<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
(AMENDMENT NO. 1)
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Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934
STEEL OF WEST VIRGINIA, INC.
(Name of Subject Company)
SWVA ACQUISITION, INC.
AND
ROANOKE ELECTRIC STEEL CORPORATION
(Bidders)
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COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
858154107
(CUSIP Number of Class of Securities)
--------------------------------------------------------------
JOHN E. MORRIS
VICE PRESIDENT - FINANCE AND ASSISTANT TREASURER
ROANOKE ELECTRIC STEEL CORPORATION
P.O. BOX 13948
ROANOKE, VIRGINIA 24038-3948
(540) 342-1831
(Name, Address, and Telephone Numbers of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
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COPIES TO:
HEMAN A. MARSHALL, III
WOODS, ROGERS & HAZLEGROVE, PLC
FIRST UNION TOWER
10 S. JEFFERSON ST., SUITE 1400
ROANOKE, VIRGINIA 24011
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<PAGE>
This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 initially filed with the Securities and Exchange Commission on
November 17, 1998 (as amended, the "Statement"), by SWVA Acquisition, Inc., a
Virginia corporation (the "Purchaser"), a wholly owned subsidiary of Roanoke
Electric Steel Corporation, a Virginia corporation (the "Parent"), and the
Parent, relating to the Purchaser's tender offer for the purchase of all of the
outstanding shares of Common Stock, $.01 par value per share ("Shares"), of
Steel of West Virginia, Inc., a Delaware corporation (the "Company"), and the
associated rights to purchase Common Stock of the Company issued pursuant to the
Rights Agreement dated as of March 19, 1997, between the Company and Continental
Stock Transfer and Trust Company, as Rights Agent, as amended on November 10,
1998, at a purchase price of $10.75 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated November 17, 1998 (the "Offer to Purchase"), a
copy of which was previously attached to this Statement as Exhibit (a)(1), in
the related Letter of Transmittal, a copy of which was previously attached to
this Statement as Exhibit (a)(2), and in the Supplement to the Offer to
Purchase, dated December 3, 1998 (the "Supplement"), a copy of which is attached
hereto as Exhibit (a)(9).
The Statement is hereby amended and/or supplemented in the following
manner:
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The information set forth in Section 1 ("Background of the Offer;
Contacts with the Company") of the Supplement is incorporated herein by
reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is hereby supplemented by the information
set forth in Section 3 ("Price Range of Shares; Dividends") of the Supplement,
which is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(b) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is hereby deleted and the
information set forth in Section 1 ("Background of the Offer; Contacts with the
Company") of the Supplement, which is incorporated herein by reference, is
inserted in lieu thereof.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is hereby deleted and the
information set forth in Section 1 ("Background of the Offer; Contacts with the
Company") of the Supplement, which is incorporated herein by reference, is
inserted in lieu thereof.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 10 ("Background of the Offer; Contacts
with the Company") of the Offer to Purchase is hereby deleted and the
information set forth in Section 1 ("Background of the Offer; Contacts with the
Company") of the Supplement, which is incorporated herein by reference, is
inserted in lieu thereof.
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ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is hereby deleted and the
information set forth in Section 1 ("Background of the Offer; Contacts with the
Company") of the Supplement, which is incorporated herein by reference, is
inserted in lieu thereof.
(b) and (c) The information set forth in Section 4 ("Certain Legal Matters
and Regulatory Approvals -- Antitrust") of the Supplement is incorporated
herein by reference.
(f) The information set forth in Section 15 ("Offer Conditions") of the
Offer to Purchase is hereby deleted and the information set forth in Section 2
("Offer Conditions") of the Supplement, which is incorporated herein by
reference, is inserted in lieu thereof.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibit is added:
(a)(9) Supplement to Offer to Purchase dated December 3, 1998.
SIGNATURE
After due 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.
ROANOKE ELECTRIC STEEL CORPORATION
By: /s/ JOHN E. MORRIS
________________________________________
Name: John E. Morris
Title: Vice President - Finance and Assistant Treasurer
SWVA ACQUISITION, INC.
