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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. 3)
MDT CORPORATION
(Name of Subject Company)
MDT CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $1.25 PER SHARE,
INCLUDING THE ASSOCIATED
COMMON STOCK PURCHASE RIGHTS
(Title of Class of Securities)
552687 10 5
(CUSIP Number of Class of Securities)
J. MILES BRANAGAN
CHIEF EXECUTIVE OFFICER
MDT CORPORATION
STRATFORD HALL
SUITE 200
1009 SLATER ROAD
DURHAM, NORTH CAROLINA 27703
(919) 941-9745
(Name, address and telephone
number of person authorized to
receive notice and communications on
behalf of the person filing statement)
with a copy to:
C. JAMES LEVIN
O'MELVENY & MYERS
400 SOUTH HOPE STREET
15TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 669-6000
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This Amendment No. 3 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (as may be amended from time to time, the "Schedule
14D-9") filed on May 17, 1996 by MDT Corporation, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission (the "Commission"),
relating to the tender offer (the "Offer") by Getinge Acquisition Corp., a
Delaware corporation (the "Bidder") and an indirect wholly-owned subsidiary of
Getinge Industrier AB (publ), a corporation organized under the laws of Sweden
("Getinge"), disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1"), dated May 17, 1996, for all outstanding shares of Common
Stock, par value $1.25 per share, of the Company (the "Shares"), including the
associated Common Stock Purchase Rights (the "Rights"), for a per Share
consideration of $4.50 net in cash to the seller, upon the terms and subject to
the conditions set forth in the Agreement and Plan of Merger, dated as of May
12, 1996 (the "Merger Agreement"), among Getinge, the Bidder and the Company.
All capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in the Schedule 14D-9. In connection with
the foregoing, the Company is hereby amending the Schedule 14D-9 as follows:
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is amended and supplemented to add the following information:
The Company has issued a press release on June 24, 1996. A copy of such
press release is attached hereto as Exhibit (d)(5) and is incorporated herein by
reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is amended and supplemented to add the following exhibits which are
filed herewith:
(d)(5) Press release issued by the Company on June 24, 1996.
(d)(6) Proposal from Congress Financial Corporation to MDT Corporation dated
June 18, 1996
1
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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.
Dated: June 24, 1996 MDT CORPORATION
By: /s/ J. Miles Branagan
---------------------------------------------
Name: J. Miles Branagan
Title: President and Chief Executive Officer
2
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EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- --------------------------------------------------------------
99.D5 Press release issued by the Company on June 24, 1996.
99.D6 Proposal from Congress Financial Corporation to MDT Corporation
dated June 18, 1996.
3
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EXHIBIT 99.D5
[MDT CORPORATION LETTERHEAD]
NEWS RELEASE
For Additional Information Contact:
J. Miles Branagan or Thomas Hein at (919) 941-9745
FOR IMMEDIATE RELEASE
JUNE 24, 1996
DURHAM, NORTH CAROLINA
MDT CORPORATION REPORTS ON STATUS OF
PRIOR CONTACTS, LENDER NEGOTIATIONS AND FIRST QUARTER PROSPECTS
MDT Corporation (NASDAQ: MDTC) reported today that it has not received any
firm offers regarding possible alternative transactions to the Company's
proposed merger with Getinge Industrier AB. The Company had previously
announced that it had been contacted by each of MEDAES Incorporated (Norcross,
Georgia), Cyclopss Corporation (Salt Lake City, Utah), Blackstone Ultrasonics
(Jamestown, New York) and Cybersonics Inc. (Jamestown, New York). MEDAES has
since notified the Company that it does not wish to meet with Company
representatives or make a proposal at this time. The Company has not received
any further communications from the other three parties.
The Company also reported that it has received a proposal from Congress
Financial Corporation to refinance the Company's existing bank credit facility.
The Company said that the proposal, which is subject to approval by Congress
Financial's credit committee, field audits and appraisals, and other
requirements, is for a three-year, secured line of credit up to $37,5000,000.
Availability under the proposed line would be determined from time to time on
the basis of various lending formulae tied to the Company's accounts receivable
and inventories. Loans under the proposed line would bear interest at one
percent (1%) per annum above the prime rate charged by CoreStates Bank, N.A.,
or, at the Company's option, 3.25% above the adjusted Eurodollar rate. A copy of
the proposal has been filed as an exhibit to the Company's Securities and
Exchange Commission filings.
