SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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SCHEDULE 13E-4
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ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE
ACT OF 1934)
ANDERSEN GROUP, INC.
(Name of Issuer)
ANDERSEN GROUP, INC.
(Name of person(s) filing statement)
10 1/2% Convertible Subordinated Debentures due 2002
(Title of class of securities)
033501 AB3
(CUSIP number of class of securities)
Bernard F. Travers, III
Assistant Secretary and Director of Law and Taxation
Andersen Group, Inc.
1280 Blue Hills Avenue
Bloomfield, Connecticut 06002
(860) 242-0761
(Name,address and telephone number of person
authorized to receive notices and
communications on behalf of the person(s)
filing statement)
copy to:
Richard A. Krantz, Esq.
Robinson & Cole LLP
Financial Centre
695 East Main Street
Stamford, Connecticut 06901
(203) 462-7500
on or about January 9, 1998
(Date tender offer first published, sent or given to security holders)
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Calculation of Filing Fee
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Transaction valuation* Amount of filing fee
$5,665,000 $1,133.00
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* For purposes of calculation of fee only. This amount assumes the
purchase of $5,665,000 aggregate principal amount of 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Debentures"), of
Andersen Group, Inc. The amount of the filing fee, calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, as amended, equals 1/50 of one percent of the value of the
Debentures to be purchased.
O Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form of Registration No.: Date Filed:
Item I. Security and Issuer.
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Preliminary Note: References in this Schedule to the "Offering
Circular" and the "Letter of Transmittal" are to the Offering Circular dated
January 12, 1998 (the "Offering Circular") and the Letter of Transmittal, dated
as of January 9, 1998 (the "Letter of Transmittal"), filed herewith as Exhibits
(a)(1) and (a)(2), respectively.
(a) The issuer is Andersen Group, Inc. (the "Company"). The Company's
principal executive offices are located at 1280 Blue Hills Avenue, Bloomfield,
Connecticut 06002.
(b) The securities being sought are any and all outstanding 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Debentures"). Upon the terms
and subject to the conditions set forth in the Offering Circular and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), the Company is offering to exchange $1,000.00 principal amount of 10
1/2% Convertible Subordinated Debentures due 2007 (the "New Debentures") and
$10.00 cash (the "Cash Payment") for each $1,000.00 principal amount of
Debentures, of which $5,665,000 aggregate principal amount are currently
outstanding.
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders" in the Offering Circular), then the Company shall, in addition to
exchanging the Debentures properly tendered to it as described in the above
paragraph, purchase and redeem all Debentures which have not been so tendered
pursuant to the terms of the Debentures at a redemption price of 100% of the
principal amount thereof plus accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company, and Mr. John S. Grace, a Director of the Company,
members of their families, their affiliates and trusts formed for the benefit of
Messrs. Oliver R. Grace, Jr. and John S. Grace and their families, have agreed
to tender all Debentures they beneficially own pursuant to the Exchange Offer.
As of December 31, 1997, these Debentureholders beneficially owned in the
aggregate $2,274,000 principal amount of Debentures, representing approximately
40.14% of the aggregate principal amount of Debentures.
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(c) There is currently no established trading market for the
Debentures.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) The Company and The Chase Manhattan Bank as trustee, will enter
into an Indenture of Trust, dated as of February ____, 1998 (the "Indenture"),
pursuant to which the Company will issue the New Debentures as the consideration
payable (along with the Cash Payment) in the Exchange Offer. The maximum
aggregate principal amount of New Debentures issuable in the Exchange Offer is
$5,665,000. See "The Exchange Offer" in the Offering Circular, incorporated
herein by reference. Assuming that all Debentures outstanding on the date of the
Offering Circular were tendered for exchange pursuant to the Exchange Offer, the
Company would be required to pay an aggregate of $56,650 in respect of the Cash
Payment. The Company intends to use its cash on hand to satisfy its obligations
with respect to the Cash Payment.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
See "Purposes and Effects of the Exchange Offer" in the Offering
Circular, incorporated herein by reference.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) See "Recent Developments Concerning the Debentures", "Restrictive
Covenants", "Pro Forma Data" and "Dividends" in the Offering Circular,
incorporated herein by reference.
(f) See "The Company - Recent Developments" and "The Special Meeting of
Stockholders" in the Offering Circular, incorporated herein by reference.
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
Item 4. Interest in Securities of the Issuer.
Neither the Company, nor to the best of its knowledge, any of the other
persons covered by Item 4 of this Schedule has effected any transaction in the
Debentures during the 40 business days preceding the date of the Offering
Circular.
Item 5. Contracts, Arrangements, Understandings or Relationships With
Respect to the Issuer's Securities.
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company, and Mr. John S. Grace, a Director of the Company,
members of their families, their affiliates and trusts formed for the benefit of
Messrs. Oliver R. Grace, Jr. and John S. Grace and their families, have agreed
to tender all Debentures they beneficially own pursuant to the Exchange Offer.
As of December 31, 1997, these Debentureholders beneficially owned in the
aggregate $2,274,000 principal amount of Debentures, representing approximately
40.14% of the aggregate principal amount of Debentures. These Debentureholders
could increase their percentage ownership interest of the New Debentures
depending upon the principal amount of Debentures tendered in the Exchange
Offer.
Item 6. Persons Retained, Employed or to be Compensated.
See "The Exchange Offer - Exchange Agent" in the offering circular,
incorporated herein by reference.
Item 7. Financial Information.
(a)(1) See Part II - Item 8. "Financial Statements and Supplementary
Data" in the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1997, incorporated herein by reference, filed as Exhibit (g)
hereto.
(a)(2) See Part I - Item 1. "Financial Statements" in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended August 31, 1997,
incorporated herein by reference, filed as Exhibit (h) hereto.
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(a)(3) See "Summary Financial Data" in the Offering Circular,
incorporated herein by reference.
(a)(4) See "Summary Financial Data" in the Offering Circular,
incorporated herein by reference.
(b)(1) See "Pro Forma Data" in the Offering Circular, incorporated
herein by reference.
(b)(2) See "Pro Forma Data" in the Offering Circular, incorporated
herein by reference.
(b)(3) See "Pro Forma Data" in the Offering Circular, incorporated
herein by reference.
Item 8. Additional Information.
(a) There is no present or proposed material contract, arrangement,
understanding or relationship between the Company and any of its executive
officers, directors or affiliates, other than as disclosed in Item 5 of this
Schedule or otherwise previously disclosed in the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997 or the Company's Quarterly
Report on Form 10-Q for the quarterly period ended August 31, 1997.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) The Company's Offering Circular and Transmittal Letter should be
read in their entirety and are incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
(a)(1) Offering Circular, dated January 9, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Letter to securities dealers, commercial banks, trust companies
and other nominees.
(a)(4) Form of Letter to Clients of securities dealers, commercial
banks, trust companies and other nominees.
(a)(5) Notice of Guaranteed Delivery.
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(a)(6) Press Release, dated January 12, 1998.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) The Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1997, is incorporated by reference herein.
(h) The Company's quarterly report on Form 10-Q for the quarterly
period ended August 31, 1997, is incorporated by reference herein.
(i) The Company's Current Report on Form 8-K dated December 23, 1997,
is incorporated by reference herein.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: January 9, 1998
ANDERSEN GROUP, INC.
By: /s/ Oliver R. Grace, Jr.
Oliver R. Grace, Jr.
President
OFFERING CIRCULAR
ANDERSEN GROUP, INC.
Offer to Exchange $1,000.00 Principal Amount of 10 1/2% Convertible
Subordinated Debentures due 2007 and $10.00 cash for each $1,000.00
Principal Amount of 10 1/2% Convertible Subordinated Debentures due
2002
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN
STANDARD TIME, ON THURSDAY, FEBRUARY 19, 1998,
UNLESS EXTENDED (SUCH TIME AND DATE, THE
"EXPIRATION DATE").
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Andersen Group, Inc., a Connecticut corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this Offering
Circular and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000.00 principal amount of 10
1/2% Convertible Subordinated Debentures due 2007 (the "New Debentures") and
$10.00 cash (the "Cash Payment") for each $1,000.00 principal amount of 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Debentures").
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
The Exchange Offer is also subject to certain customary conditions, any
or all of which may be waived by the Company. See "The Exchange
Offer--Conditions of the Exchange Offer" and "The Special Meeting of
Stockholders".
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company, and Mr. John S. Grace, a Director of the Company,
members of their families, their affiliates and trusts formed for the benefit of
Messrs. Oliver R. Grace, Jr. and John S. Grace and their families, have agreed
to tender all Debentures they beneficially own pursuant to the Exchange Offer.
As of December 31, 1997, these Debentureholders beneficially owned in the
aggregate $2,274,000 principal amount of Debentures, representing approximately
40.14% of the aggregate principal amount of Debentures. These Debentureholders
could increase their percentage ownership interest of the New Debentures
depending upon the principal amount of Debentures tendered in the Exchange
Offer.
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Tenders of Debentures may be withdrawn at any time prior to the
Expiration Date and, unless previously accepted for exchange by the Company,
after 5:00 P.M., Eastern Standard Time, on March 27, 1998. Upon the terms and
subject to the conditions set forth herein, the New Debentures issued pursuant
to the Exchange Offer will be delivered promptly following the Expiration Date.
The Debentures are not listed on any securities exchange and the
Company does not intend to make an application to list the Debentures or the New
Debentures on any such exchange. There is currently no trading market for the
Debentures or the New Debentures and it is unlikely that an active trading
market for the Debentures or the New Debentures will develop.
Holders of Debentures should carefully review the information contained
under the heading "Risk Factors".
The Board of Directors of the Company is not making any recommendation
that the holders of the Debentures tender or refrain from tendering their
Debentures pursuant to the Exchange Offer.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS
OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
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The date of this Offering Circular is January 9, 1998.
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TABLE OF CONTENTS
Page
Incorporation of Certain Documents by Reference........................... 3
Available Information..................................................... 4
Summary of the Exchange Offer............................................. 5
The Company............................................................... 8
Restrictive Covenants..................................................... 11
The Special Meeting of Stockholders ...................................... 13
Recent Developments Concerning the Debentures............................. 13
Risk Factors.............................................................. 15
Purposes and Effects of the Exchange Offer................................ 18
Summary Comparison of Terms of the Debentures and the New Debentures....... 19
Summary Financial Data.................................................... 21
Pro Forma Data............................................................ 22
Price Ranges of the Common Stock.......................................... 23
Dividends................................................................. 23
The Exchange Offer........................................................ 25
Federal Income Tax Considerations......................................... 30
Description of New Debentures............................................. 31
Description of Debentures................................................. 34
Description of Capital Stock.............................................. 37
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Offering Circular:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended May
31, 1997 and August 31, 1997; and
(c) The Company's Current Report on Form 8-K dated December 23, 1997,
respectively.
Pursuant to Rule 13e-4 under the Exchange Act, the Company has filed an
Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") with the
Commission. The Schedule 13E-4, including exhibits, may be inspected or copied
at the public reference facilities of the Commission. See "Available
Information".
All reports subsequently filed by the Company pursuant to Section 13(a)
and (c) of the Exchange Act and any definitive proxy or information statements
filed pursuant to Section 14 of the Exchange Act in connection with any
subsequent stockholders' meeting and any reports filed pursuant to Section 15(d)
of the Exchange Act prior to the completion of the Exchange Offer shall be
deemed to be incorporated by reference into this Offering Circular and to be a
part hereof from the date of filing such documents.
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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 Offering Circular to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Offering Circular.
This Offering Circular incorporates by reference documents which are
not present herein or delivered herewith. The Company will provide without
charge to each person to whom this Offering Circular is delivered, on the
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents).
Written or telephone requests for such documents should be directed to Bernard
F. Travers, III, Esq., Assistant Secretary and Director of Law and Taxation, of
the Company at (860) 242-0761.
The Exchange Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. The Company
therefore will not pay any commission or other remuneration to any broker,
dealer, salesman or other person for soliciting tenders of the Debentures.
Employees of the Company may, as part of their regular duties, contact holders
of Debentures with respect to the Exchange Offer.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission. Information as of particular dates, concerning directors
and officers, their remuneration, options granted to them, the principal holders
of securities of the Company and any material interest of such persons in
transactions with the Company, is disclosed in proxy statements distributd to
stockholders of the Company and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied (at prescribed
rates) at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Company files its reports, proxy
statements and other information with the Commission electronically. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information on issuers that file electronically with the
Commission. The address of such Web site is "http://www.sec.gov".
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Offering Circular. If given or made, such information or representations
should not be relied upon as having been authorized by the Company. Neither the
delivery of this Offering Circular nor any exchange made hereunder shall under
any circumstances create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. To the extent there is a material change in the affairs of the
Company after the date hereof, the Company will promptly disclose such
information in a manner reasonably calculated to inform the holders of
Debentures of such change. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Debentures in any
jurisdiction in which the making of the Exchange Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. However, the
Company may, at its discretion, take such action, as it may deem necessary to
make the Exchange Offer in any such jurisdiction and to extend the Exchange
Offer to holders of Debentures in such jurisdiction. In any jurisdiction the
securities laws or blue sky laws of which require the Exchange Offer to be made
by a licensed broker or dealer, the Exchange Offer is being made on behalf of
the Company by one or more registered brokers or dealers which are licensed
under the laws of such jurisdiction.
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SUMMARY OF THE EXCHANGE OFFER
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Offering Circular. Terms used
in this summary and not otherwise defined herein shall have the meanings given
to them elsewhere in this Offering Circular.
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The Exchange Offer................... Subject to the terms and conditions set forth herein and in the Letter
of Transmittal, the Company is offering to exchange $1,000.00 principal
amount of New Debentures and $10.00 cash for each $1,000.00 principal
amount of Debentures properly tendered and accepted.
Purposes of the Exchange Offer....... The principal purposes of the Exchange Offer are to (i) extend the
maturity date of the indebtedness represented by the Debentures for
five years and (ii) retire the Debentures in order to eliminate
covenants which restrict the Company's ability to make payments in
respect of dividends, redemptions and repurchases of its Series A
Preferred Stock and Common Stock (which will only be accomplished if
all of the Debentures are exchanged by their holders or redeemed by the
Company). See "Recent Developments Concerning the Debentures" and
"Description of New Debentures".
Under the Restrictive Covenants
imposed by the Debentures, the
Company must have sufficient
Consolidated Net Income determined on
a cumulative basis, net of losses,
dividends and prior redemptions or
repurchases of stock, plus cash
proceeds received by the Company from
sales of its stock and indebtedness
convertible into stock, in order to
redeem or repurchase shares or to pay
dividends on the Company's Capital
Stock (including the Series A
Preferred Stock). As a result of the
Restrictive Covenants, the Company
has omitted the regularly scheduled
quarterly dividend on the Series A
Preferred Stock for the past 18
quarters. In response to the effect
the Restrictive Covenants have had on
the Company's ability to declare and
pay dividends on the Series A
Preferred Stock, the Company has
undertaken a series of efforts to
retire the Debentures. The terms of
the New Debentures also eliminate the
Company's ability to redeem the New
Debentures at the Company's option.
See "Recent Developments Concerning
the Debentures", "Restrictive
Covenants" and "Purposes and Effects
of the Exchange Offer".
Expiration Date...................... 5:00 P.M., Eastern Standard Time, on February 19, 1998, unless
extended. See "The Exchange Offer--Expiration Date; Extensions;
Termination; Amendments".
Tenders of Debentures may be withdrawn at any time prior to the
Withdrawal of Tenders............... Expiration Date and, unless previously accepted for exchange by the
Company, after 5:00 P.M., Eastern Standard Time, on March 27, 1998.
See "The Exchange Offer-Withdrawal Rights".
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Acceptance of Debentures and
Delivery of New Debentures
and Cash Payment.................. Subject to the terms and conditions of the Exchange Offer, the Company
will accept, promptly after the Expiration Date, all Debentures properly
tendered and not withdrawn prior to the Expiration Date. The Company
will cause the New Debentures and the Cash Payment to be delivered
promptly following the Expiration Date. See "The Exchange
Offer-Acceptance of Debentures for Exchange; Delivery of New Debentures
and the Cash Payment".
Conditions of the Exchange In the event that at least 66 2/3% in aggregate principal amount of the
Offer............................. outstanding Debentures are tendered for exchange pursuant to the
Exchange Offer, the Company shall (i)
exchange the Debentures properly
tendered to it pursuant to the
Exchange Offer and, except as provided
in the next paragraph, (ii) have the
right, but not the obligation, to
purchase and redeem all Debentures
which have not been so tendered
pursuant to the terms of the
Debentures at a redemption price of
100% of the principal amount thereof
plus accrued interest to the date of
redemption.
