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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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COMMUNICATION CABLE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-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:
[x] 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:
(4) Date Filed:
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(Communication Cable, Inc. Letterhead)
February 5, 1996
To Our Stockholders:
Enclosed please find a Proxy Statement Supplement in connection with the
Company's Special Meeting of Shareholders scheduled for Friday, February 16,
1996.
The Special Meeting is being held at the demand of Kuhlman Acquisition
Corp. ("Kuhlman") in connection with its tender offer. Kuhlman also is
soliciting proxies from shareholders in connection with the Special Meeting. The
Board of Directors urges you to authorize the enclosed proxies to vote on your
behalf, and not the proxies named and sent to you by Kuhlman. The Board of
Directors and its Special Committee are interested in being sure shareholders
receive the highest value possible and they do not believe Kuhlman has this same
interest.
Time is of the essence. Please consider the enclosed information and act
immediately by returning the enclosed proxy card by fax to the Company at
201-804-8017.
By Order of the Board of Directors.
Sincerely,
(Signature of James R. Fore)
James R. Fore
President
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COMMUNICATION CABLE, INC.
1378 Charleston Drive
Post Office Box 1757
Sanford, North Carolina 27330
PROXY STATEMENT SUPPLEMENT
February 5, 1996
INTRODUCTION
On or about January 17, 1996, the Board of Directors of Communication
Cable, Inc. (the "Company") distributed a Notice of Special Meeting of
Shareholders and Proxy Statement (the "Initial Proxy Statement"), announcing the
Special Meeting of Shareholders to be held at the Company's headquarters located
at 1378 Charleston Drive, Sanford, North Carolina 27330 at 10:00 a.m., Eastern
time on Friday, February 16, 1996, and soliciting the proxies of shareholders
with respect to the Voting Rights Proposal (as defined herein and in the Initial
Proxy Statement). As described in the Initial Proxy Statement, the Board of
Directors has called the Special Meeting at the request of Kuhlman Corporation,
which is entitled under the Control Act (as defined below) to request such a
meeting to determine the voting rights of the Company's shares which Kuhlman may
acquire in connection with its ongoing tender offer. Because the Kuhlman offer
of $12.00 per share was not the highest bid for the Company's shares at the time
of the Initial Proxy Statement, the Board of Directors recommended that
shareholders vote against the Voting Rights Proposal at that time. Since the
date of the Initial Proxy Statement, the Board of Directors has been successful
in soliciting successively higher bids for the Company's shares from both
Kuhlman and Pentair, with the result that as of this date Kuhlman is bidding
$14.00 per share in its tender offer and Pentair has agreed to pay $13.50 per
share pursuant to a merger agreement. The primary goal of the Board of Directors
in connection with the ongoing contest for control of the Company is to obtain
maximum value for shareholders. Accordingly, so long as Kuhlman's offer remains
the superior bid for the Company's shares and is able to consummate the tender
offer, the Board of Directors is in favor of granting voting rights with respect
to Kuhlman's shares. In the event that Kuhlman is not able to consummate the
tender offer, however, the Board of Directors does not believe it is advisable
to grant voting rights to Kuhlman's shares. In light of these considerations,
the Board of Directors makes the recommendations set forth below.
RECOMMENDATIONS AND INSTRUCTIONS
For the reasons set forth herein and in Amendment No. 4 to Schedule 14D-9
("Amendment No. 4") attached hereto, the Board of Directors recommends that
shareholders take the following action:
(Bullet) Mark the white proxy card No. 2 to VOTE FOR the Voting Rights
Proposal granting Kuhlman voting rights effective only upon
Kuhlman's acceptance of all shares tendered at a cash price not
less than $14.00 per share and for shares not less than the
current Minimum Tender Condition.
(Bullet) Mark the white proxy card No. 2 to grant the proxy holder
authority to vote in his discretion on adjournment and other
procedural matters.
(Bullet) Mark the white proxy card No. 2 giving the Company written notice
that, if the Voting Rights Proposal is approved, the holder may
ask for the redemption of the holder's Shares under the Control
Act.
(Bullet) Mark, sign, date and return by FACSIMILE to 201-804-8017 and mail
the enclosed white proxy card No. 2. PLEASE RETURN THE CARD EVEN
IF YOU PREVIOUSLY HAVE RETURNED A WHITE OR KUHLMAN'S BLUE PROXY
CARD.
PROXY SOLICITATION
The cost of solicitation of proxies will be borne by the Company, subject
to reimbursement by the Purchaser referred to below. Solicitation of proxies
will be made by mail, personally, or by telephone, facsimile transmission or
telegraph, by officers, directors and regular employees of the Company. The
Company previously engaged Georgeson & Company Inc. to assist in the
solicitation of proxies from broker-dealers, banks and other institutional
holders at an approximate fee of $5,000 plus out-of-pocket expenses. On January
17, 1996, Georgeson & Company Inc. advised the Company that they will not serve
as proxy solicitor for the Company at the Special Meeting because of a perceived
conflict of interest with their role as information agent for the pending tender
offer by Kuhlman Corporation for the Company's shares. The Company has
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engaged Corporate Investor Communications, Inc. to replace Georgeson & Company,
Inc. in the solicitation of proxies at an approximate fee of $6,500 plus
out-of-pocket expenses. Corporate Investor Communications, Inc. may also be
involved in the solicitation of proxies from individual holders of record and
non-objecting beneficial owners. Brokerage houses and other custodians, nominees
and fiduciaries will be reimbursed for out-of-pocket expenses incurred in
forwarding soliciting material to beneficial owners.
VOTING PROCEDURE
As reported in the Initial Proxy Statement, the Board of Directors has
fixed the close of business on January 16, 1996 as the record date for the
determination of shareholders entitled to notice of and to vote at the Special
Meeting. At the close of business on January 16, 1996, there were issued and
outstanding 2,641,033 shares of common stock, par value $1.00 per share, of the
Company ("Shares"). Shares constituting "interested shares" within the meaning
of the North Carolina Control Share Acquisition Act (the "Control Act") are not
entitled to vote at the Special Meeting, of which 389,341 were issued and
outstanding at the close of business on January 16, 1996. Only the remaining
2,251,692 Shares are entitled to vote at the Special Meeting, each of which is
entitled to one vote. The approval of the Voting Rights Proposal (as described
below) requires the affirmative vote of the holders of at least a majority of
all the outstanding Shares (not including "interested shares").
Shares entitled to vote at the Special Meeting cannot be voted at the
Special Meeting unless the owner of record at the close of business on January
16, 1996 is present to vote in person or is represented by valid proxy.
Utilization of the enclosed proxy is a means by which such a shareholder may
authorize the voting of his, her or its Shares at the Special Meeting. All
Shares entitled to vote that are represented by valid proxies received by
William B. Cooper, the Secretary of the Company, prior to the time they are
voted will be as specified by the shareholder. If the shareholder does not
specify how the shares are to be voted, then they will be voted consistent with
the recommendation of the Board of Directors regarding the Voting Rights
Proposal. A proxy may be revoked by the shareholder at any time prior to the
time it is voted upon the delivery of written notice to the Secretary of the
Company, by delivering a subsequently executed and dated proxy, or by attending
the meeting and electing to vote in person. Your return of the signed enclosed
proxy card will revoke any prior proxy or proxies you may have returned in
connection with the Voting Rights Proposal, including the blue proxy card
solicited by Kuhlman.
AUTHORIZATION TO VOTE AN ADJOURNMENT AND OTHER MATTERS
By so indicating on the proxy, a shareholder will be authorizing the proxy
holder to vote in his discretion regarding any procedural motions which may come
before the meeting. Such proxy will vote as instructed by a majority of the
Special Committee of the Board of Directors of the Company. For example, this
authority could be used to adjourn the meeting if a majority of the Special
Committee believes it is desirable to do so. Adjournment or other procedural
matters could be used to obtain more time before a vote is taken in order to
solicit additional proxies or to provide additional information to shareholders.
