
timely, it must be received in any event not later than the close of business
on the seventh day preceding the day on which the meeting is to be held. Such
notice shall contain (i) the names of the nominees and all other information
required to be disclosed in a proxy statement, (ii) the name and address of
the shareholder making the nomination, (iii) a representation that the
shareholder is a holder of record of the stock entitled to vote at the meeting
on the date of the notice and intends to appear in person or by proxy at the
meeting to nominate the person specified in the notice and (iv) a description
of all arrangements or understandings between the shareholder and each nominee
and any other person on whose behalf such nominations are being made.
Shareholder Proposal Procedures. Other than advance notice requirements for
shareholder proposals involving the election or removal of directors or
amendments to the ADT Bye-Laws, neither the Companies Act nor the ADT Bye-Laws
require advance notice (other than notice of the meeting itself) of
shareholder proposals prior to a meeting of shareholders.
The Western Resources Articles permit any shareholder who is a holder of
record at the time of giving the required notice and who is entitled to vote
at the shareholders meeting, to bring business before such shareholders
meeting. Required notice must be received by the Secretary of Western
Resources not less than thirty-five days nor more than fifty days prior to the
meeting. In the event that less than forty-five days' notice or prior public
disclosure of the date of the meeting is given or made by Western Resources to
shareholders, the notice must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
meeting was mailed or public disclosure was made. For notice by the
shareholder to be timely, it must be
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received in any event not later than the close of business on the seventh day
preceding the day on which the meeting is to be held. The notice shall contain
(i) a brief description of the business desired to be brought forth and the
reasons for considering the business, (ii) the name and address of the
shareholder as they appear on the books of Western Resources, (iii) a
representation that such shareholder is a holder of record of the stock
entitled to vote at the meeting on the date of the notice and intends to
appear in person or by proxy to present the business specified in the notice
and (iv) disclosure of any material interest of the shareholder in such
proposal.
Classification of Board of Directors. The ADT Board is not classified and
the ADT Bye-Laws do not contemplate a classified board.
Section 17-6301(d) of the KGCC provides that the directors of any
corporation may be divided into one, two or three classes by the articles of
incorporation or by the corporation's initial bylaws, or by bylaws adopted by
a vote of the shareholders; the term of office of those of the first class to
expire at the annual meeting next ensuing, of the second class one year
thereafter, of the third class two years thereafter, and at each annual
election held after such classification and election, directors shall be
chosen for a full term, as the case may be, to succeed those whose terms
expire. The Western Resources Bylaws provide for three classes of directors as
nearly equal in number as possible with no class containing fewer than two
directors and with each director holding office for a term of three years.
Cumulative Voting. Both the Companies Act and the KGCC allow, but do not
require, cumulative voting for the election of directors. Under the ADT Bye-
Laws, ADT Shareholders do not have cumulative voting rights for the election
of directors. The Western Resources Bylaws provide for cumulative voting of
all shares entitled to vote for the election of directors. Each holder of
shares eligible to vote for the election of directors may cast a number of
votes in the aggregate equal to the number of shares held by that holder
multiplied by the number of directors to be elected, and such votes may be
cast for one candidate or distributed among two or more candidates at the
shareholder's discretion.
Removal of Directors; Filling Vacancies on the Board of Directors. Section
93 of the Companies Act provides that, subject to a company's bye-laws, the
shareholders of a company may at a special general meeting called for that
purpose remove a director, provided that notice of any such meeting shall be
served on the director concerned not less than fourteen days before the
meeting and that the director shall be entitled to be heard at the meeting.
Bye-Law 71 of the ADT Bye-Laws provides that any director may at any time be
removed from office as a director of ADT either by resolution of the ADT
shareholders to that effect or upon a written resolution specifying that a
director has been so removed and signed by all the other directors of ADT.
Bye-Law 57 of the ADT Bye-Laws provides that the remaining directors have the
power from time to time and at any time to appoint any qualified person to
fill a casual vacancy in the board of directors who shall hold office until
the next following annual general meeting, and the existing directors may act
notwithstanding any vacancy in their number.
Section 17-6301 of the KGCC provides that any director or the entire board
of directors may be removed, with or without cause, by the holders of a
majority of shares then entitled to vote at an election of directors, except
that in the case of a corporation having a classified board of directors, such
as Western Resources, shareholders may remove a director only for cause,
unless the articles of incorporation provide otherwise. Under the Western
Resources Articles and the Western Resources Bylaws, no director, other than
one elected because of a default in the payment of dividends on Western
Resources Preferred Stock or Western Resources Preference Stock, may be
removed except for cause. Pursuant to Section 17-6301 of the KGCC, if less
than the entire board of a corporation with cumulative voting is to be
removed, no director may be removed without cause if the votes cast against
such director's removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors or, if the
corporation has classes of directors, as does Western Resources, at an
election of the class of directors of which such director is a part.
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Pursuant to the Western Resources Bylaws, vacancies in the Western Resources
Board caused by death, resignation or otherwise may be filled at any meeting
of the Western Resources Board and the replacement directors shall serve until
the next annual meeting of shareholders and until their successors are elected
and qualified.
Shareholder Action by Written Consent. Pursuant to Section 77A of the
Companies Act, anything which may be done by resolution of a company in
general meeting or by resolution of a meeting of any class of the shareholders
of a company may, without a meeting and without any previous notice being
required, be done by resolution in writing signed by all of the shareholders
of the company who at the date of the resolution would be entitled to attend
the meeting and vote on the resolution; provided, however, that no action by
unanimous written consent shall be valid if taken with respect to a resolution
to remove either a director or an auditor before the expiration of such
director's or auditor's term of office.
Under Section 17-6518 of the KGCC, any action which may be taken by
shareholders at any annual or special meeting may be taken without a meeting
by unanimous written consent, unless otherwise provided in the articles of
incorporation.
Preemptive Rights. No shareholder of ADT or Western Resources has preemptive
rights with regard to shares of common or preferred stock.
Amendment of ADT Memorandum of Association and Western Resources
Articles. Section 12 of the Companies Act provides that a company may, with
the consent of the Minister of Finance, by resolution passed at a general
meeting of members of which due notice has been given, alter the provisions of
its memorandum of association.
The Western Resources Articles provide that unless and until a specific
provision for amending the Western Resources Articles is specially adopted,
Western Resources reserves the right, except as otherwise provided, to amend,
alter, change or repeal any provision contained in the Western Resources
Articles in the manner now or hereafter prescribed by the applicable
provisions of the laws of the State of Kansas for amending the articles of
incorporation of a Kansas corporation, and all rights conferred upon
shareholders are granted subject to such reservation.
The KGCC provides that in connection with every amendment authorized by
Section 17-6602 of the KGCC, the board of directors shall adopt a resolution
setting forth the amendment proposed, declaring its advisability, and either
calling a special meeting of the shareholders entitled to vote for the
consideration of such amendment or directing that the amendment proposed be
considered at the next annual meeting of the shareholders. Kansas law further
provides that such special or annual meeting shall be called and held upon
notice in accordance with the manner for the giving of notice of meetings of
shareholders. The notice shall set forth such amendment in full or a brief
summary of the changes to be effected. If a majority of the outstanding stock
entitled to vote thereon and a majority of the outstanding stock of each class
entitled to vote thereon as a class have been voted in favor of the amendment,
a certificate setting forth the amendment and certifying that such amendment
has been duly adopted shall be executed, acknowledged, filed and recorded.
Amendment of Bylaws. Pursuant to Bye-Law 101 of the ADT Bye-Laws and Section
13(5) of the Companies Act, the ADT Board may amend the ADT Bye-Laws, provided
that no such amendment will be operative unless and until it is confirmed by
the ADT Shareholders at a general meeting of ADT.
The Western Resources Board may make and from time to time alter, amend or
repeal any Western Resources Bylaw, subject to the power of the shareholders
to amend, alter or repeal the Western Resources Bye-Laws. The provisions of
the Western Resources Bylaws regarding the classification of the Western
Resources board of directors, the filling of vacancies by directors and the
removal of directors may not be amended without the affirmative vote of at
least 80% of the outstanding shares of Western Resources entitled to vote.
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Interested Directors. Under Bye-Law 64 of the ADT Bye-Laws, no director is
disqualified from contracting with ADT and no contract will be avoided by
reason of such director holding that office or of the fiduciary relationship
thereby established if the requisite disclosure by the interested director is
made. Bye-Law 64(7) of the ADT Bye-Laws indicates that a director who to his
knowledge is in any way, whether directly or indirectly, interested in a
contract or arrangement with ADT shall declare the nature of his interest at
the meeting of the directors at which the question of entering into the
contract or arrangement is first taken into consideration, if he knows his
interest then exists, or in any other case at the first meeting of the
directors after he knows that he is or has become so interested.
Under Section 17-6304 of the KGCC, no contract or transaction between a
corporation and one or more of its directors or officers or any other
corporation or organization in which such directors or officers are directors
or officers or have a financial interest shall be void or voidable solely
because the directors or officers are present at or participate in the meeting
of the board or committee which authorizes the contract or transaction, or
solely because such directors' or officers' votes are counted for such
purposes if: (1) the material facts as to the relationship or interest and the
contract or transaction are disclosed or known to, and the board or committee
authorized the contract or transaction by, a majority of the disinterested
directors; (2) the material facts are disclosed or known to shareholders
entitled to vote thereon and the contract or transaction is approved by them
in good faith; or (3) the contract or transaction is fair as to the
corporation as of the time it is authorized or approved.
Business Combinations.
Article XVII of the Western Resources Articles provides that an affirmative
vote of at least 80% of the voting stock of Western Resources and the
affirmative vote of at least a majority of the voting stock held by
shareholders other than an Interested Shareholder shall be required for the
approval or authorization of any Business Combination with an Interested
Shareholder; provided, however, that the 80% and majority voting requirements
shall not be applicable if: (a) the Business Combination shall have been
approved by a majority of the Continuing Directors; or (b) the cash or the
Fair Market Value (as determined by a majority of the Continuing Directors) of
the property, securities or other consideration to be received in such
Business Combination is not less than the highest per share price paid on
behalf of the Interested Shareholder for any shares of the Western Resources
stock.
"Business Combinations" requiring such a vote include: (i) any merger or
consolidation of Western Resources or any of its subsidiaries with any
Interested Shareholder; (ii) any sale, lease, exchange, transfer or other
disposition of any substantial part of the assets of Western Resources or a
subsidiary to an Interested Shareholder; (iii) the issuance of any securities
of Western Resources or a subsidiary to an Interested Shareholder other than
an issuance on a pro rata basis to all holders of shares pursuant to a stock
split or dividend; (iv) any recapitalization or reclassification that would
increase the proportionate voting power of an Interested Shareholder; (v) the
adoption of any plan or proposal for the liquidation or dissolution of Western
Resources proposed on behalf of an Interested Shareholder; (vi) any sale,
lease, exchange, transfer or other disposition of all or a substantial part of
the assets of an Interested Shareholder to Western Resources or one of its
subsidiaries; or (vii) any agreement, contract, arrangement or understanding
providing for any of the above transactions. For purposes of the foregoing
provisions, an "Interested Shareholder" is defined as (i) any individual,
corporation, partnership or other person or entity which, together with its
"Affiliates" or "Associates" as such terms are defined in Rule 12b-2 under the
Exchange Act, beneficially owns, as such term is defined in Rule 13d-3 under
the Exchange Act, in the aggregate 10% or more of the outstanding Voting Stock
and (ii) any Affiliate or Associate of such Interested Shareholder;
"Continuing Directors" is defined as any director who was a director prior to
the Interested Shareholder becoming an Interested Shareholder; "Substantial
Part" means 10% or more of the Fair Market Value of Western Resources's total
consolidated assets as reflected in the most recent end of year balance sheet;
"Voting Stock" is defined as all of the outstanding shares of common stock and
preferred stock of Western Resources, with each reference to a proportion of
shares of Voting Stock referring to such proportion of the votes entitled to
be cast by such shares; and "Fair Market Value" is defined as: (i) in the case
of stock, the highest closing sale price during the 30-day period immediately
prior to the date in question of a
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share of such stock on the NYSE or such other exchange or quotation system;
and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by a majority of
the Continuing Directors.
The affirmative vote of 80% of the voting stock of Western Resources and the
affirmative vote of a majority of the voting stock other than the stock held
by an Interested Shareholder shall be required to amend, repeal or adopt any
provision inconsistent with Article XVII of the Western Resources Articles.
Neither Bermuda law nor ADT's Bye-Laws provide similar restrictions on
transactions with Interested Shareholders.
ADT Bye-Law 104. Pursuant to Bye-Law 104(1)(A) of the ADT Bye-Laws, where
any person is or becomes "interested" in Shares, whether as a result of one
transaction or a series of transactions, in circumstances in which such person
would be obligated to make an offer to shareholders of ADT or to the holders
of every class of securities convertible into, or of rights to subscribe for,
share capital of ADT under the Rules of the City Code, the ADT Board may
require such person to make such an offer under the City Code as if the City
Code applied to ADT, provided that references in the City Code to the "Panel"
will be construed as if they were references to the ADT Board. Rule 9 of the
City Code, as it is applied by the ADT Bye-Laws, provides that, except with
the consent of the ADT Board, when any person (and persons acting in concert
with such person) acquires shares which carry 30% or more of the voting rights
of a company, such person must make an offer for all shares of that class
(whether voting or non-voting). The offer must be for cash or offer a cash
alternative, in each case at not less than the highest price paid (in cash or
otherwise) for shares of the same class by the offeror, or anyone acting in
concert with the offeror, during the offer period and within the 12 months
prior to commencement of the offer.
Section 104(1)(B) of the ADT Bye-Laws provides that when any person has
acquired, is in the process of acquiring, or appears to the ADT Board likely
to acquire an interest in the capital stock of ADT in circumstances in which
such person would be subject to the SARs, the ADT Board may give notice
requiring such person to comply with the SARs, and if such person fails to
comply, give further notice requiring such person to dispose or to procure the
disposal by any person with whom such person has acted in concert of any
interest in shares acquired within 30 days of the expiration of such notice.
The SARs provide that a person may not, in any period of seven days, acquire
shares representing 10% or more of the voting rights in a company if such
shares, aggregated with shares already held by the purchaser, would carry 15%
or more but less than 30% of the voting rights of such company. The SARs do
not apply to an acquisition from a single shareholder if such acquisition is
the only acquisition within a seven-day period. The SARs also do not apply to
a person who acquires 30% or more of the voting rights in a company.
Pursuant to Bye-Law 104(3) of the ADT Bye-Laws, where any person is
interested, whether as a result of a series of transactions over a period of
time or not, in 30% or more of the outstanding Shares, the ADT Board may
demand that a cash offer for all of the outstanding voting or non-voting
securities of ADT be made if the ADT Board determines that an offer pursuant
to Bye-Law 104(1)(A) of the ADT Bye-Laws is not expedient or if a person
required to make such an offer fails to do so. Pursuant to Bye-Law 104(4) of
the ADT Bye-Laws, if the ADT Board serves a notice under Bye-Law 104(3) of the
ADT Bye-Laws, the ADT Board may also require that the offeror offer to
purchase securities of ADT convertible into voting or non-voting shares of ADT
on terms considered "fair and reasonable" by the ADT Board in its sole
discretion. Such offer must be made within 30 days of the demand.
Unless the ADT Board otherwise agrees, an offer for each class of ADT
capital stock under Bye-Laws 104(3) and 104(4) of the ADT Bye-Laws must be for
cash or must offer a cash alternative at not less than the highest price paid
by the offeror or any person acting in concert with it for shares of such
class within the preceding 12 months. Such offer must remain open for at least
14 days after the date on which it becomes unconditional as to acceptances
and, in the case of an offer under Bye-Law 104(3), must provide that all
shares will be purchased within 21 days of the offer becoming unconditional in
all respects.
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Unless the ADT Board otherwise agrees, the offers under Bye-Laws 104(3)
through 104(5) of the ADT Bye-Laws must be for cash or a cash alternative at
not less than the highest price paid by the offeror or any person acting in
concert for shares or convertible securities of such class within the
preceding 12 months or, if unavailable or inappropriate, at a price fixed by
the directors. Such offer must remain open for at least 14 days after the date
on which it becomes unconditional as to acceptances and must provide that all
shares will be purchased within 21 days of the offer becoming unconditional in
all respects.
The foregoing does not purport to be a complete description of Bye-Law 104.
ADT Shareholders are urged to, and should, read Bye-Law 104, a copy of which
is included herein as Schedule C.
Neither the Western Resources Articles nor the Western Resources Bylaws
contain a similar provision.
Shareholder Rights Plan. As described above in "The Offer--Conditions of the
Offer--Rights Agreement," ADT has entered into the Rights Agreement pursuant
to which Shares in issue on or after November 15, 1996 entitle the holder
thereof to one Right, subject to certain exceptions.