By: /s/ JOHN E. MORRIS
________________________________________
Name: John E. Morris
Title: Vice President - Finance and Assistant Treasurer
Date: December 3, 1998
2
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------------------------------------------------------------------------------
(a)(1)* Offer to Purchase dated November 17, 1998.
(a)(2)* Letter of Transmittal.
(a)(3)* Notice of Guaranteed Delivery.
(a)(4)* Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(5)* Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(6)* Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7)* Form of Summary Advertisement as published on November 17, 1998.
(a)(8)* Form of Press Release issued jointly by the Parent and the Company
on November 10, 1998 (incorporated by reference to the Parent's Form
8-K filed on November 16, 1998).
(a)(9) Supplement to Offer to Purchase dated December 3, 1998.
(b)(1)* Commitment Letter, dated November 5, 1998, from First Union National
Bank to Roanoke Electric Steel Corporation.
(b)(2)* Commitment Letter, dated November 6, 1998, from Crestar Bank to
Roanoke Electric Steel Corporation.
(b)(3)* Commitment Letter, dated November 6, 1998, from NationsBank, N.A. to
Roanoke Electric Steel Corporation.
(b)(4)* Commitment Letter, dated November 9, 1998, from Wachovia Bank, N.A.,
to Roanoke Electric Steel Corporation.
(c)(1)* Agreement and Plan of Merger, dated as of November 10, 1998, among
Roanoke Electric Steel Corporation, SWVA Acquisition, Inc., and Steel
of West Virginia, Inc.
(c)(2)* Stock Option Agreement, dated as of November 10, 1998, between
Steel of West Virginia, Inc., and SWVA Acquisition, Inc.
(c)(3)* Form of Stock Tender and Voting Agreement, dated as of November 10,
1998, by and among Roanoke Electric Steel Corporation, SWVA
Acquisition, Inc., and certain stockholders of the Company.
(c)(4)* Employment Agreement, dated November 10, 1998, by and between Steel
of West Virginia, Inc., and Timothy R. Duke.
(c)(5)* Confidentiality Letter Agreement dated July 20, 1998, between Roanoke
Electric Steel Corporation and Janney Montgomery Scott, Inc.
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* Previously filed with the Statement on November 17, 1998.
<PAGE>
Exhibit (a)(9)
Supplement to Offer to Purchase dated December 3, 1998
<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
STEEL OF WEST VIRGINIA, INC.
AT
$10.75 NET PER SHARE
BY
SWVA ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY
OF
ROANOKE ELECTRIC STEEL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN
STANDARD TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING MORE
THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) OF ALL
SECURITIES OF STEEL OF WEST VIRGINIA, INC., ENTITLED TO VOTE GENERALLY IN THE
ELECTION OF DIRECTORS OR IN A MERGER BEING VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER. SEE SECTIONS 1 AND 15 OF THE
OFFER TO PURCHASE (AS AMENDED AND SUPPLEMENTED BY THIS SUPPLEMENT) FOR
ADDITIONAL TERMS AND CONDITIONS OF THE OFFER.
THE BOARD OF DIRECTORS OF STEEL OF WEST VIRGINIA, INC., HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT,
INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF
THE STOCKHOLDERS OF STEEL OF WEST VIRGINIA, INC., AND UNANIMOUSLY RECOMMENDS
THAT YOU ACCEPT THE OFFER AND TENDER YOUR SHARES TO SWVA ACQUISITION, INC.,
PURSUANT TO THE OFFER.
---------------
IMPORTANT
IF YOU DESIRE TO TENDER ALL OR ANY PORTION OF YOUR SHARES IN THIS OFFER AND
YOUR SHARES ARE REGISTERED IN YOUR NAME, YOU SHOULD COMPLETE AND SIGN THE
LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH ITS
INSTRUCTIONS AND MAIL OR DELIVER IT (OR ITS FACSIMILE) AND ANY OTHER REQUIRED
DOCUMENTS TO THE DEPOSITARY, AND THEN EITHER (I) DELIVER YOUR STOCK
CERTIFICATES AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY OR (II) FOLLOW
THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 3 OF THE OFFER TO
PURCHASE. IF YOUR SHARES ARE REGISTERED IN "STREET NAME," YOU MUST REQUEST
YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO TENDER
YOUR SHARES FOR YOU.
