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
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.
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This Amendment No. 7 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, 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. The purpose of this Amendment No. 7 is to amend Items 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. 7 with the same meanings as provided in the
Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is amended to add the following to section
(c) thereof:
On October 18, 1996, Schnitzer announced that it had extended its tender
offer until 5:00 p.m., Eastern time on Friday, November 1, 1996. Schnitzer
indicated that the extension would allow Schnitzer and the Company additional
time to respond to the second request.
Item 8 of the Schedule 14D-9 is amended to add the following section (e)
thereof:
(e) On October 18, 1996, Schnitzer issued a press release announcing that
it had extended its tender offer to purchase all outstanding shares of the
Company for $7.50 per share until 5:00 p.m., Eastern time on Friday, November 1,
1996. The extension also extended the period for withdrawal rights until
November 1, 1996. Schnitzer indicated that the extension would allow Schnitzer
and Proler additional time to respond to the second request received from the
U.S. Department of Justice in connection with their filings under the HSR Act.
Schnitzer also announced that it had commenced discussions and had entered into
certain agreements with HNC that included an agreement by Schnitzer to extend
the tender offer to November 1, 1996 and an agreement between Hugo Neu and
Schnitzer not to commence legal proceedings against each other during the
pendency of discussions between them. A copy of Schnitzer's October 18, 1996
press release is attached hereto as Exhibit 18 and is incorporated herein by
reference.
2
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DOCUMENT
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Exhibit 18 - Press Release issued by Schnitzer Steel Industries, Inc.
dated October 18, 1996.
Exhibit 19 - Revised Opinion, dated September 15, 1996, of
J.C. Bradford & Co. LLC.*
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* Replaces Opinion, dated September 15, 1996, of J.C. Bradford & Co. LLC.
attached as Exhibit 5 to the Schedule 14D-9.
3
<PAGE>
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: October 22, 1996
4
PRESS RELEASE
For immediate release
Contact: Schnitzer Steel
Tom Zelenka
(503) 323-2821
Schnitzer Steel Industries, Inc. Announces Extension
of Tender Offer to Acquire Proler International Corp.
Portland, Oregon, October 18, 1996 - Schnitzer Steel Industries, Inc. (NASDAQ:
SCHN) today announced that it has extended its tender offer to purchase all
outstanding shares of Proler International Corp. (Proler) for $7.50 per share in
cash until 5:00 p.m., Eastern time on Friday, November 1, 1996. The extension
will also extend the period for withdrawal rights until November 1, 1996. As
previously announced, on September 15, 1996 Schnitzer and Proler signed a
definitive merger agreement for the acquisition of Proler by Schnitzer through a
cash tender offer and merger at a price of $7.50 in cash for each Proler share.
Schnitzer's tender offer commenced on September 20, 1996.
As previously reported, on October 4, 1996 Schnitzer and Proler received a
second request from the U.S. Department of Justice for additional information
with respect to their filings under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976. The request will extend the waiting period under the
Hard-Scott-Rodino Act for 10 days following receipt by the U. S. Department of
Justice of the requested information. No purchase of Proler securities can be
consummated until the waiting period expires or is terminated. The extension of
Schnitzer's tender offer will permit Proler and Schnitzer additional time to
respond to this request.
Schnitzer also announced it has commenced discussions with Hugo Neu Corporation
(Hugo Neu), a co-owner of the three principal joint ventures through which
Proler conducts its scrap metal business. Hugo Neu is attempting to block the
transactions contemplated by the merger agreement between Schnitzer and Proler
and Proler has announced that Hugo Neu is conducting a due diligence
investigation in order to decide whether to make an offer for Proler. The
extension of the offer, which will allow the parties additional time to resolve
these matters, is part of an understanding reached between Schnitzer and Hugo
Neu.
On September 26, 1996 Hugo Neu served Proler with a notice of arbitration
alleging that certain breaches of three Hugo Neu/Proler joint venture agreements
would result if the terms of the merger agreement were carried out. In its
notice of arbitration Hugo Neu seeks to block the merger between Proler and
Schnitzer and to recover unspecified damages allegedly in excess of $50 million.
