PROSPECTUS
Common Stock
MAGMA COPPER COMPANY
This Prospectus relates to the resale by the Selling Securityholders
of up to 1,000,000 shares of Common Stock they may acquire upon exercise of
Common Stock Purchase Warrants (the "Class B Warrants") and to the resale by
one of the Selling Securityholders of 2,320,600 additional shares of
Common Stock previously acquired by such Selling Securityholder.
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") (Symbol: "MCU"). On April 5, 1994, the closing price of the
Common Stock, as reported on the NYSE, was $14-7/8 per share. Any Common
Stock offered will be listed, subject to notice of issuance, on such
exchange.
The Selling Securityholders may sell the Common Stock from time to time
in underwritten public offerings, in transactions pursuant to Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), in privately
negotiated transactions, through the facilities of the NYSE, or otherwise,
at market prices prevailing at the time of sale, at prices relating to such
prevailing market prices, or at negotiated prices. The Company will not
receive any of the proceeds from the sale of Common Stock by the Selling
Securityholders. All expenses in connection with the registration of the
securities, other than any underwriting or brokerage discounts, commissions
and selling expenses with respect to Common Stock being sold by the Selling
Securityholders, will be borne by the Company. See "Plan of Distribution"
and "Selling Securityholders."
For a discussion of certain factors that should be
considered by prospective investors, see "Investment
Considerations."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 8, 1994
AVAILABLE INFORMATION
Magma is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Magma with the Commission can be
inspected and copied at the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10007 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such information can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock is listed on the New York
Stock Exchange and similar information can be inspected and copied at the
NYSE, 20 Broad Street, 17th Floor, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). As
permitted by the rules and regulations of the Commission, this Prospectus
omits certain of the information contained in the Registration Statement and
reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of
any documents filed as an exhibit to the Registration Statement or otherwise
filed with the Commission are not necessarily complete, and in each instance
reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Magma with the Commission
and are hereby incorporated by reference into this Prospectus: (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, and (ii)
the description of the Common Stock contained in the Company's Form 8-A
filed on October 22, 1992. All other documents and reports filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this
Prospectus and prior to the termination of the offering of the securities
shall be deemed to be incorporated by reference herein and shall be deemed
to be a part hereof from the date of the filing of such reports and
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, on written or oral request of such person,
a copy of any or all documents which are incorporated herein by reference
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in the document which this Prospectus
incorporates). Requests should be directed to Mr. Richard Johnson,
Assistant Treasurer, at the Company's principal executive offices located at
7400 North Oracle Road, Suite 200, Tucson, Arizona 85704, telephone number
(602) 575-5600.
THE COMPANY
Magma is a fully integrated producer of electrolytic copper and ranks
among the largest U.S. copper producers. Magma's principal products are
high quality copper cathode and high quality copper rod, the latter of which
is the basic feedstock of the copper wire and cable industry.
The Company owns and operates underground copper mines at its San
Manuel and Superior Mining Divisions, open-pit copper mines at its San
Manuel and Pinto Valley Mining Divisions, and in situ leaching operations at
its San Manuel and Pinto Valley Mining Divisions, all in southeastern
Arizona.
Magma operates the largest and most modern copper smelting and refining
complex in the United States through its wholly owned subsidiary, Magma
Metals Company. The smelter has a rated production capacity of 1.25 million
tons of copper concentrate per year, which represents up to 25% of U.S.
smelting and refining capacity. In addition to smelting and refining its
own copper concentrate production, the Company smelts and refines a
substantial amount of copper concentrates on a custom basis for, or
purchased from, third parties, the profits from which reduce the Company's
overall break-even cost of producing copper.
Magma was a wholly owned subsidiary of Newmont Mining Corporation
("Newmont") from 1969 until March 1987, and remained under its influence
until November 1988, when Magma undertook a recapitalization (the
"Recapitalization") in which it purchased all of the remaining equity
interests held by Newmont.
