SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9*
Solicitation/Recommendation Statement Pursuant to
Section 14(D)(4) of the Securities Exchange Act of 1934
AMENDMENT NO. 12
PROLER INTERNATIONAL CORP.
(Name of Subject Company)
PROLER INTERNATIONAL CORP.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Including Associated Rights)
(Title of Class of Securities)
743396-10-3
(CUSIP Number of Class of Securities)
BRUCE W. WILKINSON
CHIEF EXECUTIVE OFFICER
PROLER INTERNATIONAL CORP.
4265 SAN FELIPE
SUITE 900
HOUSTON, TEXAS 77027
(713) 627-3737
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing statement)
COPIES TO:
GEOFFREY K. WALKER
KATHLEEN M. KOPP
MAYOR, DAY, CALDWELL & KEETON, L.L.P.
700 LOUISIANA
HOUSTON, TEXAS 77002
(713) 225-7000
*This Solicitation/Recommendation Statement on Schedule 14D-9 relates to an
offer for all outstanding shares of common stock of Proler International Corp.
by a wholly-owned subsidiary of Schnitzer Steel Industries, Inc.
<PAGE>
This Amendment No. 12 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 filed with the Securities and
Exchange Commission (the "Commission") by Proler International Corp., a Delaware
corporation (the "Company"), on September 20, 1996, (as heretofore amended, the
"Schedule 14D-9") and relates to the tender offer made by PIC Acquisition
Corporation, a Delaware corporation wholly owned by Schnitzer Steel Industries,
Inc., an Oregon corporation ("Schnitzer"), disclosed in a Tender Offer Statement
on Schedule 14D-1 filed with the Commission on September 20, 1996, as heretofore
amended, to purchase all of the outstanding shares of the Company's common
stock, par value $1.00 per share (the "Common Stock"), together with the
associated stock rights (the "Rights") issued pursuant to a Rights Agreement
dated as of February 28, 1996, as amended effective September 15, 1996, between
the Company and KeyCorp Shareholder Services, Inc., at a purchase price of $7.50
per share of Common Stock and associated Right (each such share and associated
Right, a "Share"), net to the seller in cash, on the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated September 20,
1996 and the related Letter of Transmittal, as such cash price, terms and
conditions have been amended. The purpose of this Amendment No. 12 is to amend
Items 4, 8 and 9 of the Schedule 14D-9, as set forth below. Terms defined in the
Schedule 14D-9 are used in this Amendment No. 12 with the same meanings as
provided in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 of the Schedule 14D-9 is amended to add the following to the
section entitled "Recommendation of the Board of Directors":
On November 19, 1996, the Company announced that was transmitting to its
stockholders of a letter describing the status of the pending sale of the
Company and outlining factors that the Company's Board of Directors anticipated
would continue to be of paramount concern in its deliberations. In the letter to
the Company's stockholders, the Board of Directors reaffirmed its recommendation
that the Company's stockholders accept the Offer and tender their shares. A
press release announcing the distribution of the letter to stockholders, with
the text of the letter to stockholders attached thereto, is filed herewith as
Exhibit 27 and is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is amended to add the following section (i)
thereof:
(i) On November 19, 1996, the Company announced that it was transmitting
to its stockholders a letter describing the status of the pending sale of the
Company and outlining factors that the Company's Board of Directors anticipated
would continue to be of paramount concern in its deliberations. In the letter to
the Company's stockholders, the Board of Directors reaffirmed its recommendation
that the Company's stockholders accept the Schnitzer offer and tender their
shares. A copy of the Company's November 19, 1996 press release, with the text
of the Company's letter to its stockholders attached thereto, is filed herewith
as Exhibit 27 and is incorporated herein by reference.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DOCUMENT
Exhibit 23 - Letter to the Company from Schnitzer Steel Industries, Inc.
dated November 13, 1996, waiving certain conditions to its tender
offer for the Company's stock. (*)
Exhibit 24 - Letter from the Company to Schnitzer Steel Industries, Inc.
dated November 13, 1996 advising Schnitzer that the Company's
Board of Directors had determined that Schnitzer's offer was
superior to Hugo Neu's revised proposal. (**)
Exhibit 99 - Press release issued by Proler International Corp. dated
November 19, 1996, with the text of the Company's letter to its
stockholders attached thereto.