On October 3, 1996, Hugo Neu amended an earlier court action it had filed
against Proler in New York to include a request that, pending the outcome of the
arbitration proceeding, the federal district court in New York preliminarily
enjoin Proler's merger with Schnitzer and preliminarily enjoin Proler from
allowing Schnitzer any role in the management of the joint ventures. Proler has
filed suit against Hugo Neu in Texas claiming Hugo Neu is tortiously interfering
with Proler's merger agreement with Schnitzer and seeking compensatory and
punitive damages for any resulting losses to Proler and Proler's
<PAGE>
stockholders. Schnitzer is not a party to any of these proceedings and Schnitzer
and Hugo Neu have agreed not to commence legal proceedings against each other
during the pendency of their discussions.
As discussed in its Offer to Purchase, the completion of Schnitzer's tender
offer for Proler remains subject to the satisfaction or waiver of a number of
conditions, including that all representations and warranties of Proler in the
merger agreement shall be true and correct, except for, among other things,
breaches of representations and warranties which, individually or in the
aggregate, would not have a material adverse effect with respect to Proler or
Schnitzer or materially impair the ability of the parties to consummate the
transactions contemplated by the merger agreement. If all of these conditions
have not been satisfied prior to the expiration date of the tender offer,
Schnitzer will have no obligation to accept tendered shares for payment. The
existence of any litigation or arbitration that could have a material adverse
effect on the parties following the transaction, or that could enjoin or
restrict the right or ability of Proler to perform its obligations under the
merger agreement would, constitute a breach of Proler's representations in the
merger agreement.
On October 16, 1996 Proler entered into a confidentiality agreement with Hugo
Neu providing Hugo Neu access to certain non-public information concerning
Proler for purposes of conducting its due diligence investigation.
As of 4:00 p.m. Eastern time on October 17, 1996 approximately 2.1 million
shares of Proler common stock had been tendered. Except for the extension of the
tender offer, the terms of the tender offer remain unchanged.
Schnitzer operates one of the largest scrap recycling businesses in the Western
United States. The Company supplies ferrous scrap to Asian and domestic steel
producers through its scrap collection, processing and deep water facilities
located in Oakland, California; Portland, Oregon; and Tacoma, Washington. The
Company also operates collection and processing facilities in Eugene, Bend,
White City and Grants Pass, Oregon; and Sacramento and Fresno, California.
Schnitzer's subsidiary, Cascade Steel Rolling Mills, Inc. (Cascade) operates the
only vertically integrated mini-mill in the Western United States which can
obtain its entire scrap requirements from its own scrap operations. Cascade's
steel mini-million McMinnville, Oregon manufactures rebar, merchant bar, fence
posts, special sections and grape stakes. In addition, Cascade maintains mill
depots in the Union City and El Monte, California.
[J.C. BRADFORD LETTERHEAD]
September 15, 1996
Board of Directors
Proler International Corp.
4265 San Felipe, Suite 900
Houston, Texas 77027
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the outstanding Common Stock, par value $.0l per
share (together with the associated Stock Rights, the "Shares"), of Proler
International Corp. (the "Company") of the $7.50 per Share in cash proposed to
be received by such holders pursuant to the proposed Agreement and Plan of
Merger, dated September 15, 1996 (the "Merger Agreement"), by and among
Schnitzer Steel Industries, Inc. ("Schnitzer"), PIC Acquisition Corporation, a
wholly owned subsidiary of Schnitzer ("PIC"), and the Company. For purposes of
this opinion, we have assumed that the draft Merger Agreement in the form
previously provided to us will not vary in any material respect from the Merger
Agreement to be signed by the parties thereto.