The Special Committee has no specific plans to adjourn the meeting at this time,
but it intends to attempt to do so if it believes doing so would promote
shareholder interests. The proxy holder also will be authorized to vote in his
discretion on any matter brought before the meeting by Kuhlman, including
matters as to which Kuhlman solicited proxies.
VOTING RIGHTS PROPOSAL
THE OFFER
On November 29, 1995, Kuhlman Acquisition Corp. (the "Purchaser"), a North
Carolina corporation and a wholly-owned subsidiary of Kuhlman Corporation, a
Delaware corporation ("Kuhlman"), commenced a tender offer to purchase any and
all outstanding shares of the Company's common stock, par value $1.00 per share
(the "Common Stock"), for $12.00 per Share (the "Initial Offer Price"), net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated November 29, 1995 (the "Initial Offer to Purchase")
and the related Letter of Transmittal (together, the "Initial Offer"), copies of
which were attached hereto as Exhibits A and B, respectively to the Initial
Proxy Statement. For further information about the Purchaser and Kuhlman, see
Section 9 of the Initial Offer to Purchase. Subsequently, Kuhlman amended the
Initial Offer on January 17 and 23 and February 1, 1996 (together, the "Amended
Offer"). Reference is made to the Amended Offer which Kuhlman previously has
mailed to shareholders.
The Initial Offer to Purchase states that the purpose of the Offer is to
enable the Purchaser to acquire control of the Company. It further stated that,
as soon as practicable following the purchase of Shares pursuant to the Offer,
the Purchaser
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intends to seek the maximum representation obtainable on the Company's Board of
Directors. Thereafter the Purchaser or the Company may seek to purchase, as and
in the manner permitted by law, Shares not purchased pursuant to the Offer.
Conditions as established by Kuhlman for the Amended Offer are, among other
things, (1) there being validly tendered and not withdrawn prior to the
expiration of the Offer a number of Shares that, excluding the shares
beneficially owned by the Purchaser constitutes at least a majority of the
Shares outstanding on a fully diluted basis (the "Minimum Tender Condition") and
(2) the Purchaser being satisfied, in its sole discretion, that the Control Act
has been complied with or is invalid or otherwise inapplicable to the Offer and
that all Shares then owned by the Purchaser have, and all Shares tendered for
purchase pursuant to the Offer will have, upon purchase by the Purchaser, the
same voting rights as all other Shares not constituting "interested shares"
within the meaning of the Control Act (the "Voting Rights Condition"). The
Purchaser has advised the Company and the shareholders that the Purchaser
believes that shareholder approval of the Voting Rights Proposal described below
would satisfy the Voting Rights Condition. The Purchaser is not obligated to
consummate the Offer unless and until, among other things, the Voting Rights
Condition is satisfied.
BACKGROUND
As reported in Amendment No. 2 to Schedule 14D-9 of the Company filed with
the Securities and Exchange Commission ("SEC") and mailed to shareholders on
January 16, 1996, ("Amendment No. 2"), the Board of Directors of the Company
recommended rejection of Kuhlman's $12.00 Initial Offer as not in the best
interests of the Company and its shareholders in light of the pendency of a
higher offer of $13.00 per share from Pentair. On January 17, 1996, in the
Initial Proxy Statement, the Board of Directors recommended that shareholders
vote against the Voting Rights Proposal, again because the $12.00 per share
tender offer by Kuhlman was not offering shareholders the highest price and was
subject to certain unresolved contingencies. The facts surrounding the Board's
decision were as follows: First, at a Board meeting on January 12, 1996, Pentair
confirmed its previously announced interest in acquiring the Company. The
Company established a special committee of three outside directors (the "Special
Committee") to consider and act with respect to any Pentair offer, the Kuhlman
Offer or any other third party offer. On January 15, 1996, the Company entered
into a non-binding letter of intent with Pentair, pursuant to which the Company
would merge with a wholly owned subsidiary of Pentair for cash merger
consideration of $13.00 per share. The letter of intent was attached as an
exhibit to Amendment No. 2. Second, on January 16, Kuhlman notified the Company
in writing that it would proceed to increase the price of the Offer to $13 1/16
per share. Kuhlman informed the Company that the Company could act in reliance
on Kuhlman's notification that it would increase the price of the Offer. As of
the time of printing the Initial Proxy Statement, Kuhlman had not amended its
Schedule 14D-1 which set forth the terms of the Offer. Kuhlman did announce on
January 16, 1996 that its Offer, when amended, would be extended to 5:00 p.m.
New York City time, on January 31, 1996 and that the minimum tender condition
would be reduced from 80% of the outstanding Company stock to a majority of the
outstanding Company stock not owned by the Purchaser. Kuhlman had previously
announced that it has exercised its option to purchase 315,603 shares from James
R. Fore, President and Chief Executive Officer of the Company, such that Kuhlman
notified the Company that, as of January 5, 1996, it owned approximately 12% of
the outstanding Common Stock. Reference is made to Amendment No. 3 to Schedule
14D-9 ("Amendment No. 3") which previously has been mailed to shareholders for
more detailed background information.
In reaching its recommendation set forth in the Initial Proxy Statement,
the Board and the Special Committee considered the above developments as well as
a number of factors as set forth in Amendment No. 2. The Board indicated in the
Initial Proxy Statement that it would consider its recommendation with respect
to Kuhlman's announced increase in price to $13 1/16 after evaluating the terms
of the Offer once it was amended by Kuhlman.
On January 17, 1996, following the previous recommendation of the Board of
Directors with respect to the Kuhlman Offer, Kuhlman filed an amendment to its
Schedule 14D-1, increasing the price of the Offer to $13 1/16 per share and
reducing the minimum tender condition from 80% of the outstanding Common Stock
to a majority of the outstanding Common Stock not owned by the Purchaser.
In response to the increase in the Kuhlman Offer, on January 18, 1996
representatives of Pentair informed representatives of the Company that Pentair
was prepared to sign a proposed merger agreement at a price of $13.50 under
certain conditions, including that Pentair would require: (i) an option for
300,000 shares of Common Stock at a price of $13.50 per share, and (ii) an
increase in the termination fee from $750,000, as specified in the letter of
intent, to $1 million as originally proposed. Counsel for the Special Committee
informed Kuhlman's counsel that Pentair had expressed a strong interest in going
forward and that Kuhlman would be likely to have to increase its price in excess
of $13.50 to go forward, and in several conversations with counsel to Kuhlman on
January 18 and January 19 emphasized that it was imperative that Kuhlman
communicate its intentions immediately in light of Pentair's apparently imminent
offer. Counsel for Kuhlman repeatedly
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indicated that because key executives were unavailable, Kuhlman would not be in
a position to respond until some time on Monday, January 22.
At a Noon meeting on January 19, following consideration of Pentair's
latest offer, in the interests of maximizing value to the shareholders and of
maintaining a level playing field between the two bidders for the Company, the
Special Committee decided to inform both Kuhlman and Pentair that any new offers
would be accepted through noon on Monday, January 22, and that the Special
Committee would then attempt to finalize its recommendation to the Board of
Directors. Following the Special Committee meeting, counsel for the Special
Committee informed counsel for Pentair and for Kuhlman that the Special
Committee would give both parties until Noon Monday to increase their offers,
and Counsel for both Pentair and Kuhlman took this information under advisement.