In the event that (i) at least 66 2/3%
in aggregate principal amount of the
outstanding Debentures are tendered
for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the
Company's Certificate of
Incorporation, in order to eliminate
certain restrictions on the payment of
dividends on the Company's Common
Stock and the Series A Preferred Stock
and to make certain other changes to
the Series A Preferred Stock, is
approved by the Company's stockholders
at the Special Meeting of Stockholders
(See "The Special Meeting of
Stockholders"), then the Company
shall, in addition to exchanging the
Debentures properly tendered to it as
described in the above paragraph,
purchase and redeem all Debentures
which have not been so tendered
pursuant to the terms of the
Debentures at a redemption price of
100% of the principal amount thereof
plus accrued interest to the date of
redemption.
In the event that less than 66 2/3% in
aggregate principal amount of the
outstanding Debentures are tendered
for exchange pursuant to the Exchange
Offer, the Company has the right, but
not the obligation, to (i) exchange
the Debentures properly tendered to it
pursuant to the Exchange Offer and/or
(ii) purchase and redeem all
Debentures which have not been so
tendered pursuant to the terms of the
Debentures at a redemption price of
100% of the principal amount thereof
plus accrued interest to the date of
redemption.
The Exchange Offer is also subject to certain customary conditions, any
or all of which may be waived by the Company. See "The Exchange
Offer--Conditions of the Exchange Offer" and "The Special Meeting of
Stockholders".
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Procedures for Tendering Debentures.. Each Debentureholder who wishes to tender his or her Debentures must
deliver the following documents prior to the Expiration Date to the
Exchange Agent at the address set forth on the last page hereof: (i)
certificates representing such Debentures together with the Letter of
Transmittal, which will have been properly completed and duly executed
by such Debentureholder, and all other documents required by the Letter
of Transmittal, or (ii) if a Debentureholder wishes to tender by
guaranteed delivery, a properly completed and duly executed Notice of
Guaranteed Delivery. Any Debentureholder whose Debenture is registered
in the name of a broker, dealer, commercial bank, trust company or
nominee is urged to contact such registered holder promptly if such
Debentureholder wishes to participate in the Exchange Offer. Letters of
Transmittal, Notices of Guaranteed Delivery and certificates
Representing the Debentures should be sent to the Exchange Agent. See
"The Exchange Offer-Procedures for Tendering".
Debentures Not Tendered.............. Debentures not accepted in the Exchange Offer will remain outstanding
according to their terms unless redeemed by the Company.
Interests of Certain Tendering
Debentureholders..................... Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company and Mr. John S. Grace, a Director of the
Company, members of their families, their affiliates and trusts formed
for the benefit of Messrs. Oliver R. Grace, Jr. and John S. Grace and
their families have agreed with the Company that they will tender all
Debentures they beneficially own pursuant to the Exchange Offer. As of
December 31, 1997, these Debentureholders beneficially owned in the
aggregate $2,274,000 principal amount of the Debentures, representing
approximately 40.14% of the aggregate principal amount of Debentures.
The Debentures....................... See "Summary Comparison of Terms of the Debentures and the New
Debentures" and "Description of Debentures".
The New Debentures................... The New Debentures contain essentially the same terms and conditions as
the Debentures, except that the New Debentures (i) mature five years
later than the Debentures, (ii) do not impose the Restrictive Covenants
on the Company and (iii) are not subject to optional redemption by the
Company. See "Summary Comparison of Terms of the Debentures and the New
Debentures" and "Description of the New Debentures". The Company does
not intend to make an application to list the New Debentures on any
securities exchange.
The Common Stock..................... See "Description of Capital Stock - Common Stock".
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<PAGE>
- ----------------------------------------- --------------------------------------------------------------------------
Conversion of the Debentures
and the New Debentures............. The Debentures and the New Debentures are convertible at any time at the
option of the holder thereof into shares of Common Stock at a conversion
rate of $16.17 aggregate principal amount of Debentures or New
Debentures, as the case may be, for each share of Common Stock.
Certain Federal Income Tax
Considerations..................... For a discussion of the federal income tax considerations related to the
exchange of the Debentures for the New
Debentures and the Cash Payment, see
"Federal Income Tax Considerations".
Exchange Agent............................The Chase Manhattan Bank (the
"Exchange Agent"), 450 West 33rd Street,
8th floor, New York, New York 10001.
Further Information.................. For further information concerning procedures for tendering Debentures,
please contact either the Exchange Agent or the Company. At the
Company, please contact Franklin R. Stoner at (860) 242-0761.
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</TABLE>
THE COMPANY
General
The Company was incorporated under the laws of the State of Connecticut
in 1951. The Company's principal executive offices are located at 1280 Blue
Hills Avenue, Bloomfield, Connecticut.
The Company has historically made investments in companies that
operated in several highly diverse segments, and which required extensive
management participation in operation and restructure. Since 1991, the Company's
primary investment has been The J. M. Ney Company ("J.M. Ney") which has
operated in three industry segments: electronics manufacturing and supply,
ultrasonic cleaning equipment, and dental supplies. In November 1995, J.M. Ney
sold the assets and certain liabilities of the dental segment. In addition to
the investment in J.M. Ney, since April 1993, the Company held an investment in
Digital GraphiX, Incorporated ("DGI"), a video graphics company. DGI sold
substantially all of its assets in April 1997 and is currently in the process of
winding up its affairs. The Company also holds a portfolio of marketable
securities primarily comprised of the common stock of certain financial
institutions and certain Russian and Eastern European equity securities. The
Company also owns an investment in a joint venture, which has investments in a
company that holds agreements to develop data transmission networks throughout
the Commonwealth of Independent States. The Company owns a 108,000 square foot
building in Bloomfield, Connecticut which it leases to its subsidiary, Ney
Ultrasonics, and to former subsidiaries and third parties.
On June 1, 1997, as part of a strategic reorganization of the Company,
Oliver R. Grace, Jr., the Company's Chairman of the Board, became President and
Chief Executive Officer, and Francis E. Baker, the Company's President, became
Secretary and Chairman of the Board. As part of this strategic reorganization,
the Company plans to relocate its principal executive offices from Bloomfield,
Connecticut to New York, New York during 1998.
Electronics Segment
The electronics segment is a full-service, precious metal and parts
supplier to automotive, medical, industrial electronics, military and
semi-conductor manufacturers. The fully integrated approach of J.M. Ney includes
fabrication and manufacture of its precious metal alloys, as well as design,
engineering and metallurgical support. The fabrication capabilities include
stamping, wire drawing, rolling from ingot to foil, precision turning, injection
and insert molding and refining.
J.M. Ney specializes in the engineering and manufacturing of precious
metal alloy contacts and contact assemblies aimed at low amperage applications.
Electrical contacts made of precious metals, including gold, platinum, palladium
and silver, are considered extremely dependable as the materials are inert and
highly resistant to corrosion and wear. In developing a finished contact or
assembly, J.M. Ney's technical staff works closely with customers, typically on
an engineer-to-engineer level, in order to design a product that meets all of
the metallurgical, electronic, dynamic and other performance specifications
required for the customer's applications. J.M. Ney designs and builds the
necessary molds and tools as well as designs and manufactures the end product.
By controlling the total process, J.M. Ney has a competitive advantage over
other companies in technology, cost and response time. J.M. Ney is certified in
all applicable quality standards, including certification for the manufacture of
its products, certification for production and supply of precious metal alloys,
dental alloys and products, as well as approval by the Japanese Industrial
Standards and the United States Food and Drug Administration.
J.M. Ney's business has limited direct competition with regard to the
manufacture of low amperage precious metal contacts and assemblies due to the
inherent risks which accompany the engineering and manufacture of precious
metals (i.e., high start-up and inventory costs, theft, etc.). While some
competitors offer similar products, the Company believes that these operations
lack the vertical integration to compete across the entire spectrum of products.
J.M. Ney faces indirect competition from companies such as Engelhard Corporation
and Johnson Matthey, Inc., which have significantly greater resources and which
are involved in higher volume production of more standard precious metal alloys.
J.M. Ney sells to more than 800 customers, with approximately 85% of
its sales being made to customers in the United States. J.M. Ney's sales are
made domestically through both field sales and manufacturers' representatives
located in key geographic markets. Internationally, J.M. Ney sells through
manufacturers' representatives, independent distributors and original equipment
manufacturers. No customer in the Electronics segment accounted for more than
10% of the Company's consolidated sales in fiscal 1997.
In connection with the sale of the assets and liabilities of J.M. Ney's
Dental segment in November, 1995, J.M. Ney entered into a three year
manufacturing agreement to alloy and fabricate precious metals for the purchaser
of J.M. Ney's dental business. As part of this agreement, J.M. Ney and the
Company agreed, for a ten-year period, not to sell alloys, equipment or
merchandise into the dental market served by the purchaser. The Company is,
however, permitted to continue producing, selling and marketing precious metal
copings and other machined and molded parts and material for use in the dental
implant industry.
Ultrasonics Segment
The Ultrasonics segment, which consists of J.M. Ney's majority-owned
subsidiary, Ney Ultrasonics Inc. ("Ney Ultrasonics"), has focused on working
with high-end electronic, semi-conductor, disk-drive, medical and aerospace
customers to provide the advanced capabilities of patented ultrasonic cleaning
technology. Ney Ultrasonics' products have become the preferred choice in
ultrasonics cleaning for numerous OEM system integrators and fabricators.
J.M. Ney's EnviroSONIK(TM) and Torrent(TM) cleaning systems continue to
replace equipment and processes that use ozone-depleting chemicals which are
being phased out under mandates of provisions in the Clean Air Act of 1990. Ney
Ultrasonics is the exclusive licensee of the patented ultrasonic technology used
in its products. These products are capable of cavitating some of the newer
replacement chemistries and also incorporate technologies that eliminate damage
to microminiature components typically caused by ultrasonic equipment produced
by other manufacturers.
<PAGE>
Ney Ultrasonics competes with a number of national and regional
companies on the basis of cleaning performance, price and delivery. Ney
Ultrasonics' generators carry a three-year general warranty which is not
generally offered by its competitors.
No customer in the Ultrasonics segment accounted for more than 10% of
the Company's consolidated sales in fiscal 1997.
Other Investments
The Company also holds a portfolio of marketable securities primarily
comprised of the common stock of certain financial institutions and certain
Russian and Eastern European equity securities. Other marketable securities
include stock in Centennial Cellular Corporation and non-investment grade
high-yield bonds.
DGI, a video graphics company, comprised the Company's Video Products
segment. In April 1997 DGI sold substantially all of its assets and received the
approval of its shareholders to liquidate. The Company has received partial
liquidating dividends in August and October 1997 totaling $1.10 per share, or an
aggregate of $258,867. The liquidation is expected to be completed by February
1998. At November 30, 1997 the carrying value of this investment is zero.
The Company also holds an investment in Treglos Investments, LTD, a
joint venture which is investing in a Russian telecommunications company that
has agreements to develop a data transmission network throughout the
Commonwealth of Independent States. The joint venture owns approximately 6% of
the Institute for Automated Systems. Among the joint venture partners are the
Company's Chief Executive Officer and another Director. The carrying value of
this investment at November 30, 1997 is approximately $900,000.
Recent Developments
In December, 1997 J.M. Ney entered into a Securities Purchase Agreement
with BankBoston Connecticut (the "Bank") pursuant to which the Bank loaned
$7,500,000 to J.M. Ney for working capital and general corporate purposes. The
notes mature December, 2004 and are subordinate to other debt of J.M. Ney;
however, the subordinated notes are senior to all amounts payable by J.M. Ney to
the Company in respect of management fees and indebtedness for borrowed money.
The Bank received a second lien on all of the assets of J.M. Ney. In addition,
the Bank received ten-year warrants to purchase up to approximately 4% of the
Common Stock of J.M. Ney. The Securities Purchase Agreement contains restrictive
covenants that limit the transfer of cash or other resources from J.M. Ney to
the Company.
As discussed below, under the heading "The Special Meeting of
Stockholders", the Company plans to seek shareholder approval to amend and
restate the Company's Certificate of Incorporation by modifying the terms of the
Company's Series A Cumulative Convertible Series A Preferred Stock (the "Series
A Preferred Stock") in order to provide for a fixed dividend rate of $1.50 per
share, per year (as compared to a current variable rate, depending upon the
operating income of J.M. Ney, ranging between $0.75 per share, per year, to
$1.75 per share, per year) and to eliminate the provision for mandatory
redemption.
The Company also intends to change its state of incorporation from
Connecticut to Delaware during 1998. Redomestication would require the approval
of the Company's shareholders and lenders.
RESTRICTIVE COVENANTS
The Company is subject to certain covenants under the Indenture (the
"Indenture"), dated as of October 15, 1982, from the Company to The Chase
Manhattan Bank, as successor to Shawmut Bank Connecticut, N.A., as successor to
the Hartford National Bank and Trust Company (the "Debenture Trustee"), pursuant
to which the Debentures were issued, which restrict payment of dividends on or
repurchases of the Company's capital stock
<PAGE>
(collectively, the "Restrictive Covenants"). However, as discussed below under
"Recent Developments Concerning the Debentures", the Company was able to obtain
a waiver of certain of these restrictions for the limited purposes discussed
thereunder.
Under the Indenture, the relevant covenants provide, in pertinent part,
that
So long as any of the [Debentures] shall be Outstanding [as defined], the
Company will not declare any dividends . . . on any stock of the Company or
make, or permit any Subsidiary [as defined] to make, any payment on account of
the purchase, redemption or other retirement of any shares of such stock, . . .
either directly or indirectly, unless . . . after giving effect to such proposed
dividend or other payment or distribution and to any other dividend declared but
not paid, at the date (herein called the "Computation Date") of such declaration
(in the case of a dividend) or of such other payment or distribution, . . . the
sum of the aggregate amount of all dividends declared and all such other
payments and distributions made during the period commencing October 15, 1982 to
and including the Computation Date shall not exceed the sum of:
(i) the aggregate Consolidated Net Income [as defined] computed for the
period commencing September 30, 1982, to and including the end of the last
fiscal quarter of the Company next preceding the date 45 days prior to the
Computation Date;
(ii) the aggregate net cash proceeds received by the Company from sales
subsequent to October 21, 1982, of shares of its stock for cash; and
(iii) the aggregate net cash proceeds received by the Company
from sales subsequent to October 21, 1982, of indebtedness of the
Company convertible into stock of the Company to the extent such
indebtedness has been converted into such stock.
As the result of the losses incurred in fiscal years 1993, 1994 and
1995 and because of redemptions or repurchases of the Company's Series A
Preferred Stock in fiscal years 1992, 1993, 1994, 1996, 1997 and 1998 at prices
ranging from $12.25 to $18.00 per share (see "Risk Factors"), the Company is
prohibited by this covenant from paying any dividends on the Series A Preferred
Stock or the Common Stock, and the Company has omitted the scheduled quarterly
dividend on the Series A Preferred Stock for the past 18 quarters. As of
November 30, 1997, distributions exceeded the sum of Consolidated Net Income and
cash proceeds received by the Company from sales of its stock and indebtedness
convertible into its stock by approximately $2.25 million. However, as discussed
below under "Recent Developments Concerning the Debentures", the Company was
able to obtain a waiver of certain of these restrictions for the limited
purposes of repurchasing and retiring shares of the Series A Preferred Stock.
For a discussion of the effects of this covenant on the Company's future ability
to pay dividends on the Series A Preferred Stock and the Common Stock, see
"Dividends" and "Purposes and Effects of the Exchange Offer".
The Debentures are redeemable at any time at the option of the Company.
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
The indenture pursuant to which the New Debentures are to be issued
(the "New Indenture") does not contain the Restrictive Covenants contained in
the Indenture. If all of the outstanding Debentures are either tendered to the
Company for exchange pursuant to the Exchange Offer or redeemed by the Company,
the Restrictive Covenants will be terminated. The New Debentures will not be
redeemable at the option of the Company.
Other Restrictive Covenants
A certain indenture of trust dated December 20, 1983, from the Company
to the "Trustee" named therein, as amended (the "IRB Indenture"), also restricts
the Company's ability to pay dividends on the Series A Preferred Stock and the
Common Stock. However, the IRB Indenture is less limiting on the Company's
ability to pay dividends than the Indenture.
Under the IRB Indenture, the relevant covenant provides, in pertinent part,
that
The Company will not declare or make or incur any liability to
make any Distribution [as defined] in respect of its capital stock
unless, immediately after giving effect to the proposed Distribution,
Distributions in respect of its capital stock . . . would not exceed
$750,000 plus 60% of Consolidated Net Income [as defined] (or minus
100% in the case of losses).
At November 30, 1997, Distributions exceeded Consolidated Net Income by
approximately $825,000 thereby precluding the Company from making any
Distributions currently. There is approximately $456,000 principal amount of
bonds issued pursuant to the IRB Indenture outstanding at November 30, 1997. The
bonds mature in 2003 but the Company has the right to repurchase and retire the
bonds at any time. If the Company is required to redeem, or elects to redeem,
all the Debentures which have not been tendered into the Exchange Offer, it will
repurchase and retire the principal amount of bonds issued pursuant to the IRB
Indenture before redeeming the Debentures.
