UNITED STATES
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 7, 1997
NORTH CAROLINA RAILROAD COMPANY
(Exact name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
0-15768 56-6003280
(Commission File Number) (IRS Employer Identification No.)
3200 Atlantic Avenue
Suite 110
Raleigh, North Carolina 27604
(Address of principal executive offices) (Zip Code)
(919) 954-7601
(Registrant's telephone number, including area code)
This document contains 9 pages.
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Table of Contents
Item 5. Other Events . . . . . . . . . . . . . . . . . 3
Item 7. Financial Statements and Exhibits . . . . . . . 4
Signatures . . . . . . . . . . . . . . . . . . . . . . . 4
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Item 5. Other Events
On August 7, 1997, the Registrant, the State of North
Carolina and the Beaufort & Morehead Railroad Company (a North
Carolina corporation whose stock is wholly owned by the State of
North Carolina)("State") executed a Letter of Intent to reach a
definitive agreement for a plan of merger, whereby the State
would acquire the shares held by shareholders other than the
State at a cash price of $66.00 per share.
The Letter of Intent between the State and the Registrant
was recommended for approval by the Special Committee of the
Registrant's Board of Directors and was approved by the
Registrant's Board of Directors at a meeting on April 7, 1997.
No definitive agreement has been reached with the State.
Under the terms of the Letter of Intent, any definitive
agreement will be subject to all other corporate and governmental
approvals, including approval by the shareholders of the
Registrant, to the State securing necessary financing, and to
other conditions. The Letter of Intent also provides that either
the State or the Registrant may terminate any definitive
agreement if closing does not occur on or before May 5, 1998.
The foregoing forward-looking statements contained herein
are subject to certain risks and uncertainties which could cause
actual results to differ significantly. There can be no
assurance that a definitive agreement can be reached, and if
reached, that it will include a share price or any other terms
that are attractive to the shareholders of the Registrant. In
addition, there can be no assurance that the State will obtain
the necessary financing or that any approvals required within the
State government or the Registrant could be obtained to authorize
closing on any agreement that may be reached. The Registrant
does not know what effect, if any, an acquisition of the shares
by the State, if consummated, will have on the Registrant's
relationship with Norfolk Southern, pending litigation between
Norfolk Southern and the Registrant, or the Registrant's ability
to continue to qualify as a Real Estate Investment Trust.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
Index to Exhibits
Exhibit No. Item
------------ ----
99.1 Letter of Intent between the
Beaufort & Morehead Railroad
Company, the State of North
Carolina, and the Registrant
dated April 7, 1997.
99.2 Joint News Release by the
Registrant and the State of North
Carolina dated April 7, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
NORTH CAROLINA RAILROAD COMPANY
Date: April 8, 1997 By: /s/ R. Samuel Hunt, III
-------------------------
R. Samuel Hunt, III
President and Director
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EXHIBIT 99.1
[Letterhead]
Beaufort & Morehead Railroad Company
P.O. Box 25201
Raleigh, NC 27611-5201
April 7, 1997
North Carolina Railroad Company
3200 Atlantic Avenue, Suite 110
Raleigh, North Carolina 27604
Gentlemen:
This letter of intent, when countersigned by you, will
confirm our tentative agreement to acquire the North Carolina
Railroad Company (the "Company"). Consummation of the proposed
acquisition (the "Acquisition") would result in the shareholders
of the Company, other than the State of North Carolina (the
"Public Shareholders") receiving $66 in cash for each of the
shares (the "Shares") of Common Stock of the Company owned by
them. Our agreement is on the terms, and subject to the
conditions, described below. Except for Sections 3, 4 and 6 and
the first sentence of Section 2 below (the "Binding
Provisions"), however, this letter of intent represents only our
current good-faith intention to negotiate and enter into a
definitive Acquisition agreement (the "Definitive Agreement"),
and remains subject to successful negotiation of such a
Definitive Agreement in form acceptable to us and you. It is
not, and is not intended to be, a binding agreement between us
(except as to those specified Sections), and neither of us shall
have any liability (except as to those specified Sections) to the
other if we fail to execute a Definitive Agreement for any
reason. Statements below as to what we, or you, will do, or
agree to do, or the like, are so expressed for convenience only,
and are understood in all instances (except for the Sections
enumerated above) to be subject to our mutual continued
willingness to proceed with any Acquisition as our negotiations
take place.