At approximately 2:15 p.m. on the afternoon of January 19, counsel for the
Special Committee received a call, followed immediately by a faxed letter, from
counsel for Pentair, in which Pentair rejected the process set up by the Special
Committee to solicit final offers from both parties and demanded that the
Company accept the Pentair offer to merge at $13.50 per share by executing the
merger agreement and returning it to Pentair no later than 4:00 p.m. that
day.Representatives of Pentair threatened that if the Company did not accept
their proposal, Pentair would issue a press release publicly withdrawing its
offer and indicating that it had no further interest in pursuing the merger with
the Company. Over the next several hours counsel for the Special Committee and
members of the Special Committee were able to obtain hour by hour extensions to
the Pentair deadline. Counsel for the Special Committee also informed counsel
for Kuhlman that the Special Committee was under pressure to take action due to
an ultimatum received from Pentair, and urgently requested a response from
Kuhlman regarding its willingness to increase its Offer to in excess of $13.50
per share. Counsel for Kuhlman again stated that it would not be possible for
Kuhlman to respond prior to Monday, January 22, and urged the Special Committee
to take no action prior to that time.
On the night of January 19, the Special Committee met to consider the
Pentair ultimatum. The Special Committee balanced the desire to ensure
shareholders at least $13.50 per share with a determination to preserve an
opportunity for Kuhlman to make a higher offer. As part of its deliberations,
the Special Committee considered the fact that the merger agreement would not
preclude a higher offer from Kuhlman and that it did not view an increase in the
termination fee by $250,000 and the grant of options for 300,000 shares at an
exercise price of $13.50 per share to be likely to impede any higher offer that
Kuhlman otherwise would be likely to make. The Special Committee determined that
a rejection of the Pentair ultimatum would not be in the best interests of
shareholders due to the likelihood that Pentair would withdraw, leaving
Kuhlman's $13 1/16 per share offer as the best and only offer available to
shareholders. The Special Committee concluded that it would recommend to the
board of directors approval of the Pentair merger agreement at a price of $13.50
per share, although the Special Committee would try to negotiate away any
increase in the termination fee and the granting of options. Following the
meeting of the Special Committee, a board meeting was held later on the night of
January 17 and the board received the report of the Special Committee. The Board
adopted the Special Committee's recommendation that the Company enter into the
merger agreement with Pentair at $13.50 per share.
On Saturday morning, January 20, a representative of the Company spoke with
a representative of Pentair regarding the board's willingness to enter into the
merger agreement at $13.50 per share and attempted to negotiate certain
modifications, including with respect to the termination fee and the option
agreement. Pentair would not reduce the termination fee below $1 million nor
would it alter the terms of the option agreement. The Pentair representative did
affirm to the Company representative, however, that Pentair would not use the
option agreement or the underlying shares to block a higher offer. Accordingly,
later in the day on January 20, the merger agreement and option agreement were
fully executed and delivered.
On Sunday, January 21, counsel for the Special Committee informed counsel
for Kuhlman that the Company had entered into a merger agreement with Kuhlman,
the details of which would be announced Monday morning through a press release,
and that the merger agreement would not preclude Kuhlman from making a higher
offer.
On the morning of January 22, the Company issued a press release announcing
the merger, and Counsel for the Special Committee delivered a copy of the merger
agreement to counsel for Kuhlman. Later in the day on January 22, counsel for
Kuhlman informed counsel for the Special Committee that Kuhlman had issued a
press release increasing its offer to $14.00 per share. Counsel for Kuhlman
informed counsel for the Special Committee that Kuhlman believes the Company's
board acted hastily and Kuhlman had no further desire to negotiate with the
Company's board of directors or Special Committee. Counsel to the Special
Committee renewed requests previously made for additional information regarding
Kuhlman's arrangements to finance the tender offer. On January 23, 1996 Kuhlman
filed Amendment No. 3 to its Schedule 14D-1, to which it attached its amended
Offer.
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On January 24, in response to the repeated requests of counsel to the
Special Committee for additional information regarding Kuhlman's anticipated
financing of the tender offer, counsel to Kuhlman sent a letter to counsel for
the Special Committee, stating that Kuhlman's relationships with its lenders
were excellent, that financing was not a condition to the offer, and that the
Special financing was not a condition to the offer, and the Special Committee's
requests regarding financing arrangements were "immaterial." In response, on
January 24 counsel to the Special Committee responded that the past due
diligence which the Company had conducted on Kuhlman's financial condition led
the Special Committee to believe that its requests for additional information
regarding Kuhlman's financial arrangements for the offer were reasonable and
relevant to the Special Committee's deliberations. Specifically, counsel to the
Special Committee emphasized that, "...the ability of Kuhlman to finance the
tender offer, as opposed to some other party, is an area regarding which the
Special Committee would like to receive more information."
Following Kuhlman's increase in the Offer price and the foregoing inquiries
regarding Kuhlman's financing arrangements and other matters related to the
completion of the offer, on January 25, 1996 the Company filed its Amendment No.
3 to Schedule 14D-9 with the SEC and mailed a copy of Amendment No. 3 to its
shareholders. In Amendment No. 3 the Special Committee took no position with
respect to the Kuhlman Offer. This decision was made based on twelve factors set
forth in the Amendment, including a continuing need for further information from
Kuhlman, the continued existence of conditions to Kuhlman's financing, the lack
of any undertaking by Kuhlman not to reduce the Offer price at any time, and
market conditions.
On January 25, Pentair informed the Special Committee that it intended to
respond to the $14.00 Kuhlman offer by Friday, January 26, 1996. No such
response was forthcoming, although counsel to Pentair repeatedly stated that
Pentair had doubts that Kuhlman can obtain financing sufficient to consummate
the tender offer, and until such doubts are resolved Pentair would not be
inclined to increase the Offer Price.
On the evening of January 26, 2996, counsel to Kuhlman called counsel to
the Special Committee and indicated that Kuhlman had instructed its banks to
have sufficient funds on hand to accept the tender, and that the banks were
proceeding to comply with Kuhlman's instructions. Counsel to Kuhlman indicated
that these arrangements were outside of the commitment letters previously filed
with Kuhlman's tender offer. Counsel to the Special Committee again reiterated
the Special Committee's request for written confirmations of the commitments of
Kuhlman's banks.
On January 29 counsel to the Special Committee received a letter from G. C.
Kitch, an Executive Vice President of Pentair, stating that Pentair declined to
respond to the increase in the offer price to $14.00 per share by Kuhlman at
that time, although Pentair reserved the right to make a response later. Mr.
Kitch further stated that until Pentair had an opportunity to consider
information with respect to Kuhlman's financing of the tender offer, Pentair
felt it was premature to respond.
On January 29, in connection with the deliberations of the Special
Committee, counsel to the Special Committee wrote to Kuhlman to request that
Kuhlman consider a postponement of the Special Meeting, and to ask that Kuhlman
address four issues:
(1) the status of Kuhlman's consideration of the Special Committee's
requests for an irrevocable undertaking not to decrease the tender offer
price below $14 per share;
(2) details regarding Kuhlman's arrangements to finance the tender
offer, including written confirmation from the appropriate financial
institutions regarding such financing and information as to whether the
financing would be adequate to purchase all of the Company's shares;
(3) confirmation that Kuhlman must accept all shares tendered if it
accepts any; and
(4) a request that Kuhlman furnish an irrevocable undertaking that
Kuhlman would not subsequently pay less for non-tendered shares than paid
for tendered shares in the event that less than all shares are tendered.
On the morning of January 31, counsel to Kuhlman replied to counsel to the
Special Committee by letter which included the following:
(a) Kuhlman would not agree to a postponement of the Special Meeting.
(b) Although Kuhlman has the right to decrease the price offered in
its tender offer, Kuhlman does not expect to do so.
(c) Kuhlman's arrangements with its banks are "contemplated by" the
commitment letters originally filed with the Kuhlman tender offer, and all
that has changed is the timing of the credit agreement amendment which will
implement
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those arrangements. The availability of financing was never a condition to
Kuhlman's tender offer and is not an "issue" at all. Kuhlman is deeply
disappointed that the Special Committee has decided to focus on a
"non-issue" rather than on the "real issues" of price and timing of
payment.
