<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(AMENDMENT NO. 2)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
SPRECKELS INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
----------------
AMERICAN ENTERPRISES ACQUISITION CORP.
AMERICAN ENTERPRISES, L.L.C.
(BIDDERS)
----------------
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK ($9.17 EXERCISE PRICE PER
WARRANT)
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK ($11.67 EXERCISE PRICE PER
WARRANT)
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK ($15.00 EXERCISE PRICE PER
WARRANT)
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK ($1.00 EXERCISE PRICE PER
WARRANT)
(TITLE OF CLASS OF SECURITIES)
----------------
849416 20 1
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
MR. PHILIP W. KNISELY
AMERICAN ENTERPRISES ACQUISITION CORP.
C/O AMERICAN ENTERPRISES, L.L.C.
701 EAST FRANKLIN STREET
RICHMOND, VIRGINIA 23219
(804) 649-8800
WITH A COPY TO:
MORRIS J. KRAMER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
(NAMES, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
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CALCULATION OF FILING FEE
---------------------------------
Transaction valuation: $104,057,502/1/ Amount of filing fee:
$20,811.50
---------------------------------
/1/ For purposes of calculating fee only. This amount assumes the purchase
(i) of an aggregate of 5,353,788 Shares (including the associated Rights),
consisting of 6,006,362 Shares and 548,686 Shares issuable upon exercise of
options (less 1,201,260 Shares owned by Parent) at a purchase price of $16.50
per Share, (ii) 900,000 $9.17 Warrants at a purchase price of $7.33 per
Warrant, (iii) 600,000 $11.67 Warrants at a purchase price of $4.83 per
Warrant, (iv) 1,050,000 $15.00 Warrants at a purchase price of $1.50 per
Warrant, and (v) 300,000 $1.00 Warrants at a purchase price of $15.50 per
Warrant. The amount of the filing fee, calculated in accordance with
Regulation 240.0-11(d) of the Securities Exchange Act of 1934, as amended,
equals 1/50 of one percentum of the value of Shares (including associated
Rights) and Warrants purchased.
[_] Check box if any part of the fee is offset 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: NOT APPLICABLE FILING PARTY: NOT APPLICABLE
FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
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<PAGE>
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Person
1.
American Enterprises Acquisition Corp.
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Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
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3.
SEC Use Only
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Sources of Funds AF
4.
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5.
Check if Disclosure of Legal Proceedings is Required Pursuant to [_]
Items 2(e) or 2(f)
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Citizenship or Place of Organization
6.
Delaware
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Aggregate Amount Beneficially Owned by Each Reporting
Person
7.
0
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8.
Check if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
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Percent of Class Represented by Amount in Row (7)
9.
0
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Type of Reporting Person
10.
CO
2
<PAGE>
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Person
1.
American Enterprises, L.L.C.
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Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
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3.
SEC Use Only
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Sources of Funds WC, AF
4.
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5.
Check if Disclosure of Legal Proceedings is Required Pursuant to [_]
Items 2(e) or 2(f)
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Citizenship or Place of Organization
6.
Delaware
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Aggregate Amount Beneficially Owned by Each Reporting
Person
7.
1,201,260 shares of Class A Common Stock
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8.
Check if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
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Percent of Class Represented by Amount in Row (7)
9.
20.0%
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Type of Reporting Person
10.
OO
3
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by American Enterprises Acquisition Corp., a Delaware corporation
(the "Purchaser"), and a wholly owned subsidiary of American Enterprises,
L.L.C., a Delaware limited liability company ("Parent"), to purchase (i) all
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Spreckels Industries, Inc., a Delaware corporation (the
"Company"), including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement"), and (ii) all outstanding warrants to purchase Shares
issued by the Company (the "Warrants"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 19, 1996 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). Copies of the Offer to
Purchase and the Letter of Transmittal are annexed to and filed with this
Statement as Exhibits (a)(1) and (a)(2), respectively. This Statement also
constitutes an Amendment to the Schedule 13D filed by Parent with respect to
the Shares, dated as of November 8, 1995, as amended (the "13D").
