SAFETY-KLEEN CORP.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
(803) 933-4200
Writer's Direct Dial:
(803) 933-4274
Writer's Direct Fax:
(803) 933-4340
Writer's Direct E-mail:
[email protected]
April 23, 1999
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Preliminary Proxy Material
Safety-Kleen Corp.
SEC File No. 1-8368
-------------------
Ladies and Gentlemen:
On behalf of Safety-Kleen Corp., a Delaware corporation (the
"Company"), enclosed for filing via EDGAR pursuant to Rule 14a-6(a) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
preliminary proxy materials to be furnished to stockholders of the Company in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at a special meeting of the stockholders of the Company to be
held at 1301 Gervais Street, Suite 300, Columbia, South Carolina 29201, on May
24, 1999, at 10:00 a.m. local time, and at any adjournment or postponement
thereof (the "Special Meeting").
The enclosed materials include the following:
(i) a letter to stockholders from the Company, (ii) a notice of
meeting, (iii) a preliminary proxy statement, and (iv) a form of proxy.
At the Special Meeting, the common stockholders of the Company will be
asked to approve the issuance of 11,320,755 shares of the Company's common stock
to Laidlaw International Finance Corporation ("LIFC") or another affiliate of
Laidlaw Inc. (the "Proposal"), in connection with the Company's proposed
repurchase from LIFC of the Company's outstanding $350 million 5% Subordinated
Convertible Pay-In-Kind Debenture due 2009 held by LIFC.
As stated in the materials, Delaware law does not require stockholder
approval of any kind for such issuance of shares or for such repurchase. The
Company is seeking specific approval of the Proposal to insure full compliance
with the terms, to the extent applicable, of Rule 312 of the New York Stock
Exchange, because LIFC is controlled by Laidlaw Inc., which is a principal
stockholder of the Company.
Copies of the enclosed materials are being filed by the Company under
separate cover with the New York and Pacific Stock Exchanges. No fee is required
pursuant to Exchange Act Rules 14a-6(i)(4) and 0-11.
The Company would also like to inform you, pursuant to Rule 14a-6(d)
under the Exchange Act, that it currently proposes to mail definitive proxy
materials on or about May 4, 1999.
If you have any questions or comments concerning the enclosed
materials, please call the undersigned, or John C. Kennedy, Esq. (212/373-3025)
of Paul, Weiss, Rifkind, Wharton & Garrison.
Very truly yours,
/s/ Shawn Lavery DeJames
Shawn Lavery DeJames
Corporate Counsel
Enclosures
cc: John C. Kennedy, Esq. (w/enclosure)
Brian Nicholson, The New York Stock Exchange, Inc. (w/enclosure)
Tina Cheng, Pacific Exchange, Inc. (w/enclosure)
Standard & Poor's (w/enclosure)
Moody's Investor Service (w/enclosure)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SAFETY-KLEEN CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
PRELIMINARY COPY -- SUBJECT TO COMPLETION
DATED APRIL 23, 1999
[SAFETY-KLEEN CORP. LOGO]
May 4, 1999
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the
stockholders of Safety-Kleen Corp., to be held on Monday, May 24, 1999, at 10:00
a.m. local time, at 1301 Gervais Street, Suite 300, Columbia, South Carolina
29201.
At the Special Meeting you will be asked to approve the issuance of
11,320,755 shares of common stock of the Company, par value $1.00 per share, to
Laidlaw International Finance Corporation ("LIFC") or another affiliate of
Laidlaw Inc. (the "Proposal"), in connection with the Company's proposed
repurchase of its outstanding $350 million 5% Subordinated Convertible
Pay-In-Kind Debenture due 2009 held by LIFC.
The Board of Directors has determined that the approval of the Proposal
is advisable and in the best interests of Safety-Kleen Corp. and its
Stockholders, has approved the Proposal and recommends to the Stockholders that
you vote "FOR" approval of the Proposal.
Additional information regarding the Proposal is contained in the
accompanying Proxy Statement. In view of the importance of the actions to be
taken at the Special Meeting, we urge you to read the accompanying Proxy
Statement carefully, and regardless of the number of shares you own, we request
that you complete, sign, date and return the enclosed proxy card promptly in the
accompanying prepaid envelope. You may, of course, attend the Special Meeting
and vote in person, even if you have previously returned your proxy card.
We urge you to vote "FOR" approval of the Proposal.
Sincerely,
/s/ Kenneth W. Winger
---------------------
Kenneth W. Winger
President and Chief Executive Officer
<PAGE>
SAFETY-KLEEN CORP.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On May 24, 1999
------------------------
TO THE STOCKHOLDERS OF SAFETY-KLEEN CORP.