Western Resources is not party to any similar agreement.
VOTING RIGHTS IN CONNECTION WITH BUSINESS COMBINATIONS
Generally. Pursuant to Section 106 of the Companies Act, a company's board
of directors must submit an amalgamation agreement for shareholder approval
and, unless the company's bye-laws provide otherwise, must obtain the approval
of the holders of at least three-fourths of those voting at a general meeting
of shareholders at which a requisite quorum is present. The ADT Bye-Laws do
not currently provide for any vote specific to amalgamations although, if
elected, the Western Resources Nominees intend to propose an amendment to the
ADT Bye-Laws providing that an amalgamation may be approved by the holders of
a simple majority of Shares voted at a general meeting of ADT. An amendment to
the ADT Bye-Laws may be accomplished by the affirmative vote of a simple
majority of Shares voted at a general meeting of ADT. Bye-Law 43 of the ADT
Bye-Laws provides that the quorum necessary for a general meeting of
shareholders to approve an amalgamation agreement is two persons holding
Shares and present in person or represented by proxy.
Section 17-6701 of the KGCC provides that an agreement of merger or
consolidation shall be approved by resolution adopted by the board of
directors of the corporation and approved by a majority of the outstanding
stock entitled to vote thereon, subject to certain exceptions.
Preferred Shares. Section 106(4) of the Companies Act provides that the
holders of a class of shares of an amalgamating company are entitled to vote
separately as a class in respect of an amalgamation if the amalgamation
agreement contains a provision which would constitute a variation of the
rights attaching to any such class of shares.
The Western Resources Articles provide that so long as Western Resources
Preferred Stock (as defined herein) is outstanding, Western Resources may not
merge or consolidate with any other corporation without the consent of the
holders of at least a majority of the outstanding shares of Western Resources
Preferred Stock voting separately as a class or, if more than one-third of
such holders of the Western Resources Preferred Stock shall vote negatively,
the vote of the percentage or number of shares of any and all classes required
by the law or the holders of Western Resources Articles; provided, however,
that no consent of the holders of Western Resources Preferred Stock shall be
required, except as otherwise required by law, with respect to (i) any merger
or consolidation approved by the Commission under the Public Utility Holding
Company Act of 1935 or (ii) if provision for redemption of the Western
Resources Preferred Stock is made prior to the effective time of the merger or
consolidation.
Appraisal Rights. Pursuant to Section 106(6) of the Companies Act, any
shareholder who did not vote in favor of an amalgamation and who is not
satisfied that he has been offered fair value for his shares may within one
month of the giving of the notice of a meeting of shareholders to consider
such amalgamation apply to the
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Bermuda Supreme Court to appraise the fair value of such shareholder's shares.
Within one month of the Bermuda Supreme Court appraising the fair value of any
shares, the company is entitled either to pay to the dissenting shareholder an
amount equal to the value of his or her shares as appraised by the Bermuda
Supreme Court, or to terminate the amalgamation.
Section 17-6712 of the KGCC provides that a shareholder has the right to
dissent from and receive payment of the value of such shares in the event of
the consummation of a plan of merger or consolidation in which the shareholder
objected to the plan in writing and held shares which were either not entitled
to vote or were not voted in favor of the merger or consolidation. The KGCC
further provides, however, that unless otherwise provided in the articles of
incorporation of a Kansas corporation, this section does not apply to the
holders of any class or series which, on the record date, were either
registered on a national securities exchange or were held of record by at
least 2,000 shareholders.
Bye-Law 46 of the ADT Bye-Laws. Subject to any rights or restrictions
attached to any class of shares of ADT, ADT shareholders present in person or
by proxy at any meeting of ADT shall be entitled on a poll to one vote for
each share held by such shareholders. However, a ADT shareholder is not
entitled (except as a proxy for another shareholder) to be present or vote at
any meeting if such shareholder (i) has been served with a notice under Bye-
Law 104 stating (a) that such shareholder must make an offer in accordance
with Bye-Law 104, and (b) upon failure to make such an offer before the
expiration of a specified period not exceeding twenty-eight days or, having
made such an offer, upon otherwise failing to comply with the provisions of
Bye-Law 104, such shareholder will lose the right to vote, and (ii) such
shareholder fails to make a timely offer or remedy the noncompliance.
A shareholder of ADT also loses the right to vote if such shareholder (i)
acquires three percent or more of the issued share capital of any class of
ADT, either alone or with others, and fails to notify ADT thereof within two
days or, already possessing three percent or more, the shareholder fails to
notify ADT of a change in the shareholder's interests amounting to one percent
or more of the share capital of any class and (ii) such person and the
registered holder of such Shares receives a notice from the ADT Board stating
that the registered holder of such Shares shall not be entitled to vote during
a period of one hundred and eighty days. Also pursuant to Bye-Law 46 of the
ADT Bye-Laws, any person who (i) is known or believed by ADT to be interested
in Shares of ADT, (ii) has been served a notice by ADT requesting specified
information regarding such person's interests in Shares in ADT and stating
that upon failure to provide the information within a specified period, the
shareholder will lose the right to vote, and (iii) such person fails to comply
with the notice within the specified period, shall also lose the right to vote
for the period during which such person fails to comply with the notice plus
an additional ninety days.
The foregoing does not purport to be a complete description of Bye-Law 46 of
the ADT Bye-Laws. ADT Shareholders are urged to, and should, read Bye-Law 46
of the ADT Bye-Laws, a copy of which is included herein as Schedule D.
Kansas Control Share Transaction Provision. Pursuant to Section 17-1286 of
the KGCC (the "Kansas Control Share Acquisition Provision"), control shares
are shares of an issuing public corporation that would, except for application
of the statute, entitle their holder to exercise or direct the exercise of
voting power in the election of directors within certain specified ranges
(one-fifth or more but less than one-third, one-third or more but less than a
majority, a majority or more). A control share acquisition is an acquisition,
directly or indirectly, by any person of ownership of, or power to direct the
voting of, control shares, either pursuant to a single transaction or various
transactions within a 120-day period, or pursuant to a plan to make a control
share acquisition.
This provision applies to shares of an issuing public corporation which has
100 or more shareholders, a principal place of business, principal office or
substantial assets in Kansas and either more than 10% of its shareholders
resident in Kansas, at least 10% of its shares owned by Kansas residents or at
least 2,500 shareholders resident in Kansas. Western Resources meets these
criteria and is thus an issuing public corporation in Kansas.
Control shares acquired in a control share acquisition have the same voting
rights as before the acquisition only to the extent approved by a majority of
all shares entitled to vote in the election of directors and a majority
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of all shares entitled to vote in the election of directors, excluding all
interested shares. An acquiring person can request a special meeting of
shareholders to consider the voting rights that will attach to his or her
control shares.
Interested shares are those over which (i) a person or member of a group
that makes or proposes to make a control share acquisition, (ii) an officer of
the issuing public corporation, or (iii) an employee of the issuing public
corporation who is also a director, exercises voting power in the election of
directors.
An issuing public corporation can opt out of the Kansas Control Share
Acquisition Provision with a provision in either its articles of incorporation
or its bylaws stating that it does not apply. The opt-out is effective only
with regard to control share acquisitions which occur after the opt-out has
been adopted. The Western Resources Articles and the Western Resources Bylaws
do not contain an opt-out at this time.
Unless otherwise provided in the corporation's bylaws or articles of
incorporation, control shares may be redeemed if an acquiring person statement
has not been delivered to the corporation by the tenth day after the control
share acquisition, or if a statement has been filed but the shareholders have
voted not to accord voting rights to the control shares. A call for redemption
must occur within 30 days after the event that gives the corporation the
option to call for redemption the shares and the shares must be redeemed
within 60 days of such call.
The definition of "control share acquisition" sets forth certain exceptions,
including, without limitation, the acquisition of shares in certain statutory
mergers or consolidations to which the issuing public corporation is a party.
Bermuda does not have a similar statute.
Kansas Business Combination Statute. The KGCC prohibits, subject to certain
exceptions set forth therein, various business combinations with "interested
stockholders" (as hereafter described) including mergers or consolidations of
the corporation, or of any direct or indirect majority-owned subsidiary of the
corporation, for a period of three years following the date such stockholder
became an interested stockholder unless (a) prior to such date the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (b) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (determined in accordance with the KGCC), or
(c) on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of the
shareholders of the corporation (but not by written consent of the
shareholders), by the affirmative vote of at least 66 2/3% of the outstanding
voting shares of the corporation which are not owned by the interested
stockholder. "Interested stockholder" means, subject to certain exceptions,
any person, other than the corporation or any direct or indirect majority-
owned subsidiary of the corporation, that is (i) the owner of 15% or more of
the outstanding voting stock of the corporation, or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder, and the affiliates and
associates of such person.
Bermuda does not have a similar statute.
Section 102 of the Companies Act. Section 102 of the Companies Act provides
that where a scheme or contract involving the transfer of shares in a company
(the "transferor company") to another company (the "transferee company") has,
within four months after the making of the offer, been approved by the holders
of not less than nine-tenths in value of the shares whose transfer is
involved, other than shares already held at the date of the offer by, or by a
nominee for, the transferee company or its subsidiary, the transferee company
may, within two months from the expiration of the four month period, give
notice to any dissenting shareholder that it desires to acquire his shares,
and then such transferee company shall be entitled and bound, unless upon
application by the dissenting shareholder the Bermuda Supreme Court orders
otherwise, to acquire such shares on the terms on which shareholders that
approved such scheme or contract transferred their shares. The transferor
company must offer the same terms to all holders of shares of the same class
as the shares which are the subject of such offer.
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Where shares in the transferor company of the same class as the shares whose
transfer is involved are already held by the transferee company to a value
greater than one-tenth of the aggregate of their value and that of the shares
whose transfer is involved, the holders who approve the scheme or contract,
besides holding not less than nine-tenths in value of the shares, must also be
not less than three-fourths in number of the holders of those shares. For the
purpose of Section 102 of the Companies Act, "dissenting shareholder" includes
a shareholder that has not assented to a scheme or contract and any
shareholder that has failed or refused to transfer shares to the transferee
company.
Within one month of the transfer of nine-tenths in value of the transferor
company's shares to the transferee company, or to its nominee or subsidiary,
the transferee company shall notify the holders of the remaining shares of
such transfer. Within three months of the giving of notice, any such remaining
holder of shares may require the transferee company to acquire his shares, and
the transferee company shall be required to acquire such shares on the same
terms as provided for in the scheme or contract or upon such terms as may be
agreed or upon such terms as the Bermuda Supreme Court may determine upon
application of the transferee company or the shareholder.
Section 103 of the Companies Act. Pursuant to Section 103 of the Companies
Act, a holder or holders of not less than 95% of the shares of any class of
shares in a Bermuda company may give notice to the remaining shareholders or
class of shareholders of the intention to acquire their shares on the terms
set out in the notice. Section 103 provides that when such notice is given,
the acquiring holder or holders shall be entitled and bound to acquire the
shares of the remaining shareholders on the terms set out in the notice unless
a remaining shareholder applies to the Bermuda Supreme Court for an appraisal
under Section 103(2). A shareholder to whom a notice has been given pursuant
to Section 103 may within one month of receiving the notice apply to the
Bermuda Supreme Court to appraise the value of the shares to be purchased from
him, and the acquiring holder or holders is entitled to acquire the shares at
the price fixed by the Bermuda Supreme Court or cancel the notice given
pursuant to Section 103.
Merger of Parent Corporation and Subsidiary Corporation under Section 17-
6703 of the KGCC. Under Section 17-6703 of the KGCC, where 90% of the
outstanding shares of each class of stock of a corporation is owned by another
corporation, and one such corporation is a Kansas corporation and the other is
a Kansas corporation or a corporation of any other state or states or of the
District of Columbia, and the laws of such other state or states or the
District of Columbia permit a corporation of such jurisdiction to merge with a
corporation of another jurisdiction, the corporation that has such ownership
may merge such other corporation into itself, or may merge itself into such
other corporation by executing, acknowledging and filing a certificate of
ownership and merger. If the parent corporation is not the surviving
corporation, the certificate of ownership and merger must state the proposed
merger was adopted by a majority of the outstanding stock of the parent
corporation entitled to vote thereon. In the event that all of the stock of a
subsidiary Kansas corporation party to a merger under Section 17-6704 of the
KGCC is not owned by the parent corporation, the shareholders of such
subsidiary Kansas corporation have appraisal rights under Kansas law.
Directors' Standard of Care and Indemnification. Bye-Law 102 of the ADT Bye-
Laws provides that every director, secretary and other officer of ADT shall be
indemnified by ADT against all costs, losses and expenses which any such
officer may incur or become liable for by reason of any contract entered into,
or any act or thing done by such officer or in any way in the discharge of
such officer's duties, provided that the indemnity contained in the ADT Bye-
Laws shall not extend to any matter which would render it void under the
Companies Act.
Section 98 of the Companies Act permits a company to indemnify its officers
and employees in respect of any loss arising or liability attaching to such
persons by virtue of any rule of law in respect of any negligence, default,
breach of duty or breach of trust of which the officer or employee may be
guilty in relation to the company or any subsidiary thereof; provided,
however, that the company shall not indemnify an officer or employee against
any liability arising out of any fraud or dishonesty of which such person may
be guilty.
Bye-Law 103 of the ADT Bye-Laws further provides that no director, secretary
or other officer of ADT shall be liable for (i) the acts, receipts, neglects
or defaults of any other director or officer of ADT, (ii) joining in any
receipt or other act for conformity, (iii) any loss or expense happening to
ADT through the insufficiency or
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deficiency of title to any property acquired by order of the directors for or
on behalf of ADT, (iv) the insufficiency or deficiency of any security in or
upon which any of the monies of ADT shall be invested, (v) any loss or damage
arising from the bankruptcy, insolvency or tortious act of any person with
whom any monies, securities or effects shall be deposited, (vi) any loss
occasioned by any error of judgment, omission, default, or oversight on such
person's part, or (vii) any other loss, damage or misfortune that may happen
in relation to the execution of the duties of such person's office or in
relation thereto, unless the same happens through such person's own willful
negligence, willful default, fraud or dishonesty.
Under Section 97(1) of the Companies Act, every officer of a Bermuda company
in exercising his powers and discharging his duties is required to act
honestly and in good faith with a view to the best interests of the company,
and to exercise the care, diligence and skills that a reasonably prudent
person would exercise in comparable circumstances.
The Western Resources Articles provide that each person who was or is or is
threatened to be made a party to, or is involved in, any action, whether
civil, criminal, administrative or investigative, by reason of the fact that
he or she, or a person of whom he or she is the legal representative, is or
was a director or officer, of Western Resources or is or was serving at the
request of Western Resources as a director, officer, employee or agent of
another corporation or other enterprise including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by Western Resources to the fullest extent
authorized by the KGCC.
The KGCC does not provide for a standard of care or affix fiduciary duties
to corporate directors but does permit indemnification of directors. Pursuant
to Section 17-6305 of the KGCC, a corporation shall have power to indemnify
any person who was or is, or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A corporation may indemnify any such person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation (except in certain circumstances where such person has been
adjudged to be liable to the corporation). The indemnification described above
may cover expenses, judgments and amounts paid in settlement, and is not
exclusive of any other rights to which such person seeking indemnification may
be otherwise entitled.
Dividends; Declarations and Payments. Under Section 54 of the Companies Act,
a company shall not declare or pay a dividend, or make a distribution out of
contributed surplus, if there are reasonable grounds for believing that either
the company is, or would after the payment be, unable to pay its liabilities
as they became due, or that the realizable value of the company's assets would
thereby be less than the aggregate of its liabilities and its issued share
capital and share premium accounts.
Under Section 17-6420 of the KGCC, the directors of a corporation, subject
to any restrictions contained in its articles of incorporation, may declare
and pay dividends upon the shares of its capital stock either (1) out of its
surplus, as defined in and computed in accordance with Sections 17-6404 and
17-6604 of the KGCC, or (2) in case there shall be no such surplus, out of its
net profits for the fiscal year in which the dividend is declared or the
preceding fiscal year. If the capital of the corporation shall have been
diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, the directors of such corporation
shall not declare and pay out of such net profits any dividends until the
deficiency in the amount of capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets shall
have been repaired.
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MARKET PRICES AND DIVIDENDS
The Western Resources Common Stock is listed and principally traded on the
NYSE. The Shares are listed and traded principally on the NYSE, the LSE, the
FSE and the BSX. The following table sets forth the range of high and low
sales prices as reported on the NYSE Composite Tape, together with the per
share dividends paid by Western Resources during the periods indicated.
