<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
AMENDMENT NO. 5
STERLING CHEMICALS HOLDINGS, INC.
(FORMERLY KNOWN AS STERLING CHEMICALS, INC.)
(NAME OF THE ISSUER)
STERLING CHEMICALS HOLDINGS, INC.
(THE SURVIVOR OF THE MERGER OF STERLING CHEMICALS, INC.
AND STX ACQUISITION CORP.)
THE STERLING GROUP, INC.
GORDON A. CAIN
WILLIAM A. MCMINN
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE ("COMMON STOCK"), OF THE REGISTRANT
(TITLE OF CLASS OF SECURITIES)
------------------------
85916E-10-3
(CUSIP NUMBER OF CLASS OF SECURITIES)
<TABLE>
<CAPTION>
<S> <C>
ROBERT W. ROTEN FRANK J. HEVRDEJS
PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT
STERLING CHEMICALS HOLDINGS, INC. THE STERLING GROUP, INC.
1200 SMITH STREET, SUITE 1900 EIGHT GREENWAY PLAZA
HOUSTON, TEXAS 77002-4312 SUITE 702
HOUSTON, TEXAS 77046
</TABLE>
(NAME, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
-------------------
This statement is filed in connection with (check the appropriate box):
(a) [x] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
(b) [ ] The filing of a registration statement under the Securities Act of 1933.
(c) [ ] A tender offer.
(d) [ ] None of the above.
Check the following box if soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
------------------
CALCULATION OF FILING FEE
===============================================================================
TRANSACTION VALUATION AMOUNT OF FILING FEE
$640,664,844* $125.00**
===============================================================================
* Calculated based on a proposed cash payment of $12.00 per share for
53,388,737 shares.
[x] Check box if any part of the fee is offset as provided by Rule D-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $128,133.00
Form or Registration No.: Preliminary Proxy Statement
Filing Party: Sterling Chemicals, Inc.
Date Filed: May 23, 1996
** Paid herewith.
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INTRODUCTION
This Rule 13e-3 Transaction Statement (the "Statement") relates to the
Amended and Restated Agreement and Plan of Merger, dated as of April 24, 1996
(the "Merger Agreement"), between Sterling Chemicals, Inc., a Delaware
corporation (the "Company") and STX Acquisition Corp., a Delaware corporation
("STX Acquisition"). STX Acquisition was formed in April 1996 by an investor
group led by The Sterling Group, Inc. ("TSG") and The Unicorn Group, L.L.C. to
effect the Merger. A copy of the Merger Agreement is attached as Annex A to the
Proxy Statement filed by the Company (the "Proxy Statement"). The Proxy
Statement is attached hereto as Exhibit (d)(1).
Upon the terms and subject to the conditions of the Merger Agreement, at
the effective time of the transaction (the "Effective Time"): (a) STX
Acquisition will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation");
(b) the current directors of the Company will resign and will be replaced by the
director candidates to be nominated by STX Acquisition; (c) substantially all of
the operating assets and associated liabilities of the Company will be
transferred to STX Chemicals Corp. ("Chemicals"), a wholly-owned subsidiary of
the Surviving Corporation; (d) the stockholders of the Company will be entitled
to (i) retain shares in the Surviving Corporation ("Rollover Shares") to the
extent that they make an election to do so (a "Rollover Election"), subject to
pro rata reduction in the event that Rollover Elections have been made to retain
more than an aggregate of 5.0 million Rollover Shares and (ii) receive $12.00
cash for each share of Common Stock of the Company ("Common Stock") not retained
as a Rollover Share (the "Cash Payment"); and (e) the issued and outstanding
shares of common stock of STX Acquisition will be converted into shares of
common stock of the Surviving Corporation. Depending on the number of Rollover
Shares, the issued and outstanding shares of common stock of STX Acquisition
will be converted into up to 8,589,580 shares of common stock of the Surviving
Corporation, representing approximately 79% of the total outstanding shares of
the Surviving Corporation.
The Merger Agreement was approved by the stockholders of the Company at
the Special Meeting of Stockholders of the Company held to consider the Merger
Agreement on August 20, 1996. The closing of the Merger occurred on August 21,
1996.
The following cross reference sheet shows the location in the preliminary
Proxy Statement relating to the Merger filed by the Company with the Securities
and Exchange Commission. The information in the preliminary Proxy Statement,
including all annexes thereto, is hereby expressly incorporated herein by
reference and the responses to each item of this Statement are qualified in
their entirety by the provisions of the preliminary Proxy Statement. The Proxy
Statement will be completed and, if appropriate, amended, prior to the time it
is first sent or given to stockholders of the Company. This Statement will be
amended to reflect such completion or amendment of the Proxy Statement.
1
<PAGE>
CROSS REFERENCE SHEET
ITEM IN
SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT
- --------------------------- ---------------------------------------------------
Item 1(a) and (b).......... Outside Front Cover Page, "SUMMARY--Parties to the
Transaction," "--Votes Required" "--Market Prices
and Dividends," "THE SPECIAL MEETING--Purpose;
Record Date; Voting at the Special Meeting," "--
Votes Required" and "MARKET PRICES; DIVIDENDS."
Item 1(c) and (d).......... "SUMMARY--Market Prices; Dividends" and "MARKET
PRICES; DIVIDENDS"
Item 1(e).................. Not applicable.
Item 1(f).................. Not applicable.
Item 2(a)-(d) and (g)...... Outside Front Cover Page, "SUMMARY--Parties to the
Transaction, "--Transaction Sponsors,"
"INCORPORATION BY REFERENCE" and ANNEX D.
Item 2(e) and (f).......... Negative.
Item 3(a) and (b).......... "SUMMARY--Background," "Fairness of the Merger,"
"--Opinion of Financial Advisor," "SPECIAL FACTORS
--Background," "--Fairness of the Merger", "--
Opinion of Financial Advisor," "--Purpose and
Structure of the Transaction," and "CERTAIN
FINANCIAL PROJECTIONS."
Item 4(a) and 4(b)......... Outside Front Cover Page, "SUMMARY--Terms of
the Merger," "--Effective Time of the Merger," "--
Interests of Certain Persons in the Merger," "--
Conditions to Consummation of the Merger," "--No
Solicitation; Fiduciary Duties," "--Termination;
Fees and Expenses," "SPECIAL FACTORS--Purpose and
Structure of the Transaction," "THE MERGER--Terms
of the Merger," "--Interests of Certain Persons in
the Merger," "--Effective Time of the Merger," "--
Summary of the Terms of Related Agreements," "--
Appraisal Rights of Dissenting Stockholders" and
ANNEX A.