Notice is hereby given that a special meeting (the "Special Meeting")
of the stockholders of Safety-Kleen Corp. (the "Company") will be held on
Monday, May 24, 1999, at 10:00 a.m. local time, at 1301 Gervais Street, Suite
300, Columbia, South Carolina 29201, for the following purposes:
1. To approve the issuance of 11,320,755 shares of common
stock of the Company, par value $1.00 per share, to Laidlaw International
Finance Corporation ("LIFC") or to another affiliate of Laidlaw Inc., in
connection with the Company's proposed repurchase of its outstanding $350
million 5% Subordinated Convertible Pay-In-Kind Debenture due 2009 held by LIFC.
2. To transact such other business as may properly come before
the Special Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 29,
1999 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Special Meeting and at any adjournment or
postponement thereof.
From May 14, 1999 until the date of the Special Meeting, a list of
stockholders entitled to vote at the Special Meeting will be available for
inspection by stockholders of record during business hours at the place of the
Special Meeting and also will be available at the Special Meeting.
Your attention is directed to the Proxy Statement submitted with this
Notice.
Please complete, date and sign the enclosed proxy card and return it
promptly in the enclosed envelope whether or not you plan to attend the Special
Meeting. If you attend the special meeting, you may vote in person if you wish,
even if you have previously returned your proxy card.
-------------------------------
By Order of the Board of Directors Henry H. Taylor, Secretary
Columbia, South Carolina
May 4, 1999
<PAGE>
SAFETY-KLEEN CORP.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
PROXY STATEMENT
------------------------------
Special Meeting of Stockholders
May 24, 1999
This Proxy Statement is being mailed to holders (the "Stockholders") of
common stock, par value $1.00 per share (the "Common Stock"), of Safety-Kleen
Corp. (the "Company") as of the close of business on April 29, 1999 (the "Record
Date") in connection with the solicitation of proxies by the Board of Directors
of the Company (the "Board") for use at a special meeting of the Stockholders to
be held at 1301 Gervais Street, Suite 300, Columbia, South Carolina 29201 on May
24, 1999, at 10:00 a.m. local time, and at any adjournment or postponement
thereof (the "Special Meeting").
At the Special Meeting you will be asked to approve the issuance of
11,320,755 shares (the "Shares") of Common Stock to Laidlaw International
Finance Corporation ("LIFC") or to another affiliate of Laidlaw Inc. ("Laidlaw")
(the "Proposal"), in connection with the Company's proposed repurchase (the
"Repurchase") of its outstanding $350 million 5% Subordinated Convertible
Pay-In-Kind Debenture due 2009 (the "PIK Debenture") held by LIFC.
This Proxy Statement and form of Proxy are first being mailed or
otherwise delivered to Stockholders on or about May 4, 1999.
The Board has determined that the approval of the Proposal is advisable
and in the best interests of the Company and the Stockholders, has approved the
Proposal and recommends to the Stockholders that you vote "FOR" approval of the
Proposal.
You are cordially invited to attend the Special Meeting. If you cannot
be present in person, please sign and date the enclosed proxy and promptly mail
it in the enclosed return postage paid envelope. Any stockholder giving a proxy
has the right to revoke it any time before such proxy is voted.
Your vote is important. You are urged to date and sign the enclosed
proxy and return it in the enclosed postage paid envelope as soon as possible.
You may revoke the proxy at any time prior to its use by delivering to the
Company a written notice of revocation or a duly executed proxy bearing a later
date. Any stockholder who has executed a proxy but is present at the Special
Meeting and who wishes to vote in person may do so by revoking his, her or its
proxy as described in the preceding sentence.
-------------------------------
THE DATE OF THIS PROXY STATEMENT IS MAY 4, 1999
<PAGE>
THE COMPANY
The Company provides industrial waste services designed to collect,
process, recycle and dispose of hazardous and industrial waste streams. The
Company provides these services from numerous collection locations and
processing facilities located in the United States and Canada. The Company was
incorporated in Delaware in 1968.
The Company's principal executive office is located at 1301 Gervais
Street, Suite 300, Columbia, South Carolina 29201 and its telephone number is
803-933-4200.
The Common Stock is listed and traded on the New York Stock Exchange
and on the Pacific Exchange, Inc. On April 29, 1999 the closing price of the
Common Stock on the New York Stock Exchange was $__.__.
PROXIES
The accompanying form of proxy is for use at the Special Meeting. A
Stockholder may use this proxy if he or she is unable to attend the meeting in
person or if he or she wishes to have his or her shares voted by proxy even if
he or she attends the meeting. The proxy may be revoked in writing by the person
giving it any time before the proxy is exercised by giving notice to the
Company's Secretary, or by submitting a proxy having a later date, or by such
person appearing at the meeting and electing to vote in person. All shares
represented by valid proxies received in this solicitation, and not revoked
prior to their exercise, will be voted in the manner specified in such proxies.