<TABLE>
<CAPTION>
WESTERN RESOURCES ADT
------------------------- ---------------
PRICE RANGE PRICE RANGE
--------------- ---------------
QUARTER HIGH LOW DIVIDENDS HIGH LOW
- ------- ------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
1994
First Quarter....................... $34.875 $28.250 $0.495 $11.000 $ 8.875
Second Quarter...................... 29.750 26.125 0.495 10.500 8.500
Third Quarter....................... 29.625 26.750 0.495 11.625 9.875
Fourth Quarter...................... 29.250 27.375 0.495 11.875 10.125
1995
First Quarter....................... $33.375 $28.625 $0.505 $12.250 $ 9.625
Second Quarter...................... 32.500 30.250 0.505 12.250 10.125
Third Quarter....................... 32.875 29.750 0.505 14.125 11.625
Fourth Quarter...................... 34.000 31.000 0.505 15.250 13.000
1996
First Quarter....................... $34.875 $29.250 $0.515 $18.000 $14.000
Second Quarter...................... 30.750 28.000 0.515 19.500 16.250
Third Quarter....................... 30.750 28.250 0.515 24.750 15.875
Fourth Quarter...................... 31.875 28.625 0.515 23.438 18.375
</TABLE>
In January 1997, Western Resources increased its quarterly dividend to
$0.525 per share of Western Resources Common Stock for an indicated annual
dividend of $2.10 per share.
On December 17, 1996, the last trading day prior to the public announcement
of the Offer, the closing sales price per share of Western Resources Common
Stock was $31.25, and on March 13, 1997, the last trading day prior to the
date of the Prospectus, the closing price per share of Western Resources
Common Stock was $30.125. Past price performance is not necessarily indicative
of likely future price performance. Holders of Shares are urged to obtain
current market quotations for shares of Western Resources Common Stock.
On December 17, 1996, the last trading day prior to the public announcement
of the Offer, the closing sales price per Share was $20.125, and on March 13,
1997, the last trading day prior to the date of this Prospectus, the closing
sales price per Share was $21.75.
Holders of Western Resources Common Stock are entitled to receive dividends
from funds legally available therefor when, as and if declared by the Western
Resources Board. The Western Resources Board presently intends to continue the
policy of paying quarterly cash dividends. Future dividends of Western
Resources will depend upon the earnings of Western Resources and its
subsidiaries, their financial condition and other factors including applicable
government regulations and policies. See "Description of Western Resources
Capital Stock."
According to the ADT 1995 Form 10-K, there were, as of February 29, 1996,
15,519 holders of record of Shares. As of December 31, 1996, there were 63,470
holders of record of Shares of Western Resources Common Stock.
According to the ADT Form 8-A, the Rights are listed on the NYSE and the
LSE, but are currently attached to all outstanding Shares and may not be
traded separately. Upon the occurrence of the ADT Distribution Date, the
Rights are to trade separately from the Shares.
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VALIDITY OF WESTERN RESOURCES COMMON STOCK
The validity of the shares of Western Resources Common Stock offered hereby
will be passed upon for Western Resources by Sullivan & Cromwell, 125 Broad
Street, New York, New York 10004, in reliance on the opinion of John K.
Rosenberg, General Counsel to Western Resources, with respect to matters of
Kansas law. As of March 13, 1997, Mr. Rosenberg owned directly and/or
beneficially 3,259 shares of Western Resources Common Stock and 16,500 stock
options, and had been granted pursuant to and subject to the terms of Western
Resources' Long Term Incentive Program, 822 performance shares.
EXPERTS
The audited consolidated financial statements of Western Resources
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
95
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF WESTERN RESOURCES AND WESTAR CAPITAL
Directors and Executive Officers of Western Resources. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Western Resources
and Westar Capital are set forth below. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Western Resources. Each director and executive officer listed below is a
citizen of the United States.
<TABLE>
<CAPTION>
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
<C> <S>
Frank J. Becker............................ Director of Western Resources.
Becker Investments, Inc. President, Becker Investments,
4840 W. 15th, Suite 1011 Inc., an investment company,
Lawrence, KS 66049-3862 Lawrence, Kansas, since January
1993. Prior to such time Mr. Becker
handled personal investments;
Director, Bank IV Butler County,
N.A.; Director, Great-West Life &
Annuity Insurance Co.; Director,
Douglas County Bank; Trustee, The
Kansas University Endowment
Association.
Gene A. Budig.............................. Director of Western Resources.
American League of President, The American League of
Professional Baseball Clubs Professional Baseball Clubs, New
350 Park Avenue York, New York, since July 1994;
New York, NY 10022 and prior to that chancellor,
University of Kansas; Director,
Harry S.Truman Library Institute;
Director, Ewing Marion Kauffman
Foundation; Director, Major League
Baseball Hall of Fame.
C.Q. Chandler.............................. Director of Western Resources.
INTRUST Bank Chairman of the Board, INTRUST
105 N. Main Street Financial Corporation, Wichita,
Wichita, KS 67202 Kansas; Director, Fidelity State
Bank & Trust Co.; Director, First
Newton Bankshares; Director, Kansas
Crippled Children's Society;
Trustee, The Kansas State
University Foundation.
Thomas R. Clevenger........................ Director of Western Resources.
Western Resources, Inc. Investments, Wichita, Kansas;
818 S. Kansas Avenue Director, Security Benefit Life
Topeka, KS 66612 Insurance Company; Trustee and Vice
Chairman, The Menninger Foundation;
Trustee, Midwest Research
Institute.
John C. Dicus.............................. Director of Western Resources.
Capitol Federal Savings Chairman of the Board and
700 S. Kansas Avenue President, Capitol Federal Savings
Topeka, KS 66603 and Loan Association, Topeka,
Kansas; Director, Security Benefit
Life Insurance Company; Director,
Columbian National Title Company;
Trustee, The Menninger Foundation;
Trustee, Stormont-Vail Regional
Medical Center; Trustee, The Kansas
University Endowment Association.
John E. Hayes, Jr. ........................ Chairman of the Board and Chief
Western Resources, Inc. Executive Officer, and previously
818 S. Kansas Avenue President, of Western Resources;
Topeka, KS 66612 Director, Security Benefit Life
Insurance Company; Director,
CommNet Cellular Inc.; Director, T-
Netix, Inc.; Trustee, Rockhurst
College; Trustee, The Menninger
Foundation; Trustee, Midwest
Research Institute.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
<C> <S>
David H. Hughes............................ Director of Western Resources.
Western Resources, Inc. Retired Vice Chairman, Hallmark
818 S. Kansas Avenue Cards, Inc., Kansas City, Missouri;
Topeka, KS 66612 Director, Hall Family Foundations;
Director, Midwest Research
Institute; Director, Yellow
Corporation; Trustee, St. Luke's
Hospital Foundation; Trustee,
Children's Mercy Hospital; Trustee,
Princeton Theological Seminary;
Trustee, Linda Hall Library.
Russell W. Meyer, Jr. ..................... Director of Western Resources.
Cessna Aircraft Company Chairman and Chief Executive
One Cessna Blvd. Officer, Cessna Aircraft Company,
Wichita, KS 67215 Wichita, Kansas; Director,
Boatmen's Bancshares Inc.;
Director, Vanguard Airlines, Inc.;
Trustee, Wake Forest University.
John H. Robinson........................... Director of Western Resources.
Black & Veatch Chairman Emeritus, since December
8400 Ward Parkway 1992, and prior to that Chairman,
Kansas City, MO 64114 Black & Veatch, an architectural
engineering firm, Kansas City,
Missouri; Director, St. Luke's
Hospital; Director, Automobile Club
of Missouri; Director, CompuSpeak
Laboratories, Inc.; Director, The
Greater Kansas City Community
Foundation & Affiliated Trusts;
Trustee, Midwest Research
Institute; Trustee, University of
Missouri-Kansas City.
Louis W. Smith............................. Director of Western Resources.
Ewing Marion Kauffman Foundation President and Chief Operating
4900 Oak Street Officer, Ewing Marion Kauffman
Kansas City, MO 64112-2776 Foundation, a charitable
foundation, since July 1995; and
prior to that President, Allied
Signal Aerospace Company, Kansas
City Division, Kansas City,
Missouri; Director, Commerce Bank
of Kansas City; Director, Ewing
Marion Kauffman Foundation;
Director, Kansas City Royals
Baseball Club; Director, Payless
Cashways, Inc.; Trustee, University
of Missouri-Rolla; Trustee,
Rockhurst College.
Susan M. Stanton........................... Director of Western Resources.
Payless Cashways, Inc. President and Chief Operating
2300 Main Street Officer since November 1993; and
Kansas City, MO 64108 prior to that Senior Vice
President, Merchandising and
Marketing, Payless Cashways, Inc.,
a retail chain, Kansas City,
Missouri; Director, Commerce Bank
of Kansas City; Director, Greater
Kansas City Chamber of Commerce;
Trustee, Rockhurst College.
Kenneth J. Wagnon.......................... Director of Western Resources.
Capital Enterprises, Inc. President, Capital Enterprises,
300 N. Main, Suite 201 Inc., a franchise and investment
Wichita, KS 67202 company, Wichita, Kansas; Director,
Vanguard Airlines, Inc.; Director,
Cerebral Palsy Research Foundation;
Director, T-Netix, Inc.; Director,
University of Kansas School of
Business; Trustee, The Kansas
University Endowment Association.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
<C> <S>
David C. Wittig............................ Director of Western Resources.
Western Resources, Inc. President, since March 1996, and
818 S. Kansas Avenue previously, Executive Vice
Topeka, KS 66612 President, Corporate Development,
of Western Resources; and prior to
that, Managing Director and Co-Head
of Mergers and Acquisitions,
Salomon Brothers Inc.
Steven L. Kitchen.......................... Executive Vice President and Chief
Western Resources, Inc. Financial Officer of Western
818 S. Kansas Avenue Resources. Director of Westar
Topeka, KS 66612 Capital.
Carl M. Koupal, Jr. ....................... Executive Vice President and Chief
Western Resources, Inc. Administrative Officer of Western
818 S. Kansas Avenue Resources since July 1995 and
Topeka, KS 66612 Executive Vice President, Corporate
Communications, Marketing, and
Economic Development of Western
Resources since January 1994; Vice
President, Corporate Marketing, and
Economic Development of Western
Resources, 1992 to 1994; Director,
Economic Development, Jefferson
City, Missouri, from 1985 to 1992.
John K. Rosenberg.......................... Executive Vice President and
Western Resources, Inc. General Counsel of Western
818 S. Kansas Avenue Resources. Director and General
Topeka, KS 66612 Counsel of Westar Capital.
Jerry D. Courington........................ Controller of Western Resources.
Western Resources, Inc.
818 S. Kansas Avenue
Topeka, KS 66612
Norman E. Jackson.......................... Executive Vice President of Western
Western Resources, Inc. Resources.
818 S. Kansas Avenue
Topeka, KS 66612
Rita Sharpe................................ Director and President of Westar
Western Resources, Inc. Capital; Vice President, Westar
818 S. Kansas Avenue Energy, Inc., May 1995 to February
Topeka, KS 66612 1997; Manager, Interchange Sales
Systems Operations, Western
Resources, June 1992 to May 1995;
Senior Engineer, Supervising
Systems Operations, Western
Resources, March 1992 to June 1992.
Marilyn Dalton............................. Secretary and Treasurer of Westar
Western Resources, Inc. Capital and Coordinator of
818 S. Kansas Avenue Corporate Records for Western
Topeka, KS 66612 Resources; Office Administrator,
Law Division of Western Resources,
1992 to 1995.
</TABLE>
A-3
<PAGE>
SCHEDULE B
OWNERSHIP OF SHARES BY CERTAIN BENEFICIAL OWNERS AND ADT MANAGEMENT
Each Share is entitled to one vote upon each matter presented at the ADT
Special Meeting. The ADT Proxy Statement states that, as of February 28, 1997,
there were 141,688,697 Shares outstanding, including 3,182,787 which are owned
by a subsidiary of ADT.
The following table and notes thereto, which, other than information
regarding Westar Capital and with respect to the Republic Warrant, are
reproduced from the ADT Proxy Statement, set forth certain information with
respect to beneficial ownership of Shares (i) as of December 31, 1996 by FMR
Corp., and (ii) as of February 28, 1997 by (a) all directors of ADT, (b) the
named directors and officers of ADT, including three executive officers of
subsidiaries of ADT and (c) all directors and executive officers of ADT as a
group. The following table also sets forth certain information with respect to
beneficial ownership of Shares by Westar Capital as of the date of this
Prospectus. An asterisk indicates ownership of less than one percent of
outstanding Shares.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OF
OR IDENTITY OF GROUP OWNED (1)(2) CLASS (3)
------------------------ ------------------- ----------
<S> <C> <C>
Westar Capital, Inc. (4)....................... 38,287,111 27.0%
818 S. Kansas Avenue
Topeka, Kansas 66612
FMR Corp. (5).................................. 8,416,744 5.9%
82 Devonshire Street
Boston, Massachusetts 02109
M.A. Ashcroft (5).............................. 11,075,718 7.5%
J.E. Danneberg................................. 102 *
R.A. Gross..................................... 2,000 *
A.B. Henderson................................. 621 *
R.G. Lakey..................................... 0 *
J.S. Pasman, Jr................................ 2,000 *
M.J. Richardson................................ 282,837 *
S.J. Ruzika.................................... 1,157,405 *
W.P. Slusser................................... 2,800 *
W.W. Stinson................................... 3,010 *
R.S. Troubh.................................... 2,500 *
All directors and executive officers as a
group, 11 persons............................. 12,543,993 8.4%
</TABLE>
(1) Includes Shares which may be acquired upon exercise of the following
number of options to purchase Shares from ADT exercisable on or within 60
days of February 28, 1997, held by the following persons: M.A. Ashcroft,
9,700,000; R.A. Gross, nil; R.G. Lakey, nil; M.J. Richardson, 270,000 and
S.J. Ruzika, 1,141,663.
(2) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any Shares which such person has the right
to acquire on or within 60 days after February 28, 1997. For purposes of
computing the percentage of outstanding Shares held by each person or
group of persons named above, any security which such person or persons
has or have the right to acquire on or within 60 days after February 28,
1997 is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(3) Based upon Shares outstanding on February 28, 1997, but excluding
3,182,787 Shares owned by a subsidiary of ADT.
(4) Includes 500 LYONs, each of which is exchangeable for 28.23 Shares.
B-1
<PAGE>
(5) ADT has received an Amendment No. 4 to Schedule 13G, dated February 14,
1997, filed with the Commission in respect of ownership of 8,416,744 of
Shares at December 31, 1996 by accounts under the discretionary
investment management of its wholly owned subsidiaries, Fidelity
Management Research Company and Fidelity Management Trust Company. As of
December 31, 1996, FMR exercised sole voting power with respect to
112,714 Shares and sole dispositive power with respect to 8,416,744
Shares. ADT has not attempted to independently verify any of the
information contained in the Schedule 13G.
(6) The number of Shares beneficially owned by Mr. Ashcroft includes 718
Shares owned by Mr. Ashcroft's wife. If the Republic Warrant is not
declared invalid and the 15 million Shares are issued upon the exercise
of the Republic Warrant, Mr. Ashcroft may be deemed the beneficial owner
of the additional 15 million Shares as Mr. Ashcroft, as Chairman of the
ADT Board, would hold the proxy for such Shares for a period of two years
or until such time as the Shares were transferred by Republic to a third
party. In the event that Mr. Ashcroft is deemed to be the beneficial
owner of the additional 15 million Shares upon the exercise of the
Republic Warrant, the number of Shares beneficially owned by Mr. Ashcroft
would constitute approximately 16.7% of the outstanding Shares.
B-2
<PAGE>
SCHEDULE C
ADT BYE-LAWS
BYE-LAW 104. TAKE-OVER OFFERS FOR THE COMPANY
(1) (A) Where any person is or becomes interested, whether as a result of
transactions over a period of time or not, in shares in the capital
of the Company in circumstances in which he would be obliged to make
or extend an offer or offers to shareholders or holders of other
securities or rights referred to in paragraph (4) below of the
Company under the Rules for the time being of the City Code on Take-
overs and Mergers of the United Kingdom of Great Britain and
Northern Ireland (the "City Code", which expression shall include
any revision or modification thereof) issued by the Panel on Take-
overs and Mergers ("the Panel", which expression shall include any
body which succeeds to the functions of the said Panel) if the
Company was a company incorporated in the United Kingdom of Great
Britain and Northern Ireland to which the City Code applied, the
Directors may serve upon that person a notice requiring him to make
or extend an offer or offers in writing in accordance with the
requirements of the City Code in all respects as if the City Code
did apply to the Company but so that references in the City Code to
the Panel shall be construed, for the purposes of this Bye-Law, as
if they were references to the Board of Directors of the Company.
