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. 13
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. 13 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. 13 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. 13 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 section (j)
thereof:
(j) On November 25, 1996, Schnitzer and the Company announced that they
had received notice that the waiting period under the Hart Scott Rodino
Antitrust Improvements Act of 1976 had been terminated. Schnitzer also announced
that, provided that a majority of the Company's shares of Common Stock had been
tendered at the scheduled expiration date of Schnitzer's offer at midnight,
November 29, 1996, Schnitzer planned to accept the tendered shares for payment.
A copy of the press release issued by Schnitzer and the Company announcing
termination of the waiting period is attached hereto as Exhibit 28 and is
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DOCUMENT
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Exhibit 27 - Press release issued by Proler International Corp. dated
November 19, 1996, with the text of the Company's letter
to its stockholders attached thereto. (*)
Exhibit 28 - Press release issued by Proler International Corp. and
Schnitzer Steel Industries, Inc. dated November 25,
1996, announcing the termination of the waiting period
under the Hart Scott Rodino Antitrust Improvements Act
of 1976.
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(*) Previously filed as Exhibit 27 to Amendment No. 12 to the Company's
Schedule 14D-9 and refiled herewith to include the designation "Exhibit
27" on the face thereof.
<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: November 24, 1996
NEWS RELEASE EXHIBIT 27
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
EXHIBIT 28
[PROLER INTERNATIONAL CORP. LETTERHEAD]
JOINT PRESS RELEASE
November 25, 1996
FOR IMMEDIATE RELEASE
Contact:
Tom Zelenka (Schnitzer) 503-323-2821
Michael Loy (Proler) 713-963-5904
SCHNITZER AND PROLER ANNOUNCE ANTITRUST CLEARANCE
FOR SCHNITZER TO ACQUIRE PROLER
Portland, Oregon and Houston, Texas - Schnitzer Steel Industries, Inc. (NASDAQ:
SCHN) and Proler International Corp. (NYSE: PS) jointly announced today that
they have received notice that the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 has been terminated, thereby clearing the way
for Schnitzer to proceed with its acquisition of Proler. "We are very pleased to
have received antitrust clearance," stated Robert Philip, president of
Schnitzer. "Provided that a majority of the Proler shares have been tendered at
the scheduled expiration of our tender offer at midnight on Friday November 29,
1996, we plan to accept the tendered shares for payment. We are arranging to
provide funds to the Depository on Monday, December 2, 1996 to permit the
Depository to commence making payments to Proler shareholders who have validly
tendered their shares."
<PAGE>
PS and SCHN Announce Antitrust Clearance
Page 2
November 25, 1996
As previously announced, on September 15, 1996, Proler and Schnitzer signed a
definitive 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. On
November 15, 1996, the consideration for Schnitzer's offer and merger was
increased to $9.00 in cash per share.
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-mill in McMinnville, Oregon manufactures rebar, merchant bar, fence
posts, special sections and grape stakes. In addition, Cascade maintains mill
depots in Union City and El Monte, California.
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.