Recent Operating Performance
Since the Recapitalization, the Company has substantially improved its
operating performance. The Company has increased copper production from its
own sources by approximately 40% from 402 million pounds in 1988 to 563
million pounds in 1993. Production from the leaching, solvent extraction
and electrowinning ("SX-EW") operations increased by 87% from 86 million
pounds in 1988 to 161 million pounds in 1993. The Company's total smelting
and refining production has increased by approximately 48% from 414 million
pounds of copper in 1988 to 615 million pounds in 1993. Net cash operating
costs of copper sold have decreased from $.78 per pound ($.93 adjusted for
inflation) in 1988 to $.66 per pound in 1992. In 1993, despite the effects
of extraordinary rains and flooding early in the year, the Company was able
to maintain the $.66 per pound cost level that had been achieved in 1992.
Further, as a result of intensified cost reduction efforts, cash operating
costs decreased to $.63 per pound in the third quarter and $.61 per pound in
the fourth quarter of 1993. Net cash operating costs per pound represent
(a) operating costs of Magma source copper sold (excluding depreciation,
depletion and amortization) reduced by credits for by-products and profits
from custom processing divided by (b) total pounds sold from Magma sources.
The Company attributes its increased production and productivity and
reduction in operating costs primarily to improved labor relations, which
culminated in the execution in 1991 of a 15-year collective bargaining
agreement, as well as the use of innovative operating technology, including
an increase in production from lower cost SX-EW technology.
During 1993, the Company's operations were adversely affected by
extraordinary rainfall conditions, lower copper prices (which were partially
offset by hedging activities) and other factors. As a result, total sales
and net income were $792.4 million and $21.9 million, respectively, for the
year ended December 31, 1993, compared to $819.5 million and $55.3 million,
respectively, for the year ended December 31, 1992. The Company estimates
that the extraordinary rainfalls reduced net income by approximately $15.5
million during the first six months of 1993. Although the Company is still
in the process of repairing, upgrading and expanding certain of its
facilities that were damaged by the rainfalls, operations that were affected
by the rainfalls returned to normal in the second half of 1993.
The Company's operations are highly dependent on copper prices. As a
hedge against lower copper prices, the Company purchased put options on the
London Metal Exchange ("LME") covering 511.5 million pounds of 1993
production at an exercise price of $.95 per pound. During the second, third
and fourth quarters of 1993, the Company exercised option contracts
totalling 384 million pounds. Largely as a result of these options, Magma
was able to achieve an average realized price per pound of $.94 in 1993, as
compared to an average LME price of $.87 per pound. For the first and
second quarters of 1994, the Company has purchased put option contracts
covering 287 million pounds of production, providing a minimum realized
price of $.72 per pound on a LME basis. For the third and fourth quarters of
1994, the Company has entered into LME futures contracts covering 121
million pounds of production at an average price of $.82 per pound and
purchased put option contracts covering 176 million pounds of production
that provide a minimum realized price of $.74 per pound on a LME basis. The
Company has also purchased put option contracts covering 374 million
pounds of its production during the first three quarters of 1995 providing
a minimum realized price of $.74 per pound on a LME basis. Coupled with
expected reductions in cash operating costs, the Company believes that the
protection afforded by the options should result in positive cash flow from
operations during 1994. In addition to its hedging program, the Company
has accelerated measures designed to reduce its cash operating costs, with a
view to maintaining sufficient cash balances, cash flow and borrowing
capacity necessary to fund selected development projects.
Development Opportunities
The Company is currently pursuing or evaluating several major mine
development opportunities, as well as an expansion and upgrade to its
smelting and refining complex.
Robinson Mining District. In 1991, the Company completed a series of
transactions in which it acquired the Robinson Mining District ("Robinson")
near Ely, Nevada, for an aggregate cost of approximately $58 million. Based
upon drill and assay results, the Company believes that Robinson has 252
million tons of proven/probable sulfide ore reserves with an average grade
of .553% copper and .0102 ounces of gold per ton, and 57 million tons of
gold oxide ore reserves with an average grade of .0086 ounces of gold per
ton. The Company estimates that Robinson could produce approximately 135
million pounds of copper annually for 16 years through traditional methods.