(B) Where any person has acquired, is in the process of acquiring, or
appears to the Directors likely to acquire an interest in shares in
the capital of the Company in circumstances in which he would be
subject to the Rules Governing Substantial Acquisitions of Shares
(the "SARs"), which expression shall include any revision or
modification thereof issued by the Panel, if the Company was a
company incorporated in the United Kingdom of Great Britain and
Northern Ireland to which the SARs applied, the Directors may serve
upon that person a notice requiring him to comply with the provisions
of the SARs in relation to any acquisition made (after the date of
adoption of this paragraph (1)(B)) or proposed to be made by him and
if that person has made (after the date of adoption of this paragraph
(1)(B)) or subsequently makes any acquisition in contravention of the
provisions of the SARs such a notice or a further notice issued by
the Directors may require that person to dispose or to procure the
disposal by any person with whom he has acted in concert of any
interest in shares so acquired within twenty-eight days of the date
of such notice.
(C) If a notice served under paragraph (1)(B) requiring a disposal of
shares is not complied with in accordance with its terms and has not
been withdrawn, the Directors may, so far as they are able, dispose
of the shares to which such notice relates at the best price
reasonably obtainable in all the circumstances in which case they
shall give written notice of such disposal to the person or persons
on whom such notice was served. Except as hereinafter provided such a
disposal shall be completed as soon as reasonably practicable after
the giving of a notice under this paragraph (1)(C) as may in the
opinion of the Directors be consistent with obtaining the best price
reasonably obtainable and in any event within thirty days of expiry
of such notice provided that a disposal under this paragraph (1)(C)
shall be suspended during the period when dealings by the Directors
in the Company's shares are not permitted either by law or by the
regulations of any stock exchange upon which those shares of the
Company which are to be disposed of are listed, but any disposal
under this paragraph which is suspended as aforesaid shall be
completed within thirty days after expiry of the period of such
suspension and provided further that neither the Company nor the
Directors shall be liable to any holder or any person having an
interest in any share or other person for failing to obtain the best
price so long as the Directors act in good faith within the period
specified above.
(D) For the purpose of effecting any disposal under paragraph (1)(C)
above, the Directors may authorise in writing any officer or employee
of the Company to execute any necessary transfer on behalf of any
holder and may issue a new certificate to the purchaser. The net
proceeds of such disposal shall be received by the Company, whose
receipt shall be a good discharge for the purchase money, and shall
be paid (without any interest being payable thereon) to the former
holder upon surrender by him of the certificate in respect of the
shares sold and formerly held by him.
C-1
<PAGE>
(E) The provisions of these Bye-Laws relating to the protection of
purchasers of shares sold under a lien or upon forfeiture shall apply
mutatis mutandis to disposals under this Bye-Law.
(2) Any notice served under paragraph (1) above may also require the person
on whom it is served to execute an undertaking under seal in favour of
the Directors (as trustees for all the holders of shares in the capital
of the Company) and in a form satisfactory to the Directors to observe
and perform the rules and requirements of the City Code or the SARs as
the case may be as if the same were applicable to the Company and in the
manner prescribed in paragraph (1) above.
(3) Where any person is interested, whether as a result of a series of
transactions over a period of time or not, in Common Shares which (taken
together with shares held or acquired by persons acting in concert with
him) represent 30 per cent. or more of all the Common Shares for the
time being in issue and the Directors determine that it is not expedient
to serve a notice under paragraph (1)(A) above or if any person upon
whom such a notice is served fails within thirty days to comply with the
same, the Directors may serve upon that person a notice requiring him to
make an offer in writing (the "Offer"), within 30 days of the date of
such notice on the basis set out in the following paragraphs, to the
holders of every class of share capital of the Company (whether voting
or non-voting) to purchase all such shares for cash on terms that
payment in full therefor will be made within 21 days of the Offer
becoming or being declared unconditional in all respects.
(4) Where the Directors serve a notice upon any person in accordance with
paragraph (3) above, they may also include in that notice a requirement
that such person shall make an appropriate offer or proposal in writing
to the holders of every class of securities convertible into, or of
rights to subscribe for, share capital of the Company (whether such share
capital is voting or non-voting). Such appropriate offer or proposal is
referred to in this Bye-Law as a "Convertible Offer". The Convertible
Offer shall be made at the same time as the Offer. The terms of the
Convertible Offer shall be such terms as the Directors, in their absolute
discretion, consider to be fair and reasonable having regard to the terms
of the Offer and the Directors shall notify such terms to the person
specified in paragraph (3) above (the "Offeror"). The Convertible Offer
shall be conditional only upon the Offer becoming or being declared
unconditional in all respects.
(5) In addition to the Offeror, the Directors may require, in their
absolute discretion, each of the principal members of a group of persons
acting in concert with him and who appear to be interested in any shares
in, or convertible securities of, the Company to make the Offer and/or
the Convertible Offer. For the purposes of this Bye-Law, persons shall be
deemed to be acting in concert if, pursuant to an agreement or
understanding (whether formal or informal) they actively co-operate in
acquiring or seeking to acquire shares in, or convertible securities of,
the Company.
(6) Unless the Directors otherwise agree, an offer made under paragraphs
(3), (4) or (5) of this Bye-Law must, in respect of each class of share
capital or convertible securities involved, be in cash or be accompanied
by a cash alternative offer at not less than the highest price paid by
the Offeror or any person acting in concert with it for shares or
convertible securities of that class within the preceding 12 months. If
such price cannot be ascertained by the Directors or if such shares or
convertible securities have been acquired other than for cash pursuant to
a bargain made on any recognised stock exchange or if the Directors
consider that such highest price is, for any reason, inappropriate,
unfair or unreasonable having regard to the size and timing of the
relevant purchases, the relationship (if any) between the seller and
purchaser of such shares or convertible securities or the number of
shares or convertible securities purchased in the preceding 12 months,
the Directors may, in any such case, fix the price at which the Offer,
the Convertible Offer or the cash alternative offer is to be made. The
cash Offer, the cash Convertible Offer or the cash alternative offer
must, in each case, remain open for not less than 14 days after the date
on which the Offer or the Convertible Offer, as the case may be, has
become or is declared to be unconditional as to acceptances.
C-2
<PAGE>
(7) Any person who makes or is about to make or who is or can be required
to make an offer under this Bye-Law or who has made such an offer which
has lapsed, shall observe and shall procure that any persons acting in
concert with him shall observe the rules and requirements of the City
Code both in letter and in spirit prior to, during the pursuit of and, if
applicable, after the failure of such an offer.
(8) For the purposes of this Bye-Law, any questions or disputes arising out
of the grant of consent by the Directors, the comparability of offers,
the terms of offers, any question as to whether any person shall be
regarded as acting in concert with another, any question regarding the
interpretation or application of the City Code and the meaning of any
terms or phrases used in this Bye-Law or the City Code shall be
determined by the Directors in their absolute discretion.
C-3
<PAGE>
SCHEDULE D
ADT BYE-LAWS
BYE-LAW 46. VOTING RIGHTS
(1) Subject to any rights or restrictions attached to any class of shares,
at any meeting of the Company, each Member present in person shall be
entitled to one vote on any question to be decided on a show of hands
and each Member present in person or by proxy shall be entitled on a
poll to one vote for each share held by him.
PROVIDED THAT no Member shall be entitled (save as proxy for another
Member) to be present or vote at any meeting, either personally or by
proxy, or to exercise any privilege in relation to meetings of the
Company conferred by membership, or be reckoned in a quorum:--
(A) in respect of any share held by him (whether alone or jointly with
any other person) on which there shall not have been paid all calls
for the time being due and payable, together with interest and
expenses (if any); or
(B) in respect of any shares held by him in relation to which he or any
person appearing to be interested in such shares has been duly served
with a notice under paragraph (2) of this Bye-Law which:--
(i) requires his or such other person to give information to the
Company in accordance with such paragraph; and
(ii) contains a statement to the effect that upon failure to supply
such information before the expiry of a period specified in
such notice (being such reasonable period as the Directors
shall determine from the date of service of such notice) the
registered holder of such shares shall not be entitled to vote
or otherwise exercise the rights referred to in this Bye-Law
and the person on whom such notice was served fails to supply
such information within the period so specified.
Provided that:--
(a) the Company shall be entitled to serve a notice under paragraph
(2) of this Bye-Law which fulfills sub-sub-paragraphs (i) and
(ii) above on a person who is not the registered holder of
shares in the Company only if the registered holder of the
shares in question has previously been, or is simultaneously
with the service of such a notice, served by the Company with a
notice under paragraph (2) of this Bye-Law; and
(b) the disqualification provisions of this sub-paragraph (B) shall
take effect only upon the service on the registered holder of
the shares in question of a notice to the effect that he has
thereby become subject to the said disqualification for so long
as the information requested pursuant to this sub-paragraph (B)
has not been supplied to the Company and for a period of ninety
days thereafter; and
(c) for the purpose of this sub-paragraph (B) a person shall be
treated as appearing to be interested in any shares if (after
taking into account any information supplied in response to any
notice under paragraph (2) of this Bye-Law and any other
information) the Company knows or has reasonable cause to
believe that the person in question is or may be interested in
the shares.
(C) in respect of any shares held by him in relation to which he or any
person appearing to be interested in such shares has been duly served
with a notice under Bye-Law 104 which:--
(i) requires him or such other person to make an offer in
accordance with, or otherwise comply with the terms of, such
Bye-Law; and
D-1
<PAGE>
(ii) contains a statement to the effect that upon failure to make
such an offer before the expiry of a period specified in such
notice (being not less than twenty-eight days from the date of
service of such notice) or, having made such an offer or
acquired such shares in contravention of a notice served under
that Bye-Law, otherwise fails to comply with the provisions of
Bye-Law 104 the registered holder of such shares shall not be
entitled to vote or otherwise exercise the rights referred to
in this Bye-Law and the person on whom such notice was served
fails to make such an offer within the period so specified or
fails to remedy such non-compliance.
Provided that:-
(a) the Company shall be entitled to serve a notice under paragraph
(2) of this Bye-Law which fulfils sub-sub-paragraphs (i) and
(ii) above on a person who is not the registered holder of
shares in the Company only if the registered holder of the
shares in question has previously been, or is, simultaneously
with the service of such a notice, served by the Company with a
notice under Bye-Law 104; and
(b) the disqualification provisions of this sub-paragraph (C) shall
take effect only upon the service on the registered holder of
the shares in question of a notice to the effect that he has
thereby become subject to the said disqualification and shall
subsist until an offer is made in accordance with Bye-Law 104
and such offer becomes or is declared unconditional in all
respects in accordance with its terms.
(D) in respect of any shares in relation to which he and any person
specified in paragraph (3) of this Bye-Law has been duly served with
a notice under paragraph (3) which remains in effect.
(2) (A) The Company may by notice in writing require any person whom the
Company knows or has reasonable cause to believe to be interested in
shares in the Company to indicate whether or not it is the case and,
where that person holds any interest in any such shares, to give such
further information as may be required in accordance with sub-
paragraph (B) below.
(B) Any such notice may require the person to whom it is addressed to
give particulars of his own present interests in shares in the
Company.
(C) The particulars referred to above include particulars of the identity
of persons interested in the shares in question and of whether
persons interested in the same shares are parties to any agreement or
arrangement relating to the exercise of any of the rights conferred
by the holding of the shares.
(D) A notice under this Bye-Law shall require any information given in
response to the notice to be given in writing within such reasonable
time as the Directors may determine and is specified in the notice.
(E) For the purposes of this Bye-Law, a person who is interested in a
right to subscribe for or convert into shares in the Company shall be
deemed to be interested in shares in the Company and references to
interests in shares shall include any interest whatsoever in such
shares including, without limitation, a right to control directly or
indirectly the exercise of any right conferred by the holding of
shares alone or in conjunction with a person deemed to be acting in
concert for the purposes of Bye-Law 104 and the interest of any
person shall be deemed to include the interest of any other person
deemed to be acting in concert as aforesaid.
(F) A notice which has taken effect under this Bye-Law shall remain in
effect in accordance with its terms following a transfer of the
shares to which it relates unless and until the Directors determine
otherwise and notify the registered holder accordingly.
(G) The right to receive payments of income or capital which become due
or payable in respect of any share during a period of
disqualification applicable to such share under this Bye-Law shall be
suspended during such period of disqualification without any
liability of the Company to the
D-2
<PAGE>
Member for late payment or non-payment and the Company may retain
such sums for its own use and benefit during such period of
suspension and the holders of such shares may, in the discretion of
the Directors, be excluded from participation in any further issue of
shares by reference to an existing holding of shares at a point in
time during such period of suspension. No trust shall be created in
respect of any such debt, no interest shall be payable in respect of
the same and the Company shall not be required to account for any
money earned on such amount, which may be employed in the business of
the Company or invested in such investments as the Directors may from
time to time think fit.
(3) (A) Where any person whether alone or in circumstances where for the
purposes of Bye-Law 104 he is acting in concert with other persons
acquires or has acquired interests in shares which (including the
interests of persons with whom he is acting in concert as aforesaid)
amount to three per cent. or more of the issued share capital of any
class of the Company he shall within two days following the date on
which he became aware (or ought reasonably to have become aware) of
the acquisition of such an interest notify the Company of the
existence of such interest and shall in making such notification to
the Company also supply the particulars referred to in sub-paragraphs
(2)(B) and (2)(C) above and so long as his interest as aforesaid
amounts to three per cent. or more of the issued share capital of any
class of the Company he shall notify the Company of any change in his
interests (including the interests of persons with whom he is acting
in concert as aforesaid) amounting to one per cent. or more of the
issued share capital of any class of the Company within two days
following the date on which he became aware (or ought reasonably to
have become aware) of such change.
(B) If any person has failed to make a notification in accordance with
sub-paragraph (3)(A) above (notwithstanding that such notification
has been made after the said period of two days) the Directors may
serve a notice on such person stating that the registered holder of
the shares in which that person is interested shall not be entitled
to vote or otherwise exercise the rights referred to in this Bye-Law
in respect of any shares or a number of shares specified in the
notice held by that registered holder during the one hundred and
eighty days following the service of such notice provided that the
registered holder of such shares has previously been, or is
simultaneously with the service of such a notice, served with a
notice under this sub-paragraph.
(C) If the Directors resolve that they have reasonable cause to believe
that a person is or may be interested in shares of the Company or
that any such shares are or may be shares in which any person is
interested and that they have made reasonable enquiries to establish
whether a person is so interested, or whether they are such shares,
as the case may be, such person shall for the purposes of this Bye-
Law be deemed to be interested in shares or, as the case may be, such
shares shall be deemed to be shares in which such person is
interested, from the date of such resolution until any such time as
the Directors resolve otherwise.
(D) Any belief, resolution or decision of the Directors which is held or
made in pursuance or purported pursuance of any of the provisions of
this Bye-Law shall be conclusive, final and binding on all persons
concerned, and the validity of any act or thing which is done or
caused to be done by the Directors in pursuance or purported
pursuance of any of such provisions shall not be capable of being
impeached by anyone on the ground that there was not any basis or
reasonable basis on which the Directors could have arrived at any
such belief or made any such resolution or decision, or on the ground
that any conclusion of fact on which the Directors relied or might
have relied for the purposes of arriving at any such belief or making
any such resolution or decision was incorrect, or on any other ground
whatsoever.
(E) In calculating the number of days allowed for any notification to be
made under this Bye-Law 46(3), any day which is a Saturday or Sunday
shall be disregarded.
D-3
<PAGE>
SCHEDULE E
THE COMPANIES ACT
SECTION 106. SHAREHOLDER APPROVAL
SHAREHOLDER APPROVAL
(1) The directors of each amalgamating company shall submit the amalgamation
for approval to a meeting of the holders of shares of the amalgamating company
of which they are directors and, subject to subsection (4), to the holders of
each class of such shares.
(2) A notice of a meeting of shareholders complying with section 75 shall be
sent in accordance with that section to each shareholder of each amalgamating
company, and shall--
(a) include or be accompanied by a copy or summary of the amalgamation
agreement; and
(b) subject to subsection 2A, state--
(i) the fair value of the shares as determined by each amalgamating
company; and
(ii) that a dissenting shareholder is entitled to be paid the fair
value of his shares.
(2A) Notwithstanding subsection 2(b)(ii), failure to state the matter
referred to in that subsection does not invalidate an amalgamation.
(3) Each share of an amalgamating company carries the right to vote in
respect of an amalgamation whether or not it otherwise carries the right to
vote.
(4) The holders of shares of a class of shares of an amalgamating company
are entitled to vote separately as a class in respect of an amalgamation if
the amalgamation agreement contains a provision which would constitute a
variation of the rights attaching to any such class of shares for the purposes
of section 47.
(4A) The provisions of the bye-laws of the company relating to the holding
of general meetings shall apply to general meetings and class meetings
required by this section provided that, unless the bye-laws otherwise provide,
the resolution of the shareholders or class must be approved by a majority
vote of three-fourths of those voting at such meeting and the quorum necessary
for such meeting shall be two persons at least holding or representing by
proxy more than one-third of the issued shares of the company or the class, as
the case may be, and that any holder of shares present in person or by proxy
may demand a poll.