IF YOU DESIRE TO TENDER YOUR SHARES BUT YOUR STOCK CERTIFICATES ARE NOT
IMMEDIATELY AVAILABLE, OR IF YOU CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-
ENTRY TRANSFER IN A TIMELY MANNER, YOU MAY TENDER YOUR SHARES BY FOLLOWING THE
PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN SECTION 3 OF THE OFFER TO
PURCHASE.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT AT ITS ADDRESS AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS
SUPPLEMENT. ADDITIONAL COPIES OF THIS SUPPLEMENT, THE OFFER TO PURCHASE, THE
LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND OTHER RELATED
MATERIALS MAY BE OBTAINED FROM THE INFORMATION AGENT OR FROM BROKERS, DEALERS,
COMMERCIAL BANKS AND TRUST COMPANIES.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON
& COMPANY INC.
December 3, 1998
<PAGE>
To the Stockholders of Steel of West Virginia, Inc.:
This Supplement amends and supplements the Offer to Purchase, dated November
17, 1998 (the "OFFER TO PURCHASE"), of SWVA Acquisition, Inc., a Virginia
corporation (the "PURCHASER") and a wholly owned subsidiary of Roanoke
Electric Steel Corporation, a Virginia corporation (the "PARENT"), pursuant to
which the Purchaser is offering to purchase all outstanding shares of Common
Stock, par value $.01 per share (the "SHARES"), of Steel of West Virginia,
Inc., a Delaware corporation (the "COMPANY"), and the associated rights to
purchase Common Stock of the Company (the "RIGHTS") issued pursuant to the
Rights Agreement dated as of March 19, 1997, between the Company and
Continental Stock Transfer and Trust Company, as Rights Agent, as amended on
November 10, 1998, at a purchase price of $10.75 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, as in this Supplement and in
the Letter of Transmittal (which together, as amended or supplemented from
time to time, constitute the "OFFER"). Unless the context otherwise requires,
all references herein to Shares include the associated Rights.
This Supplement should be read in conjunction with the Offer to Purchase.
Except as set forth in this Supplement, the terms and conditions set forth in
the Offer to Purchase and the Letter of Transmittal remain applicable in all
respects to the Offer. Capitalized terms used but not defined herein shall
have the meanings set forth in the Offer to Purchase.
THIS SUPPLEMENT, THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. The following
information amends and restates in its entirety the information set forth in
Section 10 of the Offer to Purchase.
Set forth below is a chronology of events and a description of contacts
between representatives of the Company and the Parent. The description of
certain meetings of the Company's Board of Directors has been supplied by the
Company. The Parent has followed the business activities of the Company for a
period of time. Beginning in January, 1997, representatives of the Parent and
the Company have engaged in discussions, from time to time, concerning a
possible business combination involving the Company.
The Parent understands that, in early January, 1997, CPT Holdings, Inc.
("CPT"), advised Robert L. Bunting, Jr., then Chief Executive Officer and
Chairman of the Company, that it was making an unsolicited offer to acquire
the Company for a price of $9.00 per Share. After a full review and
consideration of the proposal, the Company's Board determined that the offer
was inadequate, and that it was not in the best interests of the Company or
its stockholders to proceed with discussions concerning an acquisition of the
Company by CPT.
On January 14, 1997, Mr. Bunting and Timothy R. Duke, then the President and
Chief Operating Officer of the Company (and currently its Chief Executive
Officer and President), met with Donald G. Smith, the President, Chief
Executive Officer and Chairman of the Parent, at the offices of the Parent.
The purpose of the meeting was to discuss the possibility of the Parent being
a "white knight" in the event that CPT proceeded to attempt a hostile takeover
of the Company.
