SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 6, 1997
(January 6, 1997)
ROLLINS ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction or incorporation)
1-8368 51-0228924
(Commission File No.) (I.R.S. Employer Identification No.)
ONE ROLLINS PLAZA, WILMINGTON, DELAWARE 19803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 479-2700
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ITEM 5. OTHER EVENTS
On January 6, 1997, Rollins Environmental Services, Inc. ("Rollins")
entered into a letter of intent with Laidlaw, Inc. ("Laidlaw"), which
provides for the sale to Rollins of 100% of the outstanding stock of the
United States and Canadian subsidiaries conducting the hazardous and
industrial waste operations of Laidlaw. The full text of this letter of
intent is reproduced below:
January 6, 1997
James R. Bullock
President and Chief
Executive Officer
Laidlaw Inc.
3221 North Service Road
Burlington, Ontario
Canada L7R 3Y8
Dear Mr. Bullock:
This letter, once countersigned by you, will constitute
a Letter of Intent outlining certain understandings, both
binding and non-binding, relating to negotiation of a
business combination (the "Transaction") involving the
acquisition by Rollins Environmental Services, Inc.
("Purchaser") from Laidlaw Inc. ("Seller") of all of the
stock of Laidlaw Environmental Services, Inc. and Laidlaw
Environmental Services Ltd., both of which are wholly-owned
subsidiaries of Seller (the "Acquired Subsidiaries").
Any such acquisition would be subject to completion of
due diligence investigations by both parties relative to
regulatory, environmental, facility evaluation, legal and
financial matters, with results satisfactory to both parties;
negotiation and execution of a definitive binding purchase
agreement (the "Agreement") setting forth the terms and
conditions of the Transaction; approval of the Boards of
Directors of Seller and Purchaser; approval of the
shareholders of Purchaser; and approval of the appropriate
governmental agencies and authorities.
1. Non-Binding Understandings. The Agreement would
contain provisions appropriate to a transaction of this size
and type, including the following:
(a) Acquired Subsidiaries. Purchaser would
purchase the stock of the Acquired Subsidiaries from Seller
at the closing of the transaction (the "Closing"). Excluded
from the Transaction would be the following subsidiaries of
the Acquired Subsidiaries: JTM Industries, Inc. and KBK
Enterprises, Inc.
(b) Consideration. The consideration payable by
Purchaser at Closing (the "Consideration") would consist of
the following components:
(i) Four Hundred Million Dollars
($400,000,000) in Cash or the assumption
by Purchaser of indebtedness of the
Acquired Subsidiaries.
(ii) One Hundred Twenty Million (120,000,000)
shares of the common stock, par value
$1.00 per share, of Purchaser (the
"Purchaser Common Stock").
(iii) Three Hundred Fifty Million Dollars
($350,000,000) principal amount of
Purchaser's 5% twelve (12) year
Subordinated, Convertible, Pay-In-Kind
Debentures (the "Debentures").
The Debentures would be convertible by the holder
beginning on the fifth anniversary of their issuance. The
number of shares the holder would receive would be equal to
the principal amount of the Debentures surrendered divided by
$3.75 (the "Conversion Price"). The Debentures would be
redeemable by Purchaser for cash beginning on the fifth
anniversary of their issuance if the closing price of
Purchaser's Common Stock exceeds 120% of the Conversion Price
for 10 consecutive trading days. Purchaser may, at its
option, pay interest on the Debentures (or principal on
maturity) in cash or Purchaser Common Stock at the current
market value at such time, provided that the initial 2 years
shall be in Purchaser Common Stock only.
(c) Westinghouse. Purchaser and Seller will use
their best efforts to renegotiate the terms and the aggregate
amount of certain indebtedness of Purchaser to Westinghouse
Electric Corporation ("Westinghouse") and based on
negotiations held to date with Westinghouse, contemplate the
issuance by Purchaser of a new unsecured note to Westinghouse
(to be guaranteed by Seller) in exchange for cancelling
Purchaser's $13,839,000 Senior Debenture and Purchaser's
$66,000,000 Subordinated Convertible Debenture, both of which
are 100% held by Westinghouse.
