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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 18)
AQUA ALLIANCE INC.
(NAME OF SUBJECT COMPANY)
VIVENDI
AQUA ACQUISITION CORPORATION
(BIDDERS)
----------------
CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE
AND
WARRANTS TO PURCHASE CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
038367108
038367116
(CUSIP NUMBERS OF CLASS OF SECURITIES)
----------------
MICHEL AVENAS
AQUA ACQUISITION CORPORATION
C/O VIVENDI NORTH AMERICA MANAGEMENT SERVICES, INC.
800 THIRD AVENUE
38TH FLOOR
NEW YORK, NY 10022
TELEPHONE: (212) 753-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
MARTHA E. MCGARRY, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$97,091,876 $19,418
=============================================================================
* Estimated for purposes of calculating the amount of the filing fee
only. This amount assumes the purchase of 32,935,254 shares of Class A
Common Stock, par value $.001 per share (the "Shares"), of Aqua
Alliance Inc. (the "Company"), a Delaware corporation, at a price of
$2.90 per Share net to the seller in cash, without interest thereon
and 3,949,099 warrants to purchase the Shares issued pursuant to the
Company Rights Offering dated January 26, 1998 (the "Warrants"), at
the purchase price of $0.40 per Warrant. Such number of Shares
represents the 31,551,754 Shares outstanding as of July 9, 1999, not
owned by Vivendi, a societe anonyme organized under the laws of the
Republic of France and its wholly owned affiliates, and assumes the
issuance prior to the consummation of the Offer of 1,383,500 Shares
upon the exercise of outstanding options. Such number of Warrants
represents the 3,949,099 Warrants outstanding as of July 9, 1999.
** The amount of the filing fee calculated in accordance with Regulation
240.1-11 of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the value of the transaction.
|X| Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount previously paid: $19,418 Form or Registration No.: Schedule
14D-1/13SD
Filing Parties: Vivendi and Aqua Date Filed: July 16, 1999
Acquisition Corporation
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CUSIP NOS. 038367108/ 14D-1 AND 13D
038367116
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Aqua Acquisition Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)|X|
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS |_|
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 shares of Class A Common Stock
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES |_|
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10 TYPE OF REPORTING PERSON
CO
CUSIP NOS. 038367108/ 14D-1 AND 13D
038367116
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Vivendi (FORMERLY NAMED COMPAGNIE GENERALE DES EAUX)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC; OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS |_|
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
REPUBLIC OF FRANCE
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
153,714,675 shares of Class A Common Stock*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES |_|
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
83%
10 TYPE OF REPORTING PERSON
CO
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* All such Shares are owned directly and indirectly by Vivendi through its
wholly owned subsidiary, Vivendi North America Operations, Inc., which owns
153,714,675 shares of Class A Common Stock.
TENDER OFFER
This Amendment No. 1 (the "Amendment") amends and supplements the
Tender Offer Statement on Schedule 14D-1(the "Statement") filed with the
Securities and Exchange Commission (the "Commission") on July 16, 1999
relating to the offer by Aqua Acquisition Corporation (the "Purchaser") , a
Delaware corporation and an indirect wholly owned subsidiary of Vivendi
("Parent"), a societe anonyme organized under the laws of the Republic of
France, to purchase all of the outstanding shares of Class A Common Stock,
par value $.001 per share (the "Shares"), of Aqua Alliance Inc. (the
"Company"), a Delaware corporation, at a purchase price of $2.90 per Share,
net to the seller in cash, without interest and all outstanding Warrants to
purchase the Shares issued pursuant to the Company Rights Offering dated
January 26, 1998 (the "Warrants"), at the purchase price of $0.40 per
Warrant upon the terms and subject to the conditions set forth in the Offer
to Purchase dated July 16, 1999 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer").
This Statement also constitutes Amendment No. 18 to Schedule 13D with
respect to the beneficial ownership of each of the Purchaser and Parent
with respect to the Shares. The item numbers and responses thereto are in
accordance with the requirements of Schedule 14D-1.