The Parent retained the services of Ewing Monroe Bemiss & Co. ("EWING
MONROE") to evaluate the possibility of the Parent acquiring the Company and
to advise the Board of Directors of the Parent in this regard. After
consideration of the factors affecting the Company and the Parent at that
time, and in light of the advice of Ewing Monroe, the Board of Directors of
the Parent determined to pursue discussions with the Company for the possible
acquisition of the Company.
At the meeting of the Company's Board held on March 5, 1997, Mr. Duke
advised the Company's Board that the Parent had advised him that it might have
an interest in acquiring the Company at a price to be negotiated, but in no
event greater than $11.00 per Share.
<PAGE>
In April 1997, based on information from the Parent, Mr. Duke understood
that due to the possible entry of new competitors into the Company's markets,
the Parent's revised valuation was in the neighborhood of $10.00 per Share.
Later in April 1997, Mr. Duke informed Mr. Smith that the Company's Board had
concluded that it was not in the best interests of the Company's stockholders
to enter into a transaction with the Parent given the Parent's suggested
valuation. There were no further contacts between the Company and the Parent
until June 1998, other than with regard to the Company's purchasing of billets
from the Parent.
At a meeting of the Company's Board held on June 5, 1998, the Company's
Board reviewed the operations of the Huntington facility, including the
progress of the Company's modernization program, industry trends, potential
competitors, various possible strategic alliances, and in light of the
Company's stock trading price at the time, the possibility of the Company
receiving an unsolicited, inadequate offer to stockholders that could also
disrupt the Company's operations and employment levels, and leave the Company
unable to serve its customers. The Company's Board authorized Mr. Duke to
contact Mr. Smith to ascertain whether the Parent might have an interest in a
strategic alliance.
On June 11, 1998, Mr. Duke and Mr. Smith discussed the possible advantages
of a strategic alliance between the Company and the Parent, including that the
combined entity would have greater financial strength, that the Company's
Huntington facility would have a ready source of billets from the Parent's
facility and that the Parent would have a "built-in" customer for its billets.
At the same time, Mr. Smith expressed a concern regarding any strategic
alliance with the Company due to the possible entry of new competitors into
the Company's markets.
The Parent again consulted Ewing Monroe to evaluate a possible transaction
with the Company and to advise the Parent's Board of Directors in this regard.
On July 20, 1998, the Parent and the Company entered into the Parent
Confidentiality Agreement (defined in Section 11 of the Offer to Purchase)
preceding the Parent's review of certain information concerning the Company.
Following the execution of this agreement, Mr. Duke and Daniel N. Pickens, a
director of the Company and a First Vice President of Janney, kept the
Company's directors informed regularly regarding discussions with the Parent's
representatives.
On July 28, 1998, Mr. Duke and Mr. Pickens met with Mr. Smith, Mr. A. Hugh
Ewing III, President of Ewing Monroe, Ms. Mary Adams Bacon, a Managing
Director of Ewing Monroe, and other representatives of the Parent. At the
meeting, the parties discussed the Company's business, the Parent's business,
industry trends, potential competitors and general parameters and concerns
regarding possible terms and conditions of any transaction between the Company
and the Parent.
At a meeting of the Parent's Board of Directors on August 14, 1998, Mr.
Ewing and Ms. Bacon made a detailed presentation regarding a possible
transaction between the Company and the Parent. After considerable discussion,
the Parent's Board of Directors determined to consider the issue further at
its regularly scheduled meeting on August 18, 1998. At the meeting on August
18, the Parent's Board of Directors again met with Mr. Ewing and Ms. Bacon and
again discussed the transaction under consideration. After a further detailed
presentation by management and discussion, including consideration of the
possible benefits to the Parent of a combination of the business of the
Company and the Parent, the Parent's Board of Directors authorized management
to negotiate the terms and conditions for a possible acquisition of the
Company.
At a meeting on August 19, 1998, the Company's Board reviewed and analyzed
the discussion of July 28, 1998, together with the updated information on the
operations of the Huntington facility, including the progress of the Company's
modernization program, competitive trends in the industry and the Company's
stock price and performance. At the meeting, the Company's Board further
discussed the identity and key characteristics of other potential strategic
partners. After considerable discussion, the Company's Board authorized Mr.
