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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
KLLM TRANSPORT SERVICES, INC.
(Name of Subject Company)
KLLM TRANSPORT SERVICES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
482498102
(CUSIP Number of Class of Securities)
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LELAND R. SPEED
CHAIRMAN OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
KLLM TRANSPORT SERVICES, INC.
135 RIVERVIEW DRIVE
RICHLAND, MISSISSIPPI 39218
(601) 939-2545
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
WITH COPIES TO:
SIDNEY J. NURKIN, ESQ.
ALSTON & BIRD LLP
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309
(404) 881-7000
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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This Amendment No. 5 amends and supplements the solicitation/recommendation
statement on Schedule 14D-9 filed with the U.S. Securities and Exchange
Commission (the "Commission") on April 26, 2000 (the "Schedule 14D-9"), by KLLM
Transport Services, Inc., a Delaware corporation (the "Company"), in relation to
the unsolicited tender offer made by Low Acquisition, Inc., a Delaware
corporation ("Low Acquisition"), which is wholly-owned by Robert E. Low, an
individual residing in Springfield, Missouri ("Low"), disclosed in a Tender
Offer Statement on Schedule TO filed with the Commission on April 12, 2000 (the
"Schedule TO"). According to the Schedule TO, Low Acquisition is offering to
purchase all of the outstanding shares of Common Stock not owned by it or its
affiliates at a purchase price of $7.75 per share, net to the seller in cash,
without interest thereon, less applicable withholding taxes, if any, (the "Offer
Price") and upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated April 12, 2000 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with the Offer to Purchase, constitutes
the "$7.75 Per Share Offer").
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 is hereby supplemented and amended by deleting the last three
paragraphs and adding the following:
On May 5, 2000, Mr. Low and the Liles Group submitted proposals to the
Special Committee for the acquisition of all of the outstanding shares of Common
Stock. Thereafter, the Special Committee commenced negotiations with both
parties. During the course of the negotiations, Mr. Low made several proposals
to acquire the outstanding shares of Common Stock at per share prices up to
$9.25, but in each case he subsequently reduced the offered price prior to its
acceptance by the Special Committee. The Liles Group also made proposals to the
Special Committee to acquire the shares of Common Stock at per share prices up
to $9.00, but prior to May 18, 2000, those proposals were subject to certain
conditions, including a condition that the indebtedness of the Company be
refinanced, and contained a requirement that the Company reimburse the Liles
Group for their expenses if their proposal was not ultimately successful, which
the Special Committee found unacceptable. On May 18, 2000, following a reduction
by Mr. Low of his proposed price to $8.75 per share, the Liles Group submitted
an offer to the Special Committee to acquire all of the outstanding shares of
Common Stock at a price per share of $8.80, which was not subject to any
financing condition. The Special Committee concluded that it would recommend the
Liles Group's offer to the Company's Board of Directors. Shortly prior to the
meeting of the Company's Board of Directors convened for the purpose of
considering that offer, the Liles Group advised the Special Committee that they
were withdrawing their offer. Accordingly, on May 22, 2000, the Special
Committee announced that the Liles Group had withdrawn their offer to acquire
the Company and that the Company would continue its efforts to maximize
stockholder value, including seeking a transaction with Mr. Low that could be
supported by the Board of Directors. On May 23, 2000, Mr. Liles announced that
he was forced to withdraw from the bidding but that he was engaged in efforts to
present another proposal to the Special Committee to acquire the Company.
Following the withdrawal of the offer of the Liles Group, Mr. Low reduced
his offer to $7.75 per share for all Shares. After further negotiations with the
Special Committee, Mr. Low increased his offer to $7.80 per share, and on
May 24, 2000, after considering various alternatives to a sale of the Company,
the Special Committee agreed to recommend to the Company's Board of Directors
the offer of Mr. Low, which was the only offer for the acquisition of the
Company then outstanding.
On May 25, 2000, prior to the acceptance by the Board of Directors of the
offer by Mr. Low to acquire the Company for $7.80 per share, the Liles Group
submitted a proposal to purchase all of the outstanding shares of Common Stock
at a price of $8.05 per share in cash pursuant to the terms of a proposed merger
agreement. This proposal by the Liles Group was not subject to any conditions or
requirements that were unacceptable to the Special Committee. The proposal was
unanimously recommended by the Special Committee to the Company's Board of
Directors. At a telephonic Board meeting, Mr. Nurkin described to the Special
Committee the customary conditions and the expense reimbursement provisions
contained in the proposal, and Mr. Grayson presented the opinion of Morgan
Keegan as to the fairness of the proposal, from a financial point of view, to
the Company's public stockholders, and the reasons for that opinion. The
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Company's Board of Directors, with the exception of Mr. Liles, who due to his
conflict of interest did not attend the meeting, unanimously approved the
proposal on May 25, 2000, authorized an amendment to the Company's Stockholder
Rights Plan to except the transaction from the operation of the plan, adopted
resolutions exempting the transaction and certain related transactions from
Section 203 of the DGCL, and authorized the Company to enter into the Merger
Agreement. The Liles Group then caused Parent and Purchaser to be formed.