Capitalized terms used herein but not otherwise defined herein shall
have the meanings assigned to such terms in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Item 10(f) is hereby amended by amending and restating the first
paragraph under "SPECIAL FACTORS -- Recommendation of the Special Committee
and the Company Board; Fairness of the Offer and the Merger -- The Special
Committee" in the Offer to Purchase as follows:
Fairness of the Merger. In reaching its determination that the
Merger Agreement, and the transactions contemplated thereby,
including the Offer and the Merger (the "Transactions"), are fair to
and in the best interests of the Public Stockholders and the
Warrantholders, the Special Committee considered the following
factors, each of which the Special Committee believed supported its
conclusion regarding the fairness of the Transactions:
(i) The Special Committee's review, with the assistance of
Beacon, of the Company's business, its current financial
condition and results of operations and its future
prospects, and the current and anticipated developments
in the Company's industry.
(ii) The presentations by Beacon and its oral opinion (which
opinion was subsequently confirmed in writing) that the
consideration to be received by the Public Stockholders
pursuant to the Offer is fair to such stockholders from a
financial point of view.
(iii) The relationship between the consideration to be received
by the Public Stockholders and the Warrantholders as a
result of the Offer and/or the Merger and historical
market prices and recent trading activity of the Shares
and the Warrants, respectively, including the fact that
(A) the $2.90 per share price being offered to the Public
Stockholders represents a premium of more than 25.4% over
the closing price per share, as reported on the AMEX, of
the Shares on the last trading day prior to the public
announcement of the Offer and the Merger and (B) the $.40
per Warrant being offered to the Warrantholders
(representing the difference between the $2.90 per share
price and the $2.50 exercise price of each Warrant which
is the same net value Warrantholders would realize as a
consequence of the Merger pursuant to the terms of the
Warrant Agreement) represents a premium of 60% over the
exercise price of each Warrant.
(iv) The fact that the Warrant Agreement provides that in a
merger, the Warrants shall be exercisable for the
consideration which a Warrant holder would have received
if such holder had exercised the Warrant immediately
before the effective date of such transaction.
(v) The recognition that, following consummation of the Offer
and the Merger, the Public Stockholders and the
Warrantholders will no longer be able to participate in
any increases or decreases in the value of the Company's
business and properties. The Special Committee concluded,
however, that this consideration did not justify
foregoing the opportunity for Public Stockholders and the
Warrantholders to receive an immediate and substantial
cash purchase price for their Shares.
(vi) The fact that the terms of the Offer and the Merger were
determined by the Company through arms-length
negotiations with representatives of Parent.
(vii) The fact that the consideration to be paid to the Public
Stockholders and the Warrantholders in the Offer and/or
the Merger is all cash.
(b) Item 10(f) is hereby amended by adding the following paragraph
immediately succeeding the final paragraph under "SPECIAL FACTORS --
Recommendation of the Special Committee and the Company Board; Fairness of
the Offer and the Merger -- The Company Board" in the Offer to Purchase as
follows:
The Company Board recognized that the Transactions were not
structured to require the approval of a majority of the Shares held
by the Public Stockholders and that Parent currently has sufficient
voting power to approve the Transactions without the affirmative vote
of any other stockholder of the Company. However, the Company Board,
including the members of the Special Committee, believe that the
Transactions are procedurally fair because, among other things:
(i) the Special Committee was appointed to represent the
interests of the Public Stockholders and the
Warrantholders;
(ii) the Special Committee retained and was advised by
separate outside legal counsel;
(iii) the Special Committee retained Beacon as its independent
financial advisor to assist it in evaluating and
negotiating a potential transaction with Parent;
(iv) the Special Committee engaged in deliberations to
evaluate the Transactions and alternatives thereto;