2
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Item 5(a) - (g)............ "SUMMARY--Terms of the Merger," "--Interests of
Certain Persons in the Merger," "SPECIAL FACTORS--
Purpose and Structure of the Transaction," "--Risks
and Effects of the Merger," "--The Company's
Business After the Merger," "THE MERGER--Interests
of Certain Persons in the Merger," "--Source and
Amount of Funds" and "DIRECTORS AND EXECUTIVE
OFFICERS OF THE SURVIVING CORPORATION."
Item 6(a), (c) and (d)..... "SUMMARY--Financing Arrangements," and "THE
MERGER--Source and Amount of Funds."
Item 6(b).................. "SUMMARY--Financing Arrangements," "THE
MERGER--Source and Amount of Funds" and "FEES
AND EXPENSES."
Item 7(a) - (d)............ Outside Front Cover Page, "SUMMARY--Background,"
"--Recommendation of the Board; Fairness of the
Merger," "--Opinion of Financial Advisor," "--
Appraisal Rights of Dissenting Stockholders,"
"--Certain Tax Consequences of the Merger,"
"--Interests of Certain Persons in the Merger,"
"SPECIAL FACTORS--Background," "--Fairness of the
Merger," "--Purpose and Structure of the
Transaction," "--Recommendation of the Board,"
"--Opinion of Financial Advisor," "--Risks and
Effects of the Merger," "--Certain Tax Consequences
of the Merger," "--The Company's Business After the
Merger," "THE MERGER--Interests of Certain Persons
in the Merger" and "--Appraisal Rights of
Dissenting Stockholders."
Item 8(a) - (f)............ Outside Front Cover Page, "SUMMARY--Background,"
"--Recommendation of the Board," "--Fairness of the
Merger," "--Opinion of Financial Advisor," "--Votes
Required," "THE SPECIAL MEETING--Votes Required,"
"SPECIAL FACTORS--Background," "--Recommendation of
the Board," "--Fairness of the Merger," "--Opinion
of Financial Advisor," "CERTAIN FINANCIAL
PROJECTIONS" and ANNEX B.
Item 9(a) - (c)............ "SUMMARY--Background," "--Recommendation of the
Board; Fairness of the Merger," "--Opinion of
Financial Advisor," "--Interests of Certain Persons
in the Merger," "SPECIAL FACTORS--Background," "--
Fairness of the Merger" "--Recommendation of the
Board," "--Opinion of Financial Advisor," "CERTAIN
FINANCIAL PROJECTIONS" and ANNEX B.
Item 10(a) and (b)......... "SUMMARY--Interests of Certain Persons in the
Merger," "THE MERGER--Interests of Certain Persons
in the Merger," "STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS," and ANNEX D.
Item 11.................... "SUMMARY--Terms of Related Agreements," "THE
MERGER--Summary of the Terms of Related
Agreements" and ANNEX A.
3
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Item 12(a) and (b)......... "SUMMARY--Recommendation of the Board; Fairness of
the Merger," "--Terms of Related Agreements,"
"SPECIAL FACTORS--Recommendation of the Board" and
"THE MERGER--Summary of the Terms of Related
Agreements."
Item 13(a)................. Outside Front Cover Page, "SUMMARY--Votes
Required," "--Appraisal Rights of Dissenting
Stockholders," "THE SPECIAL MEETING--Votes
Required," "THE MERGER--Appraisal Rights of
Dissenting Stockholders," the Notice of Special
Meeting and ANNEX C.
Item 13(b)................. "SPECIAL FACTORS--Fairness of the Merger."
Item 13(c)................. Not applicable.
Item 14(a)................. "SUMMARY--Summary Historical Financial Data" and
"SELECTED HISTORICAL FINANCIAL DATA."
Item 14(b)................. "SUMMARY--Summary Pro Forma Financial Data" and
"PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND
OTHER INFORMATION."
Item 15(a)................. "SPECIAL FACTORS--Risks and Effects of the Merger,"
"--The Company's Business After the Merger," "THE
MERGER," "DIRECTORS AND EXECUTIVE OFFICERS OF THE
SURVIVING CORPORATION," "FEES AND EXPENSES" and
ANNEX A.
Item 15(b)................. "THE SPECIAL MEETING--Revocation and Use of
Proxies; Solicitation."
Item 16.................... Proxy Statement, Letter to Stockholders and Notice
of Special Meeting.
Item 17.................... Separately included herewith.
4
<PAGE>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
(a) and (b) The information set forth on the Outside Front Cover Page and
in "SUMMARY--Parties to the Transaction," "--Votes Required," "THE SPECIAL
MEETING--Purpose; Record Date; Voting at the Special Meeting," "--Votes
Required" "MARKET PRICES; DIVIDENDS" of the Proxy Statement is incorporated
herein by reference.
(c) and (d) The information set forth in "SUMMARY--Market Prices;
Dividends" and "MARKET PRICES; DIVIDENDS" of the Proxy Statement is incorporated
herein by reference.
(e) Not applicable.
(f) Not applicable.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) This Statement is being filed by TSG, STX Acquisition,
the Company, which is the issuer of the Common Stock, the class of equity
securities to which this Statement relates, Mr. Gordon A. Cain and Mr. William
A. McMinn (collectively, the "Filing Persons"). The information set forth on the
Outside Front Cover Page and in "SUMMARY--Parties to the Transaction" "--
Transaction Sponsors," "INCORPORATION BY REFERENCE" and ANNEX D of the Proxy
Statement is incorporated herein by reference.
(e) and (f) During the last five years, none of the Filing Persons, nor
to the best of their knowledge any of the officers, directors or control persons
of the Filing Persons, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining further violations of, or prohibiting activities subject
to, Federal or State securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) and (b) The information set forth in "SUMMARY--Background," "--
Fairness of the Merger," "--Opinion of Financial Advisor," "SPECIAL FACTORS--
Background," "Fairness of the Merger," "--Opinion of Financial Advisor," "--
Purpose and Structure of the Transaction," and "CERTAIN FINANCIAL PROJECTIONS"
of the Proxy Statement is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) and (b) The information set forth on the Outside Front Cover Page and
in "SUMMARY--Terms of the Merger," "--Effective Time of the Merger,"
"--Interests of Certain Persons in the Merger," "--Conditions to Consummation of
the Merger," "--No Solicitation; Fiduciary Duties," "--Termination; Fees and
Expenses," "SPECIAL FACTORS--Purpose and Structure of the Transaction," "THE
MERGER--Terms of the Merger," "--Interests of Certain Persons in the Merger,"
"--Summary of the Terms of Related Agreements" and "--Appraisal Rights of
Dissenting Stockholders" and ANNEX A of the Proxy Statement is incorporated by
reference.
