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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
Under Section 13(e) of the Securities Exchange Act of 1934
BI INCORPORATED
(Name of Issuer)
BI Incorporated
DAVID J. HUNTER
JACQUELINE A. CHAMBERLIN
MCKINLEY C. EDWARDS, JR.
JONATHAN M. HINEBAUCH
STEVEN P. MERREFIELD
(Name of Person(s) Filing Statement)
Common Stock, no par value 055467 20 3
(Title of Class of Securities) (CUSIP Number of Class of Securities)
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DAVID J. HUNTER
President
6400 Lookout Drive
Boulder, Colorado 80301
(303) 218-1000
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person(s) filing
statement)
----------------
Copy to:
JOHN G. LEWIS, ESQ.
Ireland, Stapleton, Pryor & Pascoe, P.C.
1675 Broadway, 26th Floor
Denver, Colorado 80202
(303) 623-2700
This statement is filed in connection with (check the appropriate box):
a.[_] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934 (the "Act").
b. [_]The filing of a registration statement under the Securities Act of
1933.
c. [X]A tender offer.
d. [_]None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [_]
Check the following box if the filing is a final amendment reporting the
results of the transaction: [_]
CALCULATION OF FILING FEE
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Transaction Valuation:
* Amount of filing fee:
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$79,281,147 $15,857
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* For purposes of calculating fee only. This amount is based on a per share
offering price of $8.25 for 7,968,818 shares of common stock and for options
to purchase 1,641,018 shares of common stock. As of August 10, 2000, BI
Incorporated had 7,968,818 shares of common stock and options to purchase
1,641,018 shares of common stock issued and outstanding. The amount of the
filing fee, calculated in accordance with Rule 0-11 under the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percent of the aggregate
of the cash offered by Offeror.
[X] 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:.................. $15,857
Form or Registration
No.:................... Schedule TO and Schedule TO/A
Filing Party:........... KBII Acquisition Company, Inc. and KBII Holdings, Inc.
Date Filed:............. August 18, 2000 and September 11, 2000.
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Introduction
This Rule 13E-3 Transaction Statement (the "Statement") is filed by certain
"filing persons" listed in Item 3 below (the "Filing Persons"), and relates to
a tender offer by KBII Acquisition Company, Inc., a Colorado corporation
("Offeror") and a wholly-owned subsidiary of KBII Holdings, Inc., a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of Common
Stock, no par value (the "Shares"), of BI Incorporated, a Colorado corporation
(the "Company"), at a price of $8.25 net to the seller in cash, (less any
required withholding taxes), without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated August 18,
2000, (the "Offer to Purchase") and the related Letter of Transmittal
(collectively the "Offer"), and is intended to satisfy the reporting
requirements of Section 13(e) of the Securities Exchange Act of 1934. Copies
of the Offer to Purchase and the related Letter of Transmittal are filed as
Exhibits (a)(1), (a)(2) and (a)(8) hereto and are incorporated by reference
from the Schedule TO filed by Offeror and Parent on August 18, 2000, and
amended August 23, September 11 and September 19, 2000 (the "Schedule TO"). In
response to the Offer, the Company filed a Solicitation/Recommendation
Statement on Schedule 14D-9 on August 18, 2000, and amended and supplemented
on August 23, August 25 and September 19, 2000 (the "Schedule 14D-9").
Pursuant to General Instruction F to Schedule 13E-3, except as otherwise set
forth below, information contained in the Schedule 14D-9 is expressly
incorporated by reference in response to the items of this Schedule 13E-3.
Certain information contained in the Schedule TO is incorporated by reference
as specifically referenced below. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Offer to Purchase.
Item 1. Summary Term Sheet.
The information set forth under the caption "Summary Term Sheet" in the
Offer to Purchase is incorporated herein by reference.
Item 2. Subject Company Information.
Name and address.
The information set forth at Item 1 under the caption "Subject Company
Information" in the Schedule 14D-9 is incorporated herein by reference.
Securities.
The information set forth at Item 1 under the caption "Subject Company
Information" in the Schedule 14D-9 is incorporated herein by reference.
Trading market and price.