THE SPECIAL MEETING OF STOCKHOLDERS
The Company intends to call a Special Meeting of its stockholders on or
about February 25, 1998 (the "Special Meeting"). At this Special Meeting, the
stockholders will be asked to consider and vote upon (a) a proposal (the
"Proposal") to amend and restate the Company's Certificate of Incorporation so
as to eliminate certain restrictions on the payment of dividends on the Common
Stock and the Series A Preferred Stock, to change the dividend payment rate on
the Series A Preferred Stock and to eliminate the requirement that the Company
redeem the Series A Preferred Stock and (b) such other business as may properly
come before the Special Meeting. For purposes of this Offering Circular, the
proposed amended and restated Certificate of Incorporation shall be referred to
as the "Amended Certificate". The Company is presently preparing a Proxy
Statement to accompany the Proposal.
At this Special Meeting, holders of record of the Common stock and the
Series A Preferred Stock will vote as separate classes. Each holder of Common
Stock will be entitled to one vote for each share held. Each holder of Series A
Preferred Stock will be entitled to one vote for each share held.
The presence, in person or by proxy, of the holders of a majority of
the voting power of the outstanding shares of the Common Stock entitled to vote
is necessary to constitute a quorum at the Special Meeting. Approval of the
Proposal by the class of Common Stock holders will require that more votes of
the Common Stock must be cast in favor of the Proposal than against the
Proposal.
However, even if the Proposal is approved at the Special Meeting by the
requisite percentage of the class of Series A Preferred Stock holders and class
of Common Stock, as discussed above, the Company will not file the Amended
Certificate and otherwise implement the Proposal unless the Company has legally
available funds: (a) to purchase all Debentures not tendered in the Exchange
Offer; (b) to extinguish the IRB Indenture; and (c) to pay the accrued dividend
arrearage on the Series A Preferred Stock.
If more than a majority but less than 85% of the outstanding shares of
Series A Preferred Stock are voted in favor of the Proposal, and at least a
majority of the outstanding shares of Common Stock are voted in favor of the
Proposal, the Company may, but shall not be obligated to, remove the Restrictive
Covenants by purchasing any Debentures not tendered in the Exchange Offer and
extinguish the IRB Indenture. If the Restrictive Covenants are not removed, the
Company will be unable to pay the dividend arrearage for the foreseeable future.
Unless the dividend arrearage are paid, the Amended Certificate will not be
filed.
If 85% or more of the outstanding shares of Series A Preferred Stock
are voted in favor of the proposal, at least a majority of the shares of Common
Stock are voted in favor of the Proposal, and at least 66 2/3% of the Company's
outstanding Debentures are tendered in the Exchange Offer, then, subject to the
legal availability of funds, the Company will: (1) purchase any Debentures not
tendered in the Exchange Offer; (2) extinguish the IRB Indenture; (3) pay the
dividend arrearage on the Series A Preferred Stock; and (4) file the Amended
Certificate.
SEE "RESTRICTIVE COVENANTS" and "DIVIDENDS".
For further information regarding the Special Meeting, and/or for a
copy of the Proxy Statement when and if issued, see "Summary of the Exchange
Offer - Further Information".
RECENT DEVELOPMENTS CONCERNING THE DEBENTURES
As discussed above under "Restrictive Covenants", the Company is
subject to certain covenants under the Indenture which restrict payment of
dividends on or repurchases of the capital stock of the Company. Since April
1993, the Restrictive Covenants have prohibited the Company from declaring and
paying a dividend on the Company's Series A Preferred Stock or Common Stock. As
of November 30, 1997, the aggregate amounts of the dividend arrearage on the
Series A Preferred Stock was approximately $1.2 million.
The terms of the Series A Preferred Stock provide that if and whenever
six quarterly dividends (whether or not consecutive) payable on the Series A
Preferred Stock shall be in arrears, whether or not earned or declared, the
number of directors then constituting the Board of Directors of the Company
shall be increased by one and the holders of the Series A Preferred Stock,
voting together a class, are entitled to elect one additional director to the
Company's Board of Directors at any annual meeting of shareholders or a special
meeting held in place thereof, or at a special meeting of the holders of the
Series A Preferred Stock. Since October 16, 1994, the Company has been in
arrears for at least six consecutive quarters in the payment of the dividends on
the Series A Preferred Stock. If and when the dividends which are in arrears on
the Series A Preferred Stock shall have been paid or declared and set apart for
payment, the rights of the holders of the Series A Preferred Stock to elect such
additional director shall cease (but always subject to the same provisions for
the vesting of such voting rights in the case of any similar future arrearages
in dividends), and the term of office of any person elected director by the
holders of the Series A Preferred Stock shall terminate. The Company has advised
the holders of the Series A Preferred Stock that they may wish to consider such
election at a special meeting to be called in accordance with the terms of the
Series A Preferred Stock. As of the date hereof, no special meeting of the
Series A Preferred Stockholders had been held or scheduled.
In response to the effect the Restrictive Covenants have had on the
Company's ability to declare and pay dividends on the Series A Preferred Stock,
the Company has undertaken a series of efforts to retire the Series A Preferred
Stock.
In January, 1996, the Company consummated a self-tender offer, that had
commenced in June, 1995, and purchased for cash (the "Offer to Purchase")
299,561 shares of Series A Preferred Stock for a purchase price of $12.25 per
share, or approximately $3.67 million in the aggregate. Of that purchase price,
approximately $1.50 per share of the consideration for the Series A Preferred
Stock represented an amount that was approximately equivalent to the eight
quarterly dividends that the Company had not been able to declare and pay on the
Series A Preferred Stock since April 15, 1993, the last date on which the
Company declared and paid dividends on the Series A Preferred Stock. At May 8,
1995, prior to commencement of the self-tender offer, 589,036 shares of Series A
Preferred Stock had been outstanding. The Company paid for the shares of Series
A Preferred Stock purchased with a portion of the net cash proceeds received
from the sale of the J.M. Ney Dental segment.
The Company was able to consummate the self-tender offer because the
holders of a majority in principal amount of the Debentures at the time
outstanding waived compliance with the Restrictive Covenants.
<PAGE>
In October 1996 the Company sought and received a second waiver of
compliance with the Restrictive Covenants to permit the Company to use up to
$6,000,000 to repurchase shares of the Company's capital stock, including the
Series A Preferred Stock. To date the Company has purchased an additional 33,027
shares of Series A Preferred Stock through this repurchase program at an
aggregate price of approximately $552,000.
Beginning March 1, 1996, and on each succeeding anniversary thereof,
the Company is required to redeem 160,000 shares of its Series A Preferred Stock
(to the extent that the Company has funds legally available therefor and subject
to the Restrictive Covenants) at a price of $18.75 per share plus accrued and
unpaid dividends up to the date of payment. Under that formula, at March 1,
1996, the Company would have been required to redeem 160,000 shares of Series A
Preferred Stock at a price of approximately $21.03 per share including the
accrued and unpaid dividends, assuming that aggregate dividends of $0.75, $0.75
and $0.78 per share of Series A Preferred Stock had been accrued for the fiscal
years ended February 28, 1994 and 1995 and February 29, 1996, respectively.
However, as a result of its purchase of 299,561 shares of Series A Preferred
Stock pursuant to the self tender offer as well as other open market purchases
of the Series A Preferred Stock to date (approximately 215,000 shares), the
Company was entitled to a share-for-share credit against the Company's mandatory
redemption obligations of 160,000 shares of Series A Preferred Stock scheduled
for each of March 1, 1996, March 1, 1997 and March 1, 1998 and has a credit of
approximately 33,000 shares towards its March 1, 1999 obligation. As of the date
of this Offering Circular, 256,448 shares of Series A Preferred Stock remain
outstanding.
RISK FACTORS
Debentureholders should consider the factors set forth below, as well
as the other information set forth in this Offering Circular, in determining
whether to participate in the Exchange Offer.
Potential Loss of Protective Covenants
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption. In addition, under certain
conditions of the Exchange Offer, the Company may elect to purchase and redeem
all the Debentures which have not been tendered. See "The Exchange Offer -
Conditions of the Exchange Offer". If the Company is obligated to redeem up to
33 1/3% in aggregate principal amount of the outstanding Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to date of redemption, then the Company would have to pay approximately $1.9
million.
Assuming that all of the outstanding Debentures are either tendered to
the Company for exchange pursuant to the Exchange Offer or redeemed by the
Company, the Restrictive Covenants would be terminated. Since the New Indenture
does not contain the Restrictive Covenants or any covenants similar to them, and
if the Company is required to redeem, or elects to redeem, the Debentures which
have not been so tendered pursuant to the Exchange Offer, then the Company will
repurchase and retire the principal amount (approximately $456,000) of bonds
outstanding, which were issued under the IRB Indenture, so that it will be free
to declare and pay dividends on its capital stock and to make any payment on
account of the purchase, redemption or other retirement of any shares of its
capital stock without restriction. This would require the Company to pay the
accrued dividend arrearage on the Series A Preferred Stock of approximately $1.2
million and to pay the scheduled quarterly dividend on Series A Preferred Stock,
subject to having legally available funds, as it becomes due. The loss of the
protective covenants could have a materially adverse effect on the Company's
ability to preserve its assets and properties for the benefit of the holders of
the New Debentures.
Absence of Trading Market
Prior to the consummation of the Exchange Offer, there will not have
been any trading market for the New Debentures. The New Debentures will not be
listed on any securities exchange or quoted in any automated inter-dealer
quotation system and it is unlikely that a trading market for the New Debentures
will develop. This may adversely affect the ability of a holder of New
Debentures to sell or transfer all or a portion of such New Debentures prior to
their maturity.
Ranking of New Debentures
The New Debentures issued in the Exchange Offer will rank pari passu
with the Debentures in right of payment and will be senior to the Company's
Series A Preferred Stock and Common Stock.
Sinking Fund for the New Debentures
On or prior to each October 15 to and including October 15, 2006, the
New Debentures are subject to mandatory redemption through operation of a
sinking fund in an amount equal to 10% of the aggregate principal amount of New
Debentures issued in the Exchange Offer at a redemption price of 100% of the
principal amount thereof, plus accrued interest to the date fixed for
redemption. The New Debentures are not otherwise subject to redemption at the
option of the Company. See "Description of New Debentures - Sinking Fund". The
Debentures are subject to mandatory redemption through operation of a sinking
fund in the amount of $834,000 on each October 15 through October 15, 2001, at
100% of the principal amount thereof, plus accrued interest to the date fixed
for redemption. In addition, the Company may at its option, on each October 15
through October 15, 2001, pay to the Debenture Trustee as and for an optional
sinking fund, up to $834,000 to be applied to the redemption of Debentures.
Restrictions on Series A Preferred Stock and Common Stock Dividends
As the result of the losses incurred in fiscal years 1993, 1994 and
1995 and because of redemptions or repurchases of the Company's Series A
Preferred Stock in fiscal years 1992, 1993, 1994, 1996, 1997 and 1998 at prices
ranging from $12.25 to $18.00 per share (see "Risk Factors" and "Recent
Developments Concerning the Debentures"), the Company is prohibited by the
Restrictive Covenants from paying any dividends on the Series A Preferred Stock
or the Common Stock, and the Company has omitted the scheduled quarterly
dividend on the Series A Preferred Stock for the past 18 quarters. As of
November 30, 1997 distributions exceeded the sum of Consolidated Net Income and
cash proceeds received by the Company from sales of its stock and indebtedness
convertible into its stock by approximately $2.25 million. However, as discussed
above under "Recent Developments Concerning the Debentures", the Company was
able to obtain a waiver of certain of these restrictions for the limited
purposes of repurchasing and retiring shares of the Series A Preferred Stock.
For a discussion of the effects of this covenant on the Company's future ability
to pay dividends on the Series A Preferred Stock and the Common Stock, see
"Dividends" and "Purposes and Effects of the Exchange Offer".
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption. In addition, under certain
conditions of the Exchange Offer, the company may elect to purchase and redeem
all the Debentures which have not been tendered. See "The Exchange Offer -
Conditions of the Exchange Offer".
In the event that all of the outstanding Debentures are either tendered
to the Company for exchange pursuant to the Exchange Offer or redeemed by the
Company, the Restrictive Covenants contained in the Indenture with respect to
the payment of dividends on and repurchases of the Company's capital stock,
including the Series A Preferred Stock, would be terminated.
<PAGE>
The Company has the right to repurchase and retire the bonds issued
pursuant to the IRB Indenture at any time. If the Company is required to redeem,
or elects to redeem, all the Debentures which have not been tendered into the
Exchange Offer, it will repurchase and retire the principal amount of bonds
issued pursuant to the IRB Indenture before redeeming the Debentures.
Any continuing inability of the Company to meet its dividend
requirements on the Series A Preferred Stock could have a materially adverse
effect on the market price of the Company's Common Stock. The Debentures and the
New Debentures are convertible at the option of the holder into shares of the
Company's Common Stock at fixed prices.
Certain Effects of the Exchange Offer
Following the consummation of the Exchange Offer, the business and
operations of the Company will be continued by the Company substantially as they
are currently being conducted. Except as disclosed herein, the Company has no
present plan or proposal that would result in (i) the acquisition by any person
of additional securities of the Company, or the disposition of securities of the
Company, (ii) an extraordinary corporate transaction, such as a merger,
reorganization, liquidation or sale, or transfer of a material amount of assets,
involving the Company or any of its subsidiaries, (iii) any change in the
present Board of Directors of the Company, or management of the Company,
including, but not limited to, a plan or proposal to change the number or term
of the directors or to change any material term of the employment contract of
any executive officer, (iv) any material change in the present dividend rates or
policies in respect of its capital stock or indebtedness or capitalization of
the Company, (v) any other material change in the Company's corporate structure
or business or (vi) any changes in the Company's Certificate of Incorporation,
by-laws or instruments corresponding thereto or any other action regarding the
acquisition or control of the Company by any person, except that the Company
presently intends to propose to its stockholders that its Certificate of
Incorporation be amended and restated. However, there can be no assurance that
one or more future events might not occur which could alter the Company's
present plans. See "The Company - Recent Developments" and "The Special Meeting
of Stockholders".
The IRB Indenture
The IRB Indenture restricts the Company's ability to pay dividends on
the Series A Preferred Stock and the Common Stock. However, the IRB Indenture is
less limiting on the Company's ability to pay dividends than the Indenture. See
"Restrictive Covenants - Other Restrictive Covenants". The Company has the right
to repurchase and repurchase and retire the principal amount of bonds issued
pursuant to the IRB Indenture at any time. If the Company is required to redeem,
or elects to redeem, all the Debentures which have not been tendered into the
Exchange Offer, it will repurchase and retire the principal amount of bonds
issued pursuant to the IRB Indenture before redeeming the Debentures. In the
event the Company was unable to retire all of the bonds issued pursuant to the
IRB Indenture, the restrictions on dividends contained in the IRB Indenture
would remain in full force and effect.
Interests of Certain Persons in the Exchange Offer
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company, and Mr. John S. Grace, a Director of the Company,
members of their families, their affiliates and trusts formed for the benefit of
Oliver R. Grace, Jr. and John S. Grace and their families have agreed to tender
all Debentures they beneficially own pursuant to the Exchange Offer. As of
December 31, 1997, these Debentureholders beneficially owned in the aggregate
$2,274,000 principal amount of Debentures, representing approximately 40.14% of
the aggregate principal amount of Debentures. These Debentureholders could
increase their percentage ownership interest of the New Debentures depending
upon the principal amount of Debentures tendered in the Exchange Offer.
The Exchange Offer is open to all Debentureholders, including certain
officers, Directors and affiliates of the Company. Any exchange of Debentures
tendered by any such officers, Directors or affiliates will be on the same terms
and conditions offered to all Debentureholders.
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to retire the Debentures
in order to eliminate the Restrictive Covenants which restrict the Company's
ability to make payments in respect of dividends, redemptions and repurchases of
its Series A Preferred Stock and Common Stock and to increase Debentureholder
value by giving holders of the Company's Debentures the opportunity to receive
the Cash Payment and New Debentures. The New Debentures represent the
opportunity to receive a fixed return at the same rate as the Debentures but the
New Debentures carry an extended maturity date. The terms of the New Debentures
also eliminate the Company's ability to redeem the New Debentures at the
Company's option. The Exchange Offer gives Debentureholders the opportunity to
exchange their Debentures without the usual transaction costs, rather than the
less certain means of liquidating their investment in the Debentures through
private sale, possible mandatory redemption or conversion to Common Stock in the
future.