(d) Representations, Warranties and
Indemnification Provisions. The Agreement would contain
typical representations and warranties, including those
relative to environmental liabilities, most of which would
not survive Closing. Indemnification obligations of the
parties post Closing would be limited to tax matters,
undisclosed liabilities (including environmental
liabilities), title, authority relative to the execution and
performance of the Agreement, and breaches or defaults in the
performance of agreements or covenants required to be
performed on or after the Closing. Purchaser would agree
(and Seller would cause Purchaser) to maintain the charter,
by-law and insurance backed indemnification protections
currently available to the officers and directors of
Purchaser. In addition, post Closing, as long as Purchaser
is a subsidiary of Seller, Purchaser's officers and directors
will have coverage under Seller's director's and officer's
insurance.
(e) Conditions and Covenants. The Agreement would
contain typical closing conditions and covenants, including
the following:
(1) Board Representation Post Closing.
Purchaser would increase its Board of
Directors to ten (10) members and the
parties would use their best efforts to
cause the Board to be composed of the
chief executive officer of Purchaser,
three directors designated by Purchaser,
three directors designated by Seller, and
three "independent directors" designated
jointly by Seller and Purchaser. The
Board would consist of 3 classes of
directors, each class with staggered 3
year terms. Each class would have one
designee from the Seller and Purchaser
and an independent director.
(2) Use of Seller Name Post Closing.
Purchaser would amend its Articles of
Incorporation such that its name would be
Laidlaw Environmental Services, Inc. post
Closing.
(3) Financing. Seller would arrange for
Purchaser a senior credit facility in the
aggregate principal amount of Six Hundred
Fifty Million Dollars ($650,000,000).
(4) Approval of Purchaser Shareholders.
Purchaser would call a special meeting of
its shareholders in order to approve the
Transaction. Purchaser's Board of
Directors would recommend approval to the
Shareholders and each member of the Board
would express his intention to vote his
shares of Purchaser Common Stock in
favor of the transaction. In addition,
each member of Purchaser's Executive
Committee would agree, subject to the
satisfaction of all conditions precedent
in the Agreement, to enter into an
agreement to vote his shares of Purchaser
Common Stock in favor of the transaction.
(5) Fairness Opinion. Purchaser will require
an acceptable fairness opinion from its
investment advisors.
(6) Registration Rights. Purchaser to afford
Seller typical registration rights
relative to the Purchaser Common Stock
and the PIK Debenture.
(7) Minority Shareholder Protection. Seller
to agree to certain contractual
protections for Purchaser's shareholders
to ensure that (a) any related party
transactions post Closing are effected at
rates which approximate those which would
result from transactions with independent
third parties, and (b) in the event of
any business combination post Closing,
such shareholders are treated on terms no
less favorable than Seller.
(8) Standstill. Seller to agree to typical
standstill provisions relative to the
acquisition of additional Purchaser
Common Stock.
(9) Termination Fees. In the event that the
Transaction is not approved by
Purchaser's shareholders due to a third
party bid for control of Purchaser,
Seller shall be entitled to a reasonable
reimbursement of its expenses in an
amount to be negotiated. Similarly,
should the Transaction not be concluded
due to the default of Seller, Purchaser
shall be entitled to liquidated damages
in an amount to be determined.
(10) Covenant Not to Compete. Seller to agree
to a five (5) year covenant not to
compete relative to owning, operating,
constructing or otherwise engaging in the
business of disposing of hazardous and
industrial wastes.
(11) Hart Scott Rodino. Closing to be
conditioned on termination of any waiting
periods provided under the Hart-Scott-
Rodino Antitrust Improvements Act ("HSR
Act").
(12) Canadian Antitrust. Closing to be
conditioned on receipt of notices, in
form and substance satisfactory to the
parties, under the Investment Canada Act
and the Competition Act.
(13) Covenants and Approvals. Each party to
obtain all material consents and
approvals of those governmental agencies,
customers, lenders or other parties
necessary in order to conclude the
Transaction.
(14) Tax Considerations. The Transaction
shall be structured in order to maximize
the tax benefits accruing to both
parties.