The Company said that proceeds from the proposed facility would be used to
repay the Company's existing loans with Wells Fargo Bank, National Association,
and Chase Bank, National Association, and for working capital. The Company had
previously reported that it was out of compliance with certain of the provisions
of its amended bank credit agreement with the banks. The Company is in
continuing discussions with the banks concerning an interim forbearance
agreement, although no assurances can be given that any such agreement will be
obtained.
The Company added that operating results through mid-June indicate that the
first quarter to end June 30, 1996, will reflect lower revenues and margins
compared to the levels of the same quarter a year ago. As a result, the current
quarter will reflect a loss before costs related to further organizational
changes, the Getinge transaction and refinancings. Incoming orders continue to
reflect weak demand in the core domestic hospital sector, the Company concluded.
MDT Corporation is a leading developer and manufacturer of sterility
assurance systems and examining and operatory equipment, including related
accessories and consumables, which it sells in the worldwide health care and
scientific markets. The Company also provides service and distributes parts for
its products in those markets through its Service Centers, domestic and foreign.
END
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[LETTERHEAD OF CONGRESS FINANCIAL]
EXHIBIT 99.D6
June 18, 1996 Supercedes June 17th Letter
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Mr. J. Miles Branagan, Chairman & CEO
Mr. Thomas M. Hein, Vice President & CFO
MDT Corporation
1009 Slater Road, Suite 900
Stratford Hall
Morrisville, North Carolina 27560
Gentlemen:
You have provided us with certain information and have discussed with us the
current and future needs for the financing of MDT Corporation and its
subsidiaries or affiliates (the "Company").
In connection therewith, we are pleased to submit our proposal to provide a
secured line of credit of up to $37,500,000 to the Company (the "Credit Line")
to be used to payoff your secured bank loans and for future working capital.
Our proposed loans shall be secured by valid first and only liens on all of the
assets of the Company, tangible and intangible, (except the Mercersburg plant
which is subject to an industrial Revenue Bond with a balance of approximately
$236,000 on which plant we shall have a second lien, and except for leased
equipment).
The exact structure and terms of the proposed Credit Line cannot be precisely
stated until the completion of our field examinations and credit investigations;
however, we envision that the following general structure and lending formulas
will apply:
1. REVOLVING LINE OF CREDIT
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A. Amount: Revolving loans of up to $37,500,000 (less the outstanding
------
balance of the term loan) based upon the lending formulas, and subject
to the sublimits and other terms described below.
B. Lending Formulas:
----------------
i. Accounts: Loans of up to eighty-five percent (85%) of the net amount
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of eligible accounts receivable of the Company. Eligible accounts
receivable and the net amounts thereof will be determined by us
pursuant to general criteria which will be set forth in the loan
documentation. Generally, eligible accounts receivable will exclude
accounts which are unpaid more than one-hundred twenty (120) days past
the original invoice date thereof, accounts owed by an account debtor
which has more than fifty percent (50%) of the
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Page 2.
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aggregate amount thereof unpaid more than one-hundred twenty (120)
days past the original invoice date thereof, retainage, billings on
service contracts to-be-rendered, contra accounts, poor credits,
employee or affiliate receivables, and those other accounts which do
not constitute collateral acceptable for lending purposes pursuant to
criteria established by us.
Subject to our determination, foreign accounts receivable payable in
the United States in U.S. dollars may be eligible accounts receivable
if a letter of credit has been issued with respect to such foreign
accounts receivable or credit insurance satisfactory to us covers them
or we are otherwise satisfied with the creditworthiness of the account
debtor and our ability to collect the foreign accounts receivable. Any
advance rate with respect to foreign accounts receivable will be
determined on an account by account basis. Canadian accounts are not
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deemed foreign for purposes of this paragraph, but are subject to the
eligibility criteria noted above.
ii. Inventory: Loans of up to fifty percent (50%) of the value of
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eligible raw materials and finished goods inventory of the Company,
valued at the lower of cost or market, as determined by us, with cost
determined under the first-in-first-out method. Eligible inventory
will be determined by us pursuant to general criteria which will be
set forth in the loan documentation. Generally, eligible inventory
will exclude work-in-process, consigned inventory, and those other
items which do not constitute collateral acceptable for lending
purposes pursuant to criteria established by us. Loans of up to 25%
on consigned inventory shall be subject to time limits to be agreed
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upon and our ability to file on said inventory.