(d) Kuhlman agrees that all shares tendered must be accepted by
Kuhlman if any such shares are tendered.
(e) Kuhlman refuses to undertake not to pay less for non-tendered
shares than it pays for tendered shares in the event that less than all
shares are tendered.
On the afternoon of January 31, counsel to the Special Committee addressed
two of the issues discussed in the letter sent by counsel to Kuhlman earlier in
the day. First, counsel to the Special Committee noted that Kuhlman had failed
to provide an undertaking that it would not decrease the tender offer price and
reserves its right to reduce the tender offer price. Secondly, counsel to the
Special Committee offered clarification as to why the Special Committee had
remained focused on the issue of the financing of the Kuhlman tender offer. A
portion of this letter is as follows:
"In your letter, you characterize Kuhlman's financing as a "non-issue", and
again criticize the Special Committee for raising its concerns. In particular,
you state that arrangements for Kuhlman to increase its borrowing capacity under
the existing credit agreement in an amount sufficient to purchase all CCI shares
are "arrangements contemplated by the commitment letters." (Emphasis in
original.) You also claim that, "All that has changed is the timing of the
credit agreement amendment." (Emphasis in original.) Unfortunately, a review of
the commitment letters which Kuhlman has provided as exhibits to its Schedule
14D-1 (referred to herein as the "Commitment Letters") indicates that these
statements and claims are inaccurate. Kuhlman has provided no other information
for review by the Special Committee in this regard."
Counsel to the Special Committee went on to renew its request for tangible
evidence that Kuhlman had secured the financing necessary to consummate its
tender offer and reiterated to Kuhlman the following points among others:
(1) Each Commitment Letter refers to a request by Kuhlman to obtain "up to
$35 million of financing..." in connection with the acquisition, related
expenses and working capital needs. This amount is inadequate to finance the
purchase of all outstanding CCI shares and shares underlying exercisable
options, much less to cover associated expenses or working capital.
(2) As the Special Committee has repeatedly pointed out, the banks each
have the right to conduct due diligence investigations of CCI prior to any
financing. The status of such due diligence or whether it will be required has
not been disclosed to the Special Committee (if such due diligence has begun at
all).
(3) Each Commitment Letter expires [February 1, 1996,] unless extended in
writing, and no evidence of any such extension has been provided."
Counsel to Kuhlman did not respond to the letter sent by counsel to the
Special Committee on January 31. On February 1, counsel to the Special Committee
again wrote to counsel to Kuhlman requesting that "on Kuhlman's behalf you send
to us by facsimile Kuhlman's amended Schedule 14D-1, with exhibits, as soon as
it is filed." Kuhlman filed an amended Schedule 14D-1 with the Securities and
Exchange Commission on February 1, 1996, but did not provide a copy to the
Special Committee.
Amendment No. 4 to the Schedule 14D-1 of Kuhlman included a Supplement,
dated February 1, 1996, to the Kuhlman tender offer. This supplement contains
the following statement regarding the financing of the tender offer under the
caption "SOURCE AND AMOUNT OF FUNDS":
"Effective January 31, 1996, the Banks extended the terms of their
Commitment letters through March 15, 1996. All other terms and conditions
of the Commitment Letters remain in full force and effect, except that the
purchase price for the Acquisition (as defined therein) is not to exceed
$46 million. Kuhlman has instructed the Banks to amend Kuhlman's existing
bank credit agreement so that Kuhlman will have access to sufficient funds
on deposit at the Expiration Date to purchase all of the Shares, and the
banks are proceeding to execute that instruction. At the time of printing
this Supplement, the parties were documenting an amendment to Kuhlman's
existing bank credit agreement that would expand Kuhlman's borrowing
ceiling and thereby comply with Kuhlman's instruction to the Banks. When
such amendment is executed, a copy will be filed as an exhibit to an
amendment to the Schedule 14D-1."
On February 2, 1996, the Special Committee met to consider its recommendations
with respect to the Amended Offer and the Voting Rights Proposal. For the
reasons described in Amendment No. 4 to Schedule 14D-9 ("Amendment No. 4")
attached hereto as Exhibit A and incorporated herein by reference and as
discussed under "Recommendation of the Board of Directors and Special
Committee," the Special Committee approved recommending to shareholders a vote
in favor of the Voting Rights Proposal granting Kuhlman voting rights effective
only upon Kuhlman's acceptance of all Shares tendered at a cash price not
6
<PAGE>
less than $14.00 per share and for Shares not less than the current Minimum
Tender Condition. The Special Committee also preliminarily approved a
recommendation in favor of the Amended Offer of $14.00 per share. The Board of
Directors then met and approved the Special Committee's recommendation. Special
Committee Counsel then informed counsel for Pentair of the Special Committee's
action and that the Company would proceed with its shareholder mailings unless
Pentair increased its offer. Special Committee Counsel also attempted to inform
Kuhlman's counsel of this information.
FAIRNESS OPINION
THE BOARD OF DIRECTORS OF THE COMPANY HAS OBTAINED A FAIRNESS OPINION FROM
INTERSTATE/JOHNSON LANE CORPORATION "IJL") THAT THE $12.00 KUHLMAN INITIAL OFFER
PRICE IS FAIR TO THE COMPANY'S SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW. IJL
AUTHORIZED THE COMPANY TO DELIVER SUCH OPINION WITH THE INITIAL PROXY STATEMENT.
A COPY OF SUCH OPINION IS ATTACHED TO THE INITIAL PROXY STATEMENT.
The Board selected IJL to advise it regarding the Offer because it felt
that, as a market maker for the Company's common stock, IJL would be familiar
enough with the Company to evaluate the Offer within the time period permitted
for filing the Schedule 14D-9. The Company gave no instructions to IJL other
than a request for the evaluation of the Initial Offer Price. The Company set no
limitations on the scope of IJL's investigation. IJL's fee was proposed by IJL
and determined by negotiation with the Board. IJL is a registered broker-dealer
and a member firm of the New York Stock Exchange.
The procedures followed by IJL, its findings and recommendations, the bases
therefor and methods used by IJL are essentially outlined in its fairness
opinion attached to the Initial Proxy Statement to which reference is made.
IJL's complete report is available for inspection and copying at the principal
executive offices of the Company during its regular business hours.
As previously indicated, IJL is a market maker for the Company's common
stock. In addition, Mr. John L. Bitter, Jr., a member of the Board of Directors
of the Company since 1987, and currently a member of the Special Committee, has
been an officer of IJL since 1984 and currently serves IJL as Senior Vice
President.
Accordingly, the Board believes that any cash price above $12.00 is fair
from a financial point of view, including the $14.00 price announced by Kuhlman.
THE VOTING RIGHTS PROPOSAL
The Voting Rights Proposal is as follows: "To grant voting rights to all of
the Shares at any time acquired by or for the Purchaser, directly or indirectly,
in a "control share acquisition" within the meaning of the Control Act,
including any and all Shares that may be acquired by the Purchaser pursuant to
its offer to purchase any and all outstanding Shares at $12.00 per Share, [now
$14.00] net to the seller in cash, on the terms and subject to the conditions
set forth in its Offer, as the same may be amended or supplemented at any time
prior to the conclusion of the Special Meeting, such voting rights to be
effective only upon Purchaser's acceptance of all Shares tendered at a cash
price not less than $14.00 per share and for shares not less than the Minimum
Tender Condition set forth in Purchaser's February 1, 1996 Offer Supplement."
The Voting Rights Proposal is being made in compliance with the Control Act.