If no specification is made in the proxy, the proxy will be voted "FOR" the
Proposal. The Board is not aware of any other matters which may be presented for
action at the Special Meeting, but if other matters do come properly before the
Special Meeting shares represented by proxies in the accompanying form will be
voted by the persons named in the proxy in accordance with their best judgment.
The Company will bear the costs of solicitation of proxies from the
Stockholders. Solicitation of proxies may be made in person, by mail or by
telephone, by officers, directors and regular employees of the Company who will
not be specially compensated in such regard. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to the beneficial
owners and secure their voting instructions and will be reimbursed for the
reasonable expenses incurred in sending proxy materials to the beneficial
owners. In addition, the Company has engaged the services of ChaseMellon
Shareholder Services to solicit proxies and will pay such proxy soliciting agent
$______ plus expenses in connection therewith. Solicitation by such firm may be
by mail, personal interview, telephone, fax or telegraph. Arrangements also will
be made with brokerage firms and other custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of Common Stock
held of record by such persons, and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
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<PAGE>
VOTING
The Board has fixed the close of business on the Record Date for the
determination of Stockholders entitled to receive notice of and to vote at the
Special Meeting. As of the Record Date, there were a total of 88,387,466 shares
of the Common Stock outstanding and entitled to vote at the Special Meeting.
Each Stockholder is entitled to one vote for each share of Common Stock held of
record by such Stockholder on the Record Date on each matter to come before the
Special Meeting. The Company's Certificate of Incorporation and By-laws do not
provide for cumulative voting.
Vote Required
Under Rule 312 of the New York Stock Exchange, approval of the Proposal
requires the affirmative vote of a majority of the votes cast in respect of
outstanding shares of Common Stock at the Special Meeting; provided that a
majority of the votes entitled to be cast by all outstanding shares of Common
Stock are cast at the Special Meeting. Under Delaware law and the Company's
Certificate of Incorporation and By-Laws, the affirmative vote of the holders of
a majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Special Meeting is necessary to approve or ratify any
act of the Company or to transact any other business which may be brought before
the Special Meeting.
Abstentions and broker non-votes with respect to any proposal coming
before the Special Meeting, including the Proposal, will be counted as present
for purposes of determining the existence of a quorum, but will not be deemed
votes cast for purposes of determining the total number of shares of which a
majority is required for any purpose. As a result, abstentions and broker
non-votes will have the same legal effect on the outcome as a vote "against" the
Proposal, even though a Stockholder or other interested parties analyzing the
results of the voting may interpret such a vote differently.
Principal Stockholder
Laidlaw, which beneficially owns approximately 35.8% of the outstanding
Common Stock as of April 15, 1999, has informed the Company that it intends to
vote for approval of the Proposal at the Special Meeting. See "Principal
Stockholders and Management Ownership," "Certain Relationships and Related
Transactions" and "The Proposal."
Dissenters' or Appraisal Rights
The Stockholders of the Company have no dissenters' or appraisal rights
in connection with the Proposal.
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<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
Principal Stockholder
The following table sets forth the only Stockholders which, to the
knowledge of management of the Company, were beneficial owners of five percent
or more of the outstanding shares of Common Stock as of April 15, 1999. The
shareholdings of Laidlaw are based on information provided by such Stockholder.
The shareholdings of Mellon Bank Corporation are based solely on a Schedule 13G
Report filed with the Securities and Exchange Commission by Mellon Bank
Corporation in January 1999.
Amount and Nature of Percent of Class
Name Ownership Beneficially Owned
Laidlaw Inc. (1) 31,615,341 35.8%
3221 North Service Road
Burlington, Ontario
L7R 3Y8
CANADA
Mellon Bank Corporation 5,504,040 6.23%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
- -----------------------------------
(1) Shares of Common Stock shown as owned by Laidlaw, except for 31 shares, are
held of record by Laidlaw Finance (Barbados) Ltd.
Management Ownership
The following table sets forth as of April 15, 1999, the number of
shares of Common Stock beneficially owned by (i) each of the Company's
directors, (ii) the Chief Executive Officer of the Company, (iii) each of the
Company's other executive officers and (iv) all directors and executive officers
of the Company as a group.
Amount and Nature of Percent of Class
Name Ownership Beneficially Owned
James R. Bullock (1), (2), (3)..............9,020 *
Leslie W. Haworth (1), (2), (4).............3,937 *
John W. Rollins, Jr. (1), (5), (6).........92,110 *
John W. Rollins, Sr. (1), (6), (7)........958,289 1%
David E. Thomas, Jr. (1), (6)...............2,645 *
Henry B. Tippie (1), (6), (8).............576,962 *
James L. Wareham (1), (6)...................2,895 *
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Amount and Nature of Percent of Class
Name Ownership Beneficially Owned
Grover C. Wrenn (1), (6)....................6,395 *
Kenneth W. Winger (9), (10)................41,712 *
Michael J. Bragagnolo (9)..................22,500 *
Paul R. Humphreys (9).......................9,000 *
Henry H. Taylor (9), (10)...................3,402 *
Robert W. Luba (11).........................5,000 *
All directors and
executive officers as a group
(13 persons).............................,733,867 1.96%
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* Signifies less than 1%
(1) Includes 2,000 shares subject to presently exercisable options. Does not
include 13,000 shares which are subject to vesting requirements pursuant to the
Directors Stock Option Plan. Under such Plan, options become exercisable at the
rate of 20% per year, on or about one year after the date of grant, with all
options becoming fully vested on or about 5 years after the date of grant.