Under the Restrictive Covenants as now in effect, the Company must have
sufficient Consolidated Net Income determined on a cumulative basis, net of
losses, dividends and prior redemptions or repurchases of stock, plus cash
proceeds received by the Company from sales of its stock and indebtedness
convertible into stock, in order to redeem or repurchase shares or to pay
dividends on the Series A Preferred Stock or the Common Stock. Under this test,
at November 30, 1997, the Company would have needed to earn approximately $2.25
million before it could redeem or repurchase shares of or pay dividends on the
Series A Preferred Stock or the Common Stock.
As discussed above under "Recent Developments Concerning the
Debentures", in response to the effect the Restrictive Covenants have had on the
Company's ability to declare and pay dividends on the Series A Preferred Stock,
the Company has undertaken a series of efforts to retire the Series A Preferred
Stock.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption. In addition, under certain
conditions of the Exchange Offer, the Company may elect to purchase and redeem
all the Debentures which have not been tendered. See "The Exchange Offer -
Conditions of the Exchange Offer".
The New Indenture does not contain the Restrictive Covenants contained
in the Indenture. To the extent all of the outstanding Debentures are either
tendered to the Company for exchange pursuant to the Exchange Offer or redeemed
by the Company, the Restrictive Covenants would be terminated. To the extent
less than all of the outstanding Debentures are tendered for exchange or
otherwise redeemed by the Company, the Restrictive Covenants contained in the
Indenture would remain in effect with respect to the payment of dividends on and
repurchases of the Company's capital stock, including the Series A Preferred
Stock.
The Company has the right to repurchase and retire the bonds issued
pursuant to the IRB Indenture at any time. If the Company is required to redeem,
or elects to redeem, all the Debentures which have not been tendered into the
Exchange Offer, it will repurchase and retire the principal amount of bonds
issued pursuant to the IRB Indenture before redeeming the Debentures.
In the event one or more holders of New Debentures were to convert
their New Debentures into shares of the Company's Common Stock, there will be a
lesser amount of indebtedness outstanding ranking prior to the Common Stock. See
"Pro Forma Data" for the anticipated effects of the Exchange Offer on the
Company's capital structure and for certain pro forma effects of the Exchange
Offer.
The New Debentures will rank pari passu with the Debentures in terms of
payment of principal and interest.
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a
Director of the Company, and Mr. John S. Grace, a Director of the Company,
members of their families, their affiliates and trusts formed for the benefit of
Oliver R. Grace, Jr. and John S. Grace and their families have agreed to tender
all Debentures they beneficially own pursuant to the Exchange Offer. As of
December 31, 1997, these Debentureholders beneficially owned in the aggregate
$2,274,000 principal amount of Debentures, representing approximately 40.14% of
the aggregate principal amount of Debentures. These Debentureholders could
increase their percentage ownership interest of the New Debentures depending
upon the principal amount of Debentures tendered in the Exchange Offer.
Upon the terms and subject to the conditions of the Exchange Offer,
Debentureholders who tender Debentures accepted by the Company will receive the
Cash Payment and New Debentures promptly upon consummation of the Exchange Offer
and, as holders of New Debentures, will be entitled to the rights and privileges
available to holders of New Debentures, but will no longer be entitled to any
right to receive interest on the Debentures that accrues after the date of
consummation of the Exchange Offer. See "Summary Comparison of Terms of the
Debentures and the New Debentures".
The New Debentures are not listed on any securities exchange and the
Company does not intend to make an application to list the New Debentures on any
such exchange. See "Risk Factors" and "Federal Income Tax Considerations".
Assuming that all Debentures outstanding on the date of this Offering
Circular were tendered for exchange pursuant to the Exchange Offer, the Company
would be required to pay an aggregate of $56,650 in respect of all Cash
Payments. The Company intends use its cash on hand to satisfy its obligations
with respect to the Cash Payments.
SUMMARY COMPARISON OF TERMS OF THE DEBENTURES AND THE NEW DEBENTURES
The following table summarizes the existing rights and preferences of
the Company's Debentures and the New Debentures. Each capitalized term utilized
in this subsection and not otherwise defined in this Offering Circular shall
have the meaning ascribed to it in the Indenture. See "Description of
Debentures" and "Description of New Debentures".
<PAGE>
<TABLE>
<S><C> <C> <C>
Debentures New Debentures
Principal Amount........... $5,665,000 in aggregate principal Assuming all Debentures are
amount currently outstanding. tendered for exchange, $5,665,000
aggregate principal amount will be
outstanding.
Interest Payment
Frequency............... Semi-annually. Semi-annually.
Interest Payments.......... $105 per annum in interest, $105 per annum in interest,
payable semi-annually on April 15 accruing from October 15, 1997,
and October 15 for each $1,000 payable semi-annually on April 15
principal amount Debenture. and October 15 for each $1,000
principal amount New Debenture.
Conversion................. Convertible into shares of Common Convertible into shares of Common
Stock at the rate of $16.17 per Stock at the rate of $16.17 per
share, subject to adjustment under share, subject to adjustment under
certain circumstances. certain circumstances.
Maturity................... October 15, 2002 October 15, 2007
Optional Redemption........ Redeemable at the option of the None.
Company at a redemption price of
100% of the principal amount
thereof, plus accrued interest to
the date fixed for redemption.
Mandatory Redemption
and Sinking Fund........ On or prior to each October 15 to On or prior to each October 15 to
and including October 15, 2001, at and including October 15, 2006, at
a redemption price of 100% of the a redemption price of 100% of the
principal amount thereof, plus principal amount thereof, plus
accrued interest to the date fixed accrued interest to the date fixed
for redemption, in an amount equal for redemption, in an amount equal
to $834,000 aggregate principal to 10% of the aggregate principal
amount of Debentures, plus, at the amount of New Debentures issued in
option of the Company, an amount the Exchange Offer.
up to an additional $834,000
aggregate principal amount.
Subordination.............. Subordinated in right of payment Subordinated in right of payment
to the prior payment in full of to the prior payment in full of
all Superior Indebtedness. all Senior Indebtedness.
Indenture Trustee.......... The Chase Manhattan Bank The Chase Manhattan Bank
</TABLE>
<PAGE>
SUMMARY FINANCIAL DATA
The Company
.........The following table sets forth, in summary form, certain financial
data of the Company for each of the periods indicated. This summary is qualified
in its entirety by the detailed information and financial statements included in
the documents incorporated herein by reference. See "Incorporation of Certain
Documents by Reference".
<PAGE>
<TABLE>
<S><C> <C> <C> <C> <C>
Nine Months Ended Years Ended
November 30, February 28/29,
1997 1996 1997 1996
(dollars in thousands, except per share amounts)
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Revenues:
Net sales $ 22,724 $ 19,253 $ 24,517 $ 23,235
Investment and other income (loss) 3,560 (860) (142) 813
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Total Revenues 26,284 18,393 24,375 24,048
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Costs and Expenses:
Cost of sales 14,645 12,452 15,469 15,398
Selling, general and administrative expenses 5,949 5,310 7,249 9,166
Research and development expenses 1,259 1,103 1,472 1,683
Interest expense 772 599 790 1,237
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Total Costs and Expenses 22,625 19,464 24,980 27,484
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Income (loss) from continuing operations
before income taxes and extraordinary item 3,659 (1,071) (605) (3,436)
Income tax (expense) benefit (1,464) 375 904 1,166
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Income (loss) from continuing operations
before extraordinary item 2,195 (696) 299 (2,270)
Income from discontinued operations, net of
income taxes of $170 -- -- -- 413
Gain on sale of discontinued segment, net of
income taxes of $2,041 -- -- -- 3,790
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Net income 2,195 (696) 299 1,933
Preferred dividend requirement (356) (328) (411) (559)
Reversal of preferred dividends 37 -- 134 1,015
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Income applicable to common shares $ 1,876 $(1,024) $ 22 $ 2,389
======= ======== ========= ========
Earnings (loss) per common share:
Continuing operations -- primary $ 0.96 $0.53 $0.01 $(0.94)
Continuing operations -- fully diluted $ 0.88 [1] [1] [1]
Discontinued operations -- -- -- $ 0.21
Gain on sale of discontinued segment -- -- -- $ 1.96
- ---------------------------------------------------- -------------- --------------- ---------------- -------------------
Income per common share -- primary $1.12 $0.00 $0.01 $1.23
Income per common share -- fully diluted $0.91 $0.00 [1] [1]
Weighted average number of shares 1,953,445 1,946,051 1,946,051 1,934,478
Ratio of earnings to fixed charges 4.16 (0.12) .51 (.87)
Coverage deficiency N/A 2,028 636 5,272
[1] Anti-dilutive
</TABLE>
<PAGE>
Balance Sheet Information
November 30, February 28,
1997 1997
---- ----
(in thousands, except per
share amounts)
Total assets.................... $42,567 37,677
Total liabilities............... 22,284 19,139
Working capital................. 13,552 12,183
Long-term debt and other long-term obligations...... 7,617 8,162
Common stock........................................ 2,103 2,103
Redeemable cumulative convertible Series A 4,760 4,891
Preferred Stock........................................
Additional paid-in capital.......................... 3,248 3,248
Treasury stock...................................... (90) (90)
Retained earnings...................................10,262 8,386
Total Common and Other Stockholders' equity........ 15,523 13,647
Book value per common share ........................ $8.03 $7.05
PRO FORMA DATA
The Exchange Offer will not have a material effect on the Company's
Consolidated Statements of Operations. However, the Exchange Offer could have a
material effect on the Company's cash if the Company is required to redeem, or
elects to redeem, the Debentures which have not been tendered. Assuming that the
Company has to purchase and redeem up to 33 1/3% in aggregate principal amount
of the outstanding Debentures, the total cash requirements of the Exchange Offer
will be approximately $2.5 million, as detailed below:
(i) the Company will have to pay approximately $456,000 to purchase and
retire the bonds issued pursuant to the IRB Indenture;
(ii) the Company will have to pay up to approximately $1.9 million to
purchase and redeem up to 33 1/3% of the Debentures; and
(iii) the Company will have to pay the Cash Payment and the expenses to
be incurred in the Exchange Offer of approximately $115,000.
In addition, if the Restrictive Covenants are eliminated, the Company
will have to pay the accrued dividend arrearage on the Series A Preferred Stock
of approximately $1.2 million.
The Company intends to fund these cash requirements with its available
cash. In the event that its available cash is not sufficient to cover this
requirement, the Company intends to sell some of its marketable securities to
satisfy any shortage. The amount of the cash requirement will be decreased to
the extent that more than 66 2/3% in aggregate principal amount of Debentures
outstanding are tendered for exchange pursuant to the Exchange Offer.
PRICE RANGES OF THE COMMON STOCK
The Company's Common Stock is traded on the over-the-counter market
under the symbol (ANDR) with quotes supplied by the National Market System of
the NASDAQ. The following table sets forth the high and low bid prices for the
Common Stock, as reported on the NASDAQ National Market System, for each
quarterly period since March 1, 1995. The stock prices shown represent prices
between dealers and do not include retail markups, markdowns or commissions and
may not necessarily represent actual transactions.
High Low
Fiscal Year Ended February 29, 1996
First Quarter........................ $6 1/2 $3 3/4
Second Quarter....................... 7 5 1/4
Third Quarter........................ 7 3 1/4
Fourth Quarter....................... 6 1/2 5
Fiscal Year Ended February 28, 1997
First Quarter........................ 6 1/2 3 3/4
Second Quarter....................... 7 5 1/4
Third Quarter........................ 7 3 1/4
Fourth Quarter....................... 6 1/2 5
Fiscal Year Ending February 28, 1998
First Quarter........................ 5 1/2 4 1/2
Second Quarter.............................. 6 1/4 6
Third Quarter.............................. 8 7 1/2
Fourth Quarter through December 23, 1997
7 1/4 5 1/2
.........On December 23, 1997, the last reported sales price for the Common
Stock on the NASDAQ National Market System was $5.50 per share.
.........On December 23, 1997 there were approximately 700 holders of
record of the Common Stock and the number of outstanding shares of the Common
Stock was 1,935,478.
DIVIDENDS
The Company's ability to pay dividends on the Series A Preferred Stock
and the common Stock is currently restricted by the Restrictive Covenants
contained in the Indenture and by the provisions of the IRB Indenture. Under
these restrictions, the Company will be unable to pay future quarterly dividends
on the Series A Preferred Stock or its Common Stock for the foreseeable future.
In the event that (i) at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer
and (ii) a proposal to amend the Company's Certificate of Incorporation, in
order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption. In addition, under certain
conditions of the Exchange Offer, the Company may elect to purchase and redeem
all the Debentures which have not been tendered.
See "The Exchange Offer - Conditions of the Exchange Offer".
In the event that all of the outstanding Debentures are either tendered
to the Company for exchange pursuant to the Exchange Offer or redeemed by the
Company, the Restrictive Covenants contained in the Indenture with respect to
the payment of dividends on and repurchases of the Company's capital stock,
including the Series A Preferred Stock, would be terminated.
The Company has the right to repurchase and retire the bonds issued
pursuant to the IRB Indenture at any time. If the Company is required to redeem,
or elects to redeem, all the Debentures which have not been tendered into the
Exchange Offer, it will repurchase and retire the principal amount of bonds
issued pursuant to the IRB Indenture before redeeming the Debentures. In the
event the Company was unable to retire all of the bonds issued pursuant to the
IRB Indenture, the restrictions on dividends contained in the IRB Indenture
would remain in full force and effect. See "Restrictive Covenants".
The amount of accrued but unpaid dividends on the Series A Preferred
Stock at November 30, 1997 was approximately $1.2 million in the aggregate, or
approximately $4.77 per share. The Company has not paid a dividend on shares of
its Common Stock since 1993. If the Restrictive Covenants are eliminated, the
Company will be required to pay the accrued dividend arrearage on the Series A
Preferred Stock. Irrespective of the restrictions contained in the Indenture and
the IRB Indenture, the Company does not intend to pay a dividend on its shares
of Common Stock for the foreseeable future.
Dividends on the Series A Preferred Stock are payable as and when
declared by the Board of Directors out of funds legally available therefor.
Dividends accrue quarterly on February 28/29, May 31, August 31 and November 30
of each year. The dividend rate on the Series A Preferred Stock is an adjustable
rate that is based on the operating income of J.M. Ney, but which rate will in
no event be less than $0.1875 per share per quarter and no more than $0.4375 per
share per quarter. The Company intends to call a Special Meeting of its
stockholders to consider and vote upon the Proposal to amend and restate the
Company's Certificate of Incorporation to modify the terms of the Series A
Preferred Stock in order to change the dividend payment rate and to eliminate
the mandatory redemption feature. See "The Special Meeting of Stockholders".
As a result of losses incurred in fiscal years 1993, 1994 and 1995 and
redemptions or repurchases of the Series A Preferred Stock in fiscal years 1992,
1993, 1994, 1995, 1996, 1997 and 1998 at prices ranging from $12.25 to $18.00
per share, the Restrictive Covenants have prevented the Company from declaring
or paying dividends on its Series A Preferred Stock since April 15, 1993. See
"Recent Developments Concerning the Debentures" and "Restrictive Covenants".
Nevertheless, dividends have been accrued during this period at the minimum
annual rate per share of $.75 for the fiscal years 1994 and 1995, at $.78 per
share for fiscal year 1996, at $1.24 per share for fiscal year 1997, and at
$1.25 per share for the nine month period ended November 30, 1997.
<PAGE>
THE EXCHANGE OFFER
Terms of the Exchange Offer
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the accompanying applicable Letter of Transmittal, to
exchange Debentures for a like principal amount of its New Debentures and the
Cash Payment as set forth below:
The holder of such
Debenture will receive:
Debenture. . . . . . . . . . . . . . . $1,000 principal amount of New
Debentures and $10.00 cash
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
The Exchange Offer is, however, subject to certain other customary
terms and conditions set forth herein and in the accompanying applicable Letter
of Transmittal. See "- Conditions of the Exchange Offer", below and "The Special
Meeting of Stockholders". Subject to the foregoing, the Company will accept any
and all Debentures properly tendered in the Exchange Offer prior to the
Expiration Date. Tendered Debentures accepted by the Company for exchange will
be retired.
In the event that the Company modifies the consideration offered for
the Debentures in the Exchange Offer, the modified consideration would be paid
with regard to all Debentures tendered and accepted in the Exchange Offer. If
the consideration is modified, the Exchange Offer will remain open at least ten
business days from the date the Company first gives notice, by public
announcement or otherwise, of such modification, if and to the extent required
by applicable law.
As of November 30, 1997, $5,665,000 aggregate principal amount of
Debentures were outstanding. This Offering Circular, together with the
applicable Letter of Transmittal, is first being sent to all holders of record
of Debentures as of January 9, 1998.