(v) the $2.90 Share Offer Price and the $.40 Warrant Offer
Price and the other terms and conditions of the
Transactions resulted from active arms-length bargaining
between representatives of the Special Committee, on the
one hand, and representatives of Parent on the other; and
(vi) any Public Stockholders desiring to do so may exercise
and perfect their appraisal rights under the DGCL and
receive "fair value" for their Shares as determined by
the court
(c) Item 10(f) is hereby amended by amending and restating in its
entirety the first paragraph on the cover page of the Offer to Purchase as
follows:
THE BOARD OF DIRECTORS OF AQUA ALLIANCE INC. (THE "COMPANY"),
BY UNANIMOUS VOTE OF ALL DIRECTORS PRESENT AND VOTING, BASED UPON,
AMONG OTHER THINGS, THE UNANIMOUS RECOMMENDATION AND APPROVAL OF A
COMMITTEE OF THE BOARD COMPRISED OF INDEPENDENT DIRECTORS (THE
"SPECIAL COMMITTEE"), HAS DETERMINED THAT THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER
AND THE MERGER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND THE PUBLIC STOCKHOLDERS (AS DEFINED BELOW) AND
WARRANTHOLDERS (AS DEFINED BELOW), APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER, DECLARED THE MERGER AGREEMENT TO BE ADVISABLE
AND RESOLVED TO RECOMMEND THAT STOCKHOLDER AND WARRANTHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES AND WARRANTS PURSUANT TO THE OFFER.
(d) Item 10(f) is hereby amended by amending and restating in its
entirety the second paragraph under "SPECIAL FACTORS -- Position of Parent
and the Purchaser Regarding Fairness of the Offer and the Merger" in the
Offer to Purchase as follows:
Parent and the Purchaser believe that the consideration to be
received by the Public Stockholders and the Warrantholders, pursuant
to the Transactions, is fair to the Public Stockholders and the
Warrantholders. Parent and Purchaser based their belief solely on the
following factors:
(i) The fact that the Company Board and the Special Committee
concluded that the Offer and the Merger are fair to and
in the best interests of the Company, the Public
Stockholders and the Warrantholders.
(ii) The Share Offer Price represents a 25.4% premium over the
closing price for the Shares on July 9, 1999, the last
full trading day prior to announcement of the Offer.
(iii) The Warrant Offer Price represents a 60% premium over the
closing price for the Warrants on June 16, 1999, the last
full trading day prior to announcement of the Offer.
(iv) The Share Offer Price and Warrant Offer Price represent
Share values that are above the ranges of implied value
derived from the analyses performed by Lazard Freres and
described below.
(v) The Offer is an all cash offer for all publicly held
Shares and Warrants which the holders thereof can accept
or reject voluntarily, and is not subject to a financing
condition.
(vi) The Offer provides stockholders who are considering
selling their Shares and Warrantholders who are
considering selling their Warrants with the opportunity
to sell all of their Shares or Warrants, as the case may
be, at the Share Offer Price or the Warrant Offer Price,
as the case may be, without incurring the transaction
costs typically associated with market sales.
(vii) The Warrant Offer Price was determined by subtracting the
exercise price of each Warrant as set forth in the
Warrant Agreement from the Share Offer Price. This means
that Warrantholders have the ability to realize the same
value in the Offer that they would otherwise realize in
the Merger pursuant to the Warrant Agreement, but without
having to pay the exercise price of each Warrant and
without having to wait for the Merger to become
effective.
(viii)The terms of the Merger Agreement were determined through
arm's-length negotiations between the Special Committee
and its legal and financial advisors, on the one hand,
and representatives of Parent, on the other, and provide
for the Offer in order to allow Public Stockholders and
Warrantholders to receive payment for their Shares on an
accelerated basis.
(ix) Parent has sufficient stock ownership to control a
disposition of the Company and informed the Special
Committee that it would not be interested in a
third-party sale of the Company; the Special Committee
was not authorized to, and did not, solicit third-party
indications of interest for the acquisition of the
Company, nor were any offers from third parties received.
(x) The ability of Public Stockholders who object to the
Merger to obtain "fair value" for their Shares if they
exercise and perfect their appraisal rights under the
DGCL.