(5) An amalgamation agreement shall be deemed to have been adopted when it
has been approved by the shareholders as provided in this section.
(6) Any shareholder who did not vote in favour of the amalgamation and who
is not satisfied that he has been offered fair value for his shares may within
one month of the giving of the notice referred to in subsection (2) apply to
the Court to appraise the fair value of his shares.
(6A) Subject to subsection (6B), within one month of the Court appraising
the fair value of any shares under subsection (6) the company shall be
entitled either--
(a) to pay to the dissenting shareholder an amount equal to the value of
his shares as appraised by the Court; or
(b) to terminate the amalgamation in accordance with subsection (7).
(6B) Where the Court has appraised any shares under subsection (6) and the
amalgamation has proceeded prior to the appraisal then, within one month of
the Court appraising the value of the shares, if the amount paid to the
dissenting shareholder for his shares is less than that appraised by the Court
the amalgamated company shall pay to such shareholder the difference between
the amount paid to him and the value appraised by the Court.
(6C) No appeal shall lie from an appraisal by the Court under this section.
(6D) The costs of any application to the Court under this section shall be
in the discretion of the Court.
(7) An amalgamation agreement may provide that at any time before the issue
of a certificate of amalgamation the agreement may be terminated by the
directors of an amalgamating company, notwithstanding approval of the
agreement by the shareholders of all or any of the amalgamating companies.
E-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each ADT Shareholder or his
or her broker, dealer, commercial bank, trust company or other nominee to the
Exchange Agent at one of its addresses set forth below.
THE EXCHANGE AGENT:
HARRIS TRUST COMPANY OF NEW YORK
By Hand By Overnight Courier By Mail
Receive Window 77 Water Street, 4th Floor Wall Street Station
77 Water Street, 5th New York, NY 10005 P.O. Box 1023
Floor New York, NY 10268-1023
New York, NY 10005
By Facsimile Transmission Telephone Number
(for Eligible Institutions only)
For information call collect:
(212) 701-7636 (212) 701-7618
(212) 701-7640
Confirm by telephone
(212) 701-7618
Any questions or requests for assistance or additional copies of the
Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Managers at their
respective telephone numbers and locations listed below. You may also contact
your local broker, commercial bank, trust company or nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO] MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
(800) 322-2885 (toll-free)
The Dealer Managers for the Offer are:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 499-8372 (call collect)
or
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XVIII of the Western Resources Articles (Exhibit 3.1 hereto)
provides that a director of Western Resources shall not be personally liable
to Western Resources or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) for paying a dividend or approving a stock
repurchase in violation of the KGCC, or (iv) for any transaction from which
the director derived an improper personal benefit. This provision is
specifically authorized by Section 17-6002(b)(8) of the KGCC.
Section 17-6305 of the KGCC (the "Indemnification Statute") provides for
indemnification by a corporation of its corporate officers, directors,
employees and agents. The Indemnification Statute provides that a corporation
may indemnify such persons who have been, are, or may become parties to an
action, suit or proceeding due to their status as directors, officers,
employees or agents of the corporation. Further, the Indemnification Statute
grants authority to a corporation to implement its own broader indemnification
policy. Article XVIII of the Western Resources Articles (Exhibit 3.1 hereto)
requires Western Resources to indemnify its directors and officers to the
fullest extent provided by Kansas law, as the same may be amended. Further, as
is provided for in Article XVIII, Western Resources has entered into
indemnification agreements with its directors, which provide indemnification
broader than that available under Article XVIII and the Indemnification
Statute.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3.1 Restated Articles of Incorporation of Western Resources, as
amended May 25, 1988 (filed as Exhibit 4 to Western Resources
Registration Statement No. 33-23022).*
3.2 Certificate of Correction to Restated Articles of Incorporation
(filed as Exhibit 3(b) to the December 1991 Form 10-K of Western
Resources).*
3.3 Amendment to Restated Articles of Incorporation, as amended May 8,
1992 (filed electronically with Western Resources Annual Report on
Form 10-K for the year ended December 31, 1995).*
3.4 Amendments to the Restated Articles of Incorporation of Western
Resources dated May 26, 1994 (filed as Exhibit 3 to Western
Resources Form 10-Q for the quarter ended June 30, 1994).*
3.5 Certificate of Designation of Preference Stock, 8.50% Series,
without par value, of Western Resources (filed as Exhibit 3(d) to
Western Resources Annual Report on Form 10-K for the year ended
December 31, 1993).*
3.6 Certificate of Designation of Preference Stock, 7.58% Series,
without par value, of Western Resources (filed as Exhibit 3(c) to
Western Resources Annual Report on Form 10-K for the year ended
December 31, 1993).*
3.7 Bylaws of Western Resources, as amended May 5, 1992 (filed
electronically with Western Resources Annual Report on Form 10-K
for the year ended December 31, 1995).*
5.1 Opinion of Sullivan & Cromwell.
8.1 Tax Opinion of Sullivan & Cromwell.
21.1 Subsidiaries of Western Resources (filed as Exhibit 21 to Western
Resources Annual Report on Form 10-K for the year ended December
31, 1995).*
23.1 Consent of Arthur Andersen LLP.
23.2 Consents of Sullivan & Cromwell (included in Exhibits 5.1 and
8.1).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
24.1 Powers of Attorney.**
99.1 Form of Letter of Transmittal and instructions thereto.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Western Resources Nominees.
99.4 Form of Letter to Clients for use by Broker, Dealers, Commercial Banks,
Trust Companies and Other Western Resources Nominees.
99.5 Form of Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.6 Form of Summary Advertisement.
</TABLE>
- --------
*Incorporated by reference.
**Previously filed.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that
II-2
<PAGE>
a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, WESTERN
RESOURCES, INC., THE REGISTRANT, HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNDER DULY AUTHORIZED, IN THE CITY OF TOPEKA, STATE OF KANSAS, ON THE 14TH
DAY OF MARCH, 1997.
Western Resources, Inc.
(Registrant)
/s/ John E. Hayes, Jr.
By:___________________________________
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
/s/ John E. Hayes, Jr. Chairman of the
- ------------------------------------ Board and Chief March 14, 1997
JOHN E. HAYES, JR. Executive Officer
(Principal
Executive Officer)
/s/ Steven L. Kitchen Executive Vice
- ------------------------------------ President and March 14, 1997
STEVEN L. KITCHEN Chief Financial
Officer (Principal
Financial and
Accounting
Officer)
* Director
- ------------------------------------
FRANK J. BECKER
* Director
- ------------------------------------
GENE A. BUDIG
* Director
- ------------------------------------
C.Q. CHANDLER
II-4
<PAGE>
SIGNATURE TITLE DATE
* Director
- ------------------------------------
THOMAS R. CLEVENGER
* Director
- ------------------------------------
JOHN C. DICUS
* Director
- ------------------------------------
DAVID H. HUGHES
* Director
- ------------------------------------
RUSSELL W. MEYER, JR.
* Director
- ------------------------------------
JOHN H. ROBINSON
* Director
- ------------------------------------
LOUIS W. SMITH
* Director
- ------------------------------------
SUSAN M. STANTON
* Director
- ------------------------------------
KENNETH J. WAGNON
* Director
- ------------------------------------
DAVID C. WITTIG
/s/ John E. Hayes, Jr.
*By: _______________________________ March 14, 1997
(JOHN E. HAYES, JR. AS ATTORNEY-
IN-FACT FOR EACH OF THE PERSONS
INDICATED)
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
3.1 Restated Articles of Incorporation of Western
Resources, as amended May 25, 1988 (filed as Exhibit 4
to Western Resources Registration Statement No. 33-
23022).*
3.2 Certificate of Correction to Restated Articles of
Incorporation (filed as Exhibit 3(b) to the December
1991 Form 10-K of Western Resources).*
3.3 Amendment to the Restated Articles of Incorporation, as
amended May 5, 1992 (filed electronically with Western
Resources Annual Report on Form 10-K for the year ended
December 31, 1995).*
3.4 Amendments to the Restated Articles of Incorporation of
Western Resources, dated May 26, 1994 (filed as Exhibit
3 to Western Resources Form 10-Q for the quarter ended
June 30, 1994).*
3.5 Certificate of Designation of Preference Stock, 8.50%
Series, without par value, of Western Resources (filed
as Exhibit 3(d) to Western Resources Annual Report on
Form 10-K for the year ended December 31, 1993).*
3.6 Certificate of Designation of Preference Stock, 7.58%
Series, without par value, of Western Resources (filed
as Exhibit 3(c) to Western Resources Annual Report on
Form 10-K for the year ended December 31, 1993).*
3.7 Bylaws of Western Resources, as amended May 5, 1992
(filed electronically with Western Resources Annual
Report on Form 10-K for the year ended December 31,
1995).*
5.1 Opinion of Sullivan & Cromwell.
8.1 Tax Opinion of Sullivan & Cromwell.
21.1 Subsidiaries of Western Resources (filed as Exhibit 21
to Western Resources Annual Report on Form 10-K for the
year ended December 31, 1995).*
23.1 Consent of Arthur Andersen LLP.
23.2 Consents of Sullivan & Cromwell (included in Exhibits
5.1 and 8.1).
24.1 Powers of Attorney.**
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Western Resources Nominees.
99.4 Form of Letter to Clients for use by Broker, Dealers,
Commercial Banks, Trust Companies and Other Western
Resources Nominees.
99.5 Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
99.6 Form of Summary Advertisement.
</TABLE>
- --------
*Incorporated by reference.
**Previously filed.
II-6
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF SULLIVAN & CROMWELL]
March 14, 1997
Western Resources, Inc.,
818 S. Kansas Avenue,
Topeka, Kansas 66612.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 72,260,989 shares of Common Stock, par value $5.00 per share (the
"Securities"), of Western Resources, Inc., a Kansas corporation ("Western
Resources"), we, as your special counsel, have examined such corporate
records, certificates and other documents, and such questions of law, as we
have considered necessary or appropriate for the purposes of this opinion. The
Securities are intended to be issued by Western Resources in connection with
Western Resources' offer to exchange the Securities for each outstanding
common share, par value $0.10 per share (each, a "Share" and, collectively,
the "Shares"), of ADT Limited, a company incorporated under the laws of
Bermuda ("ADT"), including the associated preference share purchase rights,
and the subsequent amalgamation of ADT with a wholly owned subsidiary of
Western Resources.
Upon the basis of the aforementioned examination, we advise you that, in our
opinion, when the Registration Statement on Form S-4 (Registration No. 333-
18097) of Western Resources relating to the Securities (the "Registration
Statement") has become effective under the Act, the issuance of the Securities
and the incurrence of indebtedness necessary to consummate the Offer (as
defined in the Prospectus, dated March 14, 1997 (the "Prospectus"), which is
included in the Registration Statement) have been authorized by the
appropriate regulatory authorities, the Offer has been consummated on the
terms and subject to the conditions of such Offer set forth in the Prospectus,
the certificates representing the Securities have been duly signed by Western
Resources and countersigned by the transfer agent and registrar of Western
Resources, and the Securities have been delivered as contemplated by the
Prospectus in exchange for Shares, the Securities will be validly issued,
fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of Kansas, and we are expressing no opinion as to
the effect of the laws of any other jurisdiction. With respect to all matters
of Kansas law, we have, with your approval, relied upon the opinion, dated the
date hereof, of John K. Rosenberg, General Counsel of Western Resources, and
our opinion is subject to the same assumptions, qualifications and limitations
with respect to such matters as are contained in such opinion of John K.
Rosenberg.
Also, with your approval, we have relied as to certain matters on
information obtained from public officials, officers of Western Resources and
other sources believed by us to be responsible, and we have assumed that the
signatures on all documents examined by us are genuine, which assumption we
have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity
of Western Resources Common Stock" in the Prospectus. In giving such consent,
we do not thereby admit that we are in the category of persons whose consent
is required under Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE>
[LETTERHEAD OF JOHN K. ROSENBERG]
March 14, 1997
Western Resources, Inc.,
818 S. Kansas Avenue,
Topeka, Kansas 66612.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 72,260,989 shares of Common Stock, par value $5.00 per share (the
"Securities"), of Western Resources, Inc., a Kansas corporation ("Western
Resources"), I, as General Counsel of Western Resources, have examined such
corporate records, certificates and other documents, and such questions of
law, as I have considered necessary or appropriate for the purposes of this
opinion. The Securities are intended to be issued by Western Resources in
connection with Western Resources' offer to exchange the Securities for each
outstanding common share, par value $0.10 per share (each, a "Share" and,
collectively, the "Shares"), of ADT Limited, a company incorporated under the
laws of Bermuda ("ADT"), including the associated preference share purchase
rights, and the subsequent amalgamation of ADT with a wholly owned subsidiary
of Western Resources.
Upon the basis of the aforementioned examination, I advise you that, in my
opinion, when the Registration Statement on Form S-4 (Registration No. 333-
18097) of Western Resources relating to the Securities (the "Registration
Statement") has become effective under the Act, the issuance of the Securities
and the incurrence of indebtedness necessary to consummate the Offer (as
defined in the Prospectus, dated March 14, 1997 (the "Prospectus"), which is
included in the Registration Statement) have been authorized by the
appropriate regulatory authorities, the Offer has been consummated on the
terms and subject to the conditions of such Offer set forth in the Prospectus,
the certificates representing the Securities have been duly signed by Western
Resources and countersigned by the transfer agent and registrar of Western
Resources, and the Securities have been delivered as contemplated by the
Prospectus in exchange for Shares, the Securities will be validly issued,
fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of Kansas, and I am expressing no opinion as to the
effect of the laws of any other jurisdiction.
Also, with your approval, I have relied as to certain matters on information
obtained from public officials, officers of Western Resources and other
sources believed by me to be responsible, and I have assumed that the
signatures on all documents examined by me are genuine, which assumption I
have not independently verified.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the heading "Validity
of Western Resources Common Stock" in the Prospectus. In giving such consent,
I do not thereby admit that I am in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
/s/ John K. Rosenberg
<PAGE>
EXHIBIT 8.1
March 14, 1997
Western Resources, Inc.,
818 S. Kansas Avenue,
Topeka, Kansas 66612.
Ladies and Gentlemen:
As counsel to Western Resources, Inc., a Kansas corporation, in connection
with its offer to exchange cash and shares of its common stock for common
shares of ADT Limited, a company incorporated under the laws of Bermuda (the
"Exchange Offer"), we hereby confirm to you our opinion as set forth under the
heading "Certain Federal Income Tax Consequences" in the Prospectus dated
March 14, 1997 for the Exchange Offer.
We hereby consent to the reference to us under the heading "Certain Federal
Income Tax Consequences" in the Prospectus and to the filing of this opinion
as an exhibit to the related Registration Statement on Form S-4 filed with the
Securities and Exchange Commission. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours.
/s/ Sullivan & Cromwell
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 Registration Statement of Western Resources, Inc.
regarding an offer to exchange each outstanding common share of ADT Limited,
of our reports dated January 26, 1996, incorporated by reference and included
in Western Resources, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995, and to all references to our Firm included in this
Registration Statement and related Prospectus.
/s/ ARTHUR ANDERSEN LLP
Kansas City, Missouri
March 14, 1997
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
[LOGO] WESTERN RESOURCES/(R)/
Dear ADT Limited Shareowner:
This Letter of Transmittal enables you to exchange
each of your Common Shares of ADT (and, if applicable,
associated preference share purchase rights*) for $10.00
net in cash and $12.50 of Common Stock of Western
Resources, Inc.** Please follow the instructions in this
letter in order to exchange your shares (and rights) and
receive the benefits of our Offer. Simply complete and
sign pages 2, 3 (if applicable) and 4 and return your
certificate(s) in the enclosed envelope.
Our Offer will expire at 5:00 p.m., Eastern Time, on
April 15, 1997 (the "Expiration Date") unless extended.
Shares (and rights) which are tendered may be withdrawn
at any time prior to the Expiration Date.
For further information or assistance regarding our
Offer please call our representatives listed on the
back.
Thank you for your time and support.
Sincerely,
/s/ John Hayes
John E. Hayes, Jr.
* A tender of Shares will be invalid unless accompanied by a tender of the
associated rights.
** Assumes that Western Resources' average share price is greater than $29.75
at the time of closing.
<PAGE>
IN ORDER TO TENDER YOUR SHARES, SIMPLY:
1. SIGN BY THE "X" IN THE BOX BELOW
2. COMPLETE THE SUBSTITUTE FORM W-9 ON PAGE 4.
**IMPORTANT** A TENDER OF SHARES WITHOUT A TENDER OF THE ASSOCIATED PREFERENCE
SHARE RIGHTS (THE "RIGHTS") IS INVALID. SEE PAGE 3 TO TENDER RIGHTS.
PLEASE SIGN HERE.