(2) Messrs. Bullock and Haworth are officers of Laidlaw. See "Principal
Stockholders" for information regarding the beneficial ownership of the Common
Stock by Laidlaw.
(3) Includes 770 shares of restricted stock granted on January 5, 1999 in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 5, 2000. Includes 6,250 shares owned by Mr. Bullock's spouse.
Does not include 12,500 shares indirectly owned by Midcorp (J.P.C.) Limited, as
to which shares Mr. Bullock disclaims any beneficial ownership.
(4) Includes 687 shares of restricted stock granted on January 5, 1999 in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 5, 2000.
(5) Includes 47,934 shares held by Mr. Rollins as co-trustee. Does not include
1,547 shares owned by Mr. Rollins' wife, as to which shares Mr. Rollins
disclaims any beneficial ownership.
(6) Includes 645 shares of restricted stock granted on January 5, 1999 in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 5, 2000.
(7) Does not include 58,937 shares owned by Mr. Rollins' wife and 28,217 shares
held by his wife as custodian for his minor children, as to which shares Mr.
Rollins disclaims any beneficial ownership.
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<PAGE>
(8) Includes 242,172 shares held by Mr. Tippie as co-trustee; 6,500 shares held
by him as trustee; and 7,500 shares in which a wholly owned corporation over
which he has sole voting power has a beneficial partnership interest of 75
shares and voting right for 7,500 shares. Does not include 5,750 shares owned by
Mr. Tippie's wife, as to which shares Mr. Tippie disclaims any beneficial
ownership.
(9) Includes shares subject to presently exercisable options. Does not include
remaining shares which are subject to vesting requirements pursuant to the 1997
Stock Option Plan. Options become exercisable at the rate of 20% per year, on or
about one year after the date of grant, with all options becoming fully vested
on or about five years after the date of grant.
(10) Includes holdings of Common Stock held through the Company's 401(k) plan.
(11) Does not include 5000 shares which are subject to vesting requirements
pursuant to the Directors Stock Option Plan. Under such Plan, options become
exercisable at the rate of 20% per year, on or about one year after the date of
grant, with all options becoming fully vested on or about 5 years after the date
of grant. Mr. Luba became a director on March 30,1999 following the resignation
of Mr.
Grainger.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Laidlaw Executive Officers and Stock Ownership
James R. Bullock and Leslie W. Haworth, directors of the Company, are
executive officers of Laidlaw. See "Principal Stockholders and Management
Ownership -- Management Ownership."
As of April 15, 1999, Laidlaw beneficially owned, directly or
indirectly through affiliates, 31,615,341 shares of Common Stock, or
approximately 35.8% of the outstanding Common Stock. Assuming conversion by
Laidlaw of the PIK Debenture in accordance with its terms, Laidlaw would own,
directly or indirectly through affiliates, 54,948,674 shares of Common Stock, or
approximately 49.2% of the then outstanding Common Stock, assuming that Laidlaw
retains all of the Common Stock owned by it. Upon issuance of the Shares in
connection with the Repurchase, Laidlaw will own, directly or indirectly through
affiliates, 43,531,840 shares of Common Stock, or approximately 43.4% of the
then outstanding Common Stock, assuming that Laidlaw retains all of the Common
Stock owned by it. See "Principal Stockholders and Management Ownership --
Principal Stockholder." (The total number of shares of Common Stock shown as
owned by Laidlaw upon issuance of the Shares includes 595,744 shares which
represents an estimate of the number of shares to be issued on May 15, 1999
pursuant to the PIK Debenture described in "Terms of the PIK Debenture." The
estimate is based on the closing price of $14.6875 per share of Common Stock on
April 22, 1999 as reported in the Wall Street Journal. The actual number of
shares issued on May 15, 1999 will be based on the average of the closing price
of a share of Common Stock for the ten consecutive trading days selected by the
Company commencing not more than 20 trading days before, and ending not later
than the day, such payment is due.)
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The Acquisition
In May 1997, the Company acquired the hazardous and industrial waste
operations of Laidlaw (the "Acquisition"). The Acquisition was accounted for as
a reverse acquisition by the Company using the purchase method of accounting.