(xi) Notwithstanding the fact that the Beacon Opinion was
provided solely for the information and assistance of the
Special Committee and that Parent and the Purchaser are
not entitled to rely on such opinion, the fact that the
Special Committee received the Beacon Opinion that the
$2.90 per Share in cash to be received by the Public
Stockholders in the Offer is fair to such holders from a
financial point of view.
(e) Item 10(f) is hereby amended by amending and restating in its
entirety the final paragraph under "SPECIAL FACTORS -- Position of Parent
and the Purchaser Regarding Fairness of the Offer and the Merger" in the
Offer to Purchase as follows:
In concluding that the Transactions are fair to the Public
Stockholders, Parent and the Purchaser viewed all of the factors
listed above as supporting such conclusion. Parent and the Purchaser
found it impracticable to assign, nor did they assign, relative
weights to the individual factors considered in reaching their
conclusion as to fairness. While Parent and the Purchaser recognize
that the consummation of the Transactions did not require the
approval of a majority of the Public Stockholders, they nevertheless
believe that the Transactions are procedurally fair for the reasons
cited by the Board, including the members of the Special Committee. -
See "SPECIAL FACTORS -- Recommendation of the Company Board; Fairness
of the Offer and the Merger."
(f) Item 10(f) is hereby amended by amending and restating in its
entirety the fourth paragraph under "INTRODUCTION" in the Offer to Purchase
as follows:
The Company Board, by the unanimous vote of all directors
present and voting, based upon, among other things, the unanimous
recommendation and approval of a committee of the Company Board
comprised of independent directors (the "Special Committee') has
determined that the Merger Agreement (as defined below) and the
transactions contemplated thereby, including each of the Offer and
the Merger, are fair to, and in the best interests of, the Company,
its Public Stockholders (as defined below) and Warrantholders,
approved the Merger Agreement, the Offer and the Merger, declared the
Merger Agreement to be advisable and resolved to recommend that
Public Stockholders and Warrantholders accept the Offer and tender
their Shares and Warrants pursuant to the Offer.
(g) Item 10(f) is hereby amended by amending and restating the second
paragraph under "SPECIAL FACTORS -- Company Financial Projections" in the
Offer to Purchase as follows:
THE COMPANY HAS ADVISED PARENT AND THE PURCHASER THAT IT DOES
NOT, AS A MATTER OF COURSE, DISCLOSE PROJECTIONS AS TO FUTURE
REVENUES, EARNINGS OR OTHER INCOME STATEMENT DATA AND THE PROJECTIONS
WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE. IN ADDITION, THE
PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, OR WITH A VIEW TO COMPLIANCE WITH THE
PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS, WHICH WOULD
REQUIRE A MORE COMPLETE PRESENTATION OF THE DATA THAN AS SHOWN ABOVE.
THE PROJECTIONS HAVE NOT BEEN EXAMINED, REVIEWED OR COMPILED BY THE
COMPANY'S INDEPENDENT AUDITORS, AND ACCORDINGLY SUCH AUDITORS HAVE
NOT EXPRESSED AN OPINION OR ANY OTHER ASSURANCE ON SUCH PROJECTIONS.
THE FORECASTED INFORMATION IS INCLUDED HEREIN SOLELY BECAUSE SUCH
INFORMATION WAS FURNISHED TO BEACON PRIOR TO THE OFFER. ACCORDINGLY,
THE INCLUSION OF THE PROJECTIONS IN THIS OFFER SHOULD NOT BE REGARDED
AS AN INDICATION THAT PARENT OR THE PURCHASER OR THEIR FINANCIAL
ADVISORS OR THEIR RESPECTIVE OFFICERS AND DIRECTORS CONSIDER SUCH
INFORMATION TO BE ACCURATE OR RELIABLE, AND NONE OF SUCH PERSONS
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY THEREOF. IN ADDITION,
BECAUSE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, WHICH ARE DIFFICULT OR IMPOSSIBLE TO
PREDICT ACCURATELY AND ARE BEYOND THE CONTROL OF THE COMPANY, PARENT
AND THE PURCHASER, THERE CAN BE NO ASSURANCE THAT RESULTS SET FORTH
IN THE ABOVE PROJECTIONS WILL BE REALIZED AND IT IS EXPECTED THAT
THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND
ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE SET FORTH
ABOVE.