5
<PAGE>
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (g) The information set forth in "SUMMARY--Terms of the Merger,"
"--Interests of Certain Persons in the Merger," "SPECIAL FACTORS--Purpose and
Structure of the Transaction," "--Risks and Effects of the Merger," "--The
Company's Business After the Merger," "THE MERGER--Interests of Certain Persons
in the Merger," "--Source and Amount of Funds" and "DIRECTORS AND EXECUTIVE
OFFICERS OF THE SURVIVING CORPORATION" of the Proxy Statement is incorporated
herein by reference.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a), (c) and (d) The information set forth in "SUMMARY--Financing
Arrangements" and "THE MERGER--Source and Amount of Funds" of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY--Financing Arrangements," "THE
MERGER--Source and Amount of Funds" and "FEES AND EXPENSES" of the Proxy
Statement is incorporated herein by reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) - (d) The information set forth on the Outside Front Cover Page and
in "SUMMARY--Background," "--Recommendation of the Board; Fairness of the
Merger," "--Opinion of Financial Advisor," "--Appraisal Rights of Dissenting
Stockholders," "--Certain Tax Consequences of the Merger," "--Interests of
Certain Persons in the Merger," "SPECIAL FACTORS--Background," "--Fairness of
the Merger," "--Purpose and Structure of the Transaction," "--Recommendation of
the Board," "--Opinion of Financial Advisor," "--Risks and Effects of the
Merger," "--Certain Tax Consequences of the Merger," "THE MERGER--Interests of
Certain Persons in the Merger," and "--Appraisal Rights of Dissenting
Stockholders" of the Proxy Statement is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (f) The information set forth on the Outside Front Cover Page and
in "SUMMARY--Background," "--Recommendation of the Board; Fairness of the
Merger," "--Opinion of Financial Advisor," "--Votes Required," "THE SPECIAL
MEETING--Votes Required," "SPECIAL FACTORS--Background," "--Recommendation of
the Board," "--Fairness of the Merger," "--Opinion of Financial Advisor,"
"CERTAIN FINANCIAL PROJECTIONS" and Annex B of the Proxy Statement is
incorporated herein by reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) - (c) The information set forth in "SUMMARY--Background,"
"--Recommendation of the Board; Fairness of the Merger," "--Opinion of Financial
Advisor," "--Interests of Certain Persons in the Merger," "SPECIAL FACTORS--
Background," "--Fairness of the Merger," "--Recommendation of the Board," "--
Opinion of Financial Advisor," "CERTAIN FINANCIAL PROJECTIONS" and Annex B of
the Proxy Statement is incorporated herein by reference. See also exhibits
(b)(1), (b)(2), (b)(3), (b)(4) and (b)(5).
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) The information set forth in "SUMMARY--Interests of Certain
Persons in the Merger," "THE MERGER--Interests of Certain Persons in the
Merger," "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS" and
Annex D of the Proxy Statement is incorporated herein by reference.
6
<PAGE>
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in "SUMMARY--Terms of Related Agreements," "THE
MERGER--Summary of the Terms of Related Agreements," and ANNEX A of the Proxy
Statement is incorporated herein by reference. See also exhibits (c)(1), (c)(2),
(c)(3), (c)(4), (c)(5), (c)(6), (c)(7), and (c)(8) attached hereto.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) and (b) The information set forth in "SUMMARY--Recommendation of the
Board; Fairness of the Merger," "SPECIAL FACTORS--Recommendation of the Board"
and "THE MERGER--Summary of the Terms of Related Agreements" of the Proxy
Statement is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in the Outside Front Cover Page, "SUMMARY--
Votes Required," "--Appraisal Rights of Dissenting Stockholders," "THE SPECIAL
MEETING--Votes Required," "THE MERGER--Appraisal Rights of Dissenting
Stockholders" and ANNEX C of the Proxy Statement, and in the Notice of Special
Meeting attached to the Proxy Statement, is incorporated herein by reference.
(b) The information set forth in "SPECIAL FACTORS--Fairness of the
Merger" of the Proxy Statement is incorporated herein by reference.
(C) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in "SUMMARY--Summary Historical Financial
Data" and "SELECTED HISTORICAL FINANCIAL DATA" of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth in "SUMMARY - Summary Pro Forma Financial
Data," and "PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION"
of the Proxy Statement is incorporated herein by reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in "SPECIAL FACTORS--Risks and Effects
of the Merger," "--The Company's Business After the Merger," "THE
MERGER," "DIRECTORS AND EXECUTIVE OFFICERS OF THE SURVIVING CORPORATION," "FEES
AND EXPENSES" and ANNEX A of the Proxy Statement is incorporated herein by
reference.
(b) The information set forth in "THE SPECIAL MEETING--Revocation and Use
of Proxies; Solicitation" of the Proxy Statement is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
Additional information concerning the Merger is set forth in the Proxy
Statement, Letter to Stockholders and Notice of Special Meeting which are
attached hereto as Exhibit (d)(1).
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
+(a) Credit Agreement among STX Chemicals Corp., Texas Commerce Bank
National Association, Credit Suisse and the financial institutions
named therein.
7
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+(b)(1) Fairness opinion dated April 24, 1996 delivered by
Lazard Freres & Co. LLC (filed herewith as Annex B to the Proxy
Statement that is filed as Exhibit (d)(1) hereto).
+(b)(2) Reports of Lazard Freres & Co. LLC dated April 2, 1996 and April
24, 1996 and delivered to the Board of Directors on April 2, 1996
and April 24, 1996.
(b)(3) Opinion of Houlihan, Lokey, Howard & Zukin, Inc., dated August 21,
1996.
(b)(4) Appraisal of Valuation Research Corporation, dated August 21,
1996.
(b)(5) Appraisal of Valuation Research Corporation, dated August 21,
1996.
+(c)(1) Merger Agreement (filed herewith as Annex A to the Proxy
Statement that is filed as Exhibit (d)(1) hereto).
+(c)(2) Inducement Agreement dated as of April 24, 1996.