The Acquisition involved:
(i) the issuance by the Company of 30,000,000 shares of Common Stock
and the PIK Debenture to Laidlaw; and
(ii) the payment by the Company of $349.1 million in cash ($400
million, less debt of $50.9 million assumed) to Laidlaw.
Laidlaw acquired approximately 67% of the Common Stock as a result of
the Acquisition. Laidlaw's holdings were subsequently diluted by the issuance of
shares of Common Stock in connection with the Company's acquisition of
Safety-Kleen in April 1998.
Laidlaw Indemnities
In connection with the Acquisition, Laidlaw and Laidlaw Transportation,
Inc. ("LTI"), a subsidiary of Laidlaw, agreed, subject to various limitations,
jointly and severally to indemnify and hold harmless the Company and its
affiliates from and against damages suffered by the Company resulting from or in
respect of (i) various tax obligations and liabilities, (ii) pre-closing
insurance claims, (iii) any breach or default in the performance by Laidlaw or
LTI of covenants and agreements in the purchase agreement for the Acquisition to
be performed on or after the closing of the Acquisition or of any representation
or warranty in such purchase agreement which survives the closing to the extent
that damages therefrom exceed $2,000,000, and (iv) any environmental liability
or environmental claim arising as a result of any act or omission by Laidlaw or
LTI, including any release, occurring prior to such closing.
Laidlaw Guaranties
In connection with the Acquisition, Laidlaw entered into on behalf of
the Company various guaranties, performance guaranties, bonds, performance
bonds, suretyship arrangements, surety bonds, credits, letters of credit,
reimbursement agreements and other undertakings, deposit commitments or
arrangements by which Laidlaw may be primarily, secondarily, contingently or
conditionally liable for present or future obligations of the Company. The
Company agreed to use its best efforts to cause Laidlaw to be fully and finally
released and discharged from all further liability or obligation in respect of
all such obligations within six months following the date of the closing of the
Acquisition. As of the date hereof Laidlaw had been discharged from most of such
obligations.
Service Arrangements
Laidlaw and its affiliates have provided financial and management
services to the Company and its subsidiaries, including providing general
liability and workers' compensation insurance and income tax management. Such
service arrangements have been on arms-length
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<PAGE>
terms comparable to those available in transactions with unaffiliated parties.
During the fiscal year ended August 31, 1998, the Company paid Laidlaw $11.3
million on account of such services.
Other Relationships
In the ordinary course of business, the Company or its affiliates and
Laidlaw or affiliates of Laidlaw have entered from time to time into various
business transactions and agreements.
Raymond James & Associates, Inc.
Raymond James & Associates, Inc. may act as an initial purchaser in the
offering of the Company's senior notes described in "The Proposal -- Purposes
and Effects of the Proposal -- The Repurchase and Related Financing." Since
September 1, 1997, Raymond James & Associates, Inc. has acted as financial
advisor to the Company for various transactions, including the Company's
acquisition of Safety-Kleen, and is expected to continue to act in such capacity
in the future. David E. Thomas, Jr., a director, is a Managing Director of
Raymond James & Associates, Inc.
THE PROPOSAL
Purposes and Effects of the Proposal
New York Stock Exchange Rule 312
The purpose of the Proposal is to permit the Company to issue the
Shares to LIFC or another affiliate of Laidlaw, in connection with the
Repurchase. Stockholders are not being asked to approve the Repurchase. See
"Principal Stockholders and Management Ownership" and "Certain Relationships and
Related Transactions."
Delaware law does not require stockholder approval of any kind for the
issuance of the Shares or for the Repurchase. The Company is seeking specific
approval of the Proposal to insure full compliance with the terms, to the extent
applicable, of Rule 312 of the New York Stock Exchange. Rule 312 requires
stockholder authorization in connection with the issuance of shares of common
stock to officers, directors, holders of 5% or more of the issuer's voting
power, and their affiliates or other closely related persons, if the common
stock so issued would represent more than 1% of the common stock outstanding
prior to such issuance. The Shares represent approximately 12.8% of the Common
Stock outstanding prior to issuance of the Shares.
If the Stockholders approve the Proposal, the Company currently intends
to seek listing approval of the Shares on the New York Stock Exchange and the
Pacific Exchange, Inc., repurchase the PIK Debenture for cash and the Shares as
set forth below and issue the Shares to LIFC or another affiliate of Laidlaw.
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<PAGE>
The Repurchase and Related Financing
The PIK Debenture is held by LIFC, which is an affiliate of Laidlaw.