Signature(s) of Shareholder(s) X
----------------------------------------------------
----------------------------------------------------
Dated: , 1997
--------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
I CERTIFY THAT I HAVE READ THE INSTRUCTIONS ENCLOSED WITH AND CONSTITUTING A
PART OF THIS LETTER OF TRANSMITTAL AND THAT I COMPLY WITH THE SHAREHOLDER
REPRESENTATION INCLUDED WITH SUCH INSTRUCTIONS.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________________________________
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
____________________________________
(AREA CODE AND TELEPHONE NUMBER)
COMPLETE THE BOX BELOW ONLY IF YOU WISH TO TENDER LESS THAN ALL THE SHARES
EVIDENCED BY YOUR CERTIFICATE(S)
CERTIFICATES AND SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate Total Number of Shares Number of
Number(s)* Evidenced by Certificate(s)* Shares Tendered**
<S> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Total Shares
</TABLE>
- --------------------------------------------------------------------------------
* Do not complete if delivering Shares by book-entry transfer.
** You must indicate if you are tendering less than all Shares evidenced by
any certificate(s) delivered to the Exchange Agent. See Instruction 4.
2
<PAGE>
IN ORDER TO TENDER YOUR RIGHTS, SIMPLY:
1. SIGN BY THE "X" IN THE BOX BELOW
2. COMPLETE THE SUBSTITUTE FORM W-9 ON PAGE 4.
**IMPORTANT** A TENDER OF SHARES WITHOUT A TENDER OF THE ASSOCIATED RIGHTS IS
INVALID.
PLEASE SIGN HERE.
Signature(s) of Rights holder(s) X
------------------------------------------
------------------------------------------
Dated: , 1997
--------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
rights certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
I CERTIFY THAT I HAVE READ THE INSTRUCTIONS ENCLOSED WITH AND CONSTITUTING A
PART OF THIS LETTER OF TRANSMITTAL AND THAT I COMPLY WITH THE SHAREHOLDER
REPRESENTATION INCLUDED WITH SUCH INSTRUCTIONS.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________________________________
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
____________________________________
(AREA CODE AND TELEPHONE NUMBER)
COMPLETE THE BOX BELOW ONLY IF YOU WISH TO TENDER LESS THAN ALL THE RIGHTS
EVIDENCED BY YOUR CERTIFICATE(S)
CERTIFICATES AND RIGHTS TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate Total Number of Rights Number of
Number(s)* Evidenced by Certificate(s)* Rights Tendered**
<S> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Total Rights
</TABLE>
- --------------------------------------------------------------------------------
* Do not complete if delivering Rights by book-entry transfer.
** You must indicate if you are tendering less than all Rights evidenced by
any certificate(s) delivered to the Exchange Agent. See Instruction 4.
3
<PAGE>
THIS PAGE MUST BE COMPLETED BY ALL TENDERING SHAREHOLDERS.
PLEASE FILL IN YOUR SOCIAL SECURITY NUMBER AND SIGN BELOW.
Please see Instruction 9 for additional information.
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
PART 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW.
SUBSTITUTE
FORM W-9
X
DEPARTMENT OF ---------------------
THE TREASURY --------------------------------------------------------
INTERNAL PART 2--Certificates--Under penalties of perjury, I
REVENUE certify that:
SERVICE (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because
TAXPAYER IDENTIFICATION (i) I am exempt from backup withholding, (ii) I
NUMBER (TIN) have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
Certification Instructions--You must PART 3 --
cross out item (2) in Part 2 above if Awaiting
you have been notified by the IRS TIN [_]
that you are subject to backup with-
holding because of under-reporting
interest or dividends on your tax re-
turn. However, if after being noti-
fied by the IRS that you were subject
to backup withholding you received
another notification from the IRS
stating that you are no longer sub-
ject to backup withholding, do not
cross out item (2).
--------------------------------------------------------
SIGNATURE X ________________________ DATE __________
NAME (Please Print) _________________________________
NOTE: Failure to complete and return this form may result in backup
withholding of 31% of any cash payments made to you pursuant to the
Offer. Please review the enclosed guidelines for certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
details.
Complete the following certification ONLY if you checked the box in Part 3 of
Substitute Form W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (i) I have mailed or delivered
an application to receive a Taxpayer Identification Number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (ii) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a Taxpayer
Identification Number within 60 days, 31% of all reportable payments made
to me thereafter will be withheld until I provide a number.
------------------------------------ ------------------------------------
SIGNATURE DATE
------------------------------------
NAME (PLEASE PRINT)
IMPORTANT TAX INFORMATION
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding. In order for a
foreign individual to qualify as an exempt recipient, that shareholder must
submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
4
<PAGE>
OPTIONAL
If you would like shares of Western Resources Common Stock and the check to
be issued for cash in an amount of $10.00 net per Share (and Right, if
applicable) and for cash in lieu of fractional shares, if any, of Western
Resources Common Stock to be delivered to a different address, complete the
top box below.
If you would like shares of Western Resources Common Stock and the check to
be issued for cash in an amount of $10.00 net per Share (and Right, if
applicable) and for cash in lieu of fractional shares, if any, of Western
Resources Common Stock to be issued in a different name, complete the bottom
box below. You must include a signature guarantee if you complete the box at
the bottom of the page. The signature guarantee process is more fully
described in Instructions 1 and 5.
SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 6 and 7)
To be completed ONLY if certificate(s) for the Western Resources Common
Stock and the check to be issued for cash in an amount of $10.00 net per
Share (and Right, if applicable) and for cash in lieu of fractional shares,
if any, of Western Resources Common Stock are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that
shown on the address label.
Mail Western Resources Common Stock and the check to be issued for cash in
an amount of $10.00 net per Share (and Right, if applicable) and for cash
in lieu of fractional shares, if any, of Western Resources Common Stock to:
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificate(s) for the Western Resources Common
Stock and the check to be issued for cash in an amount of $10.00 net per
Share (and Right, if applicable) and for cash in lieu of fractional shares,
if any, of Western Resources Common Stock are to be issued in the name of
someone other than those shown on your certificate(s).
Issue Western Resources Common Stock and the check to be issued for cash in
an amount of $10.00 net per Share (and Right, if applicable) and for cash
in lieu of fractional shares, if any, of Western Resources Common Stock to:
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
____________________________________________________________________________
(SOCIAL SECURITY NUMBER OR TAX IDENTIFICATION NUMBER)
GUARANTEE OF SIGNATURE(S)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
Name of Firm ________________________________ Dated: ________, 1997
5
<PAGE>
The Information Agent for the Offer is:
[LOGO] MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (CALL COLLECT)
OR
(800) 322-2885 (TOLL-FREE)
The Exchange Agent for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Hand By Overnight Courier By Mail
Receive Window 77 Water Street, 4th Floor Wall Street Station
77 Water Street, 5th New York, NY 10005 P.O. Box 1023
Floor New York, NY 10268-1023
New York, NY 10005
By Facsimile Transmission Telephone Number
(for Eligible Institutions only) For information call collect
(212) 701-7618
(212) 701-7636
(212) 701-7640
Confirm by telephone
(212) 701-7618
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 499-8372 (call collect)
or
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
<PAGE>
[LOGO] WESTERN RESOURCES/(R)/
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on the Letter
of Transmittal in cases where:
(a) the Letter of Transmittal is signed by the registered holder(s) of the
Shares (and Rights, if applicable) (which term, for purposes of this
document, shall include any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner
of Shares (and Rights, if applicable)) tendered with the Letter of
Transmittal and such holder(s) have not completed the instruction
entitled "Special Issuance Instructions" on the Letter of Transmittal, or
(b) such Shares (and Rights, if applicable) are tendered for the account of
an Eligible Institution (as defined below).
Otherwise, all signatures on the Letter of Transmittal must be guaranteed by
a financial institution (including most banks, savings and loan associations,
brokerage houses and credit unions) which is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. The Letter of Transmittal is to be used either:
(a) if certificates are to be forwarded with the Letter of Transmittal, or
(b) if tenders are to be made pursuant to the procedures for tender by
book-entry transfer set forth in "The Offer--Procedure for Tendering" in
the Prospectus (as defined herein), unless an Agent's Message is
utilized.
Certificates for all physically tendered Shares ("Share Certificates") and
Rights ("Right Certificates"), or confirmation of any book-entry transfer into
the Exchange Agent's account at one of the Book-Entry Transfer Facilities of
Shares (and Rights, if applicable) tendered by book-entry transfer, as well as
the Letter of Transmittal or facsimile thereof, properly completed and duly
executed with any required signature guarantees, and any other documents
required by the Letter of Transmittal, must be received by the Exchange Agent
at one of its addresses set forth herein on or prior to the Expiration Date
(as defined in the Prospectus).
Shareholders whose certificates are not immediately available or who cannot
deliver their certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis may nevertheless tender their Shares
(and Rights, if applicable) by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
in "The Offer--Procedure for Tendering" in the Prospectus.
In order to utilize the guaranteed delivery procedure: (i) your tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form made
available by Western Resources must be received by the Exchange Agent on or
prior to the Expiration Date; and (iii) the Share Certificates for all
tendered Shares and Rights Certificates for all tendered Rights (or a
confirmation of a book-entry transfer of such securities into the Exchange
Agent's account at a Book-Entry Transfer Facility of Shares or Rights tendered
by book-entry transfer), in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry delivery,
an Agent's Message) and all other documents required by the Letter of
Transmittal, must be received by the Exchange Agent within three New York
Stock Exchange, Inc. trading days after the date of execution of such Notice
of Guaranteed Delivery.
IF SHARE CERTIFICATES AND RIGHT CERTIFICATES ARE FORWARDED SEPARATELY TO THE
EXCHANGE AGENT, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL
MUST ACCOMPANY EACH SUCH DELIVERY.
1
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND RIGHTS CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. THE REPLACEMENT COST OF CERTIFICATES FOR
SECURITIES IS GENERALLY 2% OF MARKET VALUE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares (and Rights, if applicable) will be accepted. All tendering
shareholders, by execution of the Letter of Transmittal (or facsimile
thereof), waive any right to receive any notice of the acceptance of their
Shares (and Rights, if applicable) for exchange.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares (and Rights, if applicable)
should be listed on a separate piece of paper and returned with the Letter of
Transmittal.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares (and Rights, if applicable) evidenced
by any certificate submitted are to be tendered, fill in the number of Shares
(and Rights, if applicable) which are to be tendered in the box on page 2 (and
page 3, if applicable) of the Letter of Transmittal. In such cases, new
certificate(s) for the remainder of the Shares (and Rights, if applicable)
that were evidenced by your old certificate(s) will be sent to you, unless
otherwise indicated in the box marked "Special Delivery Instructions" on page
5 of the Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares (and Rights, if applicable) represented by certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
the Letter of Transmittal is signed by the registered holder(s) of the Shares
(and Rights, if applicable) tendered, the signature must correspond with the
name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any of the Shares (and Rights, if applicable) tendered are owned of
record by two or more joint owners, all such owners must sign the Letter of
Transmittal.
If you wish to tender Shares (and Rights, if applicable) and have more than
one certificate and those certificates are registered in more than one name,
it will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates.
If the Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Western Resources of their authority so to act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares (and Rights, if applicable) transmitted with the Letter of Transmittal,
no endorsements of certificates or separate stock powers are required unless
Western Resources Common Stock or certificates for Shares (and Rights, if
applicable) not tendered or accepted are to be issued in the name of a person
other than the registered holder(s). Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of the certificate(s) listed, the certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder or holders appear on the
certificates(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Western Resources will pay or cause to be paid any
stock transfer taxes with respect to the transfer and sale of Shares (and
Rights, if applicable) to it or its order pursuant to the Offer. If, however,
delivery of the consideration in respect of the Offer is to be made to, or (in
the circumstances permitted hereby) if certificates for Shares not tendered or
accepted are to be registered in the name of any person other than the
registered holder, or if tendered certificates are registered in the name of
any person other than the person(s) signing the Letter of Transmittal, the
tendering holder must provide satisfactory evidence of the payment of any
applicable transfer taxes (whether imposed on the registered holder or such
person) payable on account of the transfer to such person prior to the
delivery of the consideration pursuant to the Offer.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THE LETTER OF
TRANSMITTAL.
2
<PAGE>
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If certificates for Western
Resources Common Stock and the check to be issued for cash in an amount of
$10.00 net per Share (and Right, if applicable) and for cash in lieu of
fractional shares, if any, of Western Resources Common Stock are to be issued
in the name of a person other than the signer of the Letter of Transmittal or
if certificates for Western Resources Common Stock and the check to be issued
for cash in an amount of $10.00 net per Share (and Right, if applicable) and
cash in lieu of fractional shares, if any, of Western Resources Common Stock
are to be mailed to someone other than the signer of the Letter of Transmittal
or to an address other than that shown on the address label, the boxes marked
"Special Issuance Instructions" or "Special Delivery Instructions" on page 5
of the Letter of Transmittal should be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to, or additional copies of the Prospectus, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent or the Dealer
Managers at their respective telephone numbers and/or addresses set forth on
the back of the Letter of Transmittal or from your broker, dealer, commercial
bank or trust company.
9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Exchange Agent with a correct Taxpayer Identification Number ("TIN"),
generally the shareholder's social security or federal employer identification
number, on Substitute Form W-9 on page 4 of the Letter of Transmittal. If a
shareholder fails to provide a TIN to the Exchange Agent, such shareholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments of cash in lieu of fractional shares of Western Resources
Common Stock that are made to such shareholder with respect to Shares (and
Rights, if applicable) accepted pursuant to the Offer may be subject to backup
withholding of 31%. The box in Part 3 of the Substitute Form W-9 may be
checked if the tendering shareholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future. If the box
in Part 3 is checked and the Exchange Agent is not provided with a TIN within
60 days, the Exchange Agent will withhold 31% of all payments of cash
thereafter until a TIN is provided to the Exchange Agent. The shareholder is
required to give the Exchange Agent the social security number or employer
identification number of the record owner of the Shares (and Rights, if
applicable) or of the last transferee appearing on the stock powers attached
to, or endorsed on, the Shares (and Rights, if applicable). If the Shares (and
Rights, if applicable) are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
IMPORTANT: THE LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
SHAREHOLDER REPRESENTATION
The shareholder executing the Letter of Transmittal, or on whose behalf the
Letter of Transmittal is executed (the "Tendering Shareholder"), delivers to
Western Resources, Inc., a Kansas corporation ("Western Resources"), the
above-described common shares, par value $0.10 per share (the "Shares"),
including (unless and until Western Resources and Westar Capital, Inc. declare
that the Rights Condition (as defined in the Prospectus (as defined below) is
satisfied) the associated Rights, of ADT Limited, a company incorporated under
the laws of Bermuda ("ADT"), pursuant to Western Resources' offer to exchange
$10.00 net in cash and a number of shares of common stock, par value $5.00 per
share, of Western Resources (the "Western Resources Common Stock") equal to
the Exchange Ratio (as such term is defined in the Prospectus for each
outstanding Share (and Right, if applicable), upon the terms and subject to
the conditions set forth in the Prospectus dated March 14, 1997 (the
"Prospectus"), receipt of which is acknowledged, and in the Letter of
Transmittal, including the Instructions and Shareholder Representation (which
together with the Prospectus and any amendments thereto, constitute the
"Offer"). Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless the Rights Plan
Condition has been satisfied or waived. Unless the ADT Distribution Date (as
defined in the Prospectus) occurs, a tender of Shares will constitute a tender
of the associated Rights.
Upon the terms and subject to the conditions of the Offer, subject to, and
effective upon, acceptance of the Shares (and Rights, if applicable) tendered
with the Letter of Transmittal in accordance with the terms of the Offer, the
Tendering Shareholder sells, assigns and transfers to, or upon the order of,
Western Resources, all right, title and interest in and to all of the Shares
(and Rights, if applicable) that are being tendered and any and all Shares
(and Rights, if applicable) and other
3
<PAGE>
securities issued or issuable in respect thereof on or after March 17, 1997
(collectively, "Distributions"), and irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the Tendering
Shareholder with respect to such Shares (and Rights, if applicable) (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full
extent of the Tendering Shareholder's rights with respect to such Shares (and
Rights, if applicable) (and any Distributions), to (a) deliver such Share and
Rights Certificates (each as defined herein) (and any Distributions) or
transfer ownership of such Shares (and Rights, if applicable) (and any
Distributions) on the account books maintained by a Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of Western Resources, (b)
present such Shares (and Rights, if applicable) (and any Distributions) for
transfer on the books of ADT and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and Rights, if
applicable) (and any Distributions), all in accordance with the terms and the
conditions of the Offer.