(f) Timing. The Agreement must be entered into
within forty-five (45) days from the execution of this Letter
of Intent. Closing is to take place within sixty (60) days
of approval by the Securities and Exchange Commission of
Purchaser's Proxy Statement, provided that all conditions
precedent to Closing have been satisfied, but no later than
one hundred twenty (120) days from the execution of this
Letter of Intent, unless mutually extended by the parties.
Environmental due diligence must be concluded within sixty
(60) days from the execution of this Letter of Intent.
2. Binding Terms. Upon execution of this Letter of
Intent by both parties, the following paragraphs shall
constitute legally binding and enforceable agreements between
Seller and Purchaser. Both parties recognize the mutual
undertakings of each party and in consideration thereof and
intending to be legally bound agree as follows:
(a) Confidentiality. The Confidentiality
Agreement between the parties dated November 1, 1996 shall
remain in effect (the "Confidentiality Agreement").
(b) Exclusive Dealing. The exclusive dealing
provision in the Confidentiality Agreement shall be extended
for an additional forty-five (45) day period or until an
Agreement is executed, whichever is earlier.
(c) Expenses. Seller and Purchaser are each
responsible for their own costs and expenses for accounting,
legal and other consultants or experts. No such costs or
expenses shall be paid by or charged to the Acquired
Subsidiaries.
(d) Access. Each party will afford the other's
employees, auditors, legal counsel, and other authorized
representatives with reasonable access to inspect their
Facilities and to review their contracts, permits and other
documents related to their business in a reasonable manner
before Closing.
(e) Consents and Approvals. Upon execution of
this Letter of Intent, the parties agree to cooperate with
one another and proceed, as promptly as reasonably
practicable, to seek to obtain from third parties any
material consents that may be necessary to consummate the
Transaction.
(f) Hart Scott Rodino. Seller and Purchaser agree
to promptly file with the Federal Trade Commission and the
United States Department of Justice the notification required
to be filed with respect to the transaction under the HSR
Act. Both parties shall use reasonable efforts to comply as
promptly as reasonably practicable with any requests made
pursuant to the HSR Act for additional information relevant
to the Transaction. These efforts shall include the initial
filing, a second request and any investigation.
(g) Negotiation of Agreement. Seller and
Purchaser will negotiate in good faith and use reasonable
efforts to arrive at a mutually acceptable Agreement for
approval, execution, and delivery within forty-five (45) days
of the execution hereof.
(h) Termination of Letter of Intent. This Letter
of Intent may be terminated by either party without
obligation to the other party after one hundred twenty (120)
days of the execution hereof. In addition, this Letter of
Intent may be terminated by Seller and Purchaser by mutual
agreement at any time. The Confidentiality Agreement shall
survive any such termination.
(i) Employees. In the event an Agreement is not
entered into for any reason, neither party shall for a period
of eighteen (18) months from today's date, without the prior
written consent of the other, solicit the employment of, or
employ or offer to employ, any employees of the other party.
This prohibition shall only extend to employees in senior
management, or key employees in operations, regulatory,
financial, marketing and sales, or permitting aspects of a
party's business. This prohibition shall not apply to any
employee ninety (90) days after such employee has left the
employ of either party.
(j) Announcements. No announcement concerning
this transaction is to be made without the parties mutual
consent, though such consent shall not be unreasonably
withheld by either party.
This Letter of Intent is intended to be and shall be
construed to be only a non-binding Letter of Intent
summarizing our discussions to date and is not an offer to
buy the stock of the Acquired Subsidiaries. Except for
Section 2, it shall not create any rights or obligations on
the part of the parties hereto.
If the foregoing accurately reflects the intentions of
Seller, please so indicate by executing the enclosed copy
where indicated and returning to the undersigned. Thank you.
Sincerely yours,
ROLLINS ENVIRONMENTAL SERVICES, INC.
By: /s/ John W. Rollins
John W. Rollins
Chairman of the Board and
Chief Executive Officer
Accepted:
LAIDLAW, INC.
By: /s/ James R. Bullock
James R. Bullock
President and Chief Executive Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ROLLINS ENVIRONMENTAL SERVICES, INC.
Date: January 6, 1997 BY:/s/ John W. Rollins, Jr.
John W. Rollins, Jr.
Senior Vice Chairman of the Board
