SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 1997
Imo Industries Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9294 21-0733751
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification Number)
1009 Lenox Drive,
Building Four West, Lawrenceville, NJ 08648-0550
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 896-7600
N/A
(Former name or former address,
if changed since last report)
Item 5. Other Events.
A) On April 30, 1997, the Board of Directors of Imo Industries
Inc. (the "Company") declared a dividend distribution of one
Right for each outstanding share of Company Common Stock to
stockholders of record at the close of business on May 4,
1997. Each Right entitles the registered holder to purchase
from the Company a unit consisting of one one-hundredth of a
share (a "Unit") of Series B Junior Participating Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), at
a Purchase Price of $15 per Unit, subject to adjustment.
The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the
Company and the Rights Agent thereunder.
The Rights have certain antitakeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the
offer on a substantial number of Rights being acquired. The
Rights should not interfere with any merger or other
business combination approved by the Board of Directors of
the Company since the Board of Directors may, at its option,
at any time prior to 10 days following the Stock Acquisition
Date redeem all but not less than all of the then outstanding
Rights. In this regard, it is noted that the Company's
Restated Certificate of Incorporation, as amended, currently
contains a supermajority/"fair" price provision governing
certain transactions with interested stockholders.
The form of Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which
includes as Exhibit B the form of Rights Certificate, is
filed as Exhibit 4 hereto and is incorporated herein by
reference. The foregoing description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to such Exhibits.
B) In a press release dated April 30, 1997, the Registrant
reported that its Varo Inc. subsidiary successfully completed the
sale of its Electronic Systems Division to a group of private
investors for $12 million.
The information set forth in this Item 5 - B is qualified in
its entirety by reference to the Registrant's press release
announcing such information, which is filed herewith as an
exhibit.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4 Rights Agreement dated as of April 30, 1997 between Imo
Industries Inc. and First Chicago Trust Company of New
York (incorporated by reference to the Company's Form 8-
A filed with the Commission on May 1, 1997).
99.1 Press release dated April 30, 1997 issued by the
Company.
99.2 Form of letter to be sent to the stockholders of the
Company on or about May 4, 1997.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, Registrant has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
IMO INDUSTRIES INC.
Date: May 1, 1997 By: /s/ William M. Brown
William M. Brown
Executive Vice President
and Chief Financial Officer
and Corporate Controller
For Further information, contact:
R.A. Derr II, V.P. & Treasurer,
Director of Investor Relations
(609) 895-7632
News Release
FOR IMMEDIATE RELEASE
IMO SUBSIDIARY SELLS ELECTRONIC SYSTEMS UNIT;
IMO INDUSTRIES ADOPTS NEW STOCKHOLDER RIGHTS PLAN
LAWRENCEVILLE, NJ (April 30, 1997) - Imo Industries Inc.
(NYSE: IMD) today said that its Varo Inc. subsidiary
successfully completed the sale of its Electronic Systems
Division to a group of private investors for $12 million.
This sale completes Imo's divestiture of its Electro-Optical
Systems business. Proceeds from the sale have been used to
pay down debt.
Imo also announced that its board of directors had adopted a
new Stockholder Rights Plan, succeeding an existing plan
that expires next month.
Under the plan, preferred stock purchase rights will be
distributed as a dividend at the rate of one Right for each
share of Imo common stock held as of the close of business
on May 4, 1997, when Imo's current plan expires. Rights
become exercisable if a person or group acquires 15% or more
of Imo's common stock or institutes a tender offer. Details
of the plan are outlined in a letter to be mailed to all
stockholders.
The Company may redeem the Rights upon action of the board of
directors as specified in the plan. The new plan is thus
intended to assure that all shareholders receive fair value
for their investment in the company and to provide the board
of directors with sufficient time to fully evaluate any
takeover offers.
Imo Industries, with 1996 sales of $469 million, is a
diversified manufacturer of pumps, fluid sensors, motion control
products, remote control systems, and automobile components,
with operations worldwide.
May 4, 1997
Dear Imo Stockholder:
Your Board of Directors has announced the adoption of a new
1997 Stockholder Rights Plan to replace the prior stockholder
rights plan upon its expiration today. The new Plan is
structured similarly to the prior Plan, but certain
financial terms were changed to reflect current market
conditions. This letter describes the new Plan and explains our
reasons for adopting it. Also included herein is the "Summary of
Rights to Purchase Preferred Stock," which provides more detailed
information about the Plan and the Rights being distributed to
you thereunder, and we urge you to read it carefully.
