SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 7)
SHOREWOOD PACKAGING CORPORATION
(Name of Subject Company)
SHOREWOOD PACKAGING CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
825229107
(CUSIP Number of Class of Securities)
Andrew N. Shore, Esq.
Vice President, General Counsel and Secretary Shorewood Packaging
Corporation
277 Park Avenue
New York, New York 10172
Telephone: (212) 371-1500
(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:
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Shorewood Packaging Corporation, a Delaware corporation ("Shorewood"),
hereby amends and supplements its Solicitation/Recommendation Statement on
Schedule 14D-9 initially filed with the Securities and Exchange Commission
on December 16, 1999, relating to the offer (the "Offer") by Sheffield,
Inc., a Delaware corporation and a wholly owned subsidiary of Chesapeake
Corporation, a Virginia corporation, to purchase all of the issued and
outstanding common stock, par value $0.01 per share, of Shorewood,
including the associated rights to purchase preferred stock issued pursuant
to the Rights Agreement, dated as of June 12, 1995, between Shorewood and
The Bank of New York, as Rights Agent.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Item 5 is hereby amended and supplemented as follows:
Greenhill & Co., LLC ("Greenhill") was retained by Shorewood, pursuant
to the terms of a letter agreement dated as of January 7, 2000 (the
"Greenhill Letter Agreement"), to assist the Shorewood Board's Special
Strategic Committee of Independent Directors (the "Special Committee") in
its review of strategic alternatives to enhance stockholder value.
Pursuant to the Greenhill Letter Agreement, Shorewood has agreed to
pay Greenhill the following compensation:
(a) an advisory fee of $200,000 (the "Advisory Fee"), payable in cash
in two equal monthly installments of $100,000, the first of which was
payable upon the execution of the Greenhill Letter Agreement; and
(b) a transaction fee (the "Transaction Fee") determined in
accordance with the schedule set forth below. The Transaction Fee is
calculated by multiplying the Standard Transaction Fee Percentage (as
hereinafter defined) by the Transaction Value (as hereinafter defined) and
then that product by 80% (to reflect the fact that Shorewood has already
engaged other financial advisors). Twenty-five percent of the Transaction
Fee is payable in cash upon announcement of a binding acquisition
agreement, and the remainder is payable in cash promptly upon consummation
of Transaction (as hereinafter defined) if, during the term of the
Greenhill Letter Agreement or within twelve months following termination
thereof, a Transaction is consummated or a definitive agreement is entered
into that subsequently results in a Transaction.
The term "Transaction" in the Greenhill Letter Agreement means,
whether in one or a series of transactions, the sale or other transfer,
directly or indirectly, of all or a significant portion of the assets of
Shorewood, or any other extraordinary corporate transaction involving
Shorewood, whether by way of a merger or consolidation, reorganization,
recapitalization or restructuring, tender or exchange offer, negotiated
purchase, leveraged buyout, minority investment or partnership,
collaborative venture or otherwise.
TRANSACTION FEE SCHEDULE
Standard Transaction Standard
Transaction Value Fee Percentage Transaction Fee
----------------- --------------------- ---------------
$100,000 (or lower) 1.20% $1,200,000 (or lower)
$200,000 1.00% $2,000,000
$500,000 0.70% $3,500,000
$750,000 0.60% $4,500,000
$1,000,000 0.50% $5,000,000
$2,000,000 0.40% $8,000,000
$5,000,000 0.30% $15,000,000
$10,000,000 (or higher) 0.20% $20,000,000 (or higher)
For purposes of calculating a Transaction Fee, "Transaction Value"
equals the total proceeds and other consideration paid or to be paid in
connection with a Transaction (which consideration shall be deemed to
include amounts in escrow, payments made in installments and contingent
payments), including, without limitation: (i) cash, (ii) notes, securities
and other property, (iii) liabilities (other than accounts payable or other
working capital), including all debt, pension liabilities and guarantees,
assumed, (iv) payments made in installment, and (v) contingent payments
(whether or not related to future earnings or operations).