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(*) Previously filed as Exhibit 23 to Amendment No. 10 to the Company's
Schedule 14D-9 but incorrectly described in Item 9 thereof.
(**) Previously filed as Exhibit 24 to Amendment No. 10 to the Company's
Schedule 14D-9 but incorrectly described in Item 9 thereof.
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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.
PROLER INTERNATIONAL CORP.
By: BRUCE W. WILKINSON
/s/ BRUCE W. WILKINSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: November 19, 1996
EAXHIBIT 99
NEWS RELEASE
FROM ... [Proler International Corp. logo]
CONTACT:
Michael F. Loy
Vice President - Finance
(713) 963-5904
FOR IMMEDIATE RELEASE
PROLER INTERNATIONAL CORP. AFFIRMS RECOMMENDATION OF
SCHNITZER TENDER OFFER AND MERGER
Houston, Texas: November 19, 1996 - Proler International Corp. (NYSE:PS)
announced today that it is transmitting to its stockholders a letter describing
the status of the pending sale of the Company and outlining factors that the
Proler Board anticipates will continue to be of paramount concern in its
deliberations.
As previously reported, Schnitzer Steel Industries, Inc. is conducting an
all cash, all shares tender offer for Proler stock at $9.00 per share under a
merger agreement with Proler. The Schnitzer offer is scheduled to close on
November 29, 1996, subject to clearance under the Hart Scott Rodino Act and
certain other conditions.
Hugo Neu Corporation has also announced a proposal to acquire Proler
through a tender offer and merger at $9.00 per share. Hugo Neu's proposal
involves contingencies not applicable to Schnitzer's offer, including the
arrangement of financing and the satisfaction of certain conditions.
In its letter to Stockholders, Proler's Board reaffirms its recommendation
that Proler stockholders accept the Schnitzer offer and tender their shares.
The text of the Proler letter to stockholders follows.
Proler is an environmental services company involved in the recovery and
recycling of scrap metals and industrial wastes to produce high-quality
commercial products. Its shares are traded on the New York Stock Exchange under
the symbol PS.
<PAGE>
PS Affirms Recommendation of Schnitzer Offer
Page 2
November 19, 1996
Dear Proler Stockholder:
Since we last wrote to you on September 20, 1996 announcing the signing of
the merger agreement between Proler International Corp. and Schnitzer Steel
Industries, Inc., there have been a number of important developments affecting
our Company and our stockholders. The purpose of this letter is both to describe
the status of the pending sale of the Company and to explain certain factors
that the Board anticipates will continue to be of paramount concern in its
deliberations.
PROLER'S MERGER AGREEMENT WITH SCHNITZER
As previously announced, Schnitzer has modified its pending tender offer
and merger commitment to acquire all of Proler's outstanding shares in three
important ways.
o Schnitzer has extended its tender offer and related withdrawal
rights through November 29, 1996.
o Schnitzer has increased the price in its tender offer and second
step merger from $7.50 to $9.00 in cash for each Proler share.
o Schnitzer has waived key conditions to its obligation to consummate
its offer.
In the judgment of Proler's Board, the practical consequence of
Schnitzer's waiver of conditions is that THERE ARE NOW ONLY TWO SUBSTANTIVE
CONDITIONS REMAINING TO BE SATISFIED IN ORDER FOR PROLER STOCKHOLDERS TO BE ABLE
TO RECEIVE CASH FOR THEIR SHARES AT EXPIRATION OF THE SCHNITZER OFFER: (1)
tender of a majority of Proler's shares and (2) receipt of antitrust clearance
from the United States Department of Justice as required by the Hart Scott
Rodino Act. As of November 18, 1996, approximately 52% of Proler's shares had
been tendered. Based upon the advice of Proler's special antitrust counsel, the
Board is hopeful that Hart Scott Rodino Act clearance will be obtained prior to
the November 29, 1996 expiration date for Schnitzer's offer. Schnitzer has
represented in the merger agreement that it has sufficient financial resources
to consummate its offer, and its offer is not subject to obtaining any
financing. Schnitzer is a public company, and its publicly disclosed financial
statements are considered by the Board to provide adequate assurance that
Schnitzer's offer is not subject to any financing contingency.