As discussed above, in the event that all of the outstanding Debentures
are either tendered to the Company for exchange pursuant to the Exchange Offer
or redeemed by the Company, the Restrictive Covenants contained in the Indenture
with respect to the payment of dividends on and repurchases of the Company's
capital stock, including the Series A Preferred Stock, would be terminated.
Tendering Debentureholders will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Debentures pursuant
to the Exchange Offer. The Company will pay all reasonable charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"- Payment of Expenses", below.
Tenders of Less than Entire Principal Amount Represented by Certificate for
Debentures
To the extent that less than the entire principal amount of Debentures
represented by a certificate for Debentures is tendered for exchange, and the
Company does not purchase and redeem all Debentures which have not been so
tendered, the registered owner shall receive a new certificate representing
Debentures in the principal amount not tendered for exchange.
Expiration Date; Extensions; Termination; Amendments
The Exchange Offer will expire at 5:00 P.M., Eastern Standard Time, on
February 19, 1998, subject to extension by the Company by notice to the Exchange
Agent as herein provided (the "Expiration Date"). The Company reserves the right
to extend the Exchange Offer at its discretion, in which event the term
"Expiration Date" with regard to the extended Exchange Offer shall mean the time
and date on which such Exchange Offer as so extended shall expire. The Company
shall notify the Exchange Agent of any extension by written notice and shall
make a public announcement thereof, prior to 9:00 A.M., Eastern Standard Time,
on the next business day after the previously scheduled Expiration Date.
The Company reserves the right (i) to delay accepting any Debentures
for exchange, to extend or to terminate the Exchange Offer and not accept for
exchange any Debentures if any of the events set forth below under the caption
"- Conditions of the Exchange Offer" shall have occurred and shall not have been
waived by the Company, by giving written notice of such delay or termination to
the Exchange Agent, and (ii) to amend the terms of the Exchange Offer. Any such
delay in acceptance for exchange, extension, termination or amendment will be
followed as promptly as practicable by public announcement thereof. If the
consideration offered in the Exchange Offer is modified, the Exchange Offer will
remain open at least ten additional business days from the date the Company
first gives notice, by public announcement or otherwise, of such modification.
If the Exchange Offer is amended in any other manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the Debentureholders of
such amendment and the Company will extend the Exchange Offer for a period of
five to ten business days, depending upon the significance of the amendment and
the manner of disclosure to Debentureholders, if the Exchange Offer would
otherwise expire during such five to ten business day period. The rights
reserved by the Company in this paragraph are in addition to the Company's
rights set forth below under "- Conditions of the Exchange Offer".
Procedures for Tendering
The acceptance by a Debentureholder of the Exchange Offer pursuant to
one of the procedures set forth below will constitute an agreement between such
Debentureholder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
To be tendered effectively, certificates for Debentures, together with
the properly completed Letter of Transmittal, executed by the Debentureholder of
record or its assignee and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at the address set forth on
the last page hereof prior to the Expiration Date, except as otherwise provided
below under "Guaranteed Delivery Procedure". LETTERS OF TRANSMITTAL AND
CERTIFICATES FOR DEBENTURES SHOULD BE SENT TO THE EXCHANGE AGENT AND NOT TO THE
COMPANY.
Signatures on the Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Debentures tendered or withdrawn
pursuant thereto are tendered (i) by a Debentureholder of record who has not
completed the box entitled "Special Issuance and Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of a firm that is a member of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc. or by a commercial bank, credit union, savings
association or trust company having an office in the United States (each, an
"Eligible Institution").
In the event a signature is required to be guaranteed in connection
with the above, the signature of the record holder on the endorsement or
instrument of assignment and transfer must correspond with the name as written
upon the face of the certificate in every particular and must be guaranteed by a
guarantor that is a member of a "Signature Guarantee Program" recognized by the
Exchange Agent; i.e., Securities Transfer Agents Medallion Program, Stock
Exchanges Medallion Program and New York Stock Exchanges Medallion Signature
Program.
The method of delivery of certificates of Debentures and other
documents to the Exchange Agent is at the election and risk of the holder. If
such delivery is by mail, it is suggested that the mailing be made sufficiently
in advance of the Expiration Date to permit delivery to the Exchange Agent prior
to the Expiration Date.
If the Letter of Transmittal is signed by a person other than a holder
of record of any certificate(s) listed therein, such 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
certificate(s).
If the Letter of Transmittal or Notice of Guaranteed Delivery or any
certificates or stock powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, proper evidence satisfactory to the
Company of their authority to so act must be submitted.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Debentures will be resolved by
the Company, whose determination will be final and binding. The Company reserves
the absolute right to reject any or all tenders that are not in proper form or
the acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Debentures. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as the
Company shall determine. Neither the Company nor the Exchange Agent shall be
under any duty to give notification of defects in such tenders or shall incur
any liabilities for failure to give such notification. Tenders of Debentures
will not be deemed to have been made until such irregularities have been cured
or waived. Any Debentures received by the Exchange Agent that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering Debentureholder, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
Guaranteed Delivery Procedure
If a Debentureholder desires to tender his or her Debentures and the
certificate(s) representing such Debentures are not immediately available, or
time will not permit such Debentureholder's certificate(s) or any other required
documents to reach the Exchange Agent before the Expiration Date, a tender may
be effected if:
(i) The tender is made through an Eligible Institution;
(ii) Prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery by mail or hand delivery, setting forth
the name and address of the Debentureholder and the principal amount of
Debentures tendered, stating that the tender is being made thereby and
guaranteeing that, within three over-the-counter market trading days
after the Expiration Date, the certificate(s) representing such
principal amount of Debentures, together with the Letter of Transmittal
that has been properly completed and duly executed, and all other
documents required by the Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and
(iii) The certificate(s) for all tendered Debentures, as well
as the Letter of Transmittal that has been properly completed and duly
executed, and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three
over-the-counter market trading days after the Expiration Date.
Conditions of the Exchange Offer
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders"), then the Company shall, in addition to exchanging the Debentures
properly tendered to it as described in the above paragraph, purchase and redeem
all Debentures which have not been so tendered pursuant to the terms of the
Debentures at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
The Company will not be required to accept for exchange any Debentures
not theretofore accepted for exchange or exchanged, and may terminate or amend
the Exchange Offer as provided herein before the acceptance of such Debentures,
if any of the following conditions exist:
(i) any action or proceeding is instituted or threatened in
any court or by or before any governmental agency with respect to the
Exchange Offer that, in the sole judgment of the management of the
Company, may have a material adverse effect on the contemplated
benefits of the Exchange Offer to the Company; or
(ii) there shall have occurred (A) any general suspension of,
or limitation on prices for, trading in securities listed on the
over-the-counter market; (B) a declaration of a banking moratorium by
United States, New York or Connecticut authorities; or (C) a
commencement of a war, armed hostilities or other international or
national emergency directly or indirectly involving the United States.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
such conditions or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. Any determination by the Company
concerning the events described above will be final and binding upon all
parties.
<PAGE>
Acceptance of Debentures for Exchange; Delivery of New Debentures and the
Cash Payment
Upon the terms and subject to the conditions of the Exchange Offer (see
"- Conditions of the Exchange Offer", above), the Company will accept any and
all Debentures properly tendered pursuant to the Exchange Offer and not properly
withdrawn. The Company will cause the Exchange Agent to deliver the New
Debentures and the Cash Payment issued pursuant to the Exchange Offer promptly
after the Expiration Date. The Cash Payment will be in the form of a check made
payable to the registered owner or its assignee of the tendered Debenture.
If any tendered Debentures are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Debentures will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange Offer.
Withdrawal Rights
Any Debentureholder of record or its assignee who has tendered
Debentures may withdraw that tender prior to the Expiration Date, and, unless
previously accepted for exchange by the Company, after 5:00 P.M., Eastern
Standard Time, on March 27, 1998, by delivery of written notice of withdrawal to
the Exchange Agent.
To be effective, a written notice of withdrawal must be timely received
by the Exchange Agent at the address set forth on the last page hereof, must
have a guaranteed signature included thereon (unless not required by the terms
set forth above under "- Procedures for Tendering") and must specify the name of
the person having tendered the Debentures to be withdrawn and the aggregate
principal amount of Debentures to be withdrawn. 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 certificate(s)
evidencing the Debentures withdrawn must also be so furnished to the Exchange
Agent as aforesaid prior to the physical release of the certificate(s) for the
withdrawn Debentures. Withdrawals of tenders of Debentures may not be rescinded,
and any Debentures withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer; provided, however, that withdrawn Debentures may
be retendered by again following one of the procedures described herein so long
as the retender is proper and made prior to the Expiration Date.
All questions as to the validity (including time of receipt) of notices
of withdrawal will be determined by the Company, whose determination will be
final and binding. None of the Company, the Exchange Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
Exchange Agent
The Chase Manhattan Bank has been appointed as the Exchange Agent for
the Exchange Offer. Requests for information concerning procedures for tendering
Debentures or for additional copies of this Offering Circular or the Letter of
Transmittal should be directed to the Exchange Agent. For further information
concerning the Company or the terms of the Exchange Offer, please contact Mr.
Franklin R. Stoner at (860) 242-0761.
Payment of Expenses
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Offering Circular and related
documents to the beneficial owners of Debentures and in handling or forwarding
tenders for their customers.
The cash expenses to be incurred in connection with the Exchange Offer,
including the fees and expenses of the Exchange Agent and printing, accounting
and legal fees, will be paid by the Company and are estimated at $60,000.
The Company will pay all transfer taxes, if any, applicable to the
transfer and sale of Debentures to it or its order pursuant to the Exchange
Offer. If, however, Debenture certificates or substitute Debenture certificates
for any excess principal amount of Debentures not exchanged are to be delivered
to, or are to be registered or issued in the name of, any person other than the
registered holder of the Debentures tendered hereby, or if tendered certificates
are registered in the name of any person other than the person signing the
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the transfer and sale of Debentures to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
holder of record or any other persons) will be payable by the tendering
Debentureholder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering Debentureholder.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the anticipated federal income
tax consequences to the Debentureholders who exchange their Debentures for New
Debentures and the Cash Payment. This discussion is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), regulations of the Treasury
Department, administrative rulings and pronouncements of the Internal Revenue
Service (the "IRS") and judicial decisions, all as of the date hereof. All of
the foregoing are subject to change and any such change may be retroactively
applied. This discussion does not purport to address all of the federal income
tax consequences that may be applicable to particular categories of
Debentureholders, some of which may be subject to special rules.
DEBENTUREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO ANY
FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSIDERATIONS RELEVANT TO THEM.
The exchange of the Debentures for New Debentures and the Cash Payment
is made pursuant to a reorganization in the form of a "recapitalization" within
the meaning of ss. 368 of the Code. Section 354 of the Code provides that no
gain or loss shall be recognized if stock or securities in a corporation which
is a party to a reorganization are, in pursuance of the plan of reorganization,
exchanged solely for stock or securities in such corporation. Section 356 of the
Code provides that receipt of money, in addition to stock or securities, in an
exchange to which ss. 354 of the Code would otherwise apply, will cause the
recognition of realized gain (but not loss) in an amount not in excess of the
sum of the money received.
The Company is of the opinion that the New Debentures are "securities"
within the meaning of ss. 354 of the Code. Receipt of the Cash Payment will
require the recognition of a New Debentureholder's realized gain, if any, (but
not loss) only to the extent of the Cash Payment received. A New
Debentureholder's realized gain is the excess of the amount realized on the
exchange by the New Debentureholder over the exchanging Debentureholder's
adjusted tax basis in the Debentures surrendered. The amount of gain recognized
by a New Debentureholder will be treated as capital gain if the Debentures were
held as capital assets within the meaning of ss. 1221 of the Code. The treatment
of capital gain as long-term capital gain or short-term capital gain depends
upon the Debentureholder's holding period for the Debentures.
For purposes of determining gain or loss on a subsequent disposition of
the New Debentures, a holder of New Debentures will have an adjusted tax basis
in the New Debentures equal to the adjusted tax basis in the Debentures
surrendered, decreased by the amount of the Cash Payment received, and increased
by the amount of gain recognized on the exchange of the Debentures for New
Debentures. The holding period for the New Debentures will include the period
for which the Debentures were held. Holders of New Debentures will include
Interest Payments in their income according to their own methods of accounting.
Pursuant to existing judicial and administrative authority, a
subsequent conversion of New Debentures into the Common Stock of the Company
will not be a taxable event. A holder of Common Stock received as a result of
the conversion of the New Debentures will take a tax basis in the Common Stock
equal to the holder's adjusted tax basis in the New Debentures. The holding
period of the Common Stock received as a result of the exercise of the
conversion right in the New Debentures will include the holding period for the
New Debentures (which, as mentioned above, includes the holding period of the
Debentures for which they were exchanged).
Upon the sale, exchange, or retirement of a New Debenture, the New
Debentureholder will recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement and such
holder's adjusted tax basis in the New Debenture. The amount of gain recognized
by a New Debentureholder will be treated as capital gain if the New Debentures
are held as capital assets within the meaning of ss. 1221 of the Code. The
treatment of capital gain as long-term capital gain or short-term capital gain
depends upon the New Debentureholder's holding period for the New Debentures,
which shall include the holding period of the Debentures for which they were
exchanged.
DESCRIPTION OF NEW DEBENTURES
The New Debentures will be issued under an Indenture (the "New
Indenture"), between the Company and The Chase Manhattan Bank (the "Trustee").
The statements under this caption are brief summaries of certain provisions of
the New Indenture, do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the New
Indenture, including the definitions therein of certain terms. Whenever
particular sections of the New Indenture or terms that are defined in the New
Indenture are referred to herein, it is intended that such sections or defined
terms shall be incorporated by reference herein.
General
The New Debentures will be newly issued in the Exchange Offer and will
be limited to an aggregate principal amount authorized of $5,665,000 and will be
issuable only in registered form under the New Indenture. The aggregate
principal amount of New Debentures to be issued will be determined based upon
the principal amount of the Debentures tendered and accepted by the Company
pursuant to the Exchange Offer. The New Debentures will be pari passu with the
Debentures in right of payment.
The New Debentures will mature on October 15, 2007. Interest on the New
Debentures will be paid from October 15, 1997 and will be payable semi-annually
on April 15 and October 15 of each year, to the persons in whose names the New
Debentures are registered at the close of business on the day 15 days prior to
the payment date, at 10 1/2% per annum. Principal of and interest on the New
Debentures will be payable by check mailed to the registered address of the
person entitled thereto.
The New Debentures constitute unsecured, subordinated indebtedness of
the Company. The New Debentures are issued in minimum denominations of $1,000.
No service charge will be made for any transfer or exchange of the New
Debentures, but the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Subordination
The New Debentures will be subordinated and subject in right of payment
to the prior payment in full of the principal of (and premium, if any) and
interest on all Senior Indebtedness (as defined), provided that certain payments
on the New Debentures may be made, subject to the specific limitations set forth
in the New Indenture. The New Indenture provides that if there shall have
occurred a default in the payment of the principal of (or premium, if any) or
interest on any Senior Indebtedness, or if there shall have occurred an event of
default with respect to any Senior Indebtedness permitting the holders thereof
to accelerate the maturity thereof, or if such payment would itself constitute
such an event of default, then, unless and until such default or event of
default shall have been cured or waived or shall have ceased to exist, no
payment shall be made by the Company on account of principal of or interest on
the New Debentures or on account of the purchase or other acquisition of the New
Debentures. The New Indenture further provides that, upon any distribution of
all or substantially all of the assets of the Company, or upon any dissolution,
winding up or liquidation of the Company, or upon any reorganization,
readjustment, arrangement or similar proceeding relating to the Company or its
property, whether in bankruptcy, insolvency or receivership proceedings or
otherwise, or upon any assignment by the Company for the benefit of creditors,
or upon any other marshalling of the assets and liabilities of the Company, the
holders of all Senior Indebtedness shall first be paid in full in cash or
money's worth all amounts due or to become due thereon before any payment is
made on account of the principal of or interest on the New Debentures. By reason
of such subordination, in the event of insolvency, creditors of the Company who
are not holders of Senior Indebtedness or of the New Debentures may recover
less, ratably, than the holders of Senior Indebtedness and may recover more,
ratably, than the holders of the New Debentures.
The term "Senior Indebtedness" is defined to mean the principal of (and
premium, if any) and interest on indebtedness for money borrowed outstanding on
the date of the New Indenture or thereafter created, assumed or incurred for the
payment of which the Company is at the time of determination responsible or
liable as obligor, guarantor, or otherwise, other than the New Debentures, the
Debentures, and any other such indebtedness with respect to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is, to any extent or in any
manner, subordinated to or subject in right of payment to the prior payment in
full of any other indebtedness or obligation of the Company. At November 30,
1997, the Company had approximately $700,000 (including approximately $456,000
principal amount of bonds outstanding which were issued pursuant to the IRB
Indenture) in aggregate principal amount of outstanding indebtedness that would
constitute Senior Indebtedness under the New Indenture. The New Indenture does
not contain any limitations on the amount of Senior Indebtedness which may be
incurred by the Company so long as the Company is in compliance with the
covenants described below.