+(c)(3) Form of Tag-Along Agreement (filed herewith as Exhibit A to Annex
A to the Proxy Statement that is filed as Exhibit (d)(1) hereto).
+(c)(4) Agreement and Irrevocable Proxy executed by J. Virgil Waggoner,
dated as of April 24, 1996.
+(c)(5) Agreement and Irrevocable Proxy executed by Gordon A. Cain, dated
as of April 24, 1996.
+(c)(6) Agreement and Irrevocable Proxy executed by Robert W. Roten, dated
as of April 24, 1996.
+(c)(7) Agreement and Irrevocable Proxy executed by Frank J. Hevrdejs,
dated as of April 24, 1996.
+(c)(8) Agreement and Irrevocable Proxy executed by William C. Oehmig,
dated as of April 24, 1996.
+(d)(1) Proxy Statement of the Company, Notice of Special Meeting of
Stockholders of the Company, Letter to Stockholders of the
Company, Rollover Election Form and Proxy Card.
+(e)(1) Section 262 of the Delaware General Corporation Law (filed
herewith as Annex C to the Proxy Statement that is filed as
Exhibit (d)(1) hereto).
(f) None.
- ----------------
+ Previously filed.
8
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
Dated: August 22, 1996
STERLING CHEMICALS HOLDINGS, INC.
By: /s/ ROBERT W. ROTEN
Robert W. Roten
President and Chief Executive Officer
9
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
Dated: August 22, 1996
THE STERLING GROUP, INC.
By: /s/ FRANK J. HEVRDEJS
Name: Frank J. Hevrdejs
Title: President
10
<PAGE>
SIGNATURE
---------
After due 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.
Dated: August 22, 1996
/s/ GORDON A. CAIN
-------------------------
GORDON A. CAIN
11
<PAGE>
SIGNATURE
---------
After due 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.
Dated: August 22, 1996
/s/ WILLIAM A. MCMINN
-----------------------------------
WILLIAM A. MCMINN
12
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- --------- -----------
+(a) Credit Agreement among STX Chemicals Corp., Texas
Commerce Bank National Association, Credit Suisse and the
financial institutions named therein.
+(b)(1) Fairness opinion dated April 24, 1996 delivered by
Lazard Freres & Co. LLC (filed herewith as Annex B
to the Proxy Statement that is filed as Exhibit
(d)(1) hereto).
+(b)(2) Reports of Lazard Freres & Co. LLC dated April 2, 1996 and April
24, 1996 and delivered to the Board of Directors on April 2, 1996
and April 24, 1996.
(b)(3) Opinion of Houlihan, Lokey, Howard & Zukin, Inc., dated August 21,
1996.
(b)(4) Appraisal of Valuation Research Corporation, dated August 21, 1996.
(b)(5) Appraisal of Valuation Research Corporation, dated August 21, 1996.
+(c)(1) The Merger Agreement (filed herewith as Annex A to
the Proxy Statement that is filed as Exhibit (d)(1)
hereto).
+(c)(2) Inducement Agreement dated as of April 24, 1996.
+(c)(3) Form of Tag-Along Agreement (filed herewith as
Exhibit A to Annex A to the Proxy Statement that is
filed as Exhibit (d)(1) hereto).
+(c)(4) Agreement and Irrevocable Proxy executed by
J. Virgil Waggoner, dated as of April 24, 1996.
+(c)(5) Agreement and Irrevocable Proxy executed by
Gordon A. Cain, dated as of April 24, 1996.
+(c)(6) Agreement and Irrevocable Proxy executed by
Robert W. Roten, dated as of April 24, 1996.
+(c)(7) Agreement and Irrevocable Proxy executed by
Frank J. Hevrdejs, dated as of April 24, 1996.
+(c)(8) Agreement and Irrevocable Proxy executed by
William C. Oehmig, dated as of April 24, 1996.
+(d)(1) Proxy Statement of the Company, Notice of Special
Meeting of Stockholders of the Company, Letter to
Stockholders of the Company, Rollover Election Form
and Proxy Card.
+(e)(1) Section 262 of the Delaware General Corporation Law
(filed herewith as Annex C to the Proxy Statement that
is filed as Exhibit (d)(1) hereto).
(f) None.
- ------------
+ Previously filed.
13
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EXHIBIT 99(B)(3)
[HOULIHAN, LOKEY, HOWARD & ZUKIN LOGO APPEARS HERE]
[A SPECIALTY INVESTMENT BANKING FIRM]
August 21, 1996
To the Lenders
Now or Hereafter Parties to the
Credit Agreement Referred to Below
and Texas Commerce Bank National Association
as Administrative Agent
Ladies and Gentlemen:
We understand that STX Acquisition Corp. ("SAC" hereinafter) has entered into an
Agreement and Plan of Merger with Sterling Chemicals, Inc. ("SCI" hereinafter)
whereby the stockholders of SAC will acquire a controlling interest in SCI
through the merger of SAC with and into SCI (the "Acquisition" hereinafter) and
will change its name to Sterling Chemicals Holdings, Inc. ("Holdings"
hereinafter). We also understand that in connection with the Acquisition, STX
Chemicals Corp. ("SCC" hereinafter), a wholly owned subsidiary of SAC, will
obtain approximately $450 million of senior secured financing, $275 million of
senior subordinated notes, and a $6.5 million ESOP term loan and that SCC will
change its name to Sterling Chemicals, Inc. (the "Company" hereinafter). We
understand that approximately $608 million of existing SCI common stock will be
purchased by Holdings and that approximately $15 million of stock appreciation
rights, phantom stock and restricted stock will be purchased by the Company. We
further understand that these purchases and the refinancing of certain debt will
be funded through a combination of bank financing, subordinated debt and common
stock. The merger and other related transactions disclosed to Houlihan, Lokey,
Howard & Zukin, Inc. ("Houlihan Lokey") are referred to collectively herein as
the "Transaction." It is our understanding that a significant part of the
financing for the Transaction will be obtained by the Company from one or more
institutional lenders (the "Lenders") pursuant to the credit agreement dated
June 21, 1996 by and between STX Chemicals Corp., Texas Commerce Bank National
Association, Credit Suisse and financial institutions now or hereafter parties
thereto (the "Credit Agreement" hereinafter) and that Texas Commerce Bank
National Association will serve as administrative agent (the "Agent"
hereinafter) on behalf of the Lenders.