The Tendering Shareholder irrevocably appoints the designees of Western
Resources, and each of them, the attorneys-in-fact and proxies of the
Tendering Shareholder, each with full power of substitution, to vote in such
manner as each such attorney and proxy or any substitute thereof shall deem
proper in the sole discretion of such attorney-in-fact and proxy or such
substitute, and otherwise act (including pursuant to written consent) with
respect to all the Shares (and Rights, if applicable) tendered (and any
Distributions) which have been accepted by Western Resources prior to the time
of such vote or action, which the Tendering Shareholder is entitled to vote at
any meeting of shareholders (whether annual or special and whether or not an
adjourned meeting), of ADT or otherwise. This proxy and power of attorney is
coupled with an interest in the Shares (and Rights, if applicable) and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance of such Shares (and Rights, if applicable) (and any Distributions)
by Western Resources in accordance with the terms of the Offer. Such
acceptance for exchange shall revoke any other proxy granted by the Tendering
Shareholder at any time with respect to such Shares (and Rights, if
applicable) (and any Distributions) and no subsequent proxies will be given
(or, if given, will not be deemed effective) with respect thereto by the
Tendering Shareholder. The Tendering Shareholder understands that in order for
Shares (and Rights, if applicable) to be deemed validly tendered, immediately
upon Western Resources' acceptance of such Shares (and Rights, if applicable)
(and any Distributions) for exchange Western Resources or its designee must be
able to exercise full voting rights with respect to such Shares (and Rights,
if applicable) (and any Distributions).
The Tendering Shareholder represents and warrants that the Tendering
Shareholder has full power and authority to tender, sell, assign and transfer
the Shares (and Rights, if applicable) (and any Distributions) tendered and
that when the same are accepted for exchange by Western Resources, Western
Resources will acquire good, marketable and unencumbered title thereto, free
and clear of all liens, restrictions, claims, charges and encumbrances, and
the same will not be subject to any adverse claim. The Tendering Shareholder
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or Western Resources to be necessary or desirable to complete
the sale, assignment, and transfer of the Shares (and Rights, if applicable)
(and any Distributions) tendered.
All authority conferred or agreed to be conferred pursuant to the Letter of
Transmittal shall not be affected by and shall survive the death or incapacity
of the Tendering Shareholder and any obligation of the Tendering Shareholder
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the Tendering Shareholder. Subject to the withdrawal
rights set forth under "The Offer--Withdrawal Rights" in the Prospectus, the
tender of Shares (and Rights, if applicable) made is irrevocable.
The Tendering Shareholder understands that tenders of (and Rights, if
applicable) Shares pursuant to any one of the procedures described under "The
Offer--Procedure for Tendering" in the Prospectus and in the instructions to
the Letter of Transmittal and acceptance of such Shares (and Rights, if
applicable) will constitute a binding agreement between the Tendering
Shareholder and Western Resources upon the terms and subject to the conditions
set forth in the Offer.
Unless otherwise indicated on page 4 of the Letter of Transmittal under
"Special Issuance Instructions," please issue the shares of Western Resources
Common Stock and the check to be issued for cash in an amount of $10.00 net
per Share (and Right, if applicable) and for cash in lieu of fractional
shares, if any, of Western Resources Common Stock in the name(s) of the
registered holder(s). Similarly, unless otherwise indicated on page 5 of the
Letter of Transmittal under "Special Delivery Instructions," please mail the
Western Resources Common Stock and the check to be issued for cash in an
amount of $10.00 net per Share and for cash in lieu of fractional shares, if
any, of Western Resources Common Stock to the address of the registered
holder(s). The Tendering Shareholder recognizes that Western Resources has no
obligation, pursuant to the Special Issuance Instructions, to transfer any
Shares (and Rights, if applicable) from the name of the registered holder
thereof if Western Resources does not accept any of the Shares (and Rights, if
applicable) so tendered.
4
<PAGE>
The Information Agent for the Offer is:
[LOGO] MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (CALL COLLECT)
OR
(800) 322-2885 (TOLL-FREE)
The Exchange Agent for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Hand By Overnight Courier By Mail
Receive Window 77 Water Street, 4th Floor Wall Street Station
77 Water Street, 5th New York, NY 10005 P.O. Box 1023
Floor New York, NY 10268-1023
New York, NY 10005
By Facsimile Transmission Telephone Number
(for Eligible Institutions only)
For information call collect
(212) 701-7636 (212) 701-7618
(212) 701-7640
Confirm by telephone
(212)701-7618
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 499-8372 (call collect)
or
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE (INCLUDING THE ASSOCIATED
PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in "The Offer--Procedure for Tendering" in the Prospectus,
dated March 14, 1997 (the "Prospectus"), this form or one substantially
equivalent hereto must be used to accept the Offer (as defined below) if
certificates for common shares, par value $0.10 per share (the "Shares"), of
ADT Limited, a company incorporated under the laws of Bermuda ("ADT"),
including the associated preference share purchase rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of November 6, 1996, as
amended, between ADT and Citibank, N.A., New York branch, as Rights Agent, are
not immediately available, if the certificates and all other required
documents cannot be delivered to the Exchange Agent prior to the Expiration
Date (as defined in the Prospectus), or if the procedure for book-entry
transfer cannot be completed on a timely basis. Such form may be delivered by
hand or transmitted by telegram, facsimile transmission or mail to the
Exchange Agent, and must include a guarantee by an Eligible Institution (as
defined in the Prospectus). See "The Offer--Procedure for Tendering" in the
Prospectus.
The Exchange Agent for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Hand By Overnight Courier By Mail
Receive Window 77 Water Street, 4th Floor Wall Street Station
77 Water Street, 5th Floor New York NY 10005 P.O. Box 1023
New York, NY 10005 New York, NY 10268-1023
By Facsimile Transmission Telephone Number
(for Eligible Institutions only)
For information call collect
(212) 701-7636 (212) 701-7618
(212) 701-7640
Confirm by telephone
(212) 701-7618
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH GUARANTEE SIGNATURE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Western Resources, Inc., a Kansas
corporation, upon the terms and subject to the conditions set forth in the
Prospectus, dated March 14, 1997 and in the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares (and associated Rights, if applicable)
shown in the box below pursuant to the guaranteed delivery procedures set
forth under "The Offer--Procedure for Tendering" in the Prospectus.
___________ Shares
___________ Rights
CERTIFICATE NOS. FOR SHARES (IF NAME(S) OF RECORD HOLDER(S)
AVAILABLE) __________________________ ___________________________________
_____________________________________ ___________________________________
CERTIFICATE NOS. FOR RIGHTS (IF (PLEASE TYPE OR PRINT)
AVAILABLE) __________________________
ADDRESS(ES) _______________________
_____________________________________
___________________________________
(ZIP CODE)
CHECK ONE BOX IF SHARES AND RIGHTS
WILL BE TENDERED BY BOOK-ENTRY AREA CODE AND TEL. NO(S). _________
TRANSFER:
___________________________________
[_] THE DEPOSITORY TRUST COMPANY SIGNATURE(S) ______________________
[_] PHILADELPHIA DEPOSITORY TRUST ___________________________________
COMPANY
DATED ______________________ , 1997
ACCOUNT NUMBER ______________________
THE GUARANTEE BELOW MUST BE COMPLETED.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution which is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program,
guarantees (a) that the above named person(s) has (have) a "net long position"
in the Shares (and Rights, if applicable) tendered hereby within the meaning
of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and (b)
to deliver to the Exchange Agent, at one of its addresses set forth above,
certificates representing the Shares (and Rights, if applicable) tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares (and Rights, if applicable) into the Exchange Agent's accounts at
The Depository Trust Company or the Philadelphia Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or a facsimile copy thereof), or an Agent's Message (as defined
in the Prospectus) in the case of book-entry transfer, and any other documents
required by the Letter of Transmittal, within three (3) New York Stock
Exchange, Inc. trading days of the date hereof.
NAME OF FIRM ________________________ ___________________________________
(AUTHORIZED SIGNATURE)
ADDRESS _____________________________
TITLE _____________________________
_____________________________________
(ZIP CODE) NAME ______________________________
(PLEASE TYPE OR PRINT)
AREA CODE AND TEL. NO. ______________
DATED _________, 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES (AND RIGHTS, IF APPLICABLE) WITH
THIS NOTICE. SHARE CERTIFICATES (AND RIGHTS CERTIFICATES, IF
APPLICABLE) SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99.3
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10005
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC. CHASE SECURITIES INC.
245 Park Avenue 270 Park Avenue
New York, New York 10167 New York, New York 10017
(212) 499-8372 (call collect) or (212) 270-3582 (call collect)
(888) 221-3671 (toll-free)
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
APRIL 15, 1997, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
To Brokers, Dealers, Commercial Bank
Trust Companies and Other ADT Nominees:
We have been appointed by Western Resources, Inc., a Kansas corporation
("Western Resources"), to act as Dealer Managers in connection with Western
Resources' offer to exchange $10.00 net in cash and a number of shares of
common stock, par value $5.00 per share, of Western Resources (the "Western
Resources Common Stock") equal to the Exchange Ratio (as such term is defined
in the Prospectus (as defined below)) for each outstanding common share, par
value $0.10 per Share (each, a "Share" and collectively, the "Shares"), of ADT
Limited, a company incorporated under the laws of Bermuda ("ADT"), including
the associated preference share purchase rights (the "Rights") issued pursuant
to the Rights Agreement, dated as of November 6, 1996, as amended, between ADT
and Citibank, N.A., New York branch, as Rights Agent, upon the terms and
subject to the conditions set forth in the Prospectus, dated March 14, 1997
(the "Prospectus"), and in the related Letter of Transmittal (which together
constitute the "Offer"), enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE MINIMUM TENDER
CONDITION, THE WESTERN RESOURCES SHAREHOLDER APPROVAL CONDITION, THE ADT
SHAREHOLDER APPROVAL CONDITION, THE RIGHTS PLAN CONDITION, THE ADT BYE-LAW
CONDITION, THE REPUBLIC WARRANT CONDITION AND THE REGULATORY APPROVAL
CONDITION (IN EACH CASE AS DEFINED IN THE PROSPECTUS). SEE "THE OFFER--
CONDITIONS OF THE OFFER--MINIMUM TENDER CONDITION," "--WESTERN RESOURCES
SHAREHOLDER APPROVAL CONDITION," "--ADT SHAREHOLDER APPROVAL CONDITION," "--
RIGHTS PLAN CONDITION," "--ADT BYE-LAW CONDITION," "--REPUBLIC WARRANT
CONDITION," "--REGULATORY APPROVAL CONDITION," AND "--CERTAIN OTHER CONDITIONS
OF THE OFFER" IN THE PROSPECTUS.
<PAGE>
Shareholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan Condition has
been satisfied or waived. Unless the ADT Distribution Date (as defined in the
Prospectus) occurs, a tender of Shares will constitute a tender of the
associated Rights. See "The Offer--Procedure for Tendering" in the Prospectus.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominees, or who hold
Shares (and Rights, if applicable) registered in their own names, we are
enclosing the following documents:
1. Prospectus, dated March 14, 1997;
2. Letter of Transmittal (together with accompanying Substitute Form W-9)
to be used by holders of Shares (and Rights, if applicable) in accepting
the Offer and tendering Shares (and Rights, if applicable);
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares (and Rights, if applicable) are not immediately
available, if time will not permit all required documents to reach the
Exchange Agent prior to the Expiration Date (as defined in the Prospectus)
or if the procedure for book-entry transfer cannot be completed on a timely
basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares (and Rights, if applicable) registered in your name or in the name
of your nominees, with space provided for obtaining such clients'
instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Exchange Agent.
Western Resources will not pay any fees or commissions to any broker or
dealer or any other person (other than the fees of the Dealer Managers and the
Information Agent as described in the Prospectus) in connection with the
solicitation of tenders of Shares and Rights pursuant to the Offer. Western
Resources will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding the enclosed materials to your
clients. Western Resources will pay or cause to be paid any stock transfer
taxes with respect to the transfer and sale of Shares (and Rights, if
applicable) to it or its order pursuant to the Offer, subject to Instruction 6
of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., EASTERN TIME, ON APRIL 15, 1997, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, should be sent to the Exchange
Agent, and certificates evidencing the tendered Shares (and Rights, if
applicable) should be delivered or such Shares (and Rights, if applicable)
should be tendered by book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Shares (and Rights, if applicable) wish to tender Shares (and
Rights, if applicable), but it is impracticable for them to forward their
certificates or other required documents prior to the Expiration Date, a
tender may be effected by following the guaranteed delivery procedures
specified under "The Offer--Procedure for Tendering" in the Prospectus.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Managers or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Prospectus.
2
<PAGE>
Additional copies of the enclosed materials may be obtained from the
undersigned or by calling the Information Agent, MacKenzie Partners, Inc., at
(800) 322-2885 (toll free) or call collect at (212) 929-5500, or from brokers,
dealers, commercial banks or trust companies.
Very truly yours,
Salomon Brothers Inc
Bear, Stearns & Co. Inc.
Chase Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF WESTERN RESOURCES, THE DEALER MANAGERS,
THE EXCHANGE AGENT OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99.4
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
APRIL 15, 1997 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
To Our Clients:
Enclosed for your consideration are the Prospectus dated March 14, 1997 (the
"Prospectus") and the related Letter of Transmittal (which together constitute
the "Offer") in connection with the offer by Western Resources, Inc., a Kansas
corporation ("Western Resources"), to exchange $10.00 net in cash and a number
of shares of common stock, par value $5.00 per share, of Western Resources
(the "Western Resources Common Stock") equal to the Exchange Ratio (as defined
in the Prospectus) for each outstanding common share, par value $0.10 per
share (each, a "Share" and collectively, the "Shares"), of ADT Limited, a
company incorporated under the laws of Bermuda ("ADT"), including the
associated preference share purchase rights (each, a "Right" and collectively,
the "Rights") issued pursuant to the Rights Agreement, dated as of November 6,
1996, as amended, between ADT and Citibank, N.A., New York branch, as Rights
Agent, upon the terms and subject to the conditions set forth in the Offer.
Shareholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan Condition (as
defined in the Prospectus) has been satisfied or waived. Unless the ADT
Distribution Date (as defined in the Prospectus) occurs, a tender of Shares
will constitute a tender of the associated Rights.
Shareholders whose certificates evidencing Shares ("Share Certificates") and
Rights, if applicable ("Rights Certificates"), are not immediately available
or who cannot deliver their Share Certificates and, if applicable, Rights
Certificates, and all other documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date or who cannot complete the
procedure for delivery by book-entry transfer to the Exchange Agent's account
at a Book-Entry Transfer Facility (as defined in "The Offer--Exchange of
Shares; Delivery of Western Resources Common Stock and Cash Consideration" in
the Prospectus) on a timely basis and who wish to tender their Shares (and
Rights, if applicable) must do so pursuant to the guaranteed delivery
procedure described in "The Offer--Procedure for Tendering" in the Prospectus.
See Instruction 2 of the Letter of Transmittal. Delivery of documents to a
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Exchange Agent.
THIS MATERIAL IS BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF SHARES
(AND RIGHTS, IF APPLICABLE) HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN
YOUR NAME. WE ARE THE HOLDER OF RECORD OF SHARES (AND RIGHTS, IF APPLICABLE)
HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES (AND RIGHTS, IF
APPLICABLE) CAN
<PAGE>
BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES (AND RIGHTS, IF APPLICABLE) HELD BY US
FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares (and Rights, if applicable)
held by us for your account, upon the terms and subject to the conditions set
forth in the Offer.
Please note the following:
1. Western Resources is offering to acquire each outstanding Share (and
associated Right, if applicable) in exchange for a number of shares of
Western Resources Common Stock equal to the Exchange Ratio and the Cash
Consideration (each as defined in the Prospectus).
2. The Offer is being made for all of the outstanding Shares (and
associated Rights, if applicable).
3. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
time, on April 15, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, the Minimum Tender
Condition, the Western Resources Shareholder Approval Condition, the ADT
Shareholder Approval Condition, the Rights Plan Condition, the ADT Bye-Law
Condition, the Republic Warrant Condition and the Regulatory Approval
Condition (in each case as defined in the Prospectus). See "The Offer--
Conditions of the Offer--Minimum Tender Condition," "--Western Resources
Shareholder Approval Condition," "--ADT Shareholder Approval Condition,"
"--The Rights Plan Condition," "--The ADT Bye-Law Condition," "--The
Republic Warrant Condition," "--Regulatory Approval Condition" and "--
Certain Other Conditions of the Offer" in the Prospectus.
5. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the transfer of Shares pursuant to the Offer.
The Offer is made solely by the Prospectus, dated March 14, 1997, and the
related Letter of Transmittal and any amendments thereto and is being made to
all holders of Shares (and Rights, if applicable). The Offer is not being made
to, nor will tenders be accepted from or on behalf of, holders of Shares (and
Rights, if applicable) in any jurisdiction in which the making or acceptance
thereof would not be in compliance with the laws of such jurisdiction.