The inventory advance rates described above are subject to an
appraisal, conducted at your expense, by independent appraisers
acceptable to us.
C. Inventory Loan Limit: The maximum amount of loans available in
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respect of eligible inventory shall not exceed $15,000,000 at any
time, notwithstanding the total value of eligible inventory [and
including for this purpose our reliance on eligible inventory to be
acquired under commercial letters of credit opened by or through us
under the letter of credit facility described below].
2. LETTER OF CREDIT FACILITY
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A. Amount: Letters of credit arranged through us ("LCs") of up to an
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aggregate amount at any time outstanding of $1,000,000, included
within the overall revolving line of credit.
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Page 3.
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B. LC Reserves Against Availability: A reserve against the revolving
--------------------------------
loans available of one-hundred percent (100%) of the amount of such
LCs.
C. Letter of Credit Fee: We shall receive a letter of credit fee at a
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rate equal to two percent (2%) per annum on the daily outstanding
balance of the LCs payable monthly in arrears. All applicable bank and
opening charges will be in addition to our fee and charged to your
loan account.
3. TERM LOAN
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A. Amount: A term loan of up to the lesser of: $7,000,000 or eighty
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percent (80%) of the orderly liquidation value of acceptable
equipment, as determined by appraisals, conducted at your
expense, by independent appraisers acceptable to us (the "Term
Loan").
B. Amortization: The Term Loan will amortize monthly on a sixty
------------
(60) month straight line basis with the final payment due on the
termination of the Credit Line.
4. CROSS-COLLATERALIZATION: GUARANTEES
------------------------------------
A. All of our loans shall be fully cross-collateralized, cross-
defaulted, cross-terminated and, as applicable, cross-guaranteed.
5. INTEREST RATE
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The interest rate on loans shall be one percent (1%) per annum above
the rate announced from time to time by CoreStates Bank, N.A., as its
"prime rate" or at the Company's option, a rate of three and one-
quarter percent (3.25%) per annum above the adjusted Eurodollar rate
used by us. The adjusted Eurodollar rate will be calculated based on
the average of rates of interest per annum at which the Philadelphia
National Bank is offered deposits of U.S. dollars in the London
interbank market adjusted by the reserve percentage prescribed by
governmental authorities as determined by us. Collections shall be
credited to the loan account of the Company on a daily basis, allowing
one (1) business day after our receipt of an ACH transfer of funds
into our payment account designated for such purpose.
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Page 4.
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6. FEES
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All fees listed below are in addition to interest and other fees and
charges provided for herein and may, at our option, be charged
directly to any loan account(s) of the Company maintained with us.
A. Closing Fee: We shall receive a closing fee of one percent (1%) of
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the Credit Line for providing the credit facility outlined herein,
earned and payable half at closing and half on the first anniversary.
If, upon your request, we elect to issue a commitment letter, half
of the closing fee shall be payable to us upon issuance of the
commitment letter as a non-refundable commitment fee.
B. Servicing Fee: We shall receive a servicing fee of $4,000 for each
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month or part thereof during the term of the arrangements. We shall
reevaluate the amount charged under the Servicing Fee if and when the
Company consolidates to fewer operating subsidiaries.
C. Unused Line Fee: We shall receive an unused line fee of one-half
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percent (.5%) per annum on the difference between the average monthly
balance of loans and LCs outstanding under the Credit Line and
$37,500,000 payable monthly.
D. Early Termination Fee: If the Credit Line is terminated for any
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reason prior to three (3) years from the date of closing, we shall
receive an early termination fee as follows:
i. Two percent (2%) of the Credit Line if terminated on or prior to the
first anniversary of the date of closing;
ii. One percent (1%) of the Credit Line if terminated after the first
anniversary and on or prior to the second anniversary of the date of
closing, and
iii. One-half percent (.5%) of the Credit Line if terminated after the
second anniversary and prior to the third anniversary of the date of
closing,
7. TERM
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The Credit Line shall be for a minimum term of three (3) years from
the date of closing.
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Page 5.