<PAGE>
To the Lenders
Now or Hereafter Parties to the
Credit Agreement Referred to Below
and Texas Commerce Bank National Association
as Administrative Agent
August 21, 1996 -2-
You have requested our written opinion (the "Opinion") as to the matters set
forth below. This Opinion values the Company as a going concern (including
goodwill), on a pro forma basis, immediately after and giving effect to
the Transaction and the associated indebtedness. For purposes of this Opinion,
"fair value" shall be defined as the amount at which the Company would change
hands between a willing buyer and a willing seller, each having reasonable
knowledge of the relevant facts, neither being under any compulsion to act, with
equity to both; and "present fair saleable value" shall be defined as the amount
that may be realized if the Company's aggregate assets (including goodwill) are
sold as an entirety with reasonable promptness in an arm's length transaction
under present conditions for the sale of comparable business enterprises, as
such conditions can be reasonably evaluated by Houlihan Lokey. We have used the
same valuation methodologies in determining fair value and present fair saleable
value for purposes of rendering this Opinion. The term "identified contingent
liabilities" shall mean the stated amount of contingent liabilities identified
to us and explained by responsible officers of the Company, upon whom we have
relied without independent verification, including liabilities that may result
from pending litigation, asserted claims and assessments, guaranties,
environmental conditions, uninsured risks and any other contingent liabilities
identified and explained. Being "able to pay its debts as they become absolute
and mature" shall mean that, assuming the Transaction has been consummated as
proposed, the Company's financial forecasts for the period 1996 to 2000 indicate
positive cash flow for such period, including (and after giving effect to) the
payment of installments due under loans made pursuant to the indebtedness
incurred in the Transaction, as such installments are scheduled at the close of
the Transaction. It is Houlihan Lokey's understanding, upon which it is relying,
that the Lenders and any other recipient of the Opinion will consult with and
rely solely upon their own legal counsel with respect to said definitions. No
representation is made herein, or directly or indirectly by the Opinion, as to
any legal matter or as to the sufficiency of said definitions for any purpose
other than setting forth the scope of Houlihan Lokey's Opinion hereunder.
Notwithstanding the use of the defined terms "fair value" and "present fair
saleable value," we have not been engaged to identify prospective purchasers or
to ascertain the actual prices at which and terms on which the Company can
currently be sold, and we know of no such efforts by others. Because the sale of
any business enterprise involves numerous assumptions and uncertainties, not all
of which can be quantified or ascertained prior to engaging in an actual selling
effort, we express no opinion as to whether the Company would actually be sold
for the amount we believe to be its fair value and present fair saleable value.
<PAGE>
To the Lenders
Now or Hereafter Parties to the
Credit Agreement Referred to Below
and Texas Commerce Bank National Association
as Administrative Agent
August 21, 1996 -3-
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. Reviewed SCI's Form 10-K for the fiscal years ended September 30,
1992-1995 and Form 10-Q for the three quarters ended June 30, 1996;
2. Reviewed copies of relevant documents including, but not limited to,
the following:
- Confidential Information Memorandum - $456,500,000 Senior
Secured Credit Facilities
- Prospectus for the $275,000,000 Senior
Subordinated Notes due 2006 (August 16, 1996)
- Credit Agreement Dated June 21, 1996
- Agreement and Plan of Merger Between STX Acquisition Corp. And
Sterling Chemicals, Inc. (April 24, 1996)
- Confidential Information Memorandum prepared by Lazard Freres
& Co. (January 11, 1996)
- Sterling Chemical Review by CMAI (May 24, 1996)
- Asset Appraisal by Valuation Research Corporation
(May 21, 1996)
- Amendment No. 3 to Form S-1 Registration Statement for STX
Acquisition Corp. and STX Chemicals Corp. (August 12, 1996)
- Environmental Assessment of Sterling Chemicals, Inc. by Pilko
& Associates, Inc. (April 18, 1996);
3. Reviewed the Sterling Chemicals, Inc. Definitive Proxy Statement,
dated July 19, 1996;
4. Met with certain members of the senior management of SCI to discuss
the operations, financial condition, future prospects and projected
operations and performance of the SCI;
5. Visited SCI's petrochemical facility located in Texas City, Texas and
SCI's pulp chemicals facility located in Vancouver, British Columbia;
6. Reviewed forecasts and projections prepared by the Company's
management with respect to the Company for the years ended September
30, 1996 through 2007;
<PAGE>
To the Lenders
Now or Hereafter Parties to the
Credit Agreement Referred to Below
and Texas Commerce Bank National Association
as Administrative Agent
August 21, 1996 -4-
7. Reviewed the historical market prices and trading volume for SCI's
publicly traded securities;
8. Reviewed other publicly available financial data for SCI and certain
companies that we deem comparable to SCI; and
9. Conducted such other studies, analyses and investigations as we have
deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably prepared
and reflect the best currently available estimates of the future financial
results and condition of the Company, and that there has been no material
adverse change in the assets, financial condition, business or prospects of the
Company since the date of the most recent financial statements made available to
us.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it, but nothing has come to our attention in the
course of this engagement which would lead us to believe that any such
information is incorrect in any material way. We have not made any independent
appraisals of any of the properties or assets of the Company. Our opinion is
necessarily based on business, economic, market and other conditions as they
exist and can be evaluated by us at the date of this letter.
Based upon the foregoing, and in reliance thereon, it is our opinion as of the
date of this letter that, assuming the Transaction had been consummated as
proposed, immediately after and giving effect to the Transaction:
(a) on a pro forma basis, the fair value and present fair saleable
value of the Company's assets would exceed the Company's stated
liabilities and identified contingent liabilities;
(b) the Company should be able to pay its debts as they become
absolute and mature; and
(c) the Company would have sufficient capital to engage in its
business, as management has indicated.
<PAGE>
To the Lenders
Now or Hereafter Parties to the
Credit Agreement Referred to Below
and Texas Commerce Bank National Association
as Administrative Agent
August 21, 1996 -5-
This Opinion does not address the fairness of the Transaction to any party. Nor
does the Opinion address the solvency of Holdings. The Opinion does not address
the Company's underlying business decision to effect the Transaction. We have
not been requested to, and did not, solicit third party indications of interest
in acquiring all or any part of the Company. Furthermore, we have not
negotiated the Transaction or advised any party with respect to alternatives to
it. The Opinion does not constitute a recommendation either for or against the
Transaction."