(h) Item 10(f) is hereby amended by amending and restating in its
entirety the third paragraph under "THE TENDER OFFER -- Section 1. Terms of
the Offer" in the Offer to Purchase as follows:
Subject to the applicable regulations of the Commission,
Purchaser also expressly reserves the right, in its sole and
reasonable discretion (subject to the terms and conditions of the
Merger Agreement), at any time and from time to time, (i) to
terminate the Offer and not accept for payment any Shares or Warrants
upon the occurrence of any of the conditions specified in "THE TENDER
OFFER -- 12. Certain Conditions of the Offer" prior to the Expiration
Date and (ii) to waive any condition or otherwise amend the Offer in
any respect , by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and by making a
public announcement thereof.
(i) Item 10(f) is hereby amended by amending and restating in its
entirety the first paragraph under "THE TENDER OFFER -- Section 2.
Acceptance for Payment and Payment" in the Offer to Purchase as follows:
Upon the terms and subject to the conditions of the Offer
(including , if the Offer is extended or amended, the terms and
conditions of the Offer as so extended or amended), promptly after
the Expiration Date the Purchaser will Purchase, by accepting for
payment, and will pay for, all the Shares and Warrants validly
tendered and not properly withdrawn (in accordance with "THE TENDER
OFFER -- Section 4. Withdrawal Rights") prior to the Expiration Date.
(j) Item 10(f) is hereby amended by amending and restating in its
entirety the first paragraph under "THE TENDER OFFER -- Section 10. Certain
Conditions of the Offer" in the Offer to Purchase as follows:
Notwithstanding any other provision of the Offer, the Purchaser
shall not be required to accept for payment or, subject to the
applicable rules and regulations of the Commission, including Rule
14e-1(c) under the Exchange Act, pay for any Shares or Warrants
tendered pursuant to the Offer, and may postpone the acceptance for
payment of any Shares tendered in a manner consistent with the terms
of the Merger Agreement, if at any time on or after July 16, 1999 and
prior to the Expiration Date and prior to the acceptance for payment
of Shares and Warrants, any of the following conditions shall exist:
(i) there shall have been any action threatened or taken, or
approval withheld, or any statute, rule, or
interpretation of the foregoing regulation or
interpretation proposed, sought, promulgated, issued,
enacted, entered, amended, enforced or deemed to be
applicable to the Offer, the Merger, Parent or the
Purchaser or any of their subsidiaries, by any
governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which, in the
Purchaser's sole and reasonable judgment, would directly
or indirectly: (i) make the acceptance for payment of, or
payment for, some or all of the Shares or Warrants
illegal or otherwise restrict or prohibit consummation of
the Offer or the Merger, or (ii) delay or restrict, or
render the Purchaser or Parent unable, or otherwise
impose limitations on the ability of the Purchaser or
Parent to accept for payment or pay for, or to exercise
full rights of ownership with respect to, some or all of
the Shares or Warrants pursuant to the Offer or to
consummate the Merger; or
(ii) there shall be threatened, instituted or pending any
action or proceeding by any government or governmental
authority or agency, domestic or foreign, or by any other
person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign,
seeking any of the consequences referred to in clauses
(i) and (ii) of paragraph (a) above, or otherwise
challenging any aspect of or seeking to, or which could,
make illegal, delay or otherwise directly or indirectly
restrain or prohibit or make materially more costly (i)
the making of the Offer, (ii) the acceptance for payment
of, or payment for, some of or all Shares or Warrants
pursuant to the Offer, (iii) the purchase of Shares or
Warrants pursuant to the Offer, (iv) consummation of the
Merger, (v) seeking to obtain damages in connection with
the Offer or the Merger, or (vi) seeking to restrain or
prohibit the consummation of the Offer, the Merger or the
transactions contemplated thereby or which otherwise
directly or indirectly relates to the Offer or the
Merger; or
(iii) a preliminary or permanent injunction or other order by
any Federal or state court which prevents (i) the
acceptance for payment of, or payment for, some of or all
the Shares or Warrants pursuant to the Offer or (ii)
consummation of the Merger shall have been issued and
shall remain in effect; or
(iv) the Special Committee or the Company Board of Directors
(i) shall have withdrawn or modified in any manner that
is, in the reasonable judgment of the Purchaser,
materially adverse to the Purchaser or Parent (including
by way of any amendment to the Schedule 13E-3 or the
Company's Schedule 14D-9) its recommendation of the Offer
or (ii) shall have resolved to do any of the foregoing;
or
(v) any change shall occur or be threatened in the business,
condition (financial or otherwise), income, operations or
prospects of the Company and its subsidiaries, takes as a