Conversion
The New Indenture provides that New Debentureholders have the right to
convert each $1,000 principal amount of New Debentures into shares of Common
Stock at a price of $16.17 aggregate principal amount of New Debentures for each
share of Common Stock. The conversion price is subject to certain adjustments,
among them, provision for stock dividends, stock splits and reclassifications of
the Common Stock. The Company will pay any and all documentary, stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversions of New Debentures. However the Company is not
required to pay any tax which may be payable in respect of any registration of
transfer involved in the issue or delivery of Common Stock in a name other than
that of the holder of the New Debentures to be converted.
Optional Redemption
The New Debentures are not subject to optional redemption.
Sinking Fund
The Debentures are subject to mandatory redemption through operation of
a sinking fund in the amount of 10% of the aggregate principal amount of New
Debentures issued pursuant to the Exchange Offer on each October 15, through
October 15, 2006, at 100% of the principal amount thereof, plus accrued interest
to the date fixed for redemption.
Satisfaction and Discharge of the Indenture
The New Indenture will be discharged upon payment in full of all of the
New Debentures, or upon deposit with the New Debenture Trustee, in trust, of
money in an amount sufficient to pay the principal and each installment of
interest of such New Debentures, on the stated maturity of such payments in
accordance with the terms of the New Indenture and the New Debentures.
The Trustee
The Chase Manhattan Bank is the Trustee under the New Indenture and the
Indenture, and is also the Exchange Agent.
The New Indenture and the provisions of the Trust Indenture Act
incorporated by reference therein contain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Company, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise.
Covenants
The New Indenture does not contain the Restrictive Covenants.
Merger and Consolidation
The New Indenture provides that the Company may, without the consent of
the holders of the New Debentures, consolidate with or merge into any other
corporation, or convey, transfer or lease its properties and assets
substantially as an entirety to any person, provided that in any such case: (i)
the successor corporation shall be a domestic corporation and such corporation
shall assume by a supplemental indenture all the Company's obligations under the
New Indenture; and (ii) immediately after giving effect to such transaction, no
default shall have occurred and be continuing. Upon compliance with these
provisions by a successor corporation, the Company would be relieved of its
obligations under the New Indenture, but the predecessor Company in the case of
a transfer or lease shall not be released from the obligation to pay the
principal of, Redemption Price, if applicable, and premium, if any, and interest
on the New Debentures.
Events of Default
The following events are defined in the New Indenture as "Events of
Default": (i) default in the payment of interest or any mandatory sinking fund
payment when due and continuance of such default for a period of 30 days; (ii)
default in the payment of principal; (iii) default in the performance of any
covenant in the New Indenture for 60 days after notice; and (iv) certain events
of bankruptcy, insolvency or reorganization. If an Event of Default shall occur
and be continuing, either the Trustee or the holders of at least one-third in
principal amount of the outstanding New Debentures may accelerate the maturity
of all New Debentures. Under the New Indenture, the Company will be required to
furnish to the Trustee annually a statement by certain officers of the Company
to the effect that to the best of their knowledge, the Company is not in default
in the fulfillment of any of its obligations under the New Indenture or, if
there has been such a default or defaults, specifying each such default.
The holders of a majority in principal amount of the outstanding New
Debentures have the right, subject to certain limitations, to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, and to waive
certain defaults. The New Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee shall exercise such of its rights and
powers under the New Indenture, and use the same degree of skill and care on
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of his, her or its own affairs. Subject to certain provisions of
the New Indenture, the Trustee is under no obligation to exercise any of its
rights or powers under the New Indenture at the request of any of the holders of
the New Debentures unless they have offered to the Trustee reasonable security
or indemnity against the costs, expenses, and liabilities which might be
incurred by it in compliance with such request.
Modification of the New Indenture
With certain exceptions, the New Indenture may be modified or amended
with the consent of the holders of not less than a majority in principal amount
of the outstanding New Debentures; provided, however, that no such modification
or amendment may be made without the consent of the holder of each Debenture
affected which would: (i) reduce the principal amount of or the interest on any
Debenture, change the stated maturity of the principal of, or any installment of
interest on, any Debenture, or change the other terms of payment or modify the
provisions of the New Indenture with respect to subordination in a manner
adverse to the holders of the New Debentures; or (ii) reduce the percentage of
New Debentures, the consent of the holders of which is required to modify or
amend the New Indenture or to waive certain past defaults.
DESCRIPTION OF DEBENTURES
The following summaries of certain provisions of the Debentures and
Indenture do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture, including the
definition therein of certain terms. Wherever particular Sections or defined
terms of the Indenture are referred to, it is intended that such Sections or
defined terms shall be incorporated herein by reference.
General
The Debentures were issued in registered form in an aggregate principal
amount of $10,000,000 under the Indenture, dated as of October 15, 1982, from
the Company to The Chase Manhattan Bank, as successor to Shawmut Bank
Connecticut, N.A., as successor to the Hartford National Bank and Trust Company.
The Debentures mature on October 15, 2002. Interest on the Debentures
is payable semi-annually on April 15 and October 15 of each year to the persons
in whose names the Debentures are registered at the close of business on the day
15 days prior to the payment date, at 10 1/2% per annum. Principal of and
interest on the Debentures is payable at certain offices or agencies of the
Company or by check mailed to the registered address of the person entitled
thereto.
The Debentures constitute unsecured, subordinated indebtedness of the
Company. The Debentures are issued in minimum denominations of $1,000. No
service charge will be made for any transfer or exchange of Debentures, but the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Subordination
The Debentures are subordinated and subject in right of payment to the
prior payment in full of the principal of (and premium, if any) and interest on
all Superior Indebtedness (as defined), provided that certain payments on the
Debentures may be made, subject to the specific limitations set forth in the
Indenture. The Indenture provides that if there shall have occurred a default in
the payment of the principal of (or premium, if any) or interest on any Superior
Indebtedness, or if there shall have occurred an event of default with respect
to any Superior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if such payment would itself constitute such an event of
default, then, unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist, no payment shall be made by the
Company on account of principal of or interest on the Debentures or on account
of the purchase or other acquisition of Debentures. The Indenture further
provides that, upon any payment by the Company or distribution of assets of the
Company upon any dissolution, winding up or liquidation of the Company, or upon
any reorganization relating to the Company, whether in bankruptcy, insolvency or
receivership proceedings or otherwise, the holders of all Superior Indebtedness
shall first be paid in full in cash or money's worth all amounts due or to
become due thereon before any payment is made on account of the principal,
premium or interest on the Debentures. By reason of such subordination, in the
event of insolvency, creditors of the Company who are not holders of Superior
Indebtedness or of the Debentures may recover less, ratably, than the holders of
Superior Indebtedness and may recover more, ratably, than the holders of
Debentures.
The term "Superior Indebtedness" is defined to mean the principal of
(and premium, if any) and interest on indebtedness for money borrowed
outstanding on the date of the Indenture or thereafter created, assumed or
incurred for the payment of which the Company is at the time of determination
responsible or liable as obligor, guarantor, or otherwise, and any other such
indebtedness with respect to which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
indebtedness is not superior in right of payment to the Debentures. At November
30, 1997, the Company had approximately $700,000 (including approximately
$456,000 principal amount of bonds outstanding which were issued pursuant to the
IRB Indenture) in aggregate principal amount of outstanding indebtedness that
would constitute Superior Indebtedness under the Indenture. The Indenture does
not contain any limitations on the amount of Superior Indebtedness which may be
incurred by the Company.
Optional Redemption
The Debentures are redeemable at any time at the option of the Company,
in whole or in part, on not less than 30 nor more than 60 days notice, given as
provided in the Indenture, at 100% of the principal amount thereof, plus accrued
interest to the date fixed for redemption.
Sinking Fund
The Debentures are subject to mandatory redemption through operation of
a sinking fund in the amount of $834,000 on each October 15 through October 15,
2001, at 100% of the principal amount thereof, plus accrued interest to the date
fixed for redemption. In addition, the Company may at its option, on each
October 15 through October 15, 2001, pay to the Debenture Trustee as and for an
optional sinking fund, up to $834,000 to be applied to the redemption of
Debentures.
Conversion
The Indenture provides that Debentureholders have the right to convert
each $1,000 principal amount of Debentures into shares of Common Stock at a
price of $16.17, as adjusted for a 3 for 2 stock split, aggregate principal
amount of Debentures for each share of Common Stock. The conversion price is
subject to certain adjustments, among them, provision for stock dividends, stock
splits and reclassifications of the Common Stock. The Company will pay any and
all documentary, stamp or similar issue or transfer taxes payable in respect of
the issue or delivery of shares of Common Stock on conversions of Debentures.
However the Company is not required to pay any tax which may be payable in
respect of any registration of transfer involved in the issue or delivery of
Common Stock in a name other than that of the holder of the Debentures to be
converted.
Satisfaction and Discharge of the Indenture
The Indenture will be discharged upon payment in full of all of the
Debentures, or upon deposit with the Debenture Trustee, in trust, of money in an
amount sufficient to pay the principal and each installment of interest of such
Debentures, on the stated maturity or the redemption date in accordance with the
terms of the Indenture and the Debentures.
The Debenture Trustee
The Chase Manhattan Bank is the Trustee under the Indenture and the New
Indenture, and is also the Exchange Agent.
The Indenture and the provisions of the Trust Indenture Act
incorporated by reference therein contain limitations on the rights of the
Debenture Trustee thereunder, should it become a creditor of the Company, to
obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
Debenture Trustee is permitted to engage in other transactions; provided,
however, that if the Debenture Trustee acquires any conflicting interest (as
such conflicting interests are defined in the Indenture) it must eliminate such
conflict or resign.
<PAGE>
Covenants
The Indenture contains, among others, a covenant which restricts
payment of dividends on or repurchases of the Company's capital stock. See
"Restrictive Covenants" and "Purposes of the Exchange Offer" for a discussion of
this covenant and its effect on the Company's ability to consummate the Exchange
Offer.
Merger and Consolidation
The Indenture provides that the Company may, without the consent of the
holders of the Debentures, consolidate with or merge into any other corporation,
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, provided that in any such case: (i) the successor
corporation shall be a domestic corporation and such corporation shall assume by
a supplemental indenture all the Company's obligations under the Indenture; and
(ii) immediately after giving effect to such transaction, no default shall have
occurred and be continuing. Upon compliance with these provisions by a successor
corporation, the Company would be relieved of its obligations under the
Indenture.
Events of Default
The following events are defined in the Indenture as "Events of
Default": (i) default in the payment of interest when due and continuance of
such default for a period of 30 days; (ii) default in making any sinking fund
payment and continuance of such default for a period of 30 days; (iii) default
in the payment of principal at maturity, except any maturity occurring by reason
of a call for redemption through the sinking fund; (iv) default in the
performance of any covenant in the Indenture for 60 days after notice; and (v)
certain events of bankruptcy, insolvency or reorganization. If an Event of
Default shall occur and be continuing, either the Debenture Trustee or the
holders of not less than 25% in principal amount of the outstanding Debentures
may accelerate the maturity of all Debentures.
The Indenture provides that in case an Event of Default shall occur and
be continuing, the Debenture Trustee shall exercise such of its rights and
powers under the Indenture, and use the same degree of skill and care in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his, her or its own affairs. Subject to certain provisions of the
Indenture, the Debenture Trustee is under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of the
Debentures unless they have offered to the Trustee reasonable security or
indemnity against the costs, expenses, and liabilities which might be incurred
by it in compliance with such request.
Modification of the Indenture
With certain exceptions, the Indenture may be modified or amended with
the consent of the holders of not less than a 66 2/3% in principal amount of the
outstanding Debentures; provided, however, that no such modification or
amendment may be made without the consent of the holder of each Debenture
affected which would: (i) reduce the principal amount of or the rate of interest
on any Debenture, change the stated maturity of the principal of, or any
installment of interest on, any Debenture, or adversely affect the right to
convert the Debentures; or (ii) reduce the percentage of Debentures, the consent
of the holders of which is required to modify or amend the Indenture or to waive
certain past defaults.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 6,000,000
shares of Common Stock, no par value (the "Common Stock"), of which 1,934,478
shares were issued and outstanding at November 30, 1997, 800,000 shares of
redeemable cumulative convertible Series A Preferred Stock of which 256,448
shares of Series A Preferred Stock were issued and outstanding at November 30,
1997, and 200,000 shares of Series A Preferred Stock, no par value, no shares of
which were issued and outstanding at November 30, 1997.
The Debentures and the New Debentures are convertible into shares of
the Company's Common Stock. The following is a brief summary of certain rights
and provisions of the Company's Common Stock.
Common Stock
Each share of the Company's Common Stock is entitled to participate pro
rata in distributions upon liquidation and to one vote on all matters submitted
to a vote of the shareholders. Dividends may be paid to the holders of the
Company's Common Stock when and if declared by the Board of Directors out of
funds legally available therefor. The Company has not paid a dividend on shares
of its Common Stock since 1993. The Company does not intend to pay a dividend on
its shares of Common Stock for the foreseeable future. The Company's ability to
pay dividends on its Common Stock is subject to the same Restrictive Covenants
as its ability to pay dividends on the Series A Preferred Stock. See "Recent
Developments Concerning the Series A Preferred Stock", "Restrictive Covenants",
"Purposes and Effects of the Exchange Offer" and "Description of the Series A
Preferred Stock". Holders of the Company's Common Stock have no preemptive or
similar rights.
The shares of Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors.
Holders of Common Stock do not have any right to subscribe to any
additional securities which may be issued by the Company. Outstanding shares of
Common Stock are validly issued, fully paid and non-assessable.
The transfer agent and the registrar for the Common Stock is Registrar
and Transfer Company.
<PAGE>
The Exchange Agent is:
The Chase Manhattan Bank
Delivery of all Debentures to be exchanged should be made to
the Exchange Agent:
By Mail/Overnight Delivery: By Hand:
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street 450 West 33rd Street
8th Floor 8th Floor
New York, NY 10001 New York, NY 10001
Attn: Kevin Young Attn: Kevin Young
For Information Call:
(800) 355-2663
ANDERSEN GROUP, INC.
LETTER OF TRANSMITTAL
To Accompany
10 1/2% Convertible Subordinated Debentures due 2002
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 5:00 P.M.,
EASTERN STANDARD TIME, ON THURSDAY FEBRUARY 19, 1998, UNLESS EXTENDED
(SUCH TIME AND DATE, THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO THE EXPIRATION DATE, AND, UNLESS
PREVIOUSLY ACCEPTED FOR EXCHANGE BY
ANDERSEN GROUP, INC., AFTER 5:00
P.M., EASTERN STANDARD TIME, ON
MARCH 27, 1998.
- --------------------------------------------------------------------------------
To: The Chase Manhattan Bank, Exchange Agent
By Mail/Overnight Delivery: By Hand:
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street 450 West 33rd Street
8th Floor 8th Floor
New York, NY 10001 New York, NY 10001
Attn: Kevin Young Attn: Kevin Young
For Information Call:
(800) 355-2663
The undersigned acknowledges that he, she or it has received and
reviewed the Offering Circular, dated January 9, 1998 (the "Offering Circular"),
of Andersen Group, Inc., a Connecticut corporation (the "Company"), and this
Letter of Transmittal (the "Letter"), which together constitute the Company's
offer (the "Exchange Offer") to exchange $1,000.00 principal amount of 10 1/2%
Convertible Subordinated Debentures due 2007 (the "New Debentures") and $10.00
cash (the "Cash Payment") for each $1,000.00 principal amount of 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Debentures").
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In the event that (i) at least 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer and (ii) a proposal to amend the Company's Certificate of Incorporation,
in order to eliminate certain restrictions on the payment of dividends on the
Company's Common Stock and the Series A Preferred Stock and to make certain
other changes to the Series A Preferred Stock, is approved by the Company's
stockholders at the Special Meeting of Stockholders (See "The Special Meeting of
Stockholders" in the Offering Circular), then the Company shall, in addition to
exchanging the Debentures properly tendered to it as described in the above
paragraph, purchase and redeem all Debentures which have not been so tendered
pursuant to the terms of the Debentures at a redemption price of 100% of the
principal amount thereof plus accrued interest to the date of redemption.
In the event that less than 66 2/3% in aggregate principal amount of
the outstanding Debentures are tendered for exchange pursuant to the Exchange
Offer, the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption. The Exchange
Offer is also subject to certain customary conditions, any or all of which may
be waived by the Company.