Duke and Mr. Pickens to continue discussions with the Parent.
2
<PAGE>
On August 24, 1998, Mr. Duke and Mr. Pickens met again with Mr. Smith, Mr.
Ewing and Ms. Bacon to review historical and projected performance of the
Company and the Parent, strategic opportunities, valuation parameters and
terms and conditions of a possible transaction. During the course of these
discussions, the representatives of the Company and the Parent discussed
certain financial information about the Company which was not publicly
available. The information discussed consisted of the following forecasts of
the Company's results of operations for the years 1998, 1999 and 2000: Net
Sales: $145.4 million, $172.0 million and $176.3 million respectively;
Earnings Before Interest and Taxes: $13.0 million, $17.3 million and $17.4
million, respectively; Net Income: $6.1 million, $8.2 million and $8.3
million, respectively; and Earnings per Share: $1.02 million, $1.37 million
and $1.39 million, respectively. The foregoing forecasts were prepared by the
Company solely for internal use and not for publication or with a view to
complying with the published guidelines of the Commission regarding
projections or with the AICPA Guide for Prospective Financial Statements and
are included in the Supplement to the Offer to Purchase only because they were
furnished to the Parent. In the course of these discussions, representatives
of the Company advised the Parent that the forecasts were prepared assuming
that (i) both cost of sales and operating expenses, each as a percentage of
sales, would be relatively flat during the three-year period, (ii) there would
be growth in the number of tons sold in 1998 and 1999, as well as price
increases in these two years, but that both the number of tons sold and the
prices at which they were sold would be relatively flat in 2000, and (iii) the
average number of fully-diluted shares would be flat during the three-year
period. Additionally, the forecasts necessarily reflected numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are inherently uncertain or beyond the
Company's control. One cannot predict whether assumptions made in preparing
the forecasts will be accurate, and actual results may be materially higher or
lower than those contained in the forecasts. The inclusion of this information
should not be regarded as an indication that the Parent, the Company or anyone
who received this information considered it a reliable predictor of future
events, and this information should not be relied on as such. Neither the
Parent nor the Purchaser assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the forecasts and the Company has
made no representation to the Parent regarding the forecasts described above.
On September 9, 1998, the Company's Board met to discuss a possible
transaction with the Parent. The Company's Board reviewed materials prepared
by management and by Janney regarding the Company's historical performance,
projected financial results, industry trends, stock price history, stock
market data and potential competition. The Company's Board also reviewed the
meeting held with the Parent's representatives on August 24, 1998, and
authorized further discussion with the Parent.
On September 11, 1998, Mr. Duke and Mr. Pickens met with Mr. Smith, Mr.
Ewing and Ms. Bacon to discuss a possible transaction. At this meeting, Mr.
Smith indicated that the Parent was only prepared to proceed with a
transaction in which it acquired 100% of the Shares for $11.00 cash. After
considerable discussion, Mr. Smith agreed to recommend to the Parent's Board
of Directors that the Parent pay a price of $11.50 per Share in cash to
acquire the Company. Mr. Smith's willingness to recommend that price to the
Parent's Board of Directors was conditioned upon various other issues,
including protective devices such as break-up fees, an option to purchase
Shares and stockholder lock-ups, completion of due diligence and the
negotiation of definitive agreements. At a recess in the meeting, Mr. Duke,
Mr. Pickens, Albert W. Eastburn, the Chairman of the Company and Stephen A.
Albert, a director of the Company and a member of Sierchio & Albert, P.C.,
general counsel to the Company, discussed the proposed sale of the Company via
a conference call and concluded that Mr. Duke and Mr. Pickens should continue
further discussions with the Parent. Negotiations between the Company and the
Parent continued through the day.
On September 14, 1998, via a conference call, counsel to the Company and
counsel to the Parent discussed a possible transaction, including structure,
due diligence and the preparation of documents.
The Parent's Board of Directors met again on September 15, 1998, and
discussed the September 11, 1998, meeting described above. The Parent's Board
of Directors authorized the commencement of extensive due
3
<PAGE>
diligence activities by the Parent's counsel and consultants and, subject to
the results thereof and satisfaction of further conditions of management, the
continued negotiation of a possible agreement.