In addition, these studies estimate that Robinson could produce an average
of 97,300 ounces of gold and 390,000 ounces of silver annually from sulfide
copper ore and 17,500 ounces of gold per year from leaching operations
during this time period. The Company is conducting a further study of this
property to determine the opportunity to increase production and lower
costs, which may require greater capital investment. Development of
Robinson requires, among other factors, appropriate environmental and
operating permits. In early 1993, the Bureau of Land Management determined
that an Environmental Impact Statement ("EIS") must be prepared to analyze
the Company's proposed re-development of the property. The Company believes
the EIS process will be completed during 1994 and production will begin in
the first quarter of 1996, although there can be no assurance in this
regard.
Kalamazoo. The Company's Kalamazoo orebody, which is near its San
Manual underground mine, is comprised of two levels, an upper level which
consists of approximately 33 million tons of proven/probable ore reserves
and a lower level which contains approximately 186 million tons of
proven/probable ore reserves. In March 1993, the Company's Board of
Directors approved funding for the development of the lower Kalamazoo
orebody. Based on the current mine plan, this project is scheduled to
produce 2.13 billion pounds of copper during the period from 1996 to 2009.
Florence. In July 1992, the Company completed the acquisition of a
large copper deposit near Florence, Arizona. The Company's project team has
begun a pre-feasibility study to determine the opportunity for the use of
SX-EW leaching technology at this deposit.
Smelting and Refining Complex. The Company is in the process of
expanding and upgrading its smelting and refining complex. During 1993, the
smelter produced 681 million pounds of copper in anode form, significantly
in excess of its design capacity of 600 million pounds. The expansion will
increase design capacity to 720 million pounds per year. The increase in
design capacity, scheduled to be completed in the second quarter of 1994,
should enable the Company to maintain its custom smelting business even with
the expected increase in smelting from Magma source copper when the Robinson
Mining District begins production. In addition, the smelter project, which
includes the addition of a new, large acid plant, will further improve the
smelter's environmental performance.
Capital Requirements. Based on present estimates development of the
Robinson Mining District could require capital expenditures on the order of
approximately $300 million for traditional concentrate production,
development of the lower Kalamazoo orebody could require capital
expenditures of approximately $140 million and expansion of the Company's
smelting and refining complex is expected to require capital expenditures of
approximately $85 million, for an aggregate of approximately $500 million.
Of this amount, $105 million had been expended toward these projects as of
December 31, 1993, $90 million is expected to be expended in 1994 and the
remainder is expected to be spent over the next four years. The foregoing
estimates are subject to change. The Company has not yet made any
determination of the cost to develop the Florence property.
The Company intends to finance any projects that it undertakes with
internal cash flow, cash reserves and additional financings if necessary.
The completion or success of these projects or, in some cases, the decision
to undertake them is subject to a number of factors, including the price of
copper and, where appropriate, the completion of favorable feasibility
studies, permitting and other factors. Many of these factors are outside of
the Company's control. There can be no assurance that the Company will
undertake all of these opportunities or that, if undertaken, they will prove
successful. If the Company is unable to replace its reserves from the mine
development projects being pursued or evaluated, or with other reserves
identified or acquired in the future, the Company's dependence upon third-
party sources to supply copper concentrate to its smelting and refining
operations would increase.
Refinancings and Related Matters
In the past three years, the Company has taken a number of significant
actions in an effort to enhance its financial position on a prospective
basis, including the following.
Debt Refinancing. Through a series of new debt offerings and
redemptions of previously outstanding indebtedness, the Company has
refinanced almost all of its outstanding public indebtedness, reducing the
weighted average interest rate on its outstanding debt from 14.1% to 10.7%.
The refinancings resulted in a $9.7 million decrease in net interest expense
in 1992 over 1991, which was partially offset by a $3 million extraordinary
loss related to premiums paid on early debt repayments.
In May 1993, the Company established a $200 million unsecured revolving
credit facility. The facility has a five-year term and matures in May 1998.