The information set forth under the caption "Price Range of Shares;
Dividends on the Shares" in the Offer to Purchase is incorporated herein by
reference.
Dividends.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
Price Range of Shares; Dividends on the Shares
The Transaction Documents--The Merger Agreement--Conduct of Company's
Business Pending Merger
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Prior public offerings.
Neither the Company nor any other Filing Person has made an underwritten
public offering of the subject securities for cash during the past three years
that was registered under the Securities Act of 1933 or exempt from
registration under Regulation A thereunder.
Prior stock purchases.
The information set forth in Annex D to the Schedule 14D-9 is incorporated
herein by reference.
Item 3. Identity and Background of Filing Person.
Name and address.
This Schedule 13E-3 is filed jointly by the Company, which is the subject
company, and David J. Hunter, Jacqueline A. Chamberlin, Mckinley C. Edwards,
Jr., Jonathan M. Hinebauch and Steven P. Merrefield (the "Management
Shareholders"), who are executive officers of the Company. Messrs. Hunter and
Edwards are also directors of the Company. The Company and the Management
Shareholders are the "Filing Persons."
The name, business address and business telephone number of the Company are
set forth in Item 2 above. The name, business address and business telephone
number of each of the Management Shareholders and the name, business address
and business telephone number of each of the Company's directors and executive
officers are set forth under the caption "Information Concerning Current
Directors, Officers and Director Designees" in the Information Statement
pursuant to Section 14(f) of the Securities Exchange Act of 1934, as amended,
and Rule 14f-1 thereunder (the "Information Statement") that is attached as
Annex B to the Schedule 14D-9, and is incorporated herein by reference.
Business and background of entities.
Not applicable.
Business and background of natural persons.
The current principal occupation or employment, and five-year employment
history of each of the Management Shareholders and of the executive officers
and directors of the Company are set forth under the caption "Information
Concerning Current Directors, Officers and Director Designees" in the
Information Statement and are incorporated herein by reference.
During the last five years, no Management Shareholder, director or executive
officer of the Company has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), and no director or executive
officer of the Company has been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws.
The Management Shareholders, directors and executive officers of the Company
are all United States citizens, except for Jeremy N. Kendall, who is a
Canadian citizen.
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Item 4. Terms of the Transaction.
Material terms.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
Introduction
Summary Term Sheet
Term of the Offer; Expiration Date
Acceptance for Payment and Payment for Shares
Procedure for Tendering Shares
Withdrawal Rights
Transaction Documents
Federal Income Tax Consequences
Different terms.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
The tenth paragraph of the Introduction
Special Factors--Interest of Certain Persons in the Offer and the Merger
Purpose of the Offer; The Merger; Plans for the Company
Appraisal rights.
The information set forth under the caption "Purpose of the Offer; The
Merger; Plans for the Company--Dissenters' Rights" in the Offer to Purchase,
and at Item 8 under the caption "Shareholder Dissenters' Rights" in the
Schedule 14D-9 is incorporated herein by reference.
Provisions for unaffiliated security holders.
The Filing Persons have not made any provisions to grant unaffiliated
security holders access to the corporate files of the Company or to obtain
counsel or appraisal services at the expense of the Filing Persons in
connection with the transaction.
Eligibility for listing or trading.
Not applicable.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
Transactions.
The information set forth at Item 3 under the caption "Past Contacts,
Transactions, Negotiations and Agreements" in the Schedule 14D-9 is
incorporated herein by reference.
Significant corporate events.
None.
Negotiations or contacts.
None.
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Agreements involving the subject company's securities.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
The Transaction Documents--The Merger Agreement
The Transaction Documents--Stock Voting and Tender Agreement
The Transaction Documents--Side Letter
Item 6. Purposes of the Transaction and Plans or Proposals.
Use of securities acquired.
The only securities being acquired by Filing Persons are certain options to
be issued by Parent in exchange for options held by the Management
Shareholders, as described under the caption entitled "Special Factors--
Interests of Certain Persons in the Offer and the Merger in the Offer to
Purchase" and incorporated herein by reference. The Manager Shareholders
intend to hold such options for investment purposes and may exercise them from
time to time as they deem appropriate.