On September 17, 1998, the Company's Board held a telephonic meeting at
which it reviewed the Company's historical and projected results, industry
trends, stock market trends and competitive factors. The Company's Board also
analyzed and discussed the proposed purchase price in light of these factors,
the Company's stock price, performance and trading volume and other possible
strategic alternatives. The Company's Board approved the Company's retention
of Janney as the Company's investment banker with regard to the transaction
and the Company's retention of legal counsel with regard to the transaction.
Legal counsel then advised the Company's Board with respect to certain legal
matters, including its fiduciary obligations in connection with any possible
sale of the Company. The Company's Board authorized the Company to continue
negotiations with the Parent.
On September 29, 1998, the Company's Board held a meeting at which Mr. Duke,
Janney and legal counsel reviewed the status of negotiations with the Parent.
Legal counsel again advised the Company's Board with respect to certain legal
matters and reviewed the principal aspects of the Merger Agreement, including
protective devices such as break-up fees, an option to purchase Shares and
stockholder lock-ups. Representatives of Janney delivered its oral opinion to
the Company's Board as to the fairness of the $11.50 cash consideration to be
paid to the holders of the outstanding shares. The Company's Board then
analyzed and discussed the offer, the Merger Agreement and the transactions
contemplated thereby in light of the Company's historical performance,
projected financial results, industry trends, potential competitors, stock
price history and data, other strategic alternatives and various other matters
that it considered relevant. Thereafter, the Company's Board unanimously
resolved to recommend acceptance of the offer and approval and adoption of the
Merger Agreement by the Company's stockholders.
On October 6, 1998, the Parent's Board of Directors met again with
representatives of Ewing Monroe to consider the proposed transaction. Based
upon the Parent's due diligence investigation, as well as current competitive
conditions in the industry and the decline in the Company's stock price, all
of which were reviewed and addressed by Mr. Ewing and Ms. Bacon, the Parent's
Board of Directors determined not to proceed with consideration of a final
written agreement at that time, but did authorize Mr. Smith and other
representatives of the Parent to continue due diligence investigations, as
well as discussions and negotiations with representatives of the Company, and
determined to meet and consider the matter further after additional due
diligence and consideration of the financial aspects of the transaction.
During the following three weeks, discussions continued between the parties,
and the Parent proceeded with its continuing due diligence investigation. The
Parent's Board of Directors met again October 20, 1998, and considered the
status of the ongoing due diligence review and the differential between the
trading price of the Company's stock and $11.50. The Parent's Board determined
to reconvene to make a final decision on whether or not to proceed after
management had further discussions with the Company's representatives and
concluded other outstanding issues to management's satisfaction.
On October 26, 1998, Mr. Duke and Mr. Pickens met with Mr. Smith, Mr. Ewing
and Ms. Bacon. The parties discussed the results of the Parent's due diligence
investigations, including Parent's assessment of the Company's steel
manufacturing processes, properties and environmental and related issues,
historical financial data (including data released in the Company's Form 10-Q
for the three months ended September 30, 1998), and the concerns of the Parent
raised by recently identified trends in the steel industry, including
declining steel prices and increased foreign competition, due in part to an
influx of Asian steel into the U.S. market. In addition, the price of the
Company's stock had declined by approximately $4.00 per Share since the
beginning of negotiations in July 1998. The Company's stock was trading at
$9.625 per Share on July 25, 1998, and by October 23, 1998, the price per
Share had declined to $5.50. The parties also discussed overall declining
stock prices of similar corporations throughout the steel industry generally.
Although no agreement was reached regarding the possible terms and conditions
of a revised transaction at that time, Mr. Smith proposed a revised offer
price of $10.00 per Share. The parties discussed the decrease in the proposed
offer price in light of the foregoing factors, and finally narrowed their
discussion of price to a range of $10.50 to $11.00 per Share. Following the
meeting, Mr. Duke
4
<PAGE>
reported the results of the meeting to the other members of the Company's
Board, and a meeting of the Company's Board was scheduled for November 2,
1998.