The Control Act provides that an entity that acquires "control shares" of a
publicly held North Carolina corporation may not vote those shares unless a
majority of all the outstanding shares of the corporation (not including
"interested shares") entitled to vote for the election of directors adopts a
resolution to accord voting rights to the control shares. An entity acquires
control shares whenever it acquires shares that would bring its voting power in
the corporation to one of three thresholds: 20%, 33% or 50%. As used in the
Control Act, the term "interested shares" means shares of the corporation
beneficially owned by any person who has acquired or proposes to acquire control
shares in a control share acquisition, by any officer of the corporation or by
any employee of the corporation who is also a director of the corporation. The
disinterested shareholders decide whether to accord votes to such shares at the
corporation's next shareholders' meeting, unless the acquiror requests
management to hold a special meeting of shareholders for such purpose and files
a statement divulging certain information about itself and its intended plans.
If such a meeting is requested, it must be held within 50 days of such request,
except in certain situations.
On November 29, 1995, the Purchaser delivered an "acquiring person
statement" to the Company as required by the Control Act, a copy of which was
attached as an exhibit to the Initial Proxy Statement, and requested that a
special meeting be called for the purpose of acting upon the Voting Rights
Proposal. The Company has called the Special Meeting in response to the
Purchaser's request and in compliance with the Control Act. No new acquiring
person statement has been delivered by
7
<PAGE>
Kuhlman to reflect the material modifications to the Offer, including the
decrease in the Minimum Tender Condition and increases in price.
RECOMMENDATION OF BOARD OF DIRECTORS AND SPECIAL COMMITTEE
The Board of Directors recommends that shareholders mark the enclosed proxy
card No. 2 to vote as follows:
(Bullet) VOTE FOR the Voting Rights Proposal "to grant voting rights to all
of the Shares at any time acquired by or for the Purchaser,
directly or indirectly, in a "control share acquisition" within
the meaning of the Control Act, including, any and all Shares that
may be acquired by the Purchaser pursuant to its offer to purchase
any and all outstanding shares at $12.00 per share [now $14.00],
net to the seller in cash, on terms and subject to the conditions
set forth in its Offer, as the same may be amended or supplemented
at any time prior to the conclusion of the Special Meeting, such
voting rights to be effective only upon Purchaser's acceptance of
all Shares tendered at a cash price not less than $14.00 per share
and for Shares not less than the Minimum Tender Condition set
forth in Purchaser's February 1, 1996 Offer Supplement."
(Bullet) VOTE FOR the grant of discretion to the named proxy to vote with
respect to adjournment or other procedural matters.
In reaching the recommendations, the Special Committee and the Board of
Directors considered the factors and reasons set forth in Amendment No. 4
attached hereto. Among other reasons for its recommendations, they considered
the fact that the Amended Offer of $14.00 per share is higher than the current
Pentair offer of $13.50 per share. They also considered that granting Kuhlman
voting rights if its offer is not ultimately the highest may put Kuhlman in a
position of blocking a higher offer. The Special Committee and Board of
Directors believed that there are no assurances Kuhlman actually will consummate
the Amended Offer, although Kuhlman has indicated it is finalizing its financing
arrangements which would enable it to do so if it so chooses. Accordingly, the
Special Committee and the Board of Directors believe that conditioning the grant
of voting rights on Kuhlman's acquiring control of the Company through the
Amended Offer of $14.00 per share, would prevent Kuhlman from otherwise
obtaining voting rights and the enhanced ability to block a higher offer. The
Special Committee and the Board also considered that proceeding in this fashion
allows them to reserve final determination with respect to the Kuhlman Amended
Offer until after Pentair has responded.
OPTIONAL REDEMPTION
REDEMPTION RIGHTS
Section 55-9A-06 of the North Carolina Business Corporation Act (the
"NCBCA"), which is part of the Control Act, provides a right of redemption for
the shareholders of a "covered corporation" (such as the Company) following a
vote of the shareholders to accord voting rights to "control shares" acquired in
a control share acquisition. The Control Act by its terms would apply to a
non-exempt acquisition by the Purchaser of 20% or more of all outstanding Shares
in the present circumstances and would apply, therefore, to consummation of the
Offer upon satisfaction of the Minimum Tender Condition. The Company intends to
comply with the Control Act. Therefore, the Company will honor the redemption
rights provided for by statute.
If the Voting Rights Proposal is approved at the Special Meeting and the
Purchaser obtains a majority of all voting power for the election of directors,
then all Company shareholders (other than the Purchaser) shall have the right,
as prescribed in Section 55-9A-06 of the NCBCA, to have their shares redeemed by
the Company at the "fair value" of those shares as of the day prior to the date
on which the Voting Rights Proposal was approved. The Control Act defines "fair
value" as a value, in the present context, that is not less than the highest
price paid per Share by the Purchaser pursuant to the Stock Purchase Agreement
or the Offer. The price payable by the Purchaser pursuant to the Stock Purchase
Agreement is $14.00 per Share, and the price offered by the Purchaser in the
Offer is currently $14.00 per Share. Accordingly, the redemption price under the
Control Act will be $14.00 per Share, subject to any increase in the Offer Price
and assuming compliance by the shareholder with the procedure stated below for
redeeming the holder's Shares.
PROCEDURE FOR REDEEMING SHARES
The right of redemption prescribed by the Control Act will be available
only to those shareholders who give the written notice required by Section
55-9A-06(b) of the NCBA, as described below.
8
<PAGE>
IN PARTICULAR, A SHAREHOLDER WILL HAVE NO RIGHT OF REDEMPTION UNDER THE
CONTROL ACT UNLESS THE HOLDER GIVES TO THE COMPANY, PRIOR TO OR AT THE SPECIAL
MEETING, WRITTEN NOTICE THAT, IF THE VOTING RIGHTS PROPOSAL IS APPROVED, THE
HOLDER MAY ASK FOR THE REDEMPTION OF THE HOLDER'S SHARES UNDER THE CONTROL ACT.
A SHAREHOLDER NEED NOT VOTE AGAINST THE VOTING RIGHTS PROPOSAL IN ORDER TO
EXERCISE THE REDEMPTION RIGHT PRESCRIBED BY THE CONTROL ACT.
If the Voting Rights Proposal is approved, and if the Purchaser (by means
of the Offer or otherwise) acquires control shares having a majority of all
voting power for the election of Company directors, then as soon as practicable
the Board of Directors of the Company shall cause a notice to be sent to all
shareholders of the Company advising them of such facts and reminding them that,
if they gave the written notice referred to above, they may have rights to have
their Shares redeemed at the fair value of such Shares pursuant to the Control
Act.
Within 30 days after the date on which a shareholder receives such notice,
the holder may make written demand on the Company for payment of the fair value
of the holder's Shares. After such demand, if the shareholder has complied with
the notice requirement referred to above, the Company shall redeem the holder's
Shares at their fair value within 30 days after the date on which the Company
received such holder's written demand for payment.
The written notice and written demand to be delivered by the shareholder,
as explained above, may be delivered to the Company at 1378 Charleston Drive,
Sanford, North Carolina 27330, Attention: Mr. William B. Cooper,
Secretary-Treasurer. The form and method of delivery of such written notice and
written demand is in each case at the option and risk of the shareholder. If
notice or demand is sent by mail, the use of registered mail with return receipt
requested is recommended. SHAREHOLDERS MAY GIVE NOTICE BY CHECKING THE
APPROPRIATE BOX ON THE ENCLOSED PROXY CARD.
SHARES OWNED BY CERTAIN SHAREHOLDERS, DIRECTORS AND OFFICERS
The table below shows, as of January 16, 1996, the beneficial ownership of
Shares by each shareholder known by management of the Company to own more than
5% of the outstanding Shares, by each director and named executive officer of
the Company and by all directors and executive officers of the Company. Except
as otherwise noted, the persons named in the table below have sole voting and
investment power with respect to all Shares shown as beneficially owned by them.