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8. EXPENSES
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A. You agree to pay all reasonable legal and closing expenses, including
attorney's fees and disbursements, filing and search fees, appraisal fees
and field examination expenses and per diem field examination charges,
whether or not this transaction closes. We charge $650 per person per day
for our field examiners in the field and in the office, plus travel, hotel
and all other out-of-pocket expenses. All such expenses shall be paid to
us upon demand, together with such advance funds on account of such
expenses and charges as we may from time to time request. This paragraph
shall survive the expiration or termination of this letter.
B. If this transaction closes, you further agree to pay all of our out-of-
pocket expenses and customary administrative charges incurred from time to
time during the course of our financing arrangements, including, without
limitation, expenses and per diem charges for recurring field
examinations.
9. DEPOSITS
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As evidence of our mutual good faith, and in consideration of our having
incurred and continuing to incur certain expenses in the expectation of
establishing a lender/borrower arrangement between us and the Company, we
request that you deposit with us $100,000 against our expenses. This
amount, together with any other deposits at any time received by us from
you will be:
A. Returned to you, less the cost of our field examinations, legal fees and
---------------
other expenses directly related to the loan application and credit review,
if our credit approval of the proposed financing is not obtained;
B. Retained by us, and credited to the loan account of the Company, less the
--------------
expenses described in paragraph (a) above, if the credit is approved and
booked;
C. Retained by us, as a fee in addition to expenses payable by you as set
--------------
forth above, if our credit approval of the proposed financing is obtained
and the transaction does not close within forty-five (45) days from the
date of such approval, whether as a result of your election not to do
business with us or a failure to fulfill any of the conditions of the
proposed financing as approved by us (which conditions shall not be
materially different from this proposal). Notwithstanding the above, the
amount to be retained by us under this paragraph, in addition to our
actual expenses, shall be capped at $25,000.
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Page 6.
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10. OTHER INFORMATION AND CONDITIONS
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This proposal does not represent a commitment to lend. Our proposal is
expressly subject to review of certain other information, satisfactory
completion of our field examinations, credit investigations and analysis
and approval by our credit committee. Such approval, if obtained at all,
shall be contingent upon a closing taking place within forty-five (45)
days thereafter, after which time this proposal will require reapproval by
our credit committee even if we continue to work on this transaction. Such
reapproval, if obtained, may result in different terms or conditions, or
in a determination not to consummate the transaction.
Communication to you of credit committee approval or reapproval shall not
constitute a commitment to lend, unless expressly so stated in a
commitment letter signed by us and you.
In addition subject to such conditions as may be established in connection
with the credit approval, we would anticipate that the closing of the
Credit Line will be subject to the satisfaction, in a manner acceptable to
us, of the following:
A. The Company continuing to furnish us with all financial information,
projections, budgets, business plans, cash flows and such other
information as we reasonably request from time to time.
B. Satisfactory legal review of the proposed transaction and loan structure
by our counsel and execution of loan documents, all in form and substance
satisfactory to us, including, but not limited to, a loan agreement,
security agreements, UCC financing statements. Such loan documents will
contain such provisions, representations, warranties, conditions,
covenants and events of default as are satisfactory to us and our counsel.
C. The excess availability under the lending formulas provided for above,
subject to sublimits and reserves, shall be not less than $3,000,000 at
the closing, after the payment of fees and expenses of the transaction and
the application of the proceeds of the initial loans, and provided the
accounts payable of the Company are then at a level and in a condition
reasonably acceptable to us.
D. No material adverse change in the business, operations, profits or
prospects of the Company or in the condition of the assets of the Company
shall have occurred since the date of our latest field examinations. The
Company has discussed with us potential future consolidation of several
medical equipment and dental equipment distribution channels, which may
result in reserves and write-downs for the discontinuance of said
channels.
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Page 7.
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E. This transaction and the events contemplated herein must close by August
1, 1996 or forty-five (45) days from the date of our credit approvals,
whichever is earlier.
Unless accepted by you and as so accepted, received by us by the close of
business in New York on June 24, 1996 with the deposit referred to above, this
proposal shall expire at such time.
This letter is solely for your benefit and is not to be relied upon by any third
party.
We look forward to continuing to work with you and your associates in this
transaction.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
/s/ STEVEN A. STONE
Steven A. Stone
Senior Vice President
ACCEPTED ON THIS 19TH DAY OF JUNE, 1996
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MDT CORPORATION
By: /s/ Thomas M. Hein
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Vice President Finance
[Congress Financial Logo]