Immediately following the meeting of the Company's Board of Directors,
representatives of Mr. Low were advised of the Board's decision and that it was
anticipated that a merger agreement would be entered into between the Company
and Parent later in the day of May 25, 2000. Mr. Low's representatives requested
additional time to consider the matter. The Special Committee considered that
request, and in light of the fact that Mr. Low had been involved in attempts to
acquire the Company for a number of months, had been involved in the bidding
process established by the Special Committee for approximately one month, had
been given an opportunity to review the business and affairs of the Company for
several weeks and had been provided with extensive documentation related to the
operations of the Company and its financial condition, had made (and
subsequently withdrawn) other proposals to acquire the Company at prices greater
than his last proposal made to the Special Committee, that after being advised
of the decision of the Board of Directors Mr. Low had not increased his existing
offer for the acquisition of the Shares, and that the Company would likely
suffer damage (including loss of drivers, employees and customers) if the
auction process was further extended, the Special Committee determined that it
was not in the best interests of the Company or its stockholders to extend the
process further. Accordingly, the Company entered into a merger agreement with
Parent and Purchaser.
On May 26, 2000, the Company, Purchaser and Parent, separately announced the
execution of the Merger Agreement. After the announcement was made, the Special
Committee received a letter from Mr. Low again requesting an extension of time
in which to submit an improved bid for the Shares and indicating that he might
be willing to pay more than $8.05 per Share. Mr. Nurkin advised Mr. Crawford
that a definitive merger agreement had already been executed between Purchaser,
Parent, and the Company, that such definitive agreement permitted the Company to
consider unsolicited superior proposals subject to the payment of a fee if the
Merger Agreement were to be terminated in order to accept a superior proposal,
and that Mr. Low was free to revise his bid if he wished. As of the date hereof,
Mr. Low has not made a firm offer superior to the Liles Group's Offer accepted
by the Board of Directors.
Also on May 26, 2000 the Company held its annual meeting of stockholders at
which all of the Company's directors were reelected.
On June 2, 2000, pursuant to the Merger Agreement, Parent and Purchaser
commenced a tender offer for all of the outstanding shares of Common Stock.
In light of entering into the definitive agreement with the Liles Group, the
Special Committee of theBoard of Directors of KLLM reaffirms its recommendation
that the stockholders of KLLM should reject the $7.75 Per Share Offer, and that
KLLM's stockholders not tender their shares of KLLM common stock in the $7.75
Per Share Offer.
(II) REASONS FOR THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
In reaching its recommendation to enter into the merger agreement with the
Liles Group and to reaffirm its recommendation that the stockholders of KLLM
reject the $7.75 Per Share Offer, the Board of Directors considered a number of
factors, including the following:
1. COMPANY OPERATING AND FINANCIAL CONDITION. The Board considered the current
and historical financial condition and results of operations of the Company,
as well as the prospects and strategic objectives of the Company, including
the risks involved in achieving those prospects and objectives, and the
current and expected conditions in the industry in which the Company's
business operates. The Board also discussed the current conditions and
pricing pressures in the trucking industry and the resulting negative impact
of such factors on the Company's projected profitability and cash flow. In
addition,
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the Board discussed the negative impact that the sales and auction process
was having on the Company's operations.
2. TRANSACTION FINANCIAL TERMS/PREMIUM TO MARKET PRICE. The Board reviewed the
relationship of the offer price of the Liles Group to the historical market
prices of the shares of Common Stock. The $8.05 offer represents a 69%
premium over the $4.75 closing price of the Shares on the Nasdaq National
Market on December 31, 1999, an 24% premium over the $6.50 per share price
on March 29, 2000, the last full trading day prior to the first public
disclosure that Mr. Liles had an interest in acquiring the Company, and a 3%
premium over Mr. Low's most recent offer of $7.80 per share of Common Stock.
The Board also discussed that the price being paid in the transaction, based
on the financial presentation by Morgan Keegan, represents a multiple of
EBIT (earnings before interest and taxes) for the last 12 months ended
March 31, 2000 that compares favorably to the multiples of EBIT paid in
other transactions in the trucking industry. The Board was aware that the
consideration received by holders of the shares of Common Stock in the offer
and subsequent merger would be taxable to such holders for federal income
tax purposes.