The Plan is intended to protect your interests in the event
the Company is confronted with coercive or unfair takeover
tactics. The Plan contains provisions to safeguard you in the
event of an unsolicited offer to acquire the Company, whether
through a gradual accumulation of shares in the open market, a
partial or two-tiered tender offer that does not treat all
stockholders equally, the acquisition in the open market or
otherwise of shares constituting control without offering fair
value to all stockholders, or other abusive takeover tactics
which are common in today's takeover environment and which your
Board believes are not in the best interests of the Company's
stockholders. These tactics unfairly pressure stockholders,
squeeze them out of their investment without giving them any real
choice, and deprive them of the full value of their shares.
The Plan is designed to assure that all of Imo's
stockholders receive fair and equitable treatment in any
unsolicited bid for the Company. The Plan is not intended to
preclude legitimate offers to acquire the Company, but rather, to
encourage anyone seeking to acquire the Company to negotiate with
the Board of Directors prior to attempting a takeover. The mere
declaration of the rights dividend should not affect any
prospective offerer willing to make an offer at a full and fair
price or to negotiate with your Board of Directors and certainly
will not interfere with a merger or other business combination
transaction approved by your Board of Directors.
The new Plan is not being adopted in response to any effort
to acquire control of the Company. The Board is not aware of any
such effort, although in March 1997 the Company retained Credit
Suisse First Boston to evaluate strategic alternatives for
enhancing stockholder value and reducing leverage, including the
possible merger or sale of the Company. The Plan has been
adopted in order to assure that the Board will continue to have
the ability to protect your interests.
The Rights distributed to you under the Plan may generally
be redeemed by the Company at $.01 per Right prior to the time
any person or group has acquired 15% or more of the Company's
shares, and thus they should not interfere with any merger or
other business combination approved by the Board.
Issuance of the Rights does not in any way weaken the
financial strength of the Company nor interfere with its business
plans. The issuance of the Rights has no dilutive effect, will
not affect reported earnings per share, is not taxable to the
Company or to you, and will not change the way in which you can
currently trade the Company's shares. As explained in detail
below and in the accompanying Summary, the Rights will be
exercisable only if and when a situation arises that triggers
their effectiveness. They will then operate to protect you
against being deprived of your right to share in the full value
of your investment in the Company.
Your Board was aware of arguments that stockholder rights
plans deter legitimate acquisition proposals. We carefully
considered these views and concluded that the arguments are
speculative and do not justify leaving stockholders without this
protection against unfair treatment by an acquirer -- who, after
all, is seeking its own advantage, not yours. Your Board
believes that keeping a rights plan in place provides a sound
and reasonable means of addressing the complex issues of
corporate policy created by the current takeover environment.
The Rights will be issued to stockholders of record on May
4, 1997, and will expire in ten years. Initially, the Rights
will not be exercisable, certificates will not be sent to you,
and the Rights will automatically trade with the Company's Common
Stock. However, ten days after a person or group either acquires
15% or more of the Company's Common Stock or commences a tender
offer that would result in such person or group owning 15% or
more of the outstanding shares (even if no purchases actually
occur), the Rights will become exercisable and separate
certificates representing the Rights will be distributed. We
expect that the Rights will begin to trade independently from the
Company's shares at that time. At no time will the Rights have
any voting power.
When the Rights first become exercisable, a holder will be
entitled to purchase from the Company one one-hundredth (1/100)
of a share of a new Series B Junior Participating Preferred Stock
of the Company at a purchase price of $15. The terms of such
preferred stock are described under the "Description of Preferred
Stock," which is set forth below. If the Company is involved in
a merger or other business combination at any time when there is
a 15% or more stockholder of the Company, the Rights will entitle
a holder to buy a number of shares of common stock of the
acquiring company having market value of twice the exercise price
of each Right. For example, if at the time of the business
combination the acquiring company's stock has a per share value
of $10, the holder of each Right would be entitled to receive
three shares of the acquiring company's common stock for $15,
i.e., at a 50% discount. Alternatively, if a 15% holder acquires
the Company by means of a reverse merger in which the Company and
its stock survive, or engages in certain self-dealing
transactions with the Company, or if any person acquires 15% or
more of the Company's Common Stock other than pursuant to an
offer for all shares that the independent directors determine to
be fair to, and otherwise in the best interest of, stockholders,
each Right not owned by a 15% or more stockholder would become
exercisable for Common Stock of the Company (or, in certain
circumstances, cash, property or other securities of the Company)
having a market value equal to twice the exercise price of the
Right.