The address of each individual is c/o Communication Cable, Inc., 1378 Charleston
Drive, P. O. Box 1757, Sanford, NC 27330.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES (1) PERCENTAGE OF CLASS (3)
<S> <C> <C>
Charles L. Wellard.......................................... 315,971 11.8%
Kuhlman Acquisition Corp.................................... 315,703(2) 12.0%
3 Skidaway Village Square
Savannah, GA 31411
Dimensional Fund Advisors, Inc.............................. 129,361 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
John L. Bitter, Jr.......................................... 29,880 *
George J. Falconero......................................... 22,878 *
Benjamin Greene............................................. 22,675 *
William B. Cooper........................................... 24,061 *
William C. Cullen........................................... 16,995 *
Steve B. Payne.............................................. 24,809 *
Henry H. Lawton............................................. 7,773 *
James R. Fore............................................... 0(2) 0
Directors and executive officers as a group (9 persons)..... 465,042 16.5%
</TABLE>
* Less than one percent.
(1) Includes certain Shares that certain persons have the right to acquire upon
the exercise of currently exercisable options: Charles L. Wellard, 47,475;
John L. Bitter, Jr., 18,042; George J. Falconero, 21,130; Benjamin Greene,
18,042; William B. Cooper, 24,061; William C. Cullen, 16,995; Steve B.
Payne, 24,809; and Henry H. Lawton, 7,773.
(2) In the first week of January 1996, Kuhlman Acquisition Corp. exercised its
option under its Stock Option Agreement with Mr. Fore and thereby acquired
all 315,603 Shares theretofore owned by him. For additional information
about the Stock Option Agreement, see the introduction and Section 11 of the
Offer to Purchase attached as Exhibit A to the Initial Proxy Statement.
9
<PAGE>
(3) On February 2, 1996, the Company issued 300,000 shares of its common stock
to Pentair, Inc. pursuant to Pentair's exercise of its stock option at
$13.50 per share. These shares are not entitled to vote at the February 16
Special Meeting because they were not outstanding on the January 16 record
date.
DEADLINE FOR SHAREHOLDER PROPOSALS -- 1996 ANNUAL MEETING
No shareholder proposal will be considered for inclusion in the proxy
materials for the 1996 Annual Meeting because no such proposal was received by
the Company at its principal office by October 16, 1995.
If the date of the 1996 Annual Meeting is advanced more than 30 days or
delayed by more than 90 calendar days from March 12, 1996, the Company shall
inform the shareholders of the change.
ADDITIONAL INFORMATION
No individual other than James R. Fore who has been a director or executive
officer of the Company at any time since November 1, 1994 has any substantial
interest in the Voting Rights Proposal, except insofar as such individuals own
Shares and options to purchase Shares (as described below). Mr. Fore has entered
into a Stock Option Agreement and an Employment Agreement with the Purchaser and
Kuhlman. The Company has been advised that Mr. Fore will have no continuing
interest in the Company following the Offer other than as reflected in such
Stock Option Agreement and Employment Agreement. For information about such
arrangements, see the introduction and Section 11 of the Offer to Purchase.
Representatives of KPMG Peat Marwick LLP will not attend the Special
Meeting.
CURRENT INFORMATION AVAILABLE IN SEC FILINGS
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other documents and information
with the SEC. The Company's officers, directors and principal shareholders are
also presently subject to filing requirements, as well as certain trading
restrictions, imposed under the Exchange Act. Such reports, proxy statements and
other documents and information are available for inspection and copying at the
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such material may be
obtained at prescribed rates from the SEC Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549.
WILLIAM B. COOPER
SECRETARY-TREASURER
IF YOU ARE ENTITLED TO VOTE, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY,
RETURN IT BY FACSIMILE (201-804-8017) AND MAIL THE ORIGINAL PROMPTLY IN THE
ACCOMPANYING ENVELOPE.
10
<PAGE>
The CCI Proxy Statement Supplement is being provided as an exhibit for
information. Only shareholders of record on January 16 are entitled to vote and
such shareholders are being mailed the Proxy Statement Supplement and proxy card
by separate mailing.
<PAGE>
EXHIBIT A
(Communication Cable, Inc. Letterhead)
February 5, 1996
To Our Stockholders:
Reference is made to the Company's Schedule 14D-9 previously mailed to
you on December 12, 1995 in response to the Tender Offer by Kuhlman Corporation
initiated on November 29, 1995, and subsequent amended Schedule 14-D-9's mailed
by the Company. The enclosed copy of the Company's Amendment No. 4 to its
Schedule 14D-9, as filed with the Securities and Exchange Commission, describes
the Board's decision and contains other important information relating to its
decision with respect to Kuhlman's amended offer. We urge you to consider this
information carefully.
By Order of the Board of Directors.
Sincerely,
(Signature of James R. Fore)
James R. Fore
President
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMUNICATION CABLE, INC.
(Name of Subject Company)
Communication Cable, Inc.
(Name of Person(s) Filing Statement)
Common Stock Par Value $1.00 Per Share
(Title of Class of Securities)
203378 I0 4
(CUSIP Number of Class of Securities)
James R. Fore
President and Chief Executive Officer
Communication Cable, Inc.
1378 Charleston Drive
Post Office Box 1757
Sanford, North Carolina 27331
(800) 410-9473
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing statement.)
With a Copy to:
L. Bruce McDaniel
Post Office Box 58186
Raleigh, North Carolina 27658
(919) 872-3000
<PAGE>
Communication Cable, Inc. hereby amends its Schedule 14D-9 (the
"Statement"), originally filed on December 12, 1995, with respect to the tender
offer by Kuhlman Corporation initiated on November 29, 1995. Capitalized terms
not defined herein have the meaning assigned to them in the Statement.
Item 2. Tender Offer of the Bidder.
Additional paragraphs are added to Item 2. as follows:
On February 1, 1996, Kuhlman supplemented its Tender Offer, and
disclosed that:
Effective January 31, 1996, the Banks extended the terms of their
Commitment Letters through March 15, 1996. All other terms and conditions
of the Commitment Letters remain in full force and effect, except that the
purchase price for the Acquisition (as defined therein) is not to exceed
$46 million. Kuhlman has instructed the Banks to amend Kuhlman's existing
bank credit agreement so that Kuhlman will have access to sufficient funds
on deposit at the Expiration Date to purchase all of the Shares, and the
Banks are proceeding to execute that instruction. At the time of printing
this Supplement, the parties were documenting an amendment to Kuhlman's
existing bank credit agreement that would expand Kuhlman's borrowing
ceiling and thereby comply with Kuhlman's instruction to the Banks. When
such amendment is executed, a copy will be filed as an exhibit to an
amendment to the Schedule 14D-1.
As of the time of the printing of this Amendment, to the knowledge of the
Company no copy of an amendment to Kuhlman's credit agreement has been filed as
an exhibit to an amendment to Kuhlman's Schedule 14D-1.
Item 3. Identity and Background.
Item 3 is amended by adding thereto the following:
This Special Committee has been informed by Pentair that Pentair
plans to respond to the $14.00 Kuhlman offer by Friday, January 26, 1996.
On January 24, in response to the repeated requests of counsel to
the Special Committee for additional information regarding Kuhlman's anticipated
financing of the tender offer, counsel to Kuhlman sent a letter to counsel for
the Special Committee, stating that Kuhlman's relationships with its lenders
were excellent, that financing was not a condition to the offer, and that the
financing was not a condition to the offer, and the Special Committee's requests
regarding financing arrangements were "immaterial." In response, on January 24
counsel to the Special Committee responded that the past due diligence which the
Company had conducted on Kuhlman's financial condition led the Special Committee
to believe that its requests for additional information regarding Kuhlman's
financial arrangements for the offer were reasonable and relevant to the Special
Committee's deliberations. Specifically, counsel to the Special Committee
emphasized that, "...the ability of Kuhlman to finance the tender offer, as
opposed to some other party, is an area regarding which the Special Committee
would like to receive more information."