In short, the Schnitzer transaction appears to the Proler Board to be
highly likely to be capable of consummation in the near future.
<PAGE>
PS Affirms Recommendation of Schnitzer Offer
Page 3
November 19, 1996
MERGER PROPOSAL FROM HUGO NEU
Hugo Neu Corporation has publicly proposed that Proler terminate its
merger agreement with Schnitzer and enter into a merger agreement with Hugo Neu,
also providing for a cash tender offer and second step merger at $9.00 in cash
per share. In the judgment of Proler's Board of Directors, the proposal from
Hugo Neu differs from Proler's existing agreement with Schnitzer in several ways
that are of serious concern to Proler's Board, including the following:
o FINANCING. Hugo Neu's current proposal does not contain an express
financing condition. However, Hugo Neu is a privately owned company,
and the information we have received to date indicates that its
financial ability to consummate its proposal is dependent upon
completion of approximately $122 million of financing to refinance
Hugo Neu's business, to fund its purchase of Proler and to refinance
Proler's existing bank debt. Proler's management and financial
advisors are currently undertaking to evaluate the proposals Hugo
Neu has obtained for this financing, as well as Hugo Neu's overall
financial strength.
o CONDITIONS. Hugo Neu has not matched Schnitzer's waiver of key
conditions to its obligation to purchase Proler shares.
(1) Hugo Neu has conditioned its obligation on the continuing
accuracy of Proler's representations and warranties under
its proposed merger agreement. These representations and
warranties cover matters that are beyond Proler's control.
(2) Hugo Neu has conditioned its offer on the absence of any
future event having an actual or reasonably foreseeable
material adverse effect on Proler.
In the judgment of Proler's Board, and particularly in view of
Proler's financial condition and operating difficulties (discussed
below), Hugo Neu's imposition of these conditions creates a risk
that Hugo Neu might not in fact consummate its proposed purchase of
Proler shares.
o TIMING. Under provisions of the Securities Exchange Act, Hugo Neu's
proposed tender offer for Proler shares could not be completed
until, at the earliest, 20 business days after Hugo Neu commenced
its tender offer. That period would be subject to extension under
certain circumstances, such as any delay in
<PAGE>
PS Affirms Recommendation of Schnitzer Offer
Page 4
November 19, 1996
obtaining clearance under the Hart Scott Rodino Act (which has
occurred in the case of the Schnitzer offer).
o SCHNITZER AGREEMENT. In order to enter into a merger agreement with
Hugo Neu, Proler would be required to terminate its merger agreement
with Schnitzer. This would release Schnitzer from its obligation to
purchase Proler shares and would require Proler to pay Schnitzer up
to $3 million.
Proler's Board has communicated to Hugo Neu its concerns about Hugo Neu's
current proposal.
LITIGATION WITH HUGO NEU
Hugo Neu, directly and through a subsidiary, is engaged in three joint
ventures with Proler subsidiaries. These joint ventures account for the bulk of
Proler's value. After Proler announced its merger agreement with Schnitzer, Hugo
Neu commenced legal proceedings against Proler in New York to compel purported
arbitration proceedings under the joint venture agreements, seeking to block
consummation of the Schnitzer transaction. Proler sued Hugo Neu in Houston,
Texas for tortious interference with the Schnitzer transaction.