The loan agreement evidencing the facility limits the ability of the Company
and its subsidiaries to encumber their assets and property, to enter into
sale and leaseback transactions, to enter into mergers and consolidations or
to sell all or substantially all of their assets (or certain identified
assets), and to repurchase or redeem subordinated indebtedness, including
Senior Subordinated Debt Securities and Subordinated Debt Securities, except
in certain circumstances. The loan agreement also limits the incurrence of
indebtedness by the Company's subsidiaries, requires that the Company and
its subsidiaries maintain a minimum consolidated net worth, and establishes
a maximum ratio of debt to capitalization and a minimum interest coverage
ratio. As of March 31, 1994, there were no outstanding borrowings under the
revolving credit facility.
Enhanced Capital Base. During 1993, the Company raised $200 million of
additional equity through two convertible preferred stock offerings. In a
public offering completed in July 1993, the Company issued $100 million of
convertible preferred stock that carries a 5-5/8% cumulative dividend. In
December 1993, the Company completed a public offering of $100 million of
convertible preferred stock that carries a 6% cumulative dividend.
In December 1992, the Company conducted an exchange offer under which
all of its then outstanding Series B Cumulative Convertible Exchangeable
Preferred Stock was exchanged for Common Stock. This preferred stock
carried a cumulative dividend obligation in excess of $9 million per year,
which would have been payable solely in cash beginning in November 1993.
In October 1992, the Company's stockholders voted to amend the
Company's Certificate of Incorporation to eliminate the dual class,
disparate voting rights structure of its Common Stock. The Company now has
one class of Common Stock, $.01 par value per share.
Accounting Adjustments. At the end of 1991, the Company implemented
various accounting adjustments in conjunction with the reorganization of the
Company into distinct profit centers. Although these adjustments reduced
stockholders' equity and lowered prior earnings, they did not impact the
Company's cash position or cash flow.
INVESTMENT CONSIDERATIONS
Copper Price Volatility. The profitability of the Company's operations
is largely dependent upon the worldwide market price for copper. A one cent
per pound change in the average price received for the Company's 1993 output
would have affected earnings before interest, taxes, depreciation and
amortization by an estimated $5.6 million. Copper prices have historically
been subject to wide fluctuations and are affected by numerous factors
beyond the control of the Company, including international economic and
political conditions, levels of supply and demand, the availability and cost
of copper substitutes, inventory levels maintained by copper producers and
others and, to a lesser degree, inventory carrying costs (primarily interest
charges) and international exchange rates. From time to time the Company
engages in hedging activities in an effort to stabilize the Company's cash
flow in the event of declining copper prices. Depending upon the hedging
program employed, market conditions and other factors, hedging activities
could reduce the cash flow which the Company would otherwise realize.
Competition. Certain foreign and domestic copper producers benefit
from higher-grade orebodies than those owned by the Company. Further, most
foreign producers benefit from lower labor rates and less stringent
environmental regulation than United States producers. Many foreign
producers maintain maximum production to meet government-imposed employment
and foreign exchange revenue goals, sometimes without regard to the
condition of the world copper market or the profitability of their mining
operations. The Company and other copper producers also compete with
manufacturers of other materials, including aluminum, stainless steel,
plastics and fiber optic cables. Should copper prices increase, use of
these alternative materials may also increase.
Environmental Regulation. The mining and mineral processing industries
are subject to extensive regulations for the protection of the environment,
including regulations relating to air and water quality, mine reclamation,
remediation, solid and hazardous waste handling and disposal and the
promotion of occupational safety. From time to time the Company is cited
for noncompliance with applicable environmental laws and regulations.
However, the Company believes that it is currently in material compliance
with these laws and regulations and, although there can be no assurance
in this regard, the Company believes that there are no pending environmental
matters that are likely to have a material adverse effect on its results of
operations. Future regulations or regulatory interpretations could require
the Company to modify or curtail its operations or incur substantial
additional expense. In this regard, the Company cannot predict, at this
time, the level of new emissions controls and related costs which may be
required for it to comply with standards governing emissions of sulphur,
particulates and air toxics that are expected to be adopted under the
Federal Clean Air Act Amendments of 1990 and the Arizona Clean Air Act.