Plans.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
Purpose of the Offer; The Merger; Plans for the Company
Effect of Offer on Market for Shares; Nasdaq Listing; SEC Registration;
Margin Regulations
Item 7. Purposes, Alternatives, Reasons and Effects.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Background" in the Schedule 14D-9 is incorporated herein by
reference.
Purposes.
The information set forth under the following captions in the Offer to
Purchase is incorporated herein by reference:
Purpose of the Offer; The Merger; Plans for the Company
Special Factors--Interests of Certain Persons in the Offer and the Merger
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Purposes, Alternatives, Reasons and Effects--Purposes" is
incorporated herein by reference.
Alternatives.
The information set forth at Item 4 under the following captions in the
Schedule 14D-9 is incorporated by reference:
The Solicitation or Recommendation--Background
The Solicitation or Recommendation--Reasons for Rejection of Alternatives
Reasons.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Background" in the Schedule 14D-9 is incorporated herein by
reference.
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Effects.
The information set forth at Item 4 under the captions "The Solicitation or
Recommendation--Benefits and Detriments of the Offer and Merger to the Company
and the Company's Shareholders" in the Schedule 14D-9 is incorporated herein
by reference. The information set forth under the following captions in the
Offer to Purchase is incorporated herein by reference:
Effect of the Offer and Merger; Market for Shares; Nasdaq Listing; SEC
Registration; Margin Regulations
Certain Federal Tax Consequences
Item 8. Fairness of the Transaction.
Fairness.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Fairness of the Transaction--Fairness" is incorporated
herein by reference.
Factors considered in determining fairness.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Fairness Opinion" in the Schedule 14D-9 is incorporated herein
by reference.
Approval of security holders.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Fairness of the Transaction--Approval of Security Holders"
is incorporated herein by reference.
Unaffiliated representative.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Fairness of the Transaction--Unaffiliated Representative" is
incorporated herein by reference.
Approval of directors.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Fairness of the Transaction--Approval of Directors" is
incorporated herein by reference.
Other offers.
The information set forth at Item 4 under the following captions in the
Schedule 14D-9 is incorporated by reference:
The Solicitation or Recommendation--Background
The Solicitation or Recommendation--Reasons for Rejection of Alternatives
Item 9. Reports, Opinions, Appraisals and Negotiations.
Report, opinion or appraisal.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Reports, Opinions, Appraisals and Negotiations--Report,
Opinion or Appraisal" is incorporated herein by reference.
Preparer and summary of the report opinion or appraisal.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Opinion of Financial Advisor" in the Schedule 14D-9 and the
fairness opinion of SunTrust Equitable Securities attached to the Schedule
14D-9 as Annex A are incorporated herein by reference.
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Availability of documents.
The information set forth under the caption in the Schedule 14D-9 entitled
"Special Factors--Reports, Opinions, Appaisals and Negotiations--Availability
of documents" is incorporated herein by reference.
Item 10. Source and Amounts of Funds or Other Consideration.
Source of funds.
The information set forth under the caption "Source and Amount of Funds" in
the Offer to Purchase is incorporated herein by reference.
Conditions.
The information set forth under the caption "Source and Amount of Funds" in
the Offer to Purchase is incorporated herein by reference.
Expenses.
The information set forth under the caption "Fees and Expenses" in the Offer
to Purchase is incorporated herein by reference. The Company will be
responsible for approximately $1,685,000 of the fees and expenses, consisting
of approximately $1,325,000 in investment banking fees and expenses, $275,000
in legal fees and expenses, $50,000 in printing and mailing costs, $10,000 in
accounting fees and $25,000 in miscellaneous fees and expenses.
Borrowed funds.
The information set forth under the caption "Source and Amount of Funds" in
the Offer to Purchase is incorporated herein by reference.
Item 11. Interest in Securities of the Subject Company.
Securities ownership.
The information set forth under the caption "Beneficial Ownership of Common
Stock and Possible Change in Control" in the Information Statement is
incorporated herein by reference.