This Opinion is furnished solely for your benefit and your respective assignees
and participants and may not be relied upon by any other person without our
express, prior written consent. This Opinion is delivered to each recipient
subject to the conditions, scope of engagement, limitations and understandings
set forth in this Opinion and our engagement letter dated June 14, 1996, and
subject to the understanding that the obligations of Houlihan Lokey in the
Transaction are solely corporate obligations, and no officer, director,
employee, agent, shareholder or controlling person of Houlihan Lokey shall be
subjected to any personal liability whatsoever to any person, nor will any such
claim be asserted by or on behalf of you or your affiliates.
HOULIHAN, LOKEY, HOWARD & ZUKIN, INC.
<PAGE>
EXHIBIT 99(B)(4)
[LOGO APPEARS HERE]
[LETTERHEAD]
August 21, 1996
Chase Securities, Inc.
707 Travis Street
7 TCB North
Houston, TX 77002-8079
Ladies and Gentlemen:
In accordance with your request, we have made an investigation, analysis, and
appraisal of the designated personal property of Sterling Chemicals, Inc.,
headquartered in Houston, Texas. We submit this report relative to our findings
and conclusions.
This appraisal was prepared for the purpose of expressing an opinion of the
value-in-use of the designated personal property of Sterling Chemicals, Inc. as
of May 20, 1996.
VALUE-IN-USE is defined as an amount expressed in terms of money that would be
exchanged between a willing buyer and a willing seller with equity to both,
neither being under any compulsion to buy or sell and both being fully aware of
the relevant facts, as of a certain date, assuming that the assets will continue
to function in their present capacity as part of an ongoing business enterprise
at their present location.
We have determined the value-in-use of the company's real and personal property.
The appraised assets included, land, buildings, machinery and equipment, support
equipment and services, office furniture and equipment, and vehicles.
Construction-in-progress has been included at recorded cost.
Our appraisal report includes the following:
. This letter, which identifies the assets appraised, discusses the basis of
value and limiting conditions, and presents the conclusions developed.
. A narrative report containing, a description of the assets appraised, a
summary of the value premises used, a presentation of the methods of
valuation, and the conclusions of value.
. An exhibit section containing valuation information.
<PAGE>
VALUATION RESEARCH CORPORATION
Chase Securities, Inc. August 21, 1996
Page 2
Our investigation included consultations with management concerning historical
and prospective operations, and an inspection of the Texas City, Texas facility.
Valuation research Corporation does not conduct or provide environmental
liability assessments of any kind in performing its appraisals so that our
opinion of the appraised value will not reflect any actual or contingent
environmental liabilities except to the extent we are provided with a specific
monetary assessment of such liabilities in writing. In any event, Valuation
Research Corporation will not verify such monetary assessment and will offer no
warranty or representation as to its accuracy or completeness.
Based upon the investigation and methodology in our report and subject to the
Assumptions and Limiting Conditions included with this report, it is our opinion
that the Value-in-Use of the designed assets of Sterling Chemicals, Inc. as of
May 20, 1996, was estimated to be as follows:
FOUR HUNDRED SIXTY-ONE MILLION
SIX HUNDRED TWENTY-ONE THOUSAND DOLLARS
$461,621,000
These values are distributed by classification as follows:
CHASE SECURITIES, INC.
AS OF MAY 20, 1996
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
VALUE-IN-USE
<S> <C>
Land $ 2,340
Buildings 2,142
Machinery & Equipment 388,874
Railroads & Switch Tracks 333
Furniture & Office Equipment 2,220
Sewers - Storm & Sanitary 603
Automobiles & Trucks 610
Sewers - Main Drain 2,060
Roadways & Fences 1,354
Railcars 6,147
Water Transportation Equipment 188
Construction in Progress 54,750
--------
Total $461,621
========
</TABLE>
<PAGE>
VALUATION RESEARCH CORPORATION
Chase Securities, Inc. August 21, 1996
Page 3
Valuation Research Corporation is not an environmental consultant or auditor,
and it takes no responsibility for any actual or potential environmental
liabilities. Any person entitled to rely on this report wishing to know whether
such liabilities exist, or their scope, and the effect on the value of the
property is encouraged to obtain a professional environmental assessment.
Valuation Research Corporation does not conduct or provide environmental
assessments and has not performed one for the subject property.
We have made no investigation of and assume no responsibility for the title to
the assets appraised.
In accordance with professional valuation standards, as generally recognized and
practiced in the appraisal industry, the professional fee for these services is
not contingent upon our conclusions of value and neither Valuation Research
Corporation nor, to the best of its knowledge determined in good faith, any of
its professional agents or employees have a present or intended material
financial interest in the company.
Public disclosure of this letter, or any of its parts may not be made without
the express written consent of Valuation Research Corporation, not unreasonably
withheld. If given, such consent shall not be without sufficient review by
Valuation Research Corporation, as to the precise language of such disclosure
and the time and place of its potential release.
Valuation Research Corporation has no responsibility to update the opinions
stated herein for events and circumstances occurring after the date of this
letter. Any further consultation, testimony, attendance, research or opinion in
reference to the present engagement beyond the opinions as of the date of this
letter is subject to agreement by Valuation Research Corporation to specific
written arrangements between the parties.
Respectfully submitted,
VALUATION RESEARCH CORPORATION
Engagement Number: 02-2938-00
<PAGE>
VALUATION RESEARCH CORPORATION
LIMITING FACTORS AND ASSUMPTIONS
In accordance with recognized professional ethics, the professional fee for this
service is not contingent upon our conclusion of value, and neither Valuation
Research Corporation nor any of its employees have a present or intended
material financial interest in the subject company appraised.
The opinion of value expressed herein is valid only for the stated purpose as of
the date of the appraisal.
Financial statements and other related information provided by the subject
company or its representatives in the course of this investigation have been
accepted, without further verification, as fully and correctly reflecting the
company's business conditions and operating results for the respective periods,
except as specifically noted herein.
Public information and industry and statistical information has been obtained
from sources we deem to be reliable; however, we make no representation as to
the accuracy or completeness of such information, and have accepted the
information without further verification.
The conclusions of value are based upon the assumption that the current level of
management expertise and effectiveness would continue to be maintained and that
the character and integrity of the enterprise through any sale, reorganization,
exchange, or diminution of the owners' participation would not be materially or
significantly changed.
This report and the conclusions arrived at herein are for the exclusive use of
our client for the sole and specific purposes as noted herein. Furthermore, the
report and conclusions are not intended by the author, and should not be
construed by the reader, to be investment advice in any manner whatsoever. The
conclusions reached herein represent the considered opinion of Valuation
Research Corporation, based upon information furnished to them by the company
and other sources.