Industry Risks; Reserves. The Company is subject to the normal risks
encountered in the mining industry, such as unusual or unexpected geological
formations, cave-ins, flooding, fires, environmental issues and water
issues. The Company's mineral reserves may not conform to geological,
geomechanical, metallurgical or other expectations with the result that the
volume and grade of reserves recovered and rates of production may be less
than anticipated. Further, market price fluctuations in copper, changes in
operating and capital costs and other factors may affect ore reserves.
Development Projects. The existing open pit and underground mines at
the Company's San Manuel Division are scheduled to close in 1994 and 1998,
respectively, and its open pit mine at the Pinto Valley Division is
scheduled to close in 1999. The Company is pursuing or evaluating several
development opportunities in an effort to enhance its ore reserves. The
Company is also in the process of expanding and upgrading its smelting and
refining complex. Development of these projects will require several
hundred million dollars in capital investment. To the extent undertaken,
the Company intends to finance its development projects with internal cash
flow, cash reserves and additional financings if necessary. The success of
these projects is subject to a number of factors, some of which are outside
of the Company's control. The cost estimates for these projects are subject
to change. If the Company is unable to replace its reserves from the mine
development projects being pursued or evaluated, or with other reserves
identified or acquired in the future, the Company's dependence upon third-
party sources to supply copper concentrate to its smelting and refining
operations would increase.
SELLING SECURITYHOLDERS
The following table provides certain information with respect to the
Common Stock owned by each Selling Securityholder as of March 25, 1994.
Percentage Percentage
of Common of Common
Shares Shares
Beneficially Beneficially
Number of Owned Number of Owned
Common Prior to Common After
Shares Offering Shares Offering
Name Owned (1) Offered (2)
---- ---------- ------------ ---------- ----------
DBL Liquidating Trust 86,022 * 86,022 0 %
Morgenthaler Venture
Partners II 76,319 * 21,505 *
Warburg Pincus Capital
Company, L.P. 19,220,216(3) 41.1% 3,213,073 34.2%
TOTAL 19,382,557 41.5% 3,320,600 34.4%
========== ====== ========== ======
_________________________
* Represents less than 1% of the Company's outstanding Common Stock.
(1) Includes all shares of Common Stock beneficially owned by the Selling
Securityholder as a percentage of the sum of (i) the Common Stock
outstanding at March 25, 1994, and (ii) the 1,000,000 shares of
Common Stock reserved for issuance in connection with the Class B
Warrants.
(2) Assumes that the Selling Securityholder disposes of all of the shares
of Common Stock covered by this Prospectus and does not acquire any
additional shares of Common Stock.
(3) Includes 892,473 shares of Common Stock underlying Class B Warrants
held by the Selling Securityholder and 2,320,600 shares of Common Stock
previously acquired by the Selling Securityholder.
PLAN OF DISTRIBUTION
This prospectus relates to the resale by the Selling Securityholders
of up to 1,000,000 shares of Common Stock they may acquire upon the
exercise of the Class B Warrants and to the resale by Warburg, Pincus
Capital Company, L.P. ("Warburg"), one of the Selling Securityholders, of
2,320,600 shares of Common Stock previously acquired by Warburg. The Selling
Securityholders may from time to time sell Common Stock through
underwriters, dealers or agents, who may receive compensation in the form of
underderwriting discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of the securities for whom they may
act as agent. At the time a particular offering of Common Stock is made, to
the extent required, a Prospectus Supplement will be distributed with this
Prospectus which will set forth the aggregate number of shares being offered
and the terms of the offering, including the names of any underwriters,
dealers or agents, any discount, commissions and other items constituting
compensation from the Selling Securityholders and any discounts or
concessions allowed or reallowed or paid to dealers.
Alternatively, the Selling Securityholders may from time to time effect
sales of Common Stock in one or more transactions pursuant to Rule 144 under
the Securities Act, in privately negotiated transactions, through the
facilities of the NYSE, or otherwise, at market prices prevailing at the
time of sale, at prices relating to such prevailing market prices, or at
negotiated prices. It is anticipated that any broker-dealers participating
in such sales of securities will receive the usual and customary selling
commissions.