Neither the Company nor the Management Shareholders had any relationship
with KBII, LLC, KBII, L.P., Kohlberg, Parent or Offeror prior to the
commencement of the discussions which led to the execution of the Merger
Agreement. Each of the Company and the Management Shareholders disclaims that
they are an "affiliate" of KBII, LLC, KBII, L.P., Kohlberg, Parent or Offeror
within the meaning of Rule 13e-3 under the Exchange Act.
Securities transactions.
The information set forth at Item 6 under the caption "Interest in
Securities of the Subject Company" in the Schedule 14D-9 is incorporated
herein by reference.
Item 12. The Solicitation or Recommendation.
Intent to tender or vote in a going-private transaction.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Intent to Tender" in the Schedule 14D-9 is incorporated herein
by reference.
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Recommendation of others.
The information set forth at Item 4 under the caption "The Solicitation or
Recommendation--Recommendation of the Board of Directors" in the Schedule 14D-
9 is incorporated herein by reference.
Item 13. Financial Statements.
Financial information.
Certain financial information relating to the Company is hereby incorporated
by reference to the audited financial statements for the Company's 1998 and
1999 fiscal years set forth in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998, and June 30, 1999, respectively, under
the caption "Financial Statements and Supplementary Data," and for the nine
months ended March 31, 1999 and 2000, set forth in the Company's Quarterly
Report on Form 10-Q for the nine months ended March 31, 2000, under the
caption "Financial Statements," are incorporated herein by reference. These
statements may be obtained in the manner described at Item 8 to the Schedule
14D-9 under the caption "Available Information."
Based on the foregoing reports, the Company's ratio of earnings to fixed
charges was 6.9 and 6.1 for the fiscal years ended June 30, 1998 and 1999,
respectively, and 6.6 and 2.7 for the nine months ended March 31, 1999 and
2000, respectively. As of March 31, 2000, the Company's net book value per
share was $6.06 (on a non-diluted basis).
Pro forma information.
Not applicable.
Item 14. Persons/Assets, Retained, Employed, Compensated or Used.
Solicitations or recommendations.
The information set forth at Item 5 under the caption "Persons/Assets
Retained, Employed, Compensated or Used" in the Schedule 14D-9 is incorporated
herein by reference.
Employees and corporate assets.
Certain of the Company's officers and certain employees have been involved
in the facilitation of certain actions in conjunction with the transaction
including responding to due diligence requests from Offeror, preparing
documents, and responding to shareholder inquiries and similar matters.
Item 15. Additional Information.
The information set forth at Item 8 under the caption "Additional
Information" in the Schedule 14D-9 is incorporated herein by reference.
Other material information.
None.
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Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
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<C> <S>
(a)(1) Offer to Purchase dated August 18, 2000 (incorporated by reference
to Exhibit (a)(1)(A) to the Schedule TO filed by Parent and
Offeror on August 18, 2000).
(a)(2) Form of Letter of Transmittal (incorporated by reference to
Exhibit (a)(1)(B) to the Schedule TO filed by Parent and Offeror
on August 18, 2000).
(a)(3) Letter from the Chairman of the Company to the Company's
shareholders dated August 18, 2000 (incorporated by reference to
the Schedule 14D-9 filed August 18, 2000).
(a)(4) Press Release issued by the Company on August 11, 2000
(incorporated by reference to Exhibit 99.1 to the Schedule 14D-9-C
filed August 11, 2000).
(a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (incorporated by reference to
Exhibit (a)(1)(E) to the Schedule TO filed by Parent and Offeror
on August 18, 2000.
(a)(6) Letter from the Chairman of the Company to the Company's
shareholders dated September 19, 2000 (incorporated by reference
to the Schedule 14D-9 filed September 19, 2000).
(a)(7) Press Release issued by Offeror and Parent on September 18, 2000,
announcing the extension of the tender offer to October 3, 2000
(incorporated by reference to Exhibit (a)(1)(I) to the Schedule
TO/A filed by Parent and Offeror on September 19, 2000).
(a)(8) Supplement to Offer to Purchase (incorporated by reference to
Exhibit (a)(1)(J) to the Schedule TO/A filed by Parent and Offeror
on September 19, 2000).