The Company currently intends to effect the Repurchase for a purchase price
consisting of (i) $200 million in cash and (ii) the Shares. The Company and
Laidlaw have entered into a securities purchase agreement to effect the
Repurchase (the "Securities Purchase Agreement"). The Securities Purchase
Agreement contains certain customary representations, warranties and covenants
relating to the Repurchase. Under the Securities Purchase Agreement the Board is
required, subject to its fiduciary duties, to call the Special Meeting and
recommend approval of the Proposal. The Company's obligation to consummate the
Repurchase is conditioned upon, among other things, stockholder approval of the
Proposal, the satisfactory completion of a financing for the cash portion of the
purchase price in the Repurchase and the receipt of required bank consents. The
Securities Purchase Agreement may be terminated by mutual consent of the parties
or by any party if the closing of the Repurchase does not occur by August 31,
1999.
The Company currently intends to finance the cash portion of the
purchase price through a Rule 144A offering of up to $225 million in aggregate
principal amount of its senior notes. To the extent not used in the Repurchase,
any net proceeds from this offering will be used for general corporate purposes.
The senior notes are expected to have a ten year term, to be senior,
unsubordinated securities of the Company and to have covenants substantially
similar to those in the outstanding senior subordinated notes of the Company's
subsidiary, Safety-Kleen Services, Inc. Interest on the senior notes is expected
to be payable in cash. The financing plans of the Company have not been
finalized and no assurance can be given that the Company will be able to
successfully complete the proposed high yield offering. The Company may consider
other debt or equity financings to finance the Repurchase due to market
conditions or other factors.
Purposes and Effects of the Repurchase
If the Proposal is approved and the debt financing is completed,
Repurchase will be effected and the PIK Debenture will, upon closing of the
Repurchase, cease to be outstanding. The Company has negotiated the Repurchase
with Laidlaw for the following reasons:
(i) To reduce the Company's consolidated indebtedness and to increase
consolidated stockholders' equity. The Company currently intends to
raise the cash portion of the purchase price of the PIK Debenture
through a debt issuance and to finance the balance of the purchase
price through the issuance of the Shares. As a result, the Repurchase
will reduce the Company's consolidated net debt by approximately $150
million and increase consolidated stockholders' equity by the same
amount. If the Repurchase had occurred on February 28, 1999,
consolidated total indebtedness (long term debt and the PIK Debenture)
of the Company would have been reduced from $2,098,396,000 to
$1,973,396,000 and consolidated stockholders' equity would have been
increased from $1,069,502,000 to $1,219,502,000.
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<PAGE>
(ii) To simplify its capital structure through elimination of the PIK
Debenture. The PIK Debenture has added complexity to the Company's
capital structure and, the Company believes, caused confusion in the
investment community. Replacement of the PIK Debenture with debt and
Common Stock will provide the Company with a more conventional capital
structure which will assist investors in evaluating the Company's
financial performance.
(iii) To eliminate the potential for dilution resulting from future
issuances and sales of Common Stock upon payment of interest or
conversion of the PIK Debenture. While the effect, if any, that any
such future issuances and sales of shares would have on market prices
for the Common Stock is uncertain, the Company believes that the
perception that such issuances and sales could occur has adversely
affected the prevailing market price for the Common Stock.
(iv) To eliminate the current dilutive impact of the PIK Debenture on
basic earnings per share. For example, for the six months ended
February 28, 1999, the Company's diluted earnings per share were 13%
below its basic earnings per share. After the Repurchase, the Company
expects basic and diluted earnings per share to be comparable.
The Repurchase will also reduce Laidlaw's fully diluted equity
ownership of the Company. Assuming conversion by Laidlaw of the PIK Debenture in
accordance with its terms, Laidlaw would own, directly or indirectly through
affiliates, 54,948,643 shares of Common Stock, or approximately 49.2% of the
then outstanding Common Stock. Following closing of the Repurchase and the
issuance of the Shares as described above, Laidlaw will own, directly or
indirectly through affiliates, 43,531,840 shares of Common Stock, or
approximately 43.4% of the then outstanding Common Stock. See "Principal
Stockholders and Management Ownership -- Principal Stockholder." (The total
number of shares of Common Stock shown as owned by Laidlaw upon issuance of the
Shares includes 595,744 shares which represents an estimate of the number of
shares to be issued on May 15, 1999 pursuant to the PIK Debenture described in
"Terms of the PIK Debenture." The estimate is based on the closing price of
$14.6875 per share of Common Stock on April 22, 1999 as reported in the Wall
Street Journal. The actual number of shares issued on May 15, 1999 will be based
on the average of the closing price of a share of Common Stock for the ten
consecutive trading days selected by the Company commencing not more than 20
trading days before, and ending not later than the day, such payment is due.)
Finally, the Company believes the Repurchase could have the following
additional effects on its financial position:
(i) Increasing the consolidated indebtedness, as defined by the
Company's debt instruments. As a consequence of this increase and the
existing covenants in those debt instruments, the Company's operational
and strategic flexibility may be reduced. For example, the Company may
experience reduced availability of debt to finance possible future
transactions.