The Company will pay substantially all of the expenses incident to the
registration of the Common Stock offered hereby, other than underwriting
discounts, commissions and selling expenses with respect to Common Stock
being sold by the Selling Securityholders.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Securityholders.
DESCRIPTION OF SECURITIES
The following summary of terms of the Company's Class B Warrants and
Common Stock does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Class B Warrants and the
Company's Certificate of Incorporation.
Class B Warrants
The Company issued and sold 1,000,000 Class B Warrants to Warburg
in connection with a recapitalization of the Company on November 30, 1988.
Warburg subsequently transferred 107,527 of the Class B Warrants to two
other institutional investors (collectively with Warburg, the "Selling
Securityholders").
Each Class B Warrant entitles its holder to purchase one share of
Common Stock at an exercise price of $8.50 per share, subject to adjustment
in certain cases, at any time on or prior to November 30, 1995, the
expiration date of the Class B Warrants.
Common Stock
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock. As of March 25, 1994, there were
45,742,901 shares of Common Stock outstanding (excluding the 1,000,000
shares of Common Stock reserved for issuance in connection with the Class B
Warrants). The Common Stock is traded on the NYSE.
All outstanding shares of Common Stock are, and any shares issued
upon exercise of the Class B Warrants in accordance with the terms thereof
will be, fully paid and non-assessable.
The holders of Common Stock are entitled to receive dividends when and
as declared by the Board of Directors of the Company out of funds legally
available therefor, provided that if any shares of preferred stock are at
the time outstanding, the payment of dividends on Common Stock or other
distributions (including purchases of Common Stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding shares of preferred
stock. As of the date hereof, the Company has two series of preferred stock
outstanding, 2.0 million shares of Series D Cumulative Convertible Preferred
Stock, which has a liquidation preference of $50.00 per share and carries a
5-5/8% cumulative dividend, and 2.0 million shares of Series E Cumulative
Convertible Preferred Stock, which has a liquidation preference of $50.00
per share and carries a 6% cumulative dividend.
The holders of Common Stock are entitled to one vote for each share on
all matters voted on by stockholders, including elections of directors. The
holders of Common Stock do not have any conversion, redemption or preemptive
rights. In the event of the dissolution, liquidation or winding up of the
Company, holders of Common Stock are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior rights of creditors,
including holders of the Company's indebtedness, and the aggregate
liquidation preference of any preferred stock then outstanding.
Certain provisions of the Company's Certificate of Incorporation and
Bylaws may be considered as having an anti-takeover effect. Such provisions
empower the Board of Directors to fix the rights and preferences of and to
issue shares of preferred stock; limit certain substantial stockholders of
the Company from significantly increasing their interest in the stock or
assets of the Company without the consent of the Board of Directors and/or a
supermajority of the stockholders of the Company; prohibit stockholders of
the Company from calling a special meeting; place restrictions on the
ability of stockholders to nominate persons for the position of director;
and require that the Board of Directors be divided into three classes. In
addition, certain provisions of law may have the effect of protecting the
Company against undesired takeover attempts. Specifically, under Delaware
law (and a similar provision of the Company's Certificate of Incorporation),
in certain instances, significant holders (as specified) of the Company's
voting stock may not, without approval of a specified vote of the other
stockholders, or approval of the Company's Board of Directors (or the
independent members thereof) prior to becoming a significant holder, acquire
additional interests in the Company's assets or capital stock.
Transfer Agent
The transfer agent for the Common Stock is Mellon Financial Services,
111 Founders Plaza, 11th Floor, East Hartford, Connecticut 06108.
EXPERTS
The consolidated balance sheets as of December 31, 1993 and 1992, and
the consolidated statements of operations, changes in stockholders' equity
and cash flows and the related schedules for each of the three years in the
period ended December 31, 1993, incorporated into this Prospectus and
elsewhere in the Registration Statement, have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in giving said reports.
VALIDITY OF THE SECURITIES
The validity of the issuance of the securities offered hereby will be
passed upon for the Company by Snell & Wilmer, One Arizona Center, Phoenix,
Arizona 85004, counsel to the Company.