(c)(1) Opinion of SunTrust Equitable Securities dated August 9, 2000
(incorporated by reference to Annex A of the Schedule 14D-9 filed
August 18, 2000).
(c)(2) Presentation of SunTrust Equitable Securities to the Board of
Directors of BI Incorporated as of August 9, 2000 (filed
herewith).
(e)(1) Agreement and Plan of Merger dated as of August 10, 2000 among
Parent, Offeror and the Company (incorporated by reference to
Exhibit (d)(1) to the Schedule TO filed by Parent and Offeror on
August 18, 2000).
(e)(2) Pages 1-16 of the Company's Annual Meeting Proxy Statement filed
on September 27, 1999 (incorporated by reference from the filing
made as of such date; SEC File No. 000-12410).
(e)(3) Pages 7-8 of the Company's Annual Report on Form 10-K filed on
September 27, 1999 (incorporated by reference from the filing made
as of such date; SEC File No. 000-12410).
(e)(4) Form of side letter, to be entered into in substantially same form
at or prior to the consummation of the Merger among Offeror,
Parent and certain shareholders of the Company (incorporated by
reference to Exhibit (d)(2) to the Schedule TO filed by Parent and
Offeror on August 18, 2000).
(e)(5) Stock Voting and Tender Agreement dated as of August 10, 2000,
among Offeror, Parent and certain shareholders of the Company
(incorporated by reference to Exhibit (d)(3) to the Schedule TO
filed by Parent and Offeror on August 18, 2000).
(e)(6) Form of Separation Policy, to be entered into in substantially
same form at or prior to the consummation of the Merger
(incorporated by reference to Exhibit (d)(4) to the Schedule TO
filed by Parent and Offeror on August 18, 2000).
(e)(7) Confidentiality Agreement between Kohlberg & Co., L.L.C. and the
Company, dated as of January 21, 2000 (incorporated by reference
to Exhibit (d)(5) to the Schedule TO filed by Parent and Offeror
on August 18, 2000).
(e)(8) Amended and Restated Rights Plan dated December 1, 1999, as
amended August 9, 2000 (incorporated by reference to the Schedule
14D-9 filed August 18, 2000).
(e)(9) Form of Stockholders' Agreement for KBII Holdings, Inc., to be
entered into in substantially same form at or prior to the
consummation of the Merger (incorporated by reference to Exhibit
(d)(6) to the Schedule TO filed by Parent and Offeror on August
18, 2000).
</TABLE>
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<TABLE>
<CAPTION>
Exhibit No. Description
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<C> <S>
(e)(10) Summons and Complaint of M. Dean Briggs, dated August 14, 2000,
against BI Incorporated, et. al. (incorporated by reference to the
Schedule 14D-9 filed August 23, 2000).
(e)(11) Memorandum to BI Employees dated August 24, 2000 (incorporated by
reference to the Schedule 14D-9 filed August 25, 2000).
(e)(12) Motion for Extension of Time in Which to Answer or Otherwise Move
of BI Incorporated, dated September 1, 2000, in response to
Complaint (incorporated by reference to Exhibit (a)(5)(B) to the
Schedule TO/A filed by Parent and Offeror on September 11, 2000).
(e)(13) Order dated September 13, 2000, granting Motion for Extension of
Time in Which to Answer or Otherwise Move of BI Incorporated,
dated September 1, 2000, in response to Complaint (incorporated by
reference to Exhibit (e)(13) to the Schedule 14D-9 filed on
September 19, 2000).
</TABLE>
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SIGNATURE
After reasonable 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: September 19, 2000
BI INCORPORATED
By:/s/ David J. Hunter
-----------------------------------
David J. Hunter, President
/s/ David J. Hunter
-----------------------------------
David J. Hunter
/s/ Jackqueline A. Chamberlin
-----------------------------------
Jacqueline A. Chamberlin
/s/ Mckinley C. Edwards, Jr.
-----------------------------------
Mckinley C. Edwards, Jr.,
/s/ Jonathan M. Hinebauch
-----------------------------------
Jonathan M. Hinebauch
/s/ Steven P. Merrefield
-----------------------------------
Steven P. Merrefield
11