The Company reserves the right to extend the Exchange Offer at its
discretion, in which event the term "Expiration Date" shall mean the time and
date on which the Exchange Offer as so extended shall expire. The Company shall
notify the Exchange Agent of any extension by written notice and shall make a
public announcement thereof, prior to 9:00 A.M., eastern standard time, on the
next business day after the previously scheduled Expiration Date.
In the event that the Company modifies the consideration offered for
the Debentures tendered and accepted in the Exchange Offer, the modified
consideration would be paid with regard to all Debentures tendered and accepted
in the Exchange Offer. If the consideration is modified, the Exchange Offer will
remain open at least ten business days from the date the Company first gives
notice, by public announcement or otherwise, of such modification, if and to the
extent required by applicable law.
The undersigned has completed the appropriate forms contained herein
and signed this Letter to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Debentures indicated below. Subject to, and effective upon, the Company's
acceptance for exchange of the Debentures tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to any Debentures as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
as the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent also acts as the agent of the Company) with
respect to the Debentures with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to:
(a) deliver certificates representing Debentures and deliver all accompanying
evidences of transfer and authenticity to or upon the order of the Company upon
receipt by the Exchange Agent, as the undersigned's agent, of the New Debentures
and the Cash Payment to which the undersigned is entitled upon the acceptance by
the Company of Debentures under the Exchange Offer; (b) present certificates for
cancellation and transfer of Debentures on the Company's books; and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of
Debentures, all in accordance with the terms of the Exchange Offer.
The undersigned represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Debentures
tendered hereby and that the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all security interests, liens,
charges, encumbrances, conditional sales agreements or other obligations
relating to their sale or transfer, and not subject to any adverse claim; (b) on
request, the undersigned will execute and deliver any additional documents the
Exchange Agent deems necessary or desirable to complete the assignment, transfer
and purchase of the Debentures tendered hereby; and (c) the undersigned has read
and agrees to all the terms of the Exchange Offer. All authority conferred or
agreed to be conferred in this Letter and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that each $1,000.00 principal amount of
properly tendered and not withdrawn Debenture will be exchanged for $1,000
principal amount of New Debentures and the Cash Payment (or such other
consideration as may be set forth in an amendment to the Offering Circular),
upon the terms and subject to the conditions of the Offering Circular.
The undersigned recognizes that the Exchange Offer is conditioned upon
the satisfaction of certain conditions specified in the Offering Circular. The
undersigned further recognizes that the Company may waive any or all of these
conditions.
The undersigned recognizes that tenders of Debentures pursuant to any
one of the procedures described under the captions "The Exchange Offer -
Procedures for Tendering" and "-Guaranteed Delivery Procedure" in the Offering
Circular and in the instructions hereto will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Exchange Offer.
The undersigned recognizes that under certain circumstances set forth
in the Offering Circular the Company may not accept Debentures tendered by the
undersigned. Debentures not accepted by the Company or withdrawn will be
returned to the undersigned at the address specified in the first column of the
table below entitled "Description of Debentures" unless otherwise indicated
under "Special Delivery Instructions" below.
This tender may be withdrawn only in accordance with the procedures set
forth in the Instructions contained in this Letter of Transmittal.
<PAGE>
Unless otherwise indicated in the box entitled "Special Delivery
Instructions" or the box entitled "Special Issuance and Delivery Instructions"
on the following pages, please send the New Debentures and the Cash Payment for
the tendered Debentures to the undersigned at the address shown below the
signature of the undersigned. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance and Delivery Instructions" to
transfer any Debentures from the name of the registered holder thereof if the
Company does not accept any of the Debentures so tendered.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
DEBENTURES" ON THE FOLLOWING PAGES AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED THE DEBENTURES AS SET FORTH IN SUCH BOX ON THE FOLLOWING PAGES.
IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH THE CERTIFICATES FOR
DEBENTURES AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING DEBENTUREHOLDERS)
(See Instructions 1 and 3 and the following paragraph)
................................................................................
................................................................................
Signature(s) of Owner(s) Date
................................................................................
Area Code and Tel. No.
Must be signed by the registered holder(s) exactly as their name(s) appear(s) on
the certificate(s) representing Debentures or by person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s): .......................................................................
(Please Type or Print)
Capacity: ..................................................................
Address: .......................................................................
...............................................................................
(Include Zip Code)
SIGNATURE GUARANTEE
(If Required by Instruction 3)
Signature(s) Guaranteed by a member of a Signature Guarantee Program:
................................................................................
(Authorized Signature)
...............................................................................
(Please Type or Print Name)
................................................................................
(Title)
................................................................................
(Name of Firm)
Dated: .........................................................................
- --------------------------------------------------------------------------------
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
This Letter of Transmittal must be used whether certificates for shares
of Debentures are to be forwarded herewith or whether the guaranteed delivery
procedure has been utilized.
Your bank or broker can assist you in completing this form. The
Instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the Offering
Circular and this Letter of Transmittal may be directed to the Exchange Agent or
the Company.
List below the Debentures to which this Letter of Transmittal relates.
If the space provided below is inadequate, list the certificate numbers and
principal amount of Debentures on a separate SIGNED schedule and affix such
schedule to this Letter of Transmittal.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBENTURES
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Certificate Principal Amount Principal
Registered Holder(s) Number(s) Represented by Amount
(Please fill in,if blank) Certificate(s) Tendered*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Aggregate
Principal
Amount
- --------------------------------------------------------------------------------
* Unless otherwise indicated in this column, a Debentureholder that delivers
Debentures through physical delivery of certificates will be deemed to have
tendered the aggregate principal amount specified in the third column or, if
none, by the certificate or certificates specified in the second column or, if
none, the aggregate principal amount of Debentures held by the registered holder
indicated in the first column. See Instruction 2.
- ------------------------------------------------------------------------------
CHECK HERE IF TENDERED DEBENTURES ARE ENCLOSED HEREWITH.
CHECK HERE IF DEBENTURES WERE TENDERED AND ARE NOW
BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING (See Instruction 1):
Name of Registered
Owner(s):.......................................................................
Window Ticket No. (if any):.....................................................
Date of Execution of Notice of Guaranteed Delivery:.............................
Name of Eligible Institution which Guaranteed Delivery:.........................
................................................................................
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S><C> <C>
- ----------------------------------------------------------------------------------------------------------------
SPECIAL ISSUANCE AND DELIVERY SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS (See Instructions 3 and 4)
(See Instructions 3 and 4)
To be completed ONLY if certificates for Debentures To be completed ONLY if Debentures not accepted
not accepted are to be registered in the name of and and/or the New Debentures and the Cash Payment for
sent to someone other than the person or persons whose the accepted Debentures are to be sent to someone
signature(s) appear(s) on this Letter of Transmittal other than the person or persons whose signature(s)
above. appear(s) on this Letter of Transmittal above
or to such person or persons at an address other
Issue and mail than that shown in the box entitled "Description of
Debentures to: Debentures" on this Letter of Transmittal above.
Name(s): ........................................... Mail or deliver:
(Please Type or Print)
The New Debentures; and
The Cash Payment
....................................................
(Please Type or Print)
Name(s): ...........................................
(Please Type or Print)
Address: ...........................................
....................................................
.................................................... (Please Type or Print)
(Zip Code)
Address: ...........................................
....................................................
(Employer Identification or Social Security No.) ....................................................
(Zip Code)
....................................................
(Employer Identification or Social Security No.)
</TABLE>
<PAGE>
TO BE COMPLETED BY ALL TENDERING DEBENTUREHOLDERS
(See Instruction 5)
SUBSTITUTE FORM W-9
PAYOR'S NAME: ANDERSEN GROUP, INC.
- ---------------------------------- -------------------------------------------
Part I -- Taxpayer Identification __________________________________________
Number ("TIN") Name (if joint names, list first and circle
PLEASE PROVIDE YOUR TIN IN the name of the person or entity whose number
THE BOX TO THE RIGHT AND you enterin Part 1 below)
CERTIFY BY SIGNING AND DATING
BELOW. ___________________________________________
Business Name
Part II -- For Payees Exempt from
Backup Withholding ___________________________________________
If you are an exempt recipient, Address (number and street)
you should complete this form to
avoid possible erroneous backup ___________________________________________
withholding. Enter your correct City, State, and ZIP code
TIN in Part I, write "Exempt" in
the box to the right, sign and
date the form.
-----------------------
-----------------------
-----------------------
-----------------------
<TABLE>
<S><C> <C>
- ---------------------------------- ----------------------- --------------------------------------------------------
SUBSTITUTE CERTIFICATION -- Under the penalties of perjury, I certify that:
FORM W-9 (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
Department of the Treasury (2) I am not subject to backup withholding either because: (a) I am exempt
Internal Revenue Service from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
Payor's Request for Taxpayer result of a failure to report all interest or dividends, or (c) the IRS has
Identification Number (TIN) notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your
tax return.
------------------------------ ------------------------------
Signature Date
- --------------------------------- ----------------------------------------------------------------------------------
</TABLE>
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of this Letter and Certificates; Guaranteed Delivery
Procedure. This Letter is to be used whether certificates are to be forwarded
herewith pursuant to the procedures set forth in the Offering Circular under the
caption "The Exchange Offer--Procedures for Tendering," or whether tenders were
made pursuant to the procedure for guaranteed delivery set forth below and in
the Offering Circular under the caption "The Exchange Offer--Guaranteed Delivery
Procedure." Certificates for Debentures, as well as a properly completed and
duly executed copy of this Letter, and any other documents required by this
Letter, must be received by the Exchange Agent at its address set forth herein.
The method of delivery of this Letter, the Debentures and any other required
documents is at the election and risk of the Debentureholder, but, except as
otherwise provided below, the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If certificates for Debentures are
sent by mail, it is suggested that registered mail be used and the mailing be
made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to the Expiration Date.
Debentureholders whose certificates representing the Debentures that
they wish to tender are not immediately available or who cannot deliver their
certificates or any other required documents to the Exchange Agent prior to the
Expiration Date may tender their Debentures pursuant to the guaranteed delivery
procedure set forth in the Offering Circular. Pursuant to that procedure: (i)
tender must be made by or through an Eligible Institution (as defined in the
Offering Circular); (ii) by the Expiration Date, the Exchange Agent must have
received from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery by mail or hand delivery setting forth the name
and address of the Debentureholder and the principal amount of Debentures
tendered, stating that the tender is being made thereby and guaranteeing that,
within three over-the-counter market trading days after the Expiration Date, the
Debenture certificates, together with a properly completed and duly executed
Letter and all other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) the certificate(s) for
all tendered Debentures and a properly completed and duly executed copy of this
Letter, and all other documents required by this Letter, must be received by the
Exchange Agent within three over-the-counter market trading days after the
Expiration Date, all as provided in the Offering Circular under the caption "The
Exchange Offer--Guaranteed Delivery Procedure."
See "The Exchange Offer" section of the Offering Circular.
2. Partial Tenders and Withdrawals. If less than the entire principal
amount of Debentures evidenced by a submitted certificate is to be tendered, the
tendering Debentureholder should fill in the principal amount to be tendered in
the column entitled "Principal Amount Tendered" in the box above entitled
"Description of Debentures." Reissued Debentures for the principal amount not
exchanged will be sent to such Debentureholder, unless otherwise provided in the
appropriate box on this Letter, as soon as practicable after the Expiration
Date. The aggregate principal amount of all Debentures delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
Any Debentureholder of record or its assignee who has tendered
Debentures may withdraw the tender by delivering written notice of withdrawal to
the Exchange Agent prior to the Expiration Date, and, unless such tenders have
previously been accepted for exchange by the Company, after 5:00 P.M., eastern
standard time on March 27, 1998. For a withdrawal to be effective, the Exchange
Agent must timely receive a written notice of withdrawal at its address set
forth herein. Any notice of withdrawal must specify the name of the person
having tendered the Debentures to be withdrawn, the aggregate principal amount
of all Debentures to be withdrawn and the name of the registered holder(s), if
different from the name of the person having tendered the Debentures to be
withdrawn. If the certificates have been delivered or otherwise identified to
the Exchange Agent, the serial numbers shown on the particular certificates
evidencing the Debentures to be withdrawn and a signed notice of withdrawal with
such signature guaranteed by a member of a Signature Guarantee Program (except
in the case of Debentures tendered by an Eligible Institution) must be submitted
prior to the release of the certificates or the Debentures to be withdrawn.
Withdrawals of tendered Debentures may not be rescinded, and any Debentures
properly withdrawn will thereafter be deemed not to be validly tendered for
purposes of the Exchange Offer; provided, however, that withdrawn Debentures may
be retendered by again following one of the procedures described herein so long
as the retender is made prior to the Expiration Date.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Company, in its sole
discretion, which determination will be final and binding on all parties. None
of the Company, the Exchange Agent, or any other person is or will be obligated
to give any notice of any defects or irregularities in any notice of withdrawal,
and none of them will incur any liability for failure to give any such notice.
3. Signatures on this Letter, Stock Powers and Endorsements; Guarantee
of Signatures. If this Letter is signed by the registered holder of the
Debentures tendered hereby, the signature must correspond exactly with the name
as written on the face of the certificate representing such Debentures without
any change whatsoever.
If any tendered Debentures are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Debentures are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Debentures specified herein and tendered hereby, no endorsements of certificates
or separate stock powers are required. If, however, the New Debentures are to be
issued, or certificates for any untendered Debentures are to be reissued, to a
person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate stock powers are required.
If this Letter is signed by a person other than the registered holder
or holders of any certificate(s) specified herein, such 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(s) on
the certificate(s).
If this Letter or a Notice of Guaranteed Delivery or any certificates
or stock powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
Endorsements on certificates for Debentures or signatures on stock
powers required by this Instruction 3 must be guaranteed by a guarantor that is
a member of a "Signature Guarantee Program" recognized by the Exchange Agent,
i.e., Securities Transfer Agents Medallion Program, Stock Exchanges Medallion
Program and New York Stock Exchanges Medallion Signature Program.
Signatures on this Letter need not be guaranteed as provided above,
provided the Debentures are tendered: (i) by a registered holder of such
Debenture who has not completed the box entitled "Special Issuance and Delivery
Instructions" on this Letter; or (ii) for the account of an Eligible
Institution.
4. Special Issuance and Delivery Instructions. Tendering Debentures
should indicate in the applicable box the name and address to which the New
Debentures, the Cash Payment and/or substitute certificates evidencing
Debentures for the principal amount of Debentures not exchanged are to be issued
or sent, if different from the name and address of the person signing this
Letter. In the case of issuance in a different name, the employer identification
or social security number of the person named must also be indicated. If no
instructions are given, the Debentures not exchanged will be returned to the
name and address of the person signing this Letter.
5. Tax Identification Number. Federal income tax law requires that a
Debentureholder whose tendered Debentures are accepted for exchange by the
Company must provide the Company (as payor) with his or her correct Taxpayer
Identification Number ("TIN"), which, in the case of a tendering Debentureholder
who is an individual, is his or her social security number. If the Company is
not provided with the correct TIN or an adequate basis for exemption, such
Debentureholder will be subject to a $50 penalty imposed by the Internal Revenue
Service (the "IRS") unless such failure to provide such TIN is due to reasonable
cause and not to willful neglect. In addition, delivery to such Debentureholder
of the New Debentures and the Cash Payment may be subject to backup withholding
in an amount equal to 31% of the gross proceeds resulting from the Exchange
Offer. If withholding results in an overpayment of taxes, a refund may be
obtained.
Exempt Debentureholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering Debentureholder must
provide his or her correct TIN by completing the "Substitute Form W-9" set forth
herein, certifying that the TIN provided is correct (or that such
Debentureholder is awaiting a TIN) and that (i) the Debentureholder is exempt
from backup withholding, (ii) the Debentureholder has not been notified by the
IRS that he or she is subject to backup withholding as a result of a failure to
report all interest or dividends or (iii) the IRS has notified the
Debentureholder that he or she is no longer subject to backup withholding. In
order to satisfy the Exchange Agent that a foreign individual qualifies as an
exempt recipient, a Debentureholder must submit a statement signed under penalty
of perjury attesting to such exempt status. These statements may be obtained
from the Exchange Agent. If the Debentures are in more than one name or are not
in the name of the actual owner, consult the W-9 Guidelines for information on
which TIN to report. If you do not have a TIN, consult the W-9 Guidelines for
instructions on applying for a TIN, write "applied for" in lieu of your TIN in
Part I of the Substitute Form W-9, and sign and date the form. If you do not
provide your TIN to the Company within 60 days, backup withholding will begin
and continue until you furnish your TIN to the Company.
6. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the transfer and sale of Debentures to it or its order pursuant to
the Exchange Offer. If, however, the New Debentures and the Cash Payment and/or
certificates for Debentures for the principal amount of Debentures not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Debentures tendered hereby, or if
a tendered certificate representing Debentures is registered in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer and sale of Debentures to the
Company or its order pursuant to the Exchange Offer, the amount of any transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering Debentureholder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to the tendering Debentureholder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this
Letter.