whole, which is or may be material to the Company and its
subsidiaries taken as a whole; or
(vi) there shall have occurred: (i) the declaration of any
banking moratorium or suspension of payments in respect
of banks in the United States, France or the European
Union; (ii) any general suspension of trading in, or
limitation on prices for, securities on any United States
national securities exchange or in the over-the-counter
market; or the Paris Bourse; (iii) any material decline
in the CAC-40 Index from the close of business on the
last trading day immediately preceding the date of the
Merger Agreement; (iv) the commencement of a war, armed
hostilities or any other national or international crisis
directly or indirectly involving the United States; (v)
any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or
authority on, or any event which might affect, the
extension of credit by banks or other lending
institutions in the United States, France or the European
Union; or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(vii) all consents and approvals required to be obtained from
any Federal, state domestic or foreign governmental
agency, authority or instrumentality in connection with
the Offer shall not have been obtained or the Purchaser
shall have been advised that any such consent or approval
will be denied or substantially delayed, or will not be
given other than upon terms or conditions which would, in
the opinion of the Purchaser, make it impracticable to
proceed with the Offer or the Merger; or
(viii)Parent, the Purchaser and the Company (with the approval
of the Special Committee) shall have agreed that the
Purchaser shall terminate the Offer or postpone for
payment of or the payment for Shares or Warrants
thereunder or that the Merger Agreement shall be
terminated.
(k) Item 10(f) is hereby amended by amending and restating in its
entirety the ninth paragraph under "SPECIAL FACTORS -- Background of the
Offer and the Merger; Contacts with the Company -- Going Private" in the
Offer to Purchase as follows:
On June 3, 1999, representatives of Beacon and Kaye, Scholer
met again with representatives of Parent, Lazard Freres and Skadden,
Arps. The purpose of the meeting was to respond to those areas of
inquiry which had been raised by the representatives of the Special
Committee at their last meeting. It was discussed that Parent
intended the transaction to take the form of a tender offer followed
by a back-end merger. Representatives of Parent acknowledged that
this would require the approval of the Special Committee under the
relevant provision of the Recapitalization Agreement. Representatives
of Parent then presented Parent's concerns regarding restrictions
upon the immediate and full availability of the Company's net
operating losses ("NOLs") following the transaction. Beacon asked
certain questions following this presentation and a discussion among
the parties ensued. Following this, representatives of Parent
discussed the status of future plans for the Company following the
transaction. It was explained that Parent had asked its wholly owned
subsidiary, Vivendi North America Management Services, Inc., to
examine various options regarding the future of the Company's
consulting and engineering subsidiary, M&E, following a successful
transaction including the disposition of part or all of the stock or
assets of that company. It was further explained that no decisions as
to the treatment of M&E had been made at that time and that any such
decisions would be subject to the approval of the Company Board. As
to the future plans for the Company and, more specifically, its
operations and maintenance subsidiary, Professional Services Group,
Inc. ("PSG"), representatives of Parent explained that, while working
groups had been created to examine the synergies between , and
opportunities for combinations of certain operations of , the Company
and/or PSG, on the one hand, and U.S. Filter and/or its subsidiary,
United States Filter Operating Services, Inc., on the other, no
decisions had been made at that time as to how, when or whether to
combine those legal entities or their operations. Beacon asked
certain questions regarding this presentation and a discussion among
the parties ensued. Finally, a discussion ensued wherein
representatives of each party discussed the history and their
interpretations of the Investment Agreement, including certain
provisions which created an obligation for Parent to provide, subject
to certain exceptions, certain opportunities involving water
management and waste water management activities to the Company on an
exclusive basis. The parties discussed their respective views
concerning the intended scope of these provisions; and based upon the
uncertainties created by their respective views, agreed that there
might be some value, although unquantifiable, to Parent arising out
of the termination of the Investment Agreement as a result of the
transaction. At the conclusion of this meeting, representatives of
Parent indicated that, due to the terms of the Warrant Agreement, a
proposal concerning Warrants would be made depending upon what, if
any, agreement was reached on the price of the Shares.