1. Fundamental Terms. It is anticipated that the
Acquisition would be effected by means of a merger (the "Merger")
of Beaufort & Morehead Railroad Company, a North Carolina
corporation all of whose capital stock is owned by the Department
of Transportation of North Carolina, with and into the Company.
In the Merger, each of the Shares owned by the Public
Shareholders would be converted into the right to receive $66 per
share. However, we reserve the right to modify the structure of
the Acquisition to any other structure which results in the
Public Shareholders receiving $66 in cash for each of the Shares,
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and the State of North Carolina (the "State") owning directly or
indirectly all of the capital stock of the Company (or in the
case of a modification to the structure of the Acquisition
resulting in the Company merging into a successor, all of the
capital stock of such successor to the Company, provided the
alternative does not unfavorably change the tax consequences to
the Public Shareholders compared to the structure provided above
or substantially delay the transaction). The Definitive
Agreement will contain provisions (i) preserving such right to
modify the structure of the Acquisition and to assign the rights
of Beaufort & Morehead Railroad under the Definitive Agreement to
any affiliate of the State, as may be necessary to accomplish
the desired change in structure; and (ii) requiring that the
State and the Company on a monthly basis continue to confirm in
writing their respective intentions to close the Acquisition and
representing that nothing is known to them which would prevent a
closing before May 5, 1998. In addition, the Definitive
Agreement will not contain any requirement or condition to
closing regarding the Company maintaining REIT tax status. The
Definitive Agreement will provide that either party may terminate
the agreement if a closing is not held on or before May 5, 1998
or, if circumstances regarding the status of the Financing (as
defined in Section 2 hereof) are such at the time of executing
the Definitive Agreement, such earlier date as the parties may
then agree upon exercising good faith.
2. Execution and Closing. We mutually agree to proceed in
good faith toward negotiation and execution of the Definitive
Agreement, which shall provide for the Acquisition, and shall
contain representations, conditions, covenants and the like
typical in similar transactions. Consummation of the Definitive
Agreement would be subject to (i) the approval of the Definitive
Agreement by the Special Committee of independent directors the
Company, by the Board of Directors of the Company and by the
Public Shareholders holding a majority of the Shares, (ii) the
financing of the full purchase price by appropriate means (the
"Financing") subject to General assembly approval, as necessary,
(iii) the receipt by the Company of a favorable fairness opinion
from its investment banking firm, (iv) the satisfaction of any
applicable federal or state regulatory requirements, and (v)
other conditions customary to similar transactions.
3. Expenses. Each party to this letter of intent shall
bear its own expenses relating to the Acquisition.
4. Press Release and Disclosure. The parties agree to
issue a joint press release upon execution of this letter of
intent by the parties. Each party agrees that it will not issue
any other press release or other disclosure of this letter of
intent or of the Acquisition prior thereto without the prior
approval of the other which shall not unreasonably be withheld,
unless (i) such party has received a written opinion of counsel
to the effect that such disclosure is required by law and (ii)
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time does not permit the obtaining of such consent, or such
consent is unreasonably withheld.
5. Termination. This letter of intent may be terminated by
mutual consent of the State and the Company, or by either party
if the Definitive Agreement has not been executed by May 5, 1997.
In the event of such termination, all provisions hereof shall
terminate except for the Binding Provisions. If a Definitive
Agreement is executed, it shall supersede the provisions of this
letter of intent in all respects and this letter will be of no
further effect whatsoever.
6. State of North Carolina. By executing this letter of
intent, the State hereby agrees that it will use its best efforts
to promptly cause the Financing to be obtained. The State will
join in the Definitive Agreement for certain purposes including
the continued exercise of its best efforts to cause the Financing
to be obtained.