Neither all nor any part of the contents of this report (especially any
conclusions as to value, the identity of any appraiser or appraisers, or the
firm with which such appraisers are connected, or any reference to any of their
professional designations) should be disseminated to the public through
advertising media, public relations, news media, sales media, mail, direct
transmittal, or any other public means of communication, without the prior
written consent and approval of Valuation Research Corporation.
Future services regarding the subject matter of this report, including, but not
limited to, testimony or attendance in court, shall not be required of Valuation
Research Corporation, unless previous arrangements have been made in writing.
<PAGE>
VALUATION RESEARCH CORPORATION
The appraiser assumes no responsibility for matters legal in nature, nor does
the appraiser render any opinion as to the title, which is assumed to be
marketable.
The appraiser assumes that the property will be responsibly owned and properly
maintained.
The appraiser has not made a land survey of the property. The boundaries used in
this report are taken from records believed to be accurate. The sketches
included in this report are provided to assist the reader in visualizing the
property, and no responsibility is assumed for their accuracy.
The allocation of the total value between land and improvements stated in this
report is invalid if used separately or in conjunction with any other appraisal.
This report is to be used in its entirety and only for the purpose for which it
was prepared.
The appraiser assumes that there are no hidden or unapparent conditions of the
property, subsoil, or structures which would render the property more or less
valuable. The appraiser assumes no responsibility for any such conditions or for
any engineering surveys which might be required to discover such conditions.
Any information furnished by others and included in this report is from sources
deemed to be reliable and believed to be true and accurate; however, no
responsibility is assumed for its accuracy.
It is assumed that there is full compliance with all applicable federal, state,
and local environmental regulations and laws unless noncompliance is stated,
defined, and considered in the appraisal report.
Valuation Research Corporation is not an environmental consultant or auditor,
and it takes no responsibility for any actual or potential environmental
liabilities. Any person entitled to rely on this report wishing to know whether
such liabilities exist, or their scope, and the effect on the value of the
property is encouraged to obtain a professional environmental assessment.
Valuation Research Corporation does not conduct or provide environmental
assessments and has not performed one for the subject property.
Valuation Research Corporation has asked Sterling Chemicals, Inc. whether it is
subject to any present or future liability relating to environmental matters
(including but not limited to CERCLA/Superfund liability). Valuation Research
Corporation has not determined independently whether Sterling Chemicals, Inc. is
subject to any such liabilities, nor the scope of any such liabilities.
Valuation Research Corporation's appraisal takes no such liabilities into
account except as they have been reported expressly to Valuation Research
Corporation by Sterling Chemicals, Inc., or by an environmental consultant
working for Sterling Chemicals, Inc., and then only to the extent that the
<PAGE>
VALUATION RESEARCH CORPORATION
liability was reported to us in an actual or estimated dollar amount. Such
matters are noted in the report. To the extent such information has been
reported to us, Valuation Research Corporation has relied on it without
verification and offers no warranty or representation as to its accuracy or
completeness.
It is assumed that all applicable zoning and use regulations and restrictions
have been complied with, unless a nonconformity has been stated, defined, and
considered in the appraisal report.
It is assumed that all required licenses, certificates of occupancy, consents,
or other legislative or administrative authority from any local, state, or
national government or private entity or organization have been or can be
obtained or renewed for any use on which the value estimate contained in this
report is based.
We have not made a specific compliance survey or analysis of the subject
property to determine whether it is subject to or in compliance with the
Americans with Disabilities Act of 1990 (ADA) and this opinion does not consider
the impact, if any, of noncompliance in estimating the value of the property.
<PAGE>
EXHIBIT(B)(5)
[LOGO OF VALUATION RESEARCH APPEARS HERE]
[LETTERHEAD OF VALUATION RESEARCH APPEARS HERE]
June 11, 1996
CHASE SECURITIES, INC.
707 Travis Street
7 TCB North
Houston, Texas 77002-8079
Ladies and Gentlemen:
In accordance with your request, we have made an investigation, analysis, and
appraisal of the designated personal property of Sterling Pulp Chemicals, Ltd.
("Pulp Chemicals"), an indirect subsidiary of Sterling Chemicals, Inc. (the
"Company"), located at Buckingham, North Vancouver, Grande Prairie, and Thunder
Bay, Canada. We submit this letter and report relative to our findings and
conclusions.
This appraisal was prepared for the purpose of expressing an opinion of the
Value In-Use of the designated personal property of Pulp Chemicals as of May 20,
1996. It is our understanding that the purpose of this appraisal is for
financing purposes.
The standard of value is Value In-Use, which is defined as an amount expressed
in terms of money that would be exchanged between a willing buyer and a willing
seller with equity to both, neither being under any compulsion to buy or sell
and both being fully aware of the relevant facts, as of a certain date, assuming
that the assets will continue to function in their present capacity as part of
an ongoing business enterprise at their present location.
This report contains information considered relevant to both the value of the
property and the method by which we have analyzed collected data to arrive at
the value conclusion.
Based upon our investigation and methodology in this report and subject to the
Assumptions and Limiting Conditions included with this report, it is our
considered opinion that the Value In-Use of the APPRAISED personal property as
of May 20, 1996 is (shown below):
ONE HUNDRED TWENTY SIX MILLION FIFTY THOUSAND U.S. DOLLARS
U.S. $126,050,000
============
<PAGE>
VALUATION RESEARCH CORPORATION
CHASE SECURITIES, INC. June 11, 1996
Page 2
<TABLE>
<CAPTION>
This table includes assets, as footnoted, NOT APPRAISED by Valuation Research.
<S> <C>
Asset (1) Value In-Use (000)
- --------- ------------------
Process Lines:
Thunder Bay $ 14,261
Grande Prairie 26,864
Vancouver:
Phase 1 Line 10,514
Phase 2 Line 22,598
Bagging Equipment 508
Dock Facility 1,663
--------
Total Vancouver 35,283
Buckingham:
Phase 1 Line 8,351
Phase 2 Line 13,665
Phase 3 Line 16,200
Sodium Chlorite 11,426
--------
Total Buckingham 49,642
TOTAL APPRAISED ASSETS $126,050
Miscellaneous Equipment (2) 3,242
Construction In Process (2) 30,472
Total Assets, Pulp Chemicals $159,764
========
</TABLE>
(1) This appraisal does not include the value of any real, intangible or
intellectual property.