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<PAGE>
(ii) Increasing interest expense required to be paid in cash. The
Company was required to settle the semi-annual interest payments on the
PIK Debenture by the issuance of Common Stock through April 8, 2000.
After April 8, 2000, the Company could settle interest payments on the
PIK Debenture in either cash or Common Stock at is sole discretion. The
Company expects that the indebtedness incurred to finance the cash
portion of the repurchase will require cash interest payments.
(iii) Diluting earnings per share on a basic basis. The issuance of
additional shares will reduce the Company's basic earnings per share.
However, the Company expects such reduction to be less significant than
the dilutive impact of the PIK Debenture. The Company believes that the
investment community historically evaluated the Company based on its
diluted earnings per share, among other criteria.
The terms of the Repurchase were negotiated between the Company and
Laidlaw during March and April 1999. The relative values ascribed by the Company
to the PIK Debenture and the Shares were based on the then quoted market prices,
where available, along with present value calculations calculated using then
current values and rates for similar securities and other customary comparative
factors.
If the Stockholders do not approve the Proposal, the Company expects to
consider other financing alternatives for the Repurchase. Such alternatives may
include debt financings or equity financings on terms less favorable to the
Company than those described in this Proxy Statement.
Terms of the PIK Debenture
In connection with the Acquisition, the Company issued a PIK Debenture
to LTI in the original principal amount of $350,000,000. The principal of the
PIK Debenture is payable on May 15, 2009, subject to earlier mandatory or
optional prepayment and any acceleration of its maturity date upon default. The
PIK Debenture bears interest at the fixed rate of 5% per annum. Until April 8,
2000, interest on the outstanding principal balance of the PIK Debenture accrues
at the 5% rate, but is only payable in shares of Common Stock. After such date,
at the election of the Company, payments due on the PIK Debenture (except upon
an optional early redemption), including any accrued interest or principal, may
be made in shares of Common Stock or cash. The number of shares of Common Stock
for each such payment is calculated based on the dollar amount of accrued
interest or principal due divided by the average of the daily closing prices of
a share of Common Stock on the New York Stock Exchange for ten consecutive
trading days selected by the Company commencing not more than 20 trading days
before, and ending not later than, the date such payment is due. Interest on the
outstanding principal balance of the PIK Debenture is payable semiannually on
November 15 and May 15, beginning on November 15, 1997 and continuing until the
payment in full of the PIK Debenture.
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<PAGE>
Beginning on May 15, 2002, and continuing until the business day prior
to the repayment of the PIK Debenture, the PIK Debenture is convertible, in
whole or in part, at the option of the holder, into shares of Common Stock, at a
price equal to the conversion price (the "Conversion Price") of $15.00 per
share, subject to anti-dilution adjustments.
During the period commencing on May 15, 2002, and continuing until
maturity, the Company has the option to prepay the PIK Debenture, in whole or in
part, in cash, at the face amount of the PIK Debenture if the last reported
sales price of a share of Common Stock, as reported by the New York Stock
Exchange, equals or exceeds 120% of the Conversion Price for a period of at
least ten consecutive trading days prior to the date of such proposed
prepayment.
Subject to the subordination provisions of the PIK Debenture, the
maturity of the PIK Debenture may be accelerated in the event a default occurs,
with defaults including:
(i) failure by the Company to pay the principal or accrued interest,
(ii) the voluntary or involuntary bankruptcy of the Company or other
insolvency proceedings involving the Company, and
(iii) the acceleration of the maturity of amounts outstanding under the
Company's principal credit facility as a result of a default under such
facility.
The PIK Debenture ranks junior in right of payment to amounts
outstanding under the Company's principal credit facility and to substantially
all other indebtedness of the Company except amounts owed (other than to banks,
insurance companies and other financing institutions and obligations under
capitalized leases) for goods, materials, services or operating lease rental
payments in the ordinary course of business or for compensation to employees and
any liability for federal, state, provincial, local or other taxes owed or owing
by the Company.
Recommendation of the Board
The Board has determined that the approval of the Proposal is advisable
and in the best interests of the Company and the Stockholders, has approved the
Proposal and recommends to the Stockholders that you vote "FOR" approval of the
Proposal.
Messrs. Bullock and Haworth, members of the Board who are also officers
of Laidlaw, did not participate in the Board vote with respect to the Repurchase
or the Proposal. Mr. John Grainger, also an officer of Laidlaw, resigned from
the Board on March 30, 1999, prior to the Board's consideration of the
Repurchase and the Proposal.
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<PAGE>
PROPOSALS FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
Stockholders who intend to present proposals for consideration at the
Company's 1999 Annual Meeting are advised that any such proposal must be
received by the Secretary of the Company no later than the close of business on
June 29, 1999, if such proposal is to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
If any Stockholder's proposal is received after September 12, 1999 the
Company's proxies for the 1999 Annual Meeting may exercise discretionary
authority with respect to such proposal at the 1999 Annual Meeting without any
reference to such proposal being made in the proxy statement for such meeting.