On November 2, 1998, the Company's Board met to review the proposed
transaction in light of all relevant data, including, in particular, industry
trends, potential new competition, the operations of the Huntington facility,
including the progress of the Company's modernization program, historical and
projected results, the Company's stock price history and performance, together
with other stock market data and trends, other strategic alternatives
available to the Company and the due diligence performed by the Parent. The
Company's Board then discussed and analyzed the data, and concluded that a
sale of the Company to the Parent at a price of $10.75 per share would achieve
for stockholders a value that they would not likely be able to realize in the
foreseeable future and, accordingly, would be in the best interests of
stockholders. Janney delivered its oral opinion to the Company's Board as to
the fairness of a $10.75 price per Share to the stockholders of the Company
from a financial point of view. The Company's Board then unanimously resolved
to recommend acceptance of an offer of $10.75 per share, should the Parent
make such an offer, and directed Mr. Pickens to approach Mr. Ewing regarding
the Parent's willingness to enter into such a revised transaction who, in
turn, talked to Mr. Smith. Later that day, Mr. Smith indicated that he was
prepared to recommend an offer price of $10.75 per share to the Parent's Board
of Directors.
On November 9, 1998, the Board of Directors of the Parent met and considered
the offer price of $10.75 and the report of management regarding the further
negotiations with the Company. Ewing Monroe delivered its fairness opinion to
the Parent's Board of Directors that stated that the Offer Price of $10.75
was, in light of all relevant factors, fair to the Parent from a financial
point of view. The Parent's Board of Directors reviewed the fairness opinion,
the factors discussed at the October 26, 1998 meeting, and the financing
commitment letters. Following such discussion, the Parent's Board of Directors
unanimously approved the proposed transaction and directed the officers to
conclude the negotiations concerning various relevant documents and, upon
finalizing such documents, to execute the Merger Agreement. On November 10,
1998, after finalization of the various open issues, including completion of
the Commitment Letter, the Merger Agreement, the Stock Option Agreement, the
Amendment to the Rights Agreement, the Stock Tender Agreements and related
agreements were executed and delivered, and the transaction was announced
publicly after the closing of trading on the Nasdaq National Market on
November 10, 1998.
2. OFFER CONDITIONS. The following information amends and restates in its
entirety the information set forth in Section 15 of the Offer to Purchase.
Notwithstanding any other provision of the Offer, the Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or
payment for any Shares tendered pursuant to the Offer, and may terminate the
Offer (whether or not the Purchaser has purchased or paid for any Shares) to
the extent permitted by the Merger Agreement unless the following conditions
(the "OFFER CONDITIONS") have been satisfied:
(a) at the expiration of the Offer, a number of Shares that constitutes
more than 50% of the voting power (determined on a fully-diluted basis) on
the date of purchase of all the securities of the Company entitled to vote
generally in the election of directors or in a merger has been validly
tendered in the Offer and not properly withdrawn prior to the expiration of
the Offer (i.e., the Minimum Condition);
(b) all of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified by reference to a Material Adverse
Effect are true and correct, and any such representations and warranties
that are not so qualified are true and correct in all respects except in
any respect that is not
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likely to have a Material Adverse Effect, in each case as if such
representations and warranties were made at the time of such determination;
or
(c) at the expiration of the Offer, none of the following events has
occurred since November 9, 1998:
(1) the entry or issuance of any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding
before any court or governmental, administrative or regulatory
authority or agency, or any statute, rule or regulation enacted,
entered, enforced, promulgated, amended or issued that is applicable to
the Parent, the Purchaser, the Company or any subsidiary or affiliate
of the Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency that is likely to have the effect of:
(i) making illegal or otherwise directly or indirectly restraining or
prohibiting the making of the Offer in accordance with the terms of the
Merger Agreement, the acceptance for payment of, or payment for, some
of or all the Shares by the Purchaser or any of its affiliates or the
consummation of the Merger; (ii) prohibiting the ownership or operation
of the Company and its subsidiaries by the Parent or any of the
Parent's subsidiaries; (iii) imposing material limitations on the