(2) Not appraised by Valuation Research although subject to limited
procedures. No inspection performed on these assets and values based on
data supplied by the Company.
Respectfully submitted,
/s/ VALUATION RESEARCH CORPORATION
- ----------------------------------
Valuation Research Corporation
Engagement Number: 02-2938-00
<PAGE>
VALUATION RESEARCH CORPORATION
REPORT CERTIFICATION
The undersigned certify that, to the best of our knowledge and belief:
. The statements of fact contained in this report are true and correct.
. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal, unbiased
professional analyses, opinions, and conclusions.
. We have no present or prospective interest in the property that is the
subject of this report, and we have no personal interest or bias with
respect to the parties involved.
. Our compensation is not contingent upon the report of a predetermined value
or direction in value that favors the cause of the client, the amount of the
value estimate, the attainment of a stipulated result, or the occurrence of
a subsequent event.
. Our analyses, opinions, and conclusions were developed, and this report has
{not} been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice (USPAP) of the Appraisal Foundation and with
the Codes of Ethics of the Appraisal Institute and the American Society of
Appraisers.
. Edward J. Cowan and James M. Brooks have made partial inspections of those
specific properties identified in the body of this report as being
inspected. All other properties were not inspected and were appraised based
on information supplied by the Company. This appraisal was completed, in
part, based on information supplied to us by the Company.
. In addition to the undersigned, Joseph Mickle and Mark Brattebo assisted in
this appraisal.
Edward J. Cowan, ASA
James M. Brooks, ASA
/s/ Joseph L. Mickle, ASA
- ------------------------------
Joseph L. Mickle, ASA
Vice President
Review Appraiser
<PAGE>
VALUATION RESEARCH CORPORATION
ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal is subject to the following assumptions and limiting conditions.
1. No responsibility is assumed for matters of a legal nature affecting title
to the property nor is an opinion of title rendered. The title is assumed
to be good and merchantable.
2. No survey of the property has been made by the appraiser and no
responsibility is assumed in connection with such matters. Sketches in this
report are included only to assist the reader in visualizing the property.
3. Public information, industry and statistical information are from sources
we deem to be reliable; however, we make no representation as to the
accuracy or completeness of such information, and have accepted the
information without further verification.
4. All mortgages, liens, encumbrances, leases, and servitudes have been
disregarded unless so specified within the report. The property is
appraised as though under responsible ownership and competent management.
5. It is assumed that there are no hidden or inapparent conditions of the
property, subsoil or structures which would render it more or less
valuable. No responsibility is assumed for such conditions or for
engineering which may be required to discover such factors.
6. It is assumed that there is full compliance with all applicable federal,
provincial, and local environmental regulations and laws unless
non compliance is stated, defined, and considered in the appraisal report.
It is further assumed that any mechanical and electrical equipment, which
is considered part of the real estate, is in proper operating condition
except when noted herein. These include, but are not limited to, such items
as the heating, air conditioning, plumbing, sprinkler, and electrical
systems.
7. In the event this appraisal is used for a sale price, financing, or tax
purposes, no responsibility is assumed for the inability to negotiate
favorably on the basis of the values expressed herein.
8. It is assumed that all applicable zoning and use regulations and
restrictions have been complied with, unless a non conformity has been
stated, defined, and considered in the appraisal report.
<PAGE>
VALUATION RESEARCH CORPORATION
9. Neither all nor any part of the contents of this report (especially any
conclusions as to value, the identity of any appraiser or appraisers, or
the firm with which such appraisers are connected, or any reference to
any of their professional designations) should be disseminated to the
public through advertising media, public relations, news media, sales
media, mail, direct transmittal, or any other public means of
communication, without the prior written consent and approval of
Valuation Research Corporation.
10. In accordance with recognized professional ethics, the professional fee
for this service is not contingent upon our conclusion of value, and
neither Valuation Research Corporation nor any of its employees has a
present or intended financial interest in the subject Company appraised.
11. The opinion of value expressed herein is valid only for the stated purpose
and date of the appraisal.
12. Financial statements and other related information provided by the Company
or its representatives in the course of this investigation have been
accepted, without further verification, as correctly reflecting the
Company's business conditions and operating results for the respective
periods, except as specifically noted herein.
13. The conclusions of value are based upon the assumption that the current
level of management expertise and effectiveness would continue to be
maintained and that the character and integrity of the enterprise through
any sale, reorganization, exchange, or diminution of the owners
participation would not be materially or significantly changed.
14. Further services regarding the subject matter of this report, including,
but not limited to, testimony or attendance in court, shall not be
required of Valuation Research Corporation, unless previous arrangements
have been made therefore in writing.
15. This report and the conclusions arrived at therein are for the exclusive
use of our client for the sole and specific purposes as noted herein.
Furthermore, the report and conclusions are not intended by the author,
and should not be construed by the reader, to be investment advice in any
manner whatsoever. The conclusions reached herein represent the considered
opinion of Valuation Research Corporation, based upon information
furnished to them by the Company and other sources.
16. In this appraisal assignment, the existence of potentially hazardous
material used in the construction or maintenance of any structures, such
as the presence of urea-formaldehyde foam insulation, and/or the existence
of toxic waste, which may or may not be present on the property, was not
observed by Valuation Research Corporation, its employees or contractors,
nor do they have any
<PAGE>
VALUATION RESEARCH CORPORATION
knowledge of the existence of such materials on or in the property except
as noted herein. The appraisers, however, are not qualified to detect such
substances. The existence of such substances may have an effect on the
value of the property or properties appraised. Valuation Research
Corporation urges the client to retain an expert in this field if so
desired.
17. Detailed architectural and engineering drawings were not always available
to the appraisers. Construction details are based on the property
inspections, available drawings, tax records, and interviews with the
plant managers. However, some construction details in this report may
differ from the actual construction.
18. Valuation Research Corporation is not an environmental consultant or
auditor, and it takes no responsibility for any actual or potential
environmental liabilities. Any person entitled to rely on this report
wishing to know whether such liabilities exist, or their scope, and
the effect on the value of the property is encouraged to obtain a
professional environmental assessment. Valuation Research Corporation
does not conduct or provide environmental assessments and has not
performed one for the subject property.
19. At the client's request the scope of this assignment was limited to the
approaches and methodologies explained in the Valuation Procedures of the
personal property found in this report. The level of detail included is
considered acceptable for the purposes for which this report will be
utilized.