The Merger Agreement provides for a tender offer (the "Offer") for all of
the Shares pursuant to which PIC will pay $7.50 per Share in cash for each Share
accepted. The Merger Agreement further provides that, following completion of
the Offer, PIC will be merged into the Company (the "Merger") and each
outstanding Share (other than Shares owned by Proler and PIC) will be converted
into the right to receive $7.50 in cash. The terms and conditions of the Offer
and Merger are more fully set forth in the Merger Agreement. Capitalized terms
used but not defined herein have the meanings ascribed to such terms in the
Merger Agreement.
J.C. Bradford & Co., LLC, as part of its investment banking business,
engages in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements, and valuations for estate,
corporate, and other purposes. We have acted as financial advisor to the Board
of Directors of the Company in connection with the proposed Offer and Merger and
will receive a fee from the Company for our services.
<PAGE>
Board of Directors
Proler International Corp.
September 15, 1996
Page 2
In conducting our analysis and arriving at our opinion, we have considered
such financial and other information as we deemed appropriate including, among
other things, the following: (i) the proposed Merger Agreement, dated September
15, 1996; (ii) drafts of the Offer Documents; (iii) the historical and current
financial position and results of operations of the Company as set forth in its
periodic reports and proxy materials filed with the Securities and Exchange
Commission, (iv) certain internal operating data and financial analyses and
forecasts of the Company for the fiscal years beginning February 1, 1996 and
ending January 31, 1998, prepared for the Company by its senior management; (v)
certain financial and securities trading data of certain other companies, the
securities of which are publicly traded, that we believed to be comparable to
the Company or relevant to the transaction; (vi) the financial terms of certain
other transactions that we believed to be relevant; (vii) reported price and
trading activity for the Shares; and (viii) such other financial studies,
analyses, and investigations as we deemed appropriate for purposes of our
opinion. We also have held discussions with members of the senior management of
the Company regarding the past and current business operations, financial
condition, and future prospects of the Company.
We have taken into account our assessment of general economic, market, and
financial and other conditions and our experience in other transactions, as well
as our experience in securities valuation and our knowledge of the industries in
which the Company operates generally. Our opinion is necessarily based upon the
information made available to us and conditions as they exist and can be
evaluated as of the date hereof.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us for purposes of our opinion and have not
assumed any responsibility for, nor undertaken an independent verification of,
such information. With respect to the internal operating data and financial
analyses and forecasts supplied to us, we have assumed that such data, analyses,
and forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's senior management as to the
recent and likely future performance of the Company. Accordingly, we express no
opinion with respect to such analyses or forecasts or the assumptions on which
they are based. We were not asked to consider and our opinion does not address
the relative merits of the proposed Offer and Merger as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transactions in which the Company might engage. Furthermore, we
have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries or affiliates and have not
been furnished with any such evaluation or appraisal.
<PAGE>
Board of Directors
Proler International Corp.
September 15, 1996
Page 3
The Company is entitled to reproduce this opinion, in whole but not in
part, in the Offer Documents, the Schedule 14D-9, and the Proxy Statement as
required by applicable law or appropriate; provided, that any excerpt from or
reference to this opinion (including any summary thereof) in such documents must
be approved by us in advance in writing. Notwithstanding the foregoing, this
opinion does not constitute a recommendation to any holder of Shares to tender
Shares in the Offer or to vote in favor of the Merger. We were engaged by the
Board of Directors of the Company to render this opinion, upon the Board's
request, in connection with the Board's discharge of its fiduciary obligations.
We have advised the Board of Directors that we do not believe that any person
(including a stockholder of the Company) other than the Board of Directors has
the legal right to rely upon this opinion for any claim arising under state law
and that, should any such claim be brought against us, this assertion will be
raised as a defense. In the absence of governing authority, this assertion will
be resolved by the final adjudication of such issue by a court of competent
jurisdiction. Resolution of this matter under state law, however, will have no
effect on the rights and responsibilities of any person under the federal
securities laws or on the rights and responsibilities of the Company's Board of
Directors under applicable state law.
Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the
$7.50 per Share in cash to be received by the holders of the Shares in the Offer
and the Merger is fair to such holders from a financial point of view.
Very truly yours,
/s/ J. C. Bradford & Co.