However, Western Resources may, in its sole discretion, take such action as it
may deem necessary to make the Offer in any such jurisdiction and extend the
Offer to holders of Shares (and Rights, if applicable) in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Western Resources by Salomon Brothers Inc, Bear, Stearns
& Co. Inc. and Chase Securities Inc., as Dealer Managers, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares (and Rights, if
applicable), please so instruct us by completing, executing, detaching and
returning to us the instruction form contained in this letter. An envelope in
which to return your instructions to us is enclosed. If you authorize the
tender of your Shares (and Rights, if applicable), all such Shares (and
Rights, if applicable) will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE
TO ALLOW US AMPLE TIME TO TENDER SHARES (AND RIGHTS, IF APPLICABLE) ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
<PAGE>
EXHIBIT 99.5
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner
individuals (joint of the account
account) or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor
(Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The owner (3)
that is not a legal or
valid trust under State
law
5. Sole proprietorship The owner
account
- --------------------------------------------
</TABLE>
- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C>
6. A valid trust, The legal entity
estate, or pension (Do not furnish
trust the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(4)
7. Corporate account The corporation
8. Partnership account The partnership
held in the name of
the business
9. Association, club, The organization
religious,
charitable, or
other tax-exempt
organization
10. A broker or The broker or
registered nominee nominee
11. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or
prison) that
receives an
agricultural
program payment
</TABLE>
- -----------------------------------
(1) List and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. The name of the business or the "doing business
as" name may also be entered. Either the social security number or the
employer identification number may be used.
(4) List and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL dividend and
interest payments and on broker transactions include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file the Substitute Form W-9 to avoid
possible erroneous backup withholding. Complete the Substitute Form W-9 as
follows:
ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE
FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N and the regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS.--If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.6
This announcement is neither an offer to exchange nor a solicitation of an
offer to exchange Shares. The Offer is made solely by the Prospectus, dated
March 14, 1997, and the related Letter of Transmittal, and is not being made
to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Western Resources, Inc. by Salomon Brothers Inc, Bear, Stearns & Co.
Inc. and Chase Securities Inc. or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO EXCHANGE
EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
Western Resources, Inc., a Kansas corporation ("Western Resources"), and
Westar Capital, Inc., a Kansas corporation and a wholly owned subsidiary of
Western Resources ("Westar Capital"), hereby offer, upon the terms and subject
to the conditions set forth in the Prospectus dated March 14, 1997 (the
"Prospectus"), and in the related Letter of Transmittal (collectively, the
"Offer"), to exchange $10.00 net in cash and $12.50 in shares of common stock,
par value $5.00 per share, of Western Resources ("Western Resources Common
Stock"), subject to adjustment as described below, for each outstanding common
share, par value $0.10 per share (each a "Share" and collectively, the
"Shares"), of ADT Limited, a company incorporated under the laws of Bermuda
("ADT"), including the associated preference share purchase rights (each, a
"Right" and collectively, the "Rights") issued pursuant to the Rights
Agreement, dated as of November 6, 1996, as amended, between ADT and Citibank,
N.A., New York branch, as Rights Agent (the "Rights Agreement"), validly
tendered on or prior to the Expiration Date and not properly withdrawn. Unless
the context otherwise requires and unless and until the Rights are redeemed,
all references to Shares shall include the associated Rights. All references
herein to Rights shall include all benefits that may inure to holders of the
Rights pursuant to the Rights Agreement. Each Share validly tendered on or
prior to the Expiration Date and not properly withdrawn will be entitled to
receive $10.00 net in cash (the "Cash Consideration") and that number of
shares of Western Resources Common Stock equal to the Exchange Ratio (as
defined below) (the "Stock Consideration" and, together with the Cash
Consideration, the "Offer Consideration").
The term "Expiration Date" means 5:00 p.m., Eastern time, on April 15, 1997,
unless and until Western Resources, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Western Resources, will expire.
The term "Exchange Ratio" means the quotient (rounded to the nearest
1/100,000) determined by dividing $12.50 by the average of the high and low
sales prices of Western Resources Common Stock (as reported on the New York
Stock Exchange, Inc. (the "NYSE") Composite Transactions reporting system as
published in The
<PAGE>
Wall Street Journal or, if not published therein, in another authoritative
source) (the "Western Resources Average Price") on each of the twenty
consecutive trading days ending with the third trading day immediately
preceding the Expiration Date; provided that the Exchange Ratio shall not be
greater than 0.42017. Pursuant to the Exchange Ratio, each Share will be
exchanged for $10.00 net in cash and $12.50 of Western Resources Common Stock
as long as the Western Resources Average Price is $29.75 or higher. If the
Western Resources Average Price is less than $29.75, each Share will be
exchanged for $10.00 net in cash and less than $12.50 of Western Resources
Common Stock. Western Resources Common Stock is listed for trading under the
symbol "WR" on the NYSE. On March 13, 1997, the closing price of the Western
Resources Common Stock on the NYSE was $30.125. Based on such closing price,
the Exchange Ratio would be .41494 and each Share would be converted into
$10.00 net in cash and $12.50 of Western Resources Common Stock. The Exchange
Ratio will change as the market price of the Western Resources Common Stock
changes. ADT Shareholders may call (800) 798-5675 any time on or after the
date hereof through the Expiration Date for the current Exchange Ratio
calculated based on the then-current Western Resources Average Price for the
twenty consecutive trading days ending with the third trading day immediately
preceding the date the call is placed. The actual Western Resources Average
Price and Exchange Ratio will be calculated as of the third trading day
immediately prior to the Expiration Date, as described above, and a press
release will be issued announcing the actual Exchange Ratio prior to the
opening of the second trading day prior to the Expiration Date (as it may be
extended from time to time).
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
APRIL 15, 1997 , UNLESS THE OFFER IS EXTENDED.
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect an amalgamation of a newly created
subsidiary of Western Resources incorporated under the laws of Bermuda with
and into ADT, with the amalgamated company operating under the name of ADT
(the "Amalgamation"). In the Amalgamation, each then outstanding Share (other
than Shares owned by Western Resources or any of its affiliates, Shares held
in the treasury of ADT (if ADT is so authorized) or by any subsidiary of ADT
and Shares owned by ADT Shareholders who perfect appraisal rights under
Bermuda law) would be cancelled in exchange for the right to receive the Offer
Consideration. ADT has not agreed to provide Western Resources with all
information that might be relevant to the structuring of the Amalgamation.
Western Resources therefore reserves the right to change the structure of the
Amalgamation upon receipt of such information.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is conditioned upon, among other things, the
satisfaction or, where applicable, waiver of the following conditions: (i)
there being validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which, together with Shares owned by Western Resources and
its affiliates, will constitute at least a majority of the total number of
outstanding Shares on a fully diluted basis (as though all options or other
securities convertible into or exercisable or exchangeable for Shares had been
so converted, exercised or exchanged) as of the date the Shares are accepted
for exchange by Western Resources pursuant to the Offer, (ii) approval of the
issuance of shares of Western Resources Common Stock in connection with the
Offer and the Amalgamation and approval of an amendment to the Amended and
Restated Articles of Incorporation of Western Resources to increase the number
of shares of Western Resources Common Stock authorized for issuance, by the
holders (voting as a single class) of a majority of the shares of Western
Resources Common Stock and Western Resources preferred stock outstanding on
the applicable record date, (iii) the approval by a majority of those Shares
voted at a special meeting of ADT Shareholders, which has been requisitioned
by Westar Capital pursuant to Section 74 of the Companies Act 1981 of Bermuda,
as amended and Bye-Law 42 of the Bye-Laws of ADT (the "ADT Bye-Laws"), of the
following actions: (A) the removal, pursuant to Section 93 of the Companies
Act and Bye-Law 71 of the ADT Bye-Laws, of all of the present members of the
Board of Directors of ADT (the "ADT Board") and any person or persons elected
or designated by any of such directors to fill any vacancy or newly created
directorship, (B) the reduction of the number of seats on the ADT Board to two
and (C) the election of Steven L. Kitchen and Steven A. Millstein (the
"Western Resources Nominees") as the directors of ADT (or, if either Western
Resources Nominee is unable to serve as a director of ADT due to death,
disability or otherwise, any other person designated as a Western Resources
Nominee by Western Resources), (iv) the ADT Board having
2
<PAGE>
redeemed the Rights or amended the Rights Agreement so that the Rights are
inapplicable to the acquisition of Shares pursuant to the Offer, or Western
Resources being otherwise satisfied in its reasonable discretion that the
Rights are invalid or are not applicable to the acquisition of Shares pursuant
to the Offer, (v) Western Resources and Westar Capital being satisfied, in
their reasonable discretion, that the provisions of Bye-Law 104 and Bye-Law 46
of the ADT Bye-Laws do not and will not apply to Western Resources, Westar
Capital or the acquisition of Shares pursuant to the Offer so as (A) to
require Western Resources or Westar Capital to comply with the provisions of
Bye-Law 104 of the ADT Bye-Laws or (B) to prevent Western Resources, Westar
Capital or any of their affiliates from voting Shares owned by any of them at
any time, (vi) the receipt by Westar Capital of a final judgment from a court
of competent jurisdiction declaring the Republic Warrant (as defined in the
Prospectus) invalid or the expiration of the Republic Warrant prior to the
Expiration Date without having been exercised, and (vii) all regulatory
approvals required to consummate the Offer having been obtained and remaining
in full force and effect, all statutory waiting periods in respect thereof
having expired and no such approval containing any conditions or restrictions
which the Western Resources Board of Directors determines will or could be
expected materially to impair the strategic and financial benefits expected to
result from the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Western Resources will accept for exchange, and will exchange,
Shares (and Rights, if applicable) validly tendered and not properly withdrawn
as promptly as practicable following the Expiration Date. In addition, subject
to applicable rules of the Securities and Exchange Commission (the
"Commission"), Western Resources expressly reserves the right to delay
acceptance of or the exchange of Shares (and Rights, if applicable) in order
to comply with any applicable law. In all cases, the exchange of Shares (and
Rights, if applicable) tendered and accepted for exchange pursuant to the
Offer will be made only after receipt by Harris Trust Company of New York (the
"Exchange Agent") of certificates for such Shares (and Rights, if applicable)
(or a confirmation of a book-entry transfer of such Shares (and Rights, if
applicable) into the Exchange Agent's account at The Depository Trust Company
or the Philadelphia Depository Trust Company (collectively, the "Book-Entry
Transfer Facilities")), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Offer, Western Resources will be deemed to have accepted
for exchange Shares (and Rights, if applicable) validly tendered and not
withdrawn as, if and when Western Resources gives oral or written notice to
the Exchange Agent of its acceptance of the tenders of such Shares (and
Rights, if applicable) pursuant to the Offer. Delivery of Western Resources
Common Stock and Cash Consideration in exchange for Shares (and Rights, if
applicable) pursuant to the Offer and cash in lieu of fractional shares of
Western Resources Common Stock will be made by the Exchange Agent as soon as
practicable after receipt of such notice. The Exchange Agent will act as agent
for tendering ADT Shareholders for the purpose of receiving Western Resources
Common Stock, the Cash Consideration and cash to be paid in lieu of fractional
shares of Western Resources Common Stock from Western Resources and
transmitting such Western Resources Common Stock and cash to tendering ADT
Shareholders. Under no circumstances will interest with respect to fractional
shares be paid by Western Resources by reason of any delay in making such
exchange.
Tenders of Shares (and Rights, if applicable) made pursuant to the Offer are
irrevocable, except that Shares (and Rights, if applicable) tendered pursuant
to the Offer may be withdrawn pursuant to the procedures set forth in the
Prospectus at any time prior to the Expiration Date and, unless theretofore
accepted for exchange and exchanged by Western Resources for the Offer
Consideration pursuant to the Offer, may also be withdrawn at any time after
May 16, 1997.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth on the back cover of the Prospectus,
and must specify the name of the person having tendered the Shares (and
Rights, if applicable) to be withdrawn, the number of Shares (and Rights, if
applicable) to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares (and Rights, if
applicable). The signature(s) on the notice of withdrawal must be guaranteed
by a financial institution (including most banks, savings and loan
associations and brokerage houses) which is a participant in the Securities
Transfer Agents Medallion
3
<PAGE>
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program (an "Eligible Institution") unless such Shares (and
Rights, if applicable) have been tendered for the account of any Eligible
Institution. If Shares (and Rights, if applicable) have been tendered pursuant
to the procedures for book-entry tender as set forth in the Prospectus, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares (and
Rights, if applicable) and must otherwise comply with such Book-Entry Transfer
Facility's procedures. If certificates have been delivered or otherwise
identified to the Exchange Agent, the name of the registered holder and the
serial numbers of the particular certificates evidencing the Shares (and
Rights, if applicable) withdrawn must also be furnished to the Exchange Agent
as aforesaid prior to the physical release of such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Western Resources, in its sole
discretion, which determination shall be final and binding. Neither Western
Resources, the Exchange Agent, MacKenzie Partners, Inc. ("the Information
Agent"), Salomon Brothers Inc, Bear, Stearns & Co. Inc. and Chase Securities
Inc. ("the Dealer Managers") nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification. Any
Shares (and Rights, if applicable) properly withdrawn will be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn
Shares (and Rights, if applicable) may be retendered by following one of the
procedures described under the caption "The Offer--Procedure for Tendering" in
the Prospectus at any time prior to the Expiration Date. A withdrawal of
Shares shall also constitute a withdrawal of the associated Rights. Rights may
not be withdrawn unless the associated Shares are also withdrawn.
Subject to the applicable rules and regulations of the Commission, Western
Resources expressly reserves the right, in its sole discretion, at any time or
from time to time, to delay acceptance for, or, regardless of whether such
Shares (and Rights, if applicable) were theretofore accepted for exchange,
exchange of, any Shares pursuant to the Offer, or to terminate the Offer and
not accept for exchange or exchange any Shares (and Rights, if applicable) not
theretofore accepted for exchange, or exchanged, upon the failure of any of
the conditions of the Offer to be satisfied and to waive any condition (other
than the Western Resources Shareholder Approval Condition, the Regulatory
Approval Condition (each as defined in the Prospectus) and the condition
relating to the effectiveness of the Registration Statement or otherwise amend
the Offer in any respect, by giving oral or written notice of such delay,
termination or amendment to the Exchange Agent and by making a public
announcement thereof.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is incorporated herein by reference.
Requests have been made to ADT pursuant to Rule 14d-5 under the Exchange Act
and Section 66 of the Companies Act 1981 of Bermuda, as amended, for the use
of ADT's shareholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Prospectus, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares, and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists, or if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, by Western Resources following
receipt of such lists or listings from ADT or by ADT, if ADT so elects.
The Prospectus and the Letter of Transmittal contain important information
that should be read before any decision is made with respect to the Offer.
4
<PAGE>
Questions and requests for assistance may be directed to or additional
copies of the Prospectus, the Letter of Transmittal, a Notice of Guaranteed
Delivery or other Offer documents may be obtained from the Information Agent
or the Dealer Managers at their respective telephone numbers and addresses set
forth below or from your broker, dealer, commercial bank or trust company.
Copies of the foregoing will be furnished at Western Resources' expense. No
fees or commissions will be payable to brokers, dealers or other persons other
than the Dealer Managers and the Information Agent for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
[LOGO] MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (CALL COLLECT)
OR
(800) 322-2885 (TOLL-FREE)
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 499-8372 (call collect)
or
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
5
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$10.00 NET PER SHARE IN CASH
AND
$12.50 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus, dated March 14, 1997 (the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Offer") relating to the Offer by
Western Resources, Inc., a Kansas corporation ("Western Resources"), to
exchange $10.00 net in cash and a number of shares of common stock, par value
$5.00 per share, of Western Resources equal to the Exchange Ratio (as defined
in the Prospectus) for each outstanding common share, par value $0.10 per
share (collectively, the "Shares"), of ADT Limited, a company incorporated
under the laws of Bermuda, including the associated preference share purchase
rights (each, a "Right" and collectively, the "Rights") issued pursuant to the
Rights Agreement, dated as of November 6, 1996, as amended, between ADT and
Citibank, N.A., New York branch, as Rights Agent.
You are instructed to tender to Western Resources the number of Shares, and
associated Rights, indicated below (or, if no number is indicated below, all
Shares, and associated Rights) that are held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares, and associated SIGN HERE
Rights, to be tendered*
_____________________________________
__________________ Shares
_____________________________________
__________________ Rights Signature(s)
_____________________________________
Account Number: _____________________
_____________________________________
Dated: _______________________ , 1997 Please Print Name(s) and Address(es)
Here
_____________________________________
_____________________________________
Area Code and Telephone Number(s)
_____________________________________
Tax Identification or Social
Security Number(s)
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares (and
associated Rights) held by us for your account are to be tendered.
6