OTHER BUSINESS
The Board is not aware of any other matter which will be presented for
action at the Special Meeting, but if any other business is properly brought
before the Special Meeting, it is intended that the proxies received from this
solicitation will be voted by the persons named in the attached form of proxy in
accordance with their best judgment.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission. Copies of such reports, proxy statements and other information filed
with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the following Regional Offices of
the Commission: 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 may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Company files information electronically with the
Commission. The Commission maintains an Internet site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of the Commission's
Internet site is http://www.sec.gov. The Common Stock is listed and traded on
the New York Stock Exchange. The Common Stock is also traded on the Pacific
Exchange, Inc. Reports, proxy statements and other information filed by the
Company with the Commission may be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, and at the offices of
the Pacific Exchange, Inc. at 301 Pine Street, San Francisco, California 94104.
13
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Proxy Statement (particularly in
"The Proposal"), any statements preceded by, followed by or that include the
words "believes," "expects," "anticipates" or similar expressions, and other
statements contained herein regarding matters that are not historical facts, are
or may constitute forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Because such statements are
subject to risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements. The risks and
uncertainties that may cause actual results to differ include, among others,
general economic conditions, risks associated with acquisitions, fluctuations in
operating results because of acquisitions and variations in stock prices,
changes in applicable federal, state and local laws and regulations, especially
environmental regulations, alternate and emerging technologies, competition and
pricing pressures, overcapacity in the industry, seasonal fluctuations due to
weather, uncertainties of litigation, and risks associated with the operation,
growth and integration of newly acquired businesses. As a result of these
factors, the expected effects of the Repurchase could vary from those described
in this Proxy Statement, the Company's revenue and income could vary
significantly from quarter to quarter, and past financial performance should not
be considered a reliable indicator of future performance. Stockholders are
cautioned not to place undue reliance on such statements, which speak only as of
the date hereof. The Company undertakes no obligation to release publicly any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
14
<PAGE>
APPENDIX A
SAFETY-KLEEN CORP.
This proxy is solicited by and on behalf of the Board of Directors of
Safety-Kleen Corp. (the "Company"). The undersigned hereby appoints Kenneth W.
Winger, Paul R. Humphreys and Henry H. Taylor or any of them, the attorney or
attorneys and proxy or proxies of the undersigned with full power of
substitution to attend the Special Meeting of Stockholders of the Company to be
held at 1301 Gervais Street, Suite 300 Columbia, South Carolina, at 10:00 a.m.
local time, on Monday, May 24, 1999, and at any postponement or adjournment
thereof, to vote all shares of common stock, $1.00 par value, of the Company
(the "Common Stock") that the undersigned shall be entitled to vote. Said
proxies are instructed to vote on the matters set forth in the proxy statement
as specified on the reverse.
The Board of Directors recommends a vote "FOR" the proposal to approve
the issuance of 11,320,755 shares of Common Stock, to Laidlaw International
Finance Corporation ("LIFC") or another affiliate of Laidlaw Inc. (the
"Proposal"), in connection with the Company's repurchase of its $350 million 5%
Subordinated Convertible Pay-In-Kind Debenture due 2009 held by LIFC.
This proxy when properly signed and dated will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
proxy will be voted "for" the Proposal.
------------------------------------------------------------------
FOLD AND DETACH HERE
[this is reverse side]
[ X ] Please mark your votes as in this example.
FOR AGAINST ABSTAIN
1. Approval of the Proposal: [ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title. If a corporation, please sign in
full corporate name by authorized officer. If a partnership, sign in partnership
name by authorized person. If more than one trustee, all should sign. This proxy
may be revoked any time prior to its exercise.
____________________________________(L.S.)
____________________________________(L.S.)
SIGNATURE(S) DATE:
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY
----------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
SAFETY-KLEEN CORP.
Dear Stockholder:
We encourage you to take advantage of two new and convenient ways by
which you can grant a proxy to vote your shares. You can grant a proxy to vote
your shares electronically by telephone or via the Internet, which eliminates
the need to return the proxy card.
By Telephone: To grant a proxy to vote your shares by telephone, use a
touch-tone telephone and call the following toll-free number: 1-800-652-8683, 24
hours a day, 7 days a week. Insert the Control Number printed in the box above,
just below the perforation. Follow the simple recorded instructions.
By Internet: To grant a proxy to vote your shares via the Internet, go
to website www.vote-by-net.com. Insert the Control Number printed in the box
above, just below the perforation and then follow the simple instructions.
Please be aware that if you grant a proxy to vote your shares over the Internet,
you may incur costs such as telecommunication and Internet access charges for
which you will be responsible.
The Internet and telephone facilities will be available until midnight
on May 23, 1999 the day before the Special Meeting.