7. Waiver of Conditions. The Company reserves the absolute right to
waive satisfaction of any conditions enumerated in the Offering Circular.
8. No Conditional Offers. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering Debentureholders, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Debentures for exchange.
None of the Company, the Exchange Agent or any other person is
obligated to give notice of defects or irregularities in any tender of the
Debentures, nor shall any of them incur any liability for failure to give any
such notice.
9. Mutilated, Lost, Stolen or Destroyed Debenture Certificates. Any
Debentureholder whose certificates for Debentures have been mutilated, lost,
stolen or destroyed should contact the Trustee for the Debentures at the
following address for further instructions: The Chase Manhattan Bank, 450 West
33rd Street, 8th floor, New York, New York (telephone no.: (800) 355-2663).
10. Requests for Assistance or Additional Copies. Requests for
assistance or additional copies of the Offering Circular, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at its address or telephone number set forth below.
The Letter of Transmittal, certificates for Debentures and any other
required documents should be sent or delivered by each Debentureholder of the
Company or such Debentureholder's broker, dealer, commercial bank, trust company
or other nominee to the Exchange Agent at its address set forth herein.
Debentureholders may also contact brokers, dealers, commercial banks or trust
companies for assistance concerning the Exchange Offer.
EXCHANGE AGENT:
The Chase Manhattan Bank
By Mail/Overnight Delivery: By Hand:
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street 450 West 33rd Street
8th Floor 8th Floor
New York, NY 10001 New York, NY 10001
Attn: Kevin Young Attn: Kevin Young
For Information Call:
(800) 355-2663
In addition, all questions relating to the Exchange Offer may be directed
to Mr. Franklin R. Stoner at the Company at (860) 242-0761.
<PAGE>
<TABLE>
<S><C> <C> <C> <C>
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.
- ------------------------------------ ----------------------- ---------------------------------- -----------------------
Give the Give the
SOCIAL SECURITY EMPLOYER
number of-- IDENTIFICATION
For this type of account: For this type of account: number of--
- ------------------------------------ ----------------------- ---------------------------------- -----------------------
1. An individual's account The individual 9. A valid trust, estate or Legal Entity (Do not
pension trust furnish the
2. Two or more individuals The actual owner of identifying number of
(joint account) the account or, if the personal
combined funds, any representative or
one of the trustee unless the
individuals(1) legal entity itself
is not designated in
the account title.)(5)
3. Husband and wife The actual owner of
(joint account) the account or, if 10. Corporate account The corporation
joint funds, either
person(1)
4. Custodian account of a The minor(2) 11. Religious, charitable, The organization
minor (Uniform Gift to or educational
Minors Act) organization account
5. Adult and minor The adult or, if the 12. Partnership account held The partnership
(joint account) minor is the only in the name of the
contributor, the business
minor(1)
The organization
13. Association, club or other
tax-exempt organization
6. Account in the name of guardian The ward, minor, or 14. A broker or The broker or nominee
or committee for a designated incompetent person(3) registered
ward, minor, or nominee
incompetent person
7. a. The usual revocable savings The grantor-trustee(1) 15. Account with the Department The public entity
trust account (grantor is also of Agriculture in the name of a
trustee) public entity (such as a State
or local government, school
b. So-called trust account The actual owner(1) district, or prison) that
that is not legal or valid trust receives agricultural program
under State law payments
8. Sole proprietorship account The owner(4)
- ------------------------------------ ----------------------- ---------------------------------- -----------------------
(1) List first 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) Circle the ward's, minor's or incompetent person's name, and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first 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.
</TABLE>
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
<PAGE>
The Tax Identification Number ("TIN") provided in the Substitute Form W-9 should
be that of the tendering Holder
For a joint account, only that person whose TIN is furnished should sign the
Substitute Form W-9.
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.
Note: Writing "Applied for" on the form means that you have already applied
for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form and give it to the requester.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For purposes of this tender offer, only
payees listed in (1) through (13), and a person registered under the Investment
Advisers Act of 1940 who regularly acts as a broker are exempt.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan (IRA), or a custodial account under 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States, or any
or their political subdivisions, or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publications of the American Society of Corporate Secretaries, Inc.,
Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947. If
you are a nonresident alien or a foreign entity not subject to backup
withholding, give the payer a completed Form W-8 Certificate of Foreign Status.
(1) 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.
(2) Criminal Penalty for Falsifying Information -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
ANDERSEN GROUP, INC.
Offer to Exchange $1,000.00 Principal Amount of
10 1/2% Convertible Subordinated Notes due 2007 and
$10.00 Cash for each $1,000.00 Principal Amount of
10 1/2% Convertible Subordinated Notes due 2002
-------------------
January 9, 1998
To Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
Andersen Group, Inc. (the "Company"), is offering to exchange, upon the
terms and subject to the conditions set forth in the Offering Circular, dated
January 9, 1998 (the "Offering Circular"), and the related Letter of Transmittal
(which together constitute the "Exchange Offer"), $1,000.00 principal amount of
10 1/2% Convertible Subordinated Debentures due 2007 (the "New Debentures") and
$10.00 cash (the "Cash Payment") for each $1,000.00 principal amount of 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Debentures").
Enclosed are copies of the following documents:
<PAGE>
1. Offering Circular, dated January 9, 1998;
2. Letter of Transmittal for your use and for the information of your
clients;
3. Letter to Clients which may be sent to clients for whose
account you hold Debentures in your name or in the name of a
nominee, with space provided for obtaining such clients'
instructions with regard to the Exchange Offer; and
4. Form of Notice of Guaranteed Delivery.
PLEASE NOTE THAT THE OFFER WILL EXPIRE ON FEBRUARY 19, 1998, AT 5:00
P.M., EASTERN STANDARD TIME, UNLESS EXTENDED.
No fees or commission will be payable to brokers, dealers or other
persons in connection with any tenders pursuant to the Exchange Offer. However,
you will be reimbursed for reasonable and necessary costs incurred by you in
forwarding the enclosed materials to beneficial owners of Debentures held by
such entities as nominee or in a fiduciary capacity.
<PAGE>
Additional copies of the enclosed material may be obtained from the
Exchange Agent, The Chase Manhattan Bank, 450 West 33rd Street, 8th Floor, New
York, NY 10001, by calling (800) 355-2663.
Very truly yours,
ANDERSEN GROUP, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, IN ANY
CAPACITY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE
ANY STATEMENTS ON BEHALF OF THE COMPANY WITH RESPECT TO THE EXCHANGE OFFER,
EXCEPT THE STATEMENTS CONTAINED IN THE OFFERING CIRCULAR OR THE LETTER OF
TRANSMITTAL.
<PAGE>
ANDERSEN GROUP, INC.
Offer to Exchange $1,000.00 Principal Amount of
10 1/2% Convertible Subordinated Notes due 2007 and
$10.00 Cash for each $1,000.00 Principal Amount of
10 1/2% Convertible Subordinated Notes due 2002
-------------------
To Our Clients:
Enclosed for your consideration is an Offering Circular, dated January
9, 1998 (the "Offering Circular"), and a form of Letter of Transmittal (the
"Letter of Transmittal"), which, together set forth the offer (the "Exchange
Offer") of Andersen Group, Inc., a Connecticut corporation (the "Company"), to
exchange $1,000.00 principal amount of 10 1/2% Convertible Subordinated
Debentures due 2007 (the "New Debentures") and $10.00 cash (the "Cash Payment")
for each $1,000.00 principal amount of 10 1/2% Convertible Subordinated
Debentures due 2002 (the "Debentures"). The Offer to Exchange and the Letter of
Transmittal are being forwarded to you as the beneficial owner of Debentures
held by us for your account but not registered in your name. A tender of such
Debentures can be made only by us as the holder of record and only pursuant to
your instructions.
Upon the terms and subject to the conditions of the Exchange Offer, if
Debentures have been validly tendered and not withdrawn prior to 5:00 P.M.,
Eastern Standard Time, on February 19, 1998, the Debentures so tendered will,
upon the terms and subject to the conditions of the Exchange Offer, be purchased
and Debentures tendered after such date and time will not be purchased.
Your attention is called to the following:
<PAGE>
1. Tendering Debentureholders will not be obligated to pay
brokerage commission or, subject to instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of
Debentures by the Company pursuant to the Exchange Offer.
2. The Expiration Date (unless extended) of the Exchange Offer is
5:00 P.M., Eastern Standard Time, on February 19, 1998. Your
instructions to us should be forwarded in ample time to permit
us to submit a tender on your behalf.
If you wish to have us tender all of your Debentures, will you kindly
so instruct us by completing, executing and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. The
enclosed specimen Letter of Transmittal is furnished to you for information only
and may not be used to tender Debentures.
The Exchange Offer is not being made to, nor will the Company accept
tenders from, holders of Debentures in any jurisdiction in which the making or
acceptance of the Exchange Offer would not be in compliance with the laws of
such jurisdiction or if the making or acceptance of the Exchange Offer would
violate or contravene any agreement to which the Company is a party. In any
jurisdiction the securities or blue sky laws of which require the Exchange Offer
to be made by a licensed broker or dealer, the Exchange Offer shall be deemed to
be made on behalf of the Company by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter enclosing the
Offering Circular, dated January 9, 1998 (the "Offering Circular"), relating to
the offer by Andersen Group, Inc. to exchange $1,000.00 principal amount of 10
1/2% Convertible Subordinated Debentures due 2007 and $10.00 cash (the "Cash
Payment") for each $1,000.00 principal amount of 10 1/2% Convertible
Subordinated Debentures due 2002 (the "Debentures").
This will instruct you to tender to the Company the principal amount of
Debentures indicated below which are held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offering Circular, and in the related Letter of Transmittal that you have
furnished to the undersigned.
Date: , 199__
Sign Here
Signature(s)
(Please print name(s))
(Street Address)
(City, State, Zip)
Aggregate principal amount of Debentures to be tendered by us
Principal Amount of Debentures
Unless a specific contrary Instruction is given in the spaces provided, your
signature(s) hereon shall constitute an instruction to us to tender all your
Debentures pursuant to the terms and conditions set forth in the Offering
Circular and the Letter of Transmittal.
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR DEBENTURES
OF ANDERSEN GROUP, INC.
A form substantially equivalent to that set forth below must be used to
tender certificates representing 10 1/2% Convertible Subordinated Debentures due
2002 of Andersen Group, Inc. (the "Debentures"), if such certificates are not
immediately available or time will not permit all required documents to reach
the Company prior to the Expiration Date, as defined in the Offering Circular,
dated January 9, 1998 (the "Offering Circular"). Such form may be delivered by
hand or mail to the Exchange Agent. See Instruction 1 of the Letter of
Transmittal. Any capitalized terms used in this Notice of Guaranteed Delivery
not defined herein shall have the meanings ascribed to them in the Offering
Circular and the Letter of Transmittal.
To: The Chase Manhattan Bank, Exchange Agent
By Mail/Overnight Delivery: By Hand:
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street 450 West 33rd Street
8th Floor 8th Floor
New York, NY 10001 New York, NY 10001
Attn: Kevin Young Attn: Kevin Young
For Information Call:
(800) 355-2663
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Andersen Group, Inc., upon
the terms and subject to the conditions set forth in the Offering Circular and
the related Letter of Transmittal, receipt of which is hereby acknowledged
$___________ principal amount of Debentures pursuant to the guaranteed delivery
procedures set forth in the Offering Circular and the Letter of Transmittal.
The signature(s) must correspond exactly with the name(s) of
the registered holders of the certificates to be delivered.
Signature(s):_______________________________________
Names(s):_________________________________________
Address:___________________________________________
--------------------------------------------------
Area Code and Telephone No.:
--------------------------------------------------
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an "Eligible Institution", guarantees that
(a) the above named person(s) "own(s)" the Debentures tendered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b)
such tender of Debentures complies with Rule 14e-4, and (c) the Exchange Agent
will receive the certificates representing the Debentures tendered hereby in
proper form for transfer together with a properly completed and duly executed
Letter of Transmittal and any other required documents, all within three
over-the counter market trading days after the date of execution of this notice.
Dated:________________, 199__
Firm:__________________________________________
Sign Here:_______________________________________
(Authorized Signature)
- --------------------------------------------------
(Title)
Name:____________________________________________
(Please Type or Print)
Address:___________________________________________
- --------------------------------------------------
Area Code and Telephone No.:
- --------------------------------------------------
Please do not send Debentures with this form. Debentures must be sent with a
Letter of Transmittal.
FOR IMMEDIATE RELEASE
CONTACT: Bernard F. Travers, III, Esq.
Assistant Secretary and
Director of Law and Taxation
(860) 242-0761
ANDERSEN GROUP ANNOUNCES
PROGRAM TO EXCHANGE DEBENTURES
Bloomfield, CT, January 12, 1998 - Andersen Group, Inc. (NASDAQ: ANDR)
announced today the commencement of an Exchange Offer for its 10 1/2%
Convertible Subordinated Debentures due 2002 (CUSIP 033501 AB3) (the
"Debentures").
Pursuant to the terms of the Exchange Offer, the Company offers to exchange
$1,000.00 principal amount of 10 1/2% Convertible Subordinated Debentures due
2007 (the "New Debentures") and $10.00 cash for each $1,000.00 principal amount
of 10 1/2% Convertible Subordinated Debentures due 2002.
In the event that at least 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company shall (i) exchange the Debentures properly tendered to it pursuant
to the Exchange Offer and, except as provided in the next paragraph, (ii) have
the right, but not the obligation, to purchase and redeem all Debentures which
have not been so tendered pursuant to the terms of the Debentures at a
redemption price of 100% of the principal amount thereof plus accrued interest
to the date of redemption.
In addition, as part of an overall program to restructure the Company's
financial structure, if at least 66 2/3% of outstanding Debentures are tendered
as described above, and certain other conditions are met, as described herein,
the Company shall, in addition to exchanging the Debentures properly tendered to
it, purchase and redeem all Debentures which have not been so tendered pursuant
to the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption. The conditions
are that a proposal to amend the Company's Certificate of Incorporation
("Certificate") is approved by the requisite percentages of each class of equity
stockholders entitled to vote thereon at a Special Meeting ("Meeting") which the
Company intends to call on or about February 25, 1998. At this Meeting, the
Company's Common Stockholders and Series A Preferred Stockholders will be asked
to approve an amendment to the Certificate which eliminates certain restrictions
on the payment of dividends on the Company's Common Stock and on the Series A
Preferred Stock and which makes certain other changes in the redemption
provisions of the Series A Preferred Stock. For purposes of this Special
Meeting, the Company will implement the proposal if more than fifty percent of
the Common Stockholders voting at the Meeting approve, and if eighty-five
percent or more of the Series A Preferred Stockholders entitled to vote thereat
approve the proposal.
In the event that less than 66 2/3% in aggregate principal amount of the
outstanding Debentures are tendered for exchange pursuant to the Exchange Offer,
the Company has the right, but not the obligation, to (i) exchange the
Debentures properly tendered to it pursuant to the Exchange Offer and/or (ii)
purchase and redeem all Debentures which have not been so tendered pursuant to
the terms of the Debentures at a redemption price of 100% of the principal
amount thereof plus accrued interest to the date of redemption.
The Exchange Offer is also subject to certain customary conditions, any or all
of which may be waived by the Company.
Each Debentureholder may tender all or any lesser portion of his or her
Debentures. The Exchange Offer will expire at 5:00 p.m., Eastern Standard Time,
on Tuesday, February 19, 1998, unless extended (the "Expiration Date").
Tenders of Debentures may be withdrawn at any time prior to the Expiration Date
and, unless previously accepted for exchange by the Company, after 5:00 P.M.,
Eastern Standard Time, on March 27, 1998.
Certain affiliates of the Company have agreed to tender all Debentures they
beneficially own pursuant to the Exchange Offer. As of December 31, 1997, these
Debentureholders beneficially owned in the aggregate $2,274,000 principal amount
of Debentures, representing approximately 40.14% of the aggregate principal
amount of the Debentures.
The New Debentures contain essentially the same terms and conditions as the
Debentures, except that the New Debentures (i) mature five years later than the
Debentures, (ii) do not impose covenants on the Company which restrict the
payment of dividends on, or repurchases of, its capital stock and (iii) are not
subject to optional redemption by the Company.
Both the Debentures and the New Debentures are convertible into the Company's
Common Stock at any time prior to maturity, unless redeemed, at $16.17 per
share, subject to adjustment under certain conditions.
Andersen Group, Inc. is a diversified holding company with subsidiaries that
manufacture electronic connectors and components, precious metal materials and
ultrasonic cleaning systems and processing equipment. It also holds a variety of
other investments, including a portfolio of Russian and Eastern European
securities, common stock of certain financial institutions, and an investment
that is involved in developing data transmission networks in Russia.