Under the Greenhill Letter Agreement, Shorewood has also agreed to
reimburse Greenhill for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of its counsel and other consultants and
advisors) and to indemnify Greenhill and certain related parties against
certain liabilities, including liabilities under the federal securities
laws, relating to or arising out of Greenhill's engagement by Shorewood.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended and supplemented as follows:
Exhibit No. Description
----------- -----------
28. Press release issued by Shorewood Packaging Corporation
on January 10, 2000.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
SHOREWOOD PACKAGING CORPORATION
By: /s/ Andrew N. Shore
---------------------------------
Name: Andrew N. Shore
Title: Vice President, General Counsel and
Secretary
Dated: January 11, 2000
EXHIBIT 28
FOR IMMEDIATE RELEASE
CONTACT:
Sard Verbinnen & Co.
David Reno/Paul Caminiti/ Brandy Bergman
(212) 687-8080
SHOREWOOD PACKAGING CORPORATION
ENGAGES GREENHILL & CO. AS FINANCIAL ADVISOR TO
SPECIAL STRATEGIC COMMITTEE
_____________________________________________________________
NEW YORK, NY, JANUARY 10, 2000 - Shorewood Packaging Corporation
(NYSE:SWD) today announced that its Special Strategic Committee of
Independent Directors, formed to evaluate strategic alternatives which
could enhance stockholder value, has engaged Greenhill & Co., LLC as its
financial advisor. Earlier, the Board of Directors had selected Bear,
Stearns & Co. and Jefferson Capital Group, Ltd. to serve as Shorewood's
financial advisors in connection with the unsolicited proposal by
Chesapeake Corporation (NYSE: CSK) to acquire Shorewood, and Bear Stearns
and Jefferson Capital will continue to advise the full Board in that
capacity and will also assist the full Board in its review of strategic
alternatives which could enhance stockholder value.
Shorewood Packaging Corporation is a leading value-added provider of
high quality printing and paperboard packaging for the music, computer
software, cosmetics and toiletries, food, home video, tobacco and general
consumer markets in North America and China, with 16 plants in the United
States, Canada and China.
# # #
Certain statements included in this press release constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Act"). While the safe harbors intended to be
created by the Act are not available to statements made in connection with
a tender offer, it has not been judicially determined whether such safe
harbor provisions apply to forward-looking statements made in connection
with a consent solicitation conducted in connection with a tender offer.
However, the consent solicitation by Chesapeake Corporation is intended to
facilitate its tender offer, and the statements made herein may be deemed
to have been made in connection with such tender offer. Accordingly, such
statements may not be covered by the safe harbor provisions of the Act.
Any forward-looking statements made herein are only predictions, subject to
risks and uncertainties that exist in the business environment which could
render actual outcomes and results materially different from those
expressed in such statements, including, but not limited to, general
economic and business conditions, competition, political changes in
international markets, raw material and other operating costs; costs of
capital equipment, changes in foreign currency exchange rates, changes in
business strategy or expansion plans, the results of continuing
environmental compliance testing and monitoring; quality of management;
availability, terms and development of capital, fluctuating interest rates
and other factors referenced in this release and in Shorewood's annual
report on Form 10-K and quarterly reports on Form 10-Q.
THIS PRESS RELEASE DOES NOT CONSTITUTE A SOLICITATION TO REVOKE
CONSENTS IN CONNECTION WITH THE CONSENT SOLICITATION OF CHESAPEAKE
CORPORATION. ANY SUCH SOLICITATION WILL BE MADE ONLY BY MEANS OF SEPARATE
CONSENT SOLICITATION MATERIALS COMPLYING THE REQUIREMENTS OF SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Shorewood Packaging Corporation ("Shorewood") and certain other
persons named below may be deemed to be participants in the solicitation
of revocations of consents in response to the consent solicitation being
conducted by Chesapeake Corporation ("Chesapeake"). The participants in
this solicitation may include: (i) the directors of Shorewood (Marc P.
Shore (Chairman of the Board and Chief Executive Officer), Howard M.