(l) Item 10(f) is hereby amended by amending and restating in its
entirety paragraph thirteen under "SPECIAL FACTORS -- Analysis of
Investment Banker to Parent" in the Offer to Purchase as follows:
In the ordinary course of business, Lazard Freres and its
affiliates may own or actively trade the securities of Parent and the
Company for their own accounts and for the accounts of their
customers and, accordingly, may at any time hold a long or short
position in Parent's or the Company's securities. Lazard Freres, as
part of its investment banking services, is regularly engaged in the
valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for estate,
corporate and other purposes. Lazard Freres has performed investment
banking and other services for Parent in the past, including advising
on the acquisition of U.S. Filter. In 1998 and 1999, affiliates of
Lazard Freres received fees of approximately $14 million for
investment banking services rendered to Parent.
(m) Item 10(f) is hereby amended by inserting the following data
table immediately following the data table with the heading "AQUA ALLIANCE
INC., SELECTED FINANCIAL INFORMATION, CONSOLIDATED BALANCE SHEETS" under
"THE TENDER OFFER -- Certain Information Concerning the Company" in the
Offer to Purchase:
BOOK VALUE PER SHARE
(IN THOUSANDS EXCEPT PER SHARE DATA)
@10/31/98 @4/30/99
--------- --------
Total shareholder's equity $ 43,520 $ 30,571
Shares outstanding 185,177 185,177
Book value per share $ 0.24 $ 0.17
(n) Item 10(f) is hereby amended by inserting the following data
table and related notes immediately following the data table with the
heading "AQUA ALLIANCE INC., SELECTED CONSOLIDATED STATEMENTS OF
OPERATIONS" under "THE TENDER OFFER --- Certain Information Concerning the
Company" in the Offer to Purchase::
<TABLE>
<CAPTION>
AQUA ALLIANCE
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
Year Ended October 31 Six Months Ended April 30
--------------------- -------------------------
1998 1997 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Loss before income taxes $ (31,770) $ (51,313) $ (12,477) $ (21,197)
Add
Portion of rental expense
representative
of the interest factor 4,922 5,637 2,591 2,413
Interest on indebtedness 14,899 24,356 4,888 9,910
------------- ------------ ------------- -------------
Loss as adjusted $ (11,949) $ (21,320) $ (4,998) $ (8,874)
============= ============ ============= =============
Fixed Charges
Interest on indebtedness (1) $ 14,899 $ 24,356 $ 4,888 $ 9,910
Rental expense 14,765 16,911 7,773 7,240
Portion of rental expense
representative
of the interest factor (2) 4,922 5,637 2,591 2,413
------------- ------------ ------------- -------------
Total Fixes Charges (1) + (2) $ 19,821 $ 29,993 $ 7,479 $ 12,323
============= ============ ============= =============
Ratio of Earnings to Fixed (0.60) (0.71) (0.67) (0.72)
Charges
============= ============ ============= =============
</TABLE>
Notes:
Fixed charges consist of interest expense (including
amortization of deferred debt issuance costs) and the portion of
rental expense that is deemed representative of the interest factor.