While, as noted above, the distribution of the Rights will
not be taxable to you or the Company, stockholders may, depending
upon the circumstances, recognize taxable income when the Rights
become exercisable.
Striving to maximize stockholder value is a preeminent goal
of your management and Board of Directors.
Sincerely,
Donald K. Farrar
Chairman, President and
Chief Executive Officer
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On April 30, 1997, the Board of Directors of Imo Industries
Inc. (the "Company") declared a dividend distribution of one
Right for each outstanding share of Company Common Stock to
stockholders of record at the close of business on May 4, 1997.
Each Right entitles the registered holder to purchase from the
Company a unit consisting of one one-hundredth of a share (a
"Unit") of Series B Junior Participating Preferred Stock, par
value $1.00 per share (the "Preferred Stock"), at a purchase
price of $15 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the
Company and the Rights Agent thereunder.
Initially, the Rights will be attached to the Common Stock,
and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the "Stock
Acquisition Date") or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 15% or more of
such outstanding shares of Common Stock. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with such
Common Stock certificates, (ii) new Common Stock certificates
issued after May 4, 1997 will contain a notation incorporating
the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on May 4, 2007, unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except as otherwise determined by the Board of
Directors, and except in certain circumstances described in the
Rights Agreement, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution
Date, (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Stock is not changed or
exchanged, or (ii) a Person becomes the beneficial owner of more
than 15% of the then outstanding shares of Common Stock other
than pursuant to an offer for all outstanding shares of Common
Stock that the independent directors determine to be fair to, and
otherwise in the best interests of, stockholders, each holder of
a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of
the foregoing, following the occurrence of any of the events set
forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
However, Rights are not exercisable following the occurrence of
either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth
below.
For example, at an exercise price of $15 per Right, each
Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $30 worth of Common Stock
(or other consideration, as noted above) for $15. Assuming that
the Common Stock had a per share value of $5 at such time, the
holder of each valid Right would be entitled to purchase six
shares of Common Stock for $15.
In the event that, any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving
corporation (other than a merger described in the second
preceding paragraph or a merger which follows an offer described
in the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights that previously have been voided
as set forth above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a
value equal to two times the exercise price of the Right. The
events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are
granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Units will be issued
and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
At any time until 10 days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right, payable in cash or stock.
After the redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding shares of
Common Stock in a transaction or series of transactions not
involving the Company. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights; provided,
however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
DESCRIPTION OF PREFERRED STOCK
The Imo Industries Inc. Series B Junior Participating
Preferred Stock purchasable upon exercise of the Rights will be
subordinate to other series of the Company's Preferred Stock
that may be issued in the future.
Each share of Series B Junior Participating Preferred
Stock will be entitled to an aggregate dividend of 100 times
the dividend declared per share on the Company's Common Stock,if
any.
In the event of liquidation, the holders of the Series B
Junior Participating Preferred Stock will receive a preferred
liquidation payment equal to the greater of $100 per share or
an amount equal to 100 times the payment to be made per share
of Common Stock.
Each share of Series B Junior Participating Preferred
Stock will have 100 votes, voting together with the Company's
Common Stock. Each share of Series B Junior Participating
Preferred Stock will be redeemable from time to time at the
then current market price of 100 shares of Common Stock.
In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each
share of Series B Junior Participating Preferred Stock will be
entitled to receive 100 times the amount received per share of
Common Stock.
The rights of the Series B Junior Participating Preferred
Stock as to dividends, liquidation, redemption and voting, and
in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Series B Junior Participating
Preferred Stock's dividend, liquidation, redemption and voting
rights, the economic value of the one one-hundredth (1/100)
interest in a share of Series B Junior Participating Preferred
Stock purchasable upon the exercise of each Right should
approximate the economic value of one share of Imo Common
Stock.