Liebman (President and Chief Financial Officer), Leonard Verebay (Executive
Vice President), Andrew N. Shore (Vice President and General Counsel),
Kevin J. Bannon, Sharon R. Fairley, Virginia A. Kamsky, R. Timothy
O'Donnell and William P. Weidner; and (ii) William H. Hogan (Senior Vice
President, Finance and Corporate Controller). As of the date of this
communication, the number of shares of common stock, par value $0.01 per
share ("Common Stock"), beneficially owned by the Shorewood participants
(including shares subject to stock options exercisable within 60 days) is
as follows: Marc P. Shore (4,750,485), Howard M. Liebman (233,269), Leonard
J. Verebay (500,180), Andrew N. Shore (169,052), Kevin J. Bannon (33,000),
Virginia A. Kamsky (4,500), R. Timothy O'Donnell (326,118); William P.
Weidner (57,000); and William H. Hogan (30,500).
Shorewood has retained Bear, Stearns & Co. Inc. ("Bear Stearns") and
Jefferson Capital Group, Ltd. ("Jefferson Capital") to act as its co-
financial advisors in connection with the tender offer (the "Offer") by
Chesapeake and its wholly owned subsidiary, Sheffield, Inc., to purchase
shares of Common Stock for $17.25 per share net to the seller in cash, for
which Bear Stearns and Jefferson Capital may receive substantial fees, as
well as reimbursement of reasonable out-of-pocket expenses. In addition,
Shorewood has agreed to indemnify Bear Stearns, Jefferson Capital and
certain related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of their
engagement. Neither Bear Stearns nor Jefferson Capital admit that they or
any of their partners, directors, officers, employees, affiliates or
controlling persons, if any, is a "participant" as defined in Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended, in the
solicitation of consent revocations, or that Schedule 14A requires the
disclosure of certain information concerning Bear Stearns and Jefferson
Capital, respectively.
In connection with Bear Stearns' role as co-financial advisor to
Shorewood, Bear Stearns and the following investment banking employees of
Bear Stearns may communicate in person, by telephone or otherwise with a
limited number of institutions, brokers or other persons who are
stockholders of Shorewood and may solicit consent revocations therefrom:
Terence Cryan (Senior Managing Director), Charles Edelman (Senior Managing
Director), Mark A. Van Lith (Managing Director) and Karen Duffy (Vice
President). Bear Stearns engages in a full range of investment banking,
securities trading, market-making and brokerage services for institutional
and individual clients. In the normal course of its business Bear Stearns
may trade securities of Shorewood for its own account and the accounts of
its customers, and accordingly, may at any time hold a long or short
position in such securities. Bear Stearns has informed Shorewood that, as
of the date hereof, Bear Stearns held, net long, no shares of Common Stock
for its own account. Bear Stearns and certain of its affiliates may have
voting and dispositive power with respect to certain shares of Common Stock
held in asset management, brokerage and other accounts. Bear Stearns and
such affiliates disclaim beneficial ownership of such shares of Common
Stock.
In connection with Jefferson Capital's role as co-financial advisor to
Shorewood, Jefferson Capital and the following investment banking employees
of Jefferson Capital may communicate in person, by telephone or otherwise
with a limited number of institutions, brokers or other persons who are
stockholders of Shorewood and may solicit consent revocations therefrom: R.
Timothy O'Donnell (President) and Louis W. Moelchert (Vice President). R.
Timothy O'Donnell is the beneficial owner of 276,118 shares of Common
Stock. Louis W. Moelchert is the beneficial owner of 1,500 shares of
Common Stock. Jefferson Capital has informed Shorewood that, as of the
date hereof, it held 22,231 shares of Common Stock in its investment
account.
The special committee of independent directors (the "Special
Committee") of the Shorewood Board of Directors, formed to evaluate
strategic alternatives which could enhance stockholder value, has retained
Greenhill & Co., LLC ("Greenhill") as its financial advisor. In connection
with Greenhill's role as financial advisor to the Special Committee,
Greenhill and the following investment banking employees of Greenhill may
communicate in person, by telephone or otherwise with a limited number of
institutions, brokers or other persons who are stockholders of Shorewood
and may solicit consent revocations therefrom: Robert F. Greenhill
(Chairman), Scott L. Bok (Managing Director), James M. Wildasin (Vice
President) and Joseph A. McMillan, Jr. (Associate). Greenhill has informed
Shorewood that, as of the date hereof, Greenhill held, net long, no shares
of Common Stock for its own account.