Earnings were insufficient to cover fixed charges by $31.8 and $51.3
million in the years ended October 31, 1998 and 1997, respectively
and by $12.5 million and $21.2 million in the six month periods ended
April 30, 1999 and 1998, respectively.
(o) Item 10(f) is hereby amended by inserting the following text at
the end of "SPECIAL FACTORS -- Company Financial Projections" in the Offer
to Purchase:
Assumptions Underlying Company Financial Projections.
Overall:
The projected future financial results for the years ended
October 31, 1999, 2000 and 2001, reflect the favorable benefits which
were anticipated from the continued implementation of the Company's
revised business strategy to redeploy its capital to PSG and M&E, its
core water businesses. Following a strategic analysis, the Company
concluded that the water and wastewater treatment markets, which are
the primary markets for PSG and M&E, offered additional opportunities
and greater forecasted returns on capital than the Research-Cottrell
segment. During the course of fiscal 1998, the Company divested a
major portion of the Research-Cottrell businesses; the divestiture
was completed in January 1999.
The projected return to profitability reflected management's
continued implementation of the next stages of the revised business
strategy, which consist of the reorganization and streamlining of the
Company's operations. This reorganization involves the integration of
key functions in all areas in order to decrease costs, improve
efficiencies and optimize business development. It was expected to
result in improved operating performance and cash flow.
The projections reflect the Company's belief that its
redeployment of capital and revised business strategy would
facilitate the participation of PSG and M&E in the emerging
privatization market in the water and wastewater treatment industry.
According to industry analysts, the water and wastewater
treatment industry is poised for significant short-term and long-term
growth. Analysts predict growth in annual revenue generation from the
issuance of major new contracts to set the pace for the water
industry in the range of 15% over the next four years.
The Company projected additional growth based on the premise
that as a complete service provider, the Company through PSG is
capable of providing not only standard OM&M services, but also
design/build of treatment facilities through M&E.
The projections also include a significant increase in revenue
and margin resulting from the expanded scope under the Amendments to
the PRASA contract in Puerto Rico. Additionally, the Company assumed
a strategic acquisition would be made and provide a consequential
"step-up" in revenue and margin, and further leverage the operating
SG&A expense.
1999:
The projection for 1999, is management's current forecast for the
fiscal year, after eight months of actual results. SG&A expense
includes certain one-time reorganization charges, as a result of the
implementation of the revised business strategy.
2000:
EBITDA improves $17.0 million from the prior year to $15.4 million
due primarily to; a 6% increase in "organic sales growth"; assumed
improvement in the gross margin from 13% in 1999 to 14%, based on the
continuing focus on operational efficiency gains; and a SG&A expense
reduction of $11.2 million. The SG&A improvement includes
approximately $8.5 million of cost forecasted in 1999 that is
nonrecurring in 2000, (this is reflective of the current "run rate"
of SG&A expense). Additionally, the projection assumes a further
improvement of approximately $2.7 million from continued streamlining
of overhead functions.
2001:
EBITDA improves $10.9 million from the prior year to $26.3 million,
primarily due to the significant impact, on revenue and gross
margins, of one or more targeted strategic acquisitions and the
improved results in Puerto Rico as a result of the PRASA, and to
lesser extent, continued "organic sales growth" of approximately 7%.
Also reflected in the results, is reduction in SG&A cost of $1.6
million, as the Company continues to reduce and leverage its
operating expenses.
SIGNATURES
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.
Date: August 9, 1999
AQUA ACQUISITION CORPORATION
By: /s/ Michel Avenas
--------------------------
Name: Michel Avenas
Title: President
VIVENDI
By: /s/ Daniel Caille
--------------------------
Name: Daniel Caille
Title: Directeur