ability of the Parent, the Purchaser or any of the Parent's affiliates
effectively to acquire or hold or to exercise in all material respects
full rights of ownership of the Shares, including without limitation
the right to vote any Shares acquired or owned by the Parent or the
Purchaser or any of its affiliates on all matters properly presented to
the stockholders of the Company, including, without limitation, the
adoption of the Merger Agreement or the right to vote any shares of
capital stock of any subsidiary directly or indirectly owned by the
Company; or (iv) requiring divestiture by the Parent or the Purchaser
or any of their affiliates of any Shares;
(2) (i) any general suspension of trading in, or limitation on prices
(other than suspensions or limitations triggered on Nasdaq National
Market by price fluctuations on a trading day) for, securities on any
national securities exchange, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (iii) a commencement of a war or material armed
hostilities or other material national calamity directly involving the
entire United States or materially adversely affecting the consummation
of the Offer or (v) in the case of any of the foregoing existing at the
time of commencement of the Offer, a material acceleration or worsening
thereof;
(3) (i) the Board of Directors of the Company or any committee
thereof has withdrawn or modified in a manner adverse to the Parent or
the Purchaser the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any takeover
proposal or any other acquisition of Shares other than the Offer, (ii)
any such person or group has entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer
or exchange offer for any Shares or a merger, consolidation or other
business combination with or involving the Company or any of its
subsidiaries, or (iii) the Board of Directors of the Company or any
committee thereof has resolved to do any of the foregoing;
(4) the Company fails to perform in any material respect any material
obligation or to comply in any material respect with any material
agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(5) the Merger Agreement has been terminated in accordance with its
terms or the Offer has been terminated with the consent of the Company;
or
(6) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer or the Merger have not expired or been
terminated;
and, upon the failure of any of the conditions set forth in paragraphs (b) or
(c) above, the Purchaser determines, in its reasonable judgment, that it is
inadvisable for the Purchaser to proceed with the Offer or with the acceptance
for payment of or payment for Shares.
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The Offer Conditions (other than the Minimum Condition) are for the sole
benefit of the Purchaser and may be waived by the Purchaser in whole or in
part at any time and from time to time in its sole discretion.
3. PRICE RANGE OF SHARES; DIVIDENDS. According to published financial
sources, from November 17, 1998, the date of the Offer, through December 2,
1998, the last full day of trading prior to the date of this Supplement, the
high and low sales prices per Share on the Nasdaq National Market were $10.75
and $10.3125, respectively. Stockholders are urged to obtain a current market
quotation for the Shares.
4. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. ANTITRUST. On November
24, 1998, the waiting period under the HSR Act with respect to the Offer and
the Merger was terminated early.
5. MISCELLANEOUS. The Purchaser has filed with the Commission an Amendment
No. 1 to the Tender Offer Statement pursuant to Rule 14d-3 under the Exchange
Act, furnishing certain additional information with respect to the Offer. The
Tender Offer Statement and any amendments thereto, including exhibits, may be
inspected and copies obtained at the same place and in the same manner as set
forth in Section 7 of the Offer to Purchase (except that they will not be
available at the regional offices of the Commission).
SWVA ACQUISITION, INC.
December 3, 1998
7
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
By Overnight Courier: By Mail or Hand Delivery:
First Union Customer Information First Union Customer Information
Center Center
Corporate Trust Operations Corporate Trust Operations
1525 West W.T. Harris Blvd. 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-1153 Charlotte, North Carolina 28288-1153
Attn: Mike Klotz, Reorganization Attn: Mike Klotz, Reorganization
Department Department
By Facsimile Transmission:
(for Eligible Institutions Only)
(704) 590-7628
For Information or Confirmation:
(704) 590-7408
CONFIRM BY TELEPHONE:
Any questions and requests for assistance may be directed to the Information
Agent at its telephone numbers and address listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent. You may also contact
your broker, dealer, commercial bank or trust company for assistance
concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
Wall Street Plaza
88 Pine Street 30th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
FAX: (212) 440-9009