If the foregoing accurately summarizes our understanding, we
request that the Special Committee and the Board of Directors of
the Company approve this letter of intent and evidence such
approval by causing the enclosed copy of this letter to be
signed, dated and returned to the undersigned.
Very truly yours,
Beaufort & Morehead Railroad Company
By: /s/ Garland B. Garrett
--------------------------
President
State of North Carolina
By: /s/ Garland B. Garrett
---------------------------
Secretary of Transportation
Accepted and agreed to
this 7th day of April, 1997
North Carolina Railroad Company
By: /s/ R. Samuel Hunt, III
-----------------------
President
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EXHIBIT 99.2
State of N.C. and North Carolina Railroad Company Approve Letter of
Intent for Proposal to Acquire Shares of Minority Shareholders
Raleigh, NC, April 7, 1997 -- The North Carolina Railroad
Company (OTC:NORA) and the Governor's Office of the State of North
Carolina (State) today said that they have approved a Letter of
Intent for a proposed merger plan, whereby the State would acquire
the shares of the approximately 800 NCRR shareholders at a price of
$66 per share. The State currently owns approximately 3.2 million
shares or 75 percent of NCRR, with private shareholders owning
approximately 1.1 million shares.
No definitive agreement has been reached. The Letter of
Intent between the State and NCRR was recommended for Board approval
by the Special Committee of the NCRR Board of Directors and was
approved by the NCRR Board of Directors at a meeting today.
Sam Hunt, President of the NCRR, cautioned investors: "This is
only a letter of intent. Even if we execute a definitive agreement,
closing will depend upon legislative or other governmental approvals
of the proposal. As with any transaction involving government,
investors should not assume that the necessary approvals will be
forthcoming."
Porter Thompson, a member of the Special Committee of the NCRR
Board of Directors who holds several thousand shares of stock,
stated, "This has been a lengthy and comprehensive process. With the
assistance of our advisors, we hope to reach a definitive agreement
that will allow the shareholders to capitalize on the value of the
NCRR's assets. The Letter of Intent expressly provides that any
definitive agreement must be approved by the holders of a majority of
the non-State shares, so they will have the opportunity to vote on
any definitive proposal." The financial advisor to the Special
Committee is Credit Suisse First Boston Corporation.
The Letter of Intent, which has been approved by Governor Hunt
and the North Carolina Department of Transportation, states that
consummation of a definitive agreement is subject to the State
obtaining financing of the full purchase price, or approximately $71
million.
Governor Hunt stated, "For a century and a half, the North
Carolina Railroad has been owned approximately 75 percent by he
State, but because of the nature of the North Carolina Railroad's
creation the State has not had full control of the North Carolina's
Railroad's assets. With 100 percent ownership, the North Carolina
Railroad can be the transportation cornerstone for the next century."
Under the terms of the Letter of Intent, any definitive
agreement will be subject to all other corporate and governmental
approvals, to the State securing necessary financing, and to other
conditions. The Letter of Intent also provides that either the State
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or the NCRR may terminate any definitive agreement if closing does
not occur on or before May 5, 1998. A shareholder meeting will be
scheduled later.
The State of North Carolina has owned a majority of the shares
of the NCRR since its inception in 1849.
The foregoing forward-looking statements contained herein are
subject to certain risks and uncertainties which could cause actual
results to differ significantly. There can be no assurance that a
definitive agreement can be reached, and if reached, that it will
include a share price or any other terms that are attractive to the
shareholders of the Company. In addition, there can be no assurance
that the State will obtain the necessary financing or that any
approvals required within State government or the Company could
be obtained to authorize closing on any agreement that may be
reached. The Company does not know what effect, if any, an
acquisition of the shares by the State, if consummated, will have on
the Company's relationship with Norfolk Southern, pending litigation
between Norfolk Southern and NCRR, or the Company's ability to
continue to qualify as a Real Estate Investment Trust.
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