Following Kuhlman's increase in the Offer price and the foregoing
inquiries regarding Kuhlman's financing arrangements and other matters related
to the completion of the offer, on January 25, 1996 the Company filed its
Amendment No. 3 to Schedule 14D-9 with the SEC and mailed a copy of Amendment
No. 3 to its shareholders. In Amendment No. 3 the Special Committee took no
position with respect to the Kuhlman Offer. This decision was made based on
twelve factors set forth in the Amendment, including a continuing need for
further information from Kuhlman, the continued
<PAGE>
existence of conditions to Kuhlman's financing, the lack of any undertaking by
Kuhlman not to reduce the Offer price at any time, and market conditions.
On January 25, Pentair informed the Special Committee that it
intended to respond to the $14.00 Kuhlman offer by Friday, January 26, 1996. No
such response was forthcoming, although counsel to Pentair repeatedly stated
that Pentair had doubts that Kuhlman can obtain financing sufficient to
consummate the tender offer, and until such doubts are resolved Pentair would
not be inclined to increase the Offer Price.
On the evening of January 26, 1996, counsel to Kuhlman called
counsel to the Special Committee and indicated that Kuhlman had instructed its
banks to have sufficient funds on hand to accept the tender, and that the banks
were proceeding to comply with Kuhlman's instructions. Counsel to Kuhlman
indicated that these arrangements were outside of the commitment letters
previously filed with Kuhlman's tender offer. Counsel to the Special Committee
again reiterated the Special Committee's request for written confirmations of
the commitments of Kuhlman's banks.
On January 29 counsel to the Special Committee received a letter
from G. C. Kitch, an Executive Vice President of Pentair, stating that Pentair
declined to respond to the increase in the offer price to $14.00 per share by
Kuhlman at that time, although Pentair reserved the right to make a response
later. Mr. Kitch further stated that until Pentair had an opportunity to
consider information with respect to Kuhlman's financing of the tender offer,
Pentair felt it was premature to respond.
On January 29, in connection with the deliberations of the Special
Committee, counsel to the Special Committee wrote to Kuhlman to request that
Kuhlman consider a postponement of the Special Meeting, and to ask that Kuhlman
address four issues:
(1) the status of Kuhlman's consideration of the Special
Committee's requests for an irrevocable undertaking not to decrease the
tender offer price below $14 per share;
(2) details regarding Kuhlman's arrangements to finance the
tender offer, including written confirmation from the appropriate financial
institutions regarding such financing and information as to whether the
financing would be adequate to purchase all of the Company's shares;
(3) confirmation that Kuhlman must accept all shares
tendered if it accepts any; and
(4) a request that Kuhlman furnish an irrevocable
undertaking that Kuhlman would not subsequently pay less for non-tendered
shares than paid for tendered shares in the event that less than all shares
are tendered.
On the morning of January 31, counsel to Kuhlman replied to counsel
to the Special Committee by letter which included the following:
(a) Kuhlman would not agree to a postponement of the
Special Meeting.
(b) Although Kuhlman has the right to decrease the price
offered in its tender offer, Kuhlman does not expect to do so.
(c) Kuhlman's arrangements with its banks are "contemplated
by" the commitment letters originally filed with the Kuhlman tender offer,
and all that has changed is the timing of the credit agreement amendment
which will implement those arrangements. The availability of financing was
never a condition to Kuhlman's tender offer and is not an "issue" at all.
Kuhlman is
<PAGE>
deeply disappointed that the Special Committee has decided to focus on a
"non-issue" rather than on the "real issues" of price and timing of
payment.
(d) Kuhlman agrees that all shares tendered must be
accepted by Kuhlman if any such shares are tendered.
(e) Kuhlman refuses to undertake not to pay less for
non-tendered shares than it pays for tendered shares in the event that less
than all shares are tendered.
On the afternoon of January 31, counsel to the Special Committee
addressed two of the issues discussed in the letter sent by counsel to Kuhlman
earlier in the day. First, counsel to the Special Committee noted that Kuhlman
had failed to provide an undertaking that it would not decrease the tender offer
price and reserves its right to reduce the tender offer price. Secondly, counsel
to the Special Committee offered clarification as to why the Special Committee
had remained focused on the issue of the financing of the Kuhlman tender offer.
The relevant portion of this letter is as follows:
"In your letter, you characterize Kuhlman's financing as a
"non-issue", and again criticize the Special Committee for raising its concerns.
In particular, you state that arrangements for Kuhlman to increase its borrowing
capacity under the existing credit agreement in an amount sufficient to purchase
all CCI shares are "arrangements contemplated by the commitment letters."
(Emphasis in original.) You also claim that, "All that has changed is the timing
of the credit agreement amendment." (Emphasis in original.) Unfortunately, a
review of the commitment letters which Kuhlman has provided as exhibits to its
Schedule 14D-1 (referred to herein as the "Commitment Letters") indicates that
these statements and claims are inaccurate. Kuhlman has provided no other
information for review by the Special Committee in this regard."
Counsel to the Special Committee went on to renew its request for
tangible evidence that Kuhlman had secured the financing necessary to consummate
its tender offer and reiterated to Kuhlman the following points among others:
(1) Each Commitment Letter refers to a request by Kuhlman to obtain
"up to $35 million of financing..." in connection with the acquisition, related
expenses and working capital needs. This amount is inadequate to finance the
purchase of all outstanding CCI shares and shares underlying exercisable
options, much less to cover associated expenses or working capital.
(2) As the Special Committee has repeatedly pointed out, the banks
each have the right to conduct due diligence investigations of CCI prior to any
financing. The status of such due diligence or whether it will be required has
not been disclosed to the Special Committee (if such due diligence has begun at
all).
(3) Each Commitment Letter expires [February 1, 1996,] unless
extended in writing, and no evidence of any such extension has been provided."
Counsel to Kuhlman did not respond to the letter sent by counsel to
the Special Committee on January 31. On February 1, counsel to the Special
Committee again wrote to counsel to Kuhlman requesting that "on Kuhlman's behalf
you send to us by facsimile Kuhlman's amended Schedule 14D-1, with exhibits, as
soon as it is filed." Kuhlman filed an amended Schedule 14D-1 with the
Securities and Exchange Commission on February 1, 1996, but did not provide a
copy to the Special Committee.
As noted under Item 2, above, amendment No. 4 to the Schedule 14D-1
of Kuhlman included a Supplement, dated February 1, 1996, to the Kuhlman tender
offer. This supplement contains
<PAGE>
the following statement regarding the financing of the tender offer under the
caption "SOURCE AND AMOUNT OF FUNDS":
"Effective January 31, 1996, the Banks extended the terms of their
Commitment letters through March 15, 1996. All other terms and conditions
of the Commitment Letters remain in full force and effect, except that the
purchase price for the Acquisition (as defined therein) is not to exceed
$46 million. Kuhlman has instructed the Banks to amend Kuhlman's existing
bank credit agreement so that Kuhlman will have access to sufficient funds
on deposit at the Expiration Date to purchase all of the Shares, and the
banks are proceeding to execute that instruction. At the time of printing
this Supplement, the parties were documenting an amendment to Kuhlman's
existing bank credit agreement that would expand Kuhlman's borrowing
ceiling and thereby comply with Kuhlman's instruction to the Banks. When
such amendment is executed, a copy will be filed as an exhibit to an
amendment to the Schedule 14D-1."
Item 4. The Solicitation or Recommendation.