All claims of the parties are now before the court in Houston. After
hearings, United States District Judge Lynn N. Hughes ruled that the
transactions contemplated by Proler's merger agreement with Schnitzer are not
subject to arbitration under the joint venture agreements. The court therefore
denied Hugo Neu's motion to compel arbitration. Hugo Neu has filed a notice of
appeal. Judge Hughes' ruling also denied, without prejudice, Proler's motion for
a preliminary injunction against Hugo Neu's interference with the Schnitzer
transaction.
The most important consequence of these rulings is that, unless the
rulings are reversed on appeal, the Schnitzer transaction can now proceed.
PROLER'S FINANCIAL CONDITION
For some months, Proler has had, and disclosed, growing concerns regarding
its liquidity position. The Company's liquidity problems reflect three main
factors. (1) A continued build-up of inventory by the joint ventures,
exacerbated by declining margins on joint venture sales, has resulted in
increased working capital requirements that have strained Proler's financial
resources. Proler has advised its joint venture partners that it cannot continue
to fund its proportionate share of what it regards as excessive joint
<PAGE>
PS Affirms Recommendation of Schnitzer Offer
Page 5
November 19, 1996
venture inventory levels. (2) Proler's non-joint venture operations have not
generated satisfactory cash flow or earnings, primarily as a result of
continuing poor results from Proler's wholly-owned copper recycling plant in
Coolidge, Arizona. (3) In pursuing and defending the opportunity afforded to
Proler stockholders under the Schnitzer merger agreement, Proler has incurred
extraordinary costs, including very substantial legal fees and expenses as a
result of Hugo Neu's efforts to block the Schnitzer transaction through
litigation and purported arbitration proceedings.
As of November 18, 1996, under its bank line of credit, Proler had
outstanding borrowings of approximately $25.8 million out of a total borrowing
capacity (based on the most recent required borrowing base computation) of
approximately $27.3 million. Proler is dependent upon this bank line of credit
for liquidity. The line of credit expires on January 31, 1997.
If, for any reason, Proler is not acquired in the near future, the Board
believes that in the absence of an unanticipated material improvement in
operating results the Company would need additional capital resources to sustain
itself as a going concern. There is no assurance that such resources would be
available. Proler has disclosed details of its financial condition and liquidity
problems to both Schnitzer and Hugo Neu.
MAXIMIZING VALUE FOR PROLER STOCKHOLDERS
The Board of Directors believes that Proler's assets clearly have
substantial value, as evidenced by the $9.00 per share cash price that has been
agreed to by Schnitzer and proposed by Hugo Neu. At the same time, the Board
believes that Proler's current financial condition makes it essential to
consummate a sale of the Company in the near future in order to translate that
value into cash for Proler stockholders.
Proler's Board of Directors is committed to obtaining the highest value
for you, the stockholders, that is reasonably achievable under the
circumstances. In the context of Proler's present financial condition and
operating business results, the Board believes that promptness and certainty of
consummation are critical factors in assessing the value apparently offered by
any potential alternative to the Schnitzer transaction.
We currently anticipate obtaining Hart Scott Rodino Act clearance for the
Schnitzer transaction within a short period of time, and Schnitzer has waived
the other conditions about which the Board has the greatest concern. Both J. C.
Bradford & Co. and Chase Securities Inc., Proler's financial advisors, confirmed
to the Board on
<PAGE>
PS Affirms Recommendation of Schnitzer Offer
Page 6
November 19, 1996
November 15, 1996 their opinions that the Schnitzer offer is fair, from a
financial point of view, to Proler stockholders. And a majority of Proler's
shares have been tendered to Schnitzer. The Proler Board therefore considers the
pending Schnitzer offer to be at a fair price, essentially unconditional and
highly likely to be capable of consummation in the near future.
ACCORDINGLY, THE BOARD OF DIRECTORS OF PROLER CONTINUES TO RECOMMEND THAT
YOU ACCEPT SCHNITZER'S TENDER OFFER AND TENDER YOUR SHARES.
By Order of the Board of Directors
Herman Proler
CHAIRMAN OF THE BOARD OF DIRECTORS
Bruce W. Wilkinson
PRESIDENT