3. STRATEGIC ALTERNATIVES. The Board considered presentations of Morgan Keegan
and the Board's review with respect to trends in the industry in which the
Company's business operates and the strategic alternatives available to the
Company, including the Company's alternative to remain an independent public
company and the possibility of liquidating the Company's assets, of
significantly curtailing operations in an attempt to increase profitability,
and other extraordinary corporate transactions, as well as the risks and
uncertainties associated with such alternatives. The Board also considered
the information provided by Morgan Keegan relating to the process that had
been conducted on behalf of the Company by Morgan Keegan since August, 1999
relating to the Company's exploration of strategic alternatives available to
it, including information regarding discussions and meetings held by Morgan
Keegan and the Company's management with other potential acquirors of the
Company. The Board noted that the only one of these discussions with other
potential buyers that had resulted in proposals to acquire the Company was
from Mr. Low, and that, at the time the Board of Directors approved the
transaction with the Liles Group, Mr. Low's offer was $.25 per Share less
than Low Group's offer and that the other material terms of the two offers
were not significantly different. The Board discussed the extensive
arms'-length negotiations between the Company and the Liles Group and the
Company and Mr. Low that resulted in the Merger Agreement and the $8.05 per
share Offer Price.
4. MORGAN KEEGAN FAIRNESS OPINION. The Board took into account the
presentations and advice from Morgan Keegan and the opinion of Morgan
Keegan, dated May 25, 2000, that as of that date, based upon and subject to
certain considerations and assumptions, the consideration to be received by
holders of shares of Common Stock pursuant to the merger agreement was fair
from a financial point of view to such holders. The Board was aware that
Morgan Keegan becomes entitled to certain fees described in Item 5 upon the
consummation of the Offer.
5. LIMITED CONDITIONS TO CONSUMMATION. The Board discussed how Parent's and
Purchaser's obligation to consummate the Offer and the Merger is subject to
a limited number of customary conditions, with no financing condition. The
Board also considered the likelihood of obtaining required regulatory
approvals, and the terms of the Merger Agreement regarding the obligations
of both companies to pursue such regulatory approvals. The Board of
Directors also considered the financial condition and business reputation of
Mr. Ebbers and the ability of Parent to complete the Offer and Merger in a
timely manner.
6. ALTERNATIVE TRANSACTIONS. The Board of Directors considered that under the
terms of the merger agreement, while the Company is prohibited from
soliciting, initiating or encouraging the submission of acquisition
proposals from third parties, the Company may engage in any negotiations or
discussions with, or provide any information to, a third party in response
to an unsolicited written acquisition proposal by such third party if the
Board determines in good faith that the failure to take such action would
constitute a breach of its fiduciary duties to its stockholders under
applicable law.
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The Board further considered that the terms of the merger agreement permit
the Company to terminate the merger agreement to enter into an alternative
unsolicited acquisition proposal (1) if, prior to or concurrently with
terminating the merger agreement, the Company pays Purchaser a $844,500
termination fee, which includes reimbursement for out-of-pocket expenses
incurred by Parent and Purchaser in connection with the transactions
contemplated by the merger agreement, and (2) if the Board of Directors
determines in good faith, after consultation with and upon the advice of its
outside legal counsel, prior to the consummation (or, if the Offer is
consummated and extended, the initial consummation) of the Offer, that the
failure to terminate the merger agreement and accept such alternative
acquisition proposal would constitute a breach of its fiduciary duties to
its stockholders under applicable law. The Board considered the possible
effect of these provisions of the merger agreement on third parties, who
might be interested in exploring an acquisition of the Company. In this
regard, the Board recognized that the provisions of the merger agreement
relating to termination fees and solicitation of acquisition proposals were
insisted upon by Parent as a condition to entering into the merger agreement
and that the amount of the termination fees that would be payable if the
merger agreement were to be terminated to accept an alternative acquisition
proposal was within the range of the amounts of termination fees customarily
paid under similar circumstances in transactions comparable to those
provided for in the merger agreement. The Board of Directors also considered
the contacts that the Company had had with third parties regarding a
potential transaction involving the Company and took into account the views
of management and Morgan Keegan as to the likelihood that a third party
would be prepared to pay a higher price for the Shares than the
consideration offered in the Liles Group Offer and the merger in a
transaction that could be completed on a timely basis.
The foregoing includes all material factors considered by the Board of
Directors. In view of its many considerations, the Board did not find it
practical to, and did not, quantify or otherwise assign relative weights to the
specific factors considered. In addition, individual members of the Board may
have given different weights to the various factors considered. After weighing
all of these considerations, the Board determined to approve the merger
agreement with the Liles Group and recommend that holders of shares of Common
Stock tender their shares in the Liles Group's offer and to reject the $7.75 Per
Share Offer.
ITEM 9. EXHIBITS.
Item 9 is hereby supplemented and amended by adding the following:
Exhibit 8 Press Release issued by the Company, dated June 2, 2000 (incorporated
by reference to Exhibit (a)(7) to the Schedule 14D-9/A filed by the
Company on June 2, 2000).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
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Dated: June 2, 2000 KLLM TRANSPORT SERVICES, INC.
By: /s/ LELAND R. SPEED
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Leland R. Speed, Chairman of the Special
Committee of the Board of Directors
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