The Board of Directors has determined to recommend to the
shareholders acceptance of the Tender Offer at the present time.
This decision was made in light of Kuhlman's recent disclosure
regarding its financing arrangements, the fact that the price offered by Kuhlman
remains higher than that offered by Pentair or an other bidder for the Company's
common stock, and the following factors during the course of essentially the
past year up to the date of such action:
1. The Special Committee has received additional information
regarding the Kuhlman Offer and Kuhlman has publicly undertaken to provide
further information upon amendment of its credit facility.
2. Kuhlman's financial commitments for the Offer appear to have
been increased and extended.
3. Kuhlman has represented that it does not expect to reduce the
price of the Offer.
4. The Offer price and terms compared to the Merger price and
terms and the fact that no price equal to or higher than the Offer price has
been offered.
5. The fact that shareholders not tendering may have redemption
rights as described in the Company's Proxy Statement and Proxy Statement
Supplement.
6. The fact that the Board of Directors and the Special Committee
is recommending that shareholders condition the grant of voting rights to
Kuhlman on Kuhlman's acceptance of the offer.
7. The previously received, in connection with the Kuhlman Tender
Offer, fairness opinion from Interstate/Johnson Lane indicating that a price of
$12.00 per share was fair to the shareholders from a financial point of view;
8. The consideration of prices discussed in indications of
interest received by the Company during the past year;
9. A review of the market price of the Company's Shares for every
trading day since the Kuhlman Offer was announced;
10. The nature of the Offer;
<PAGE>
11. An assessment by directors of the strengths and weaknesses of
the Company's current business, business plans, prospects, financial condition,
and stock market perception;
12. A review of the trading history and current market value of
the shares of the Company;
13. The effect of the acquisition on the Company's customers,
employees, suppliers, and business plans.
Other than as set forth above, there was no basis for the decision
on the Tender Offer, and no relative weight was assigned to any individual
factor considered in reaching its determination. The recommendation above is
preliminary and is subject to revision. Shareholders are urged to monitor
further corporate announcements.
Item 7. Certain Negotiations and Transactions on the Subject Company.
Item 7 is amended by adding thereto an Item 7(a)(3), as follows:
On Friday, February 2, 1996, Pentair, Inc. exercised its option to
purchase 300,000 shares of the Company's common stock at a price of $13.50 per
share. Pentair, its subsidiary Pentair Acquisition, Inc. and the Company
previously entered into an Agreement and Plan of Merger providing for a merger
of the Company with Pentair Acquisition, Inc. at a cash price of $13.50 per
share, and pursuant to which the option was granted. In connection with the
exercise of the option, the Company informed Pentair that the Company granted
the option, and issued shares pursuant to Pentair's exercise of the option, in
reliance on Pentair's prior assurance that shares obtained pursuant to the
option will not be used to block an acquisition of the Company by any party
offering a higher price per share than that offered by Pentair. The Company and
Pentair have agreed to a reservation of rights with respect to this issue.
Item 9. Material to be Filed as Exhibits.
(a) CCI Proxy Statement Supplement dated February 5, 1996
THE CCI PROXY STATEMENT SUPPLEMENT IS BEING PROVIDED AS AN EXHIBIT
FOR INFORMATION. ONLY SHAREHOLDERS OF RECORD ON JANUARY 16 ARE ENTITLED TO VOTE
AND SUCH SHAREHOLDERS ARE BEING MAILED THE PROXY STATEMENT SUPPLEMENT AND PROXY
CARD BY SEPARATE MAILING.
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete, and correct.
Date: February 5, 1996 COMMUNICATION CABLE, INC.
BY: JAMES R. FORE
James R. Fore
President and
Chief Executive Officer
******************************************************************************
APPENDIX
<PAGE>
COMMUNICATION CABLE, INC.
P R O X Y N O. 2
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) certifies that the undersigned is not an
officer of Communication Cable, Inc. (the "Company"), is not an employee of the
Company who is also a director of the Company and is not a person who has
acquired or proposes to acquire "control shares" of the Company in a "control
share acquisition" within the meaning of the North Carolina Control Share
Acquisition Act (the "Control Act"), (ii) appoints each of George J. Falconero
and Paul L. Holland as Proxies, each with the power to appoint his substitute,
and (iii) authorizes such Proxies to represent and to vote, as designated below
and in their discretion upon such other matters as may properly come before the
meeting and any adjournments thereof, including any proposal made by Kuhlman,
all of the shares of common stock of the Company held of record by the
undersigned on January 16, 1996 at the special meeting of shareholders to be
held on February 16, 1996 or any adjournment thereof (the "Special Meeting").
The undersigned understands that approval of the Voting Rights Proposal stated
below is a condition precedent to the obligation of Kuhlman Acquisition Corp. to
consummate its tender offer.
1 VOTING RIGHTS PROPOSAL: To grant voting rights to all of the shares of
common stock of the Company at any time acquired by or for Kuhlman Acquisition
Corp., directly or indirectly, in a "control share acquisition" within the
meaning of the Control Act, including any and all shares that may be acquired by
Kuhlman Acquisition Corp. pursuant to its tender offer to purchase any and all
outstanding shares at $12.00 per share, [now $14.00] net to the seller in cash,
on the terms and subject to the conditions set forth in the Offer to Purchase
dated November 29, 1995 and the related Letter of Transmittal, as the same may
be amended or supplemented at any time prior to the conclusion of the Special
Meeting, such voting rights to be effective only upon Kuhlman's acceptance of
all shares tendered at a cash price not less than $14.00 per share, and for
Shares not less than the Minimum Tender Condition set forth in Kuhlman's
February 1, 1996 Offer Supplement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To grant the Proxies full authority to vote in their discretion on
adjournment and any other procedural matters.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. By marking this box the undersigned gives the Company written notice
that, if the Voting Rights Proposal is approved, I may ask for the
redemption of my shares under the Control Act as described in the
Proxy Statement Supplement.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, then this proxy
will be voted with the recommendation of the Special Committee of the Company's
Board of Directors.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, administrator, trustee or
guardian, please give full title as such. If a corporation, then please sign in
full corporate name by president or other authorized officer. If a partnership,
then please sign in partnership name by authorized person.
[ ] Wish to attend and vote shares
at meeting.
Dated: February , 1996
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE ORIGINAL PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE. PLEASE FAX YOUR SIGNED
CARD TO THE COMPANY AT
(201-804-8017)
<PAGE>
PLEASE READ THE FOLLOWING INSTRUCTIONS BEFORE EXECUTING YOUR VOTING INSTRUCTIONS
ON THE FRONT OF THIS FORM
(Bullet) TIME IS OF THE ESSENCE. PLEASE IMMEDIATELY FAX YOUR SIGNED PROXY TO
THE COMPANY AT (201-804-8017).
(BULLET) Review the Proxy Statement Supplement and, in particular, the
explanation of the Voting Rights Proposal. The shares represented hereby will be
voted as indicated; if no direction is indicated, then they will be voted with
the recommendation of the Special Committee of the Company's Board of Directors.
(Bullet) VOTING ON THE PROPOSAL: You can vote on the proposal by marking an
[x] in the appropriate block.
(Bullet) If your shares are held by a broker or bank, then you must return
your voting instructions for your shares to be represented at the meeting.
Brokers and banks vote only as instructed to vote.
(Bullet) If you wish to attend and vote your shares at the meeting, then
mark an [x] in the appropriate block and sign and return the form. If you wish
to authorize another person to vote your shares at the meeting, then print your
representatives's name and address in the area below. A legal proxy will be
issued to you or your authorized representative. Please note: If a legal proxy
is issued, then your shares will not be represented at the meeting unless you or
your representative attends the meeting.
(Bullet) Note: If the address shown for you is incorrect, then notify your
broker or bank directly.