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Spreckels Industries, Inc., a
Delaware corporation. The principal executive offices of the Company are
located at 6805 Morrison Boulevard, Suite 450, One Morrocroft Centre,
Charlotte, North Carolina 28211.
(b) The class of equity securities to which this Statement relates is the
Class A Common Stock, par value $0.01 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) This Statement is being filed by the Purchaser and Parent.
The information set forth in the Introduction, Section 9 and Schedule I of the
Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor Parent nor, to
their best knowledge, any of the persons listed in Schedule I of the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining further violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violations of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth in the Introduction, Section 8, Section 9
and Section 11 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth in Section 9 and Section 10 of the Offer to
Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(c) The information set forth in the Introduction, Section 11 and
Section 12 of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
(d)-(e) The information set forth in the Introduction, Section 6, Section 7,
Section 12 and Section 13 of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in Section 7 and Section 12 of the Offer
to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth in the Introduction, Section 8, and
Section 9 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, Section 7, Section 8, Section
9, Section 11 and Section 12 of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction, Section 11 and Section 16 of
the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
(a) Not applicable.
(b)-(c), (e) The information set forth in Section 15 of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
(a)(1) Offer to Purchase, dated July 19, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release, issued July 19, 1996.
(a)(8) Summary Advertisement, dated July 19, 1996.
</TABLE>
5
<PAGE>
<TABLE>
<C> <S>
(c)(1) Registration Rights Agreement, dated as of September 2, 1993, by and
among Spreckels Industries, Inc., The Prudential Insurance Company of
America, Prudential-Bache Capital Partners I, L.P., Prudential-Bache
Capital Partners II, L.P., Spreckels Industries, Inc. Employee Stock
Ownership Plan, Spreckels Industries, Inc. Employees' Incentive Savings
Plan, Spreckels Industries, Inc. Profit Sharing and Savings Plan for
Union Hourly Employees and Prudential Securities Incorporated,
incorporated by reference to Exhibit 1 to the 13D.
(c)(2) Sale and Assignment Agreement, dated as of November 8, 1995, between
The Prudential Insurance Company of America and American Enterprises,
L.L.C., incorporated by reference to Exhibit 2 to the 13D.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint seeking Declaratory and Injunctive Relief filed in the Court
of Chancery in the State of Delaware on July 19, 1996.
</TABLE>
6
<PAGE>
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.
Dated: July 19, 1996
American Enterprises, L.L.C.
/s/ John A. Young
By: _________________________________
Name: John A. Young
Title: Vice President
American Enterprises Acquisition
Corp.
/s/ John A. Young
By: _________________________________
Name: John A. Young
Title: Vice President
/s/ Steven M. Rales
By: _________________________________
Name: Steven M. Rales
/s/ Mitchell P. Rales
By: _________________________________
Name: Mitchell P. Rales
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT NAME PAGE NO.
------- ------------ --------
<C> <S> <C>
(a)(1) Offer to Purchase, dated July 19, 1996.....................
(a)(2) Letter of Transmittal......................................
(a)(3) Notice of Guaranteed Delivery..............................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees...............................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees..................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9..............................
(a)(7) Press Release, issued July 19, 1996........................
(a)(8) Summary Advertisement, dated July 19, 1996.................
(c)(1) Registration Rights Agreement, dated as of September 2,
1993, by and among Spreckels Industries, Inc., The
Prudential Insurance Company of America, Prudential-Bache
Capital Partners I, L.P., Prudential-Bache Capital Partners
II, L.P., Spreckels Industries, Inc. Employee Stock
Ownership Plan, Spreckels Industries, Inc. Employees'
Incentive Savings Plan, Spreckels Industries, Inc. Profit
Sharing and Savings Plan for Union Hourly Employees and
Prudential Securities Incorporated, incorporated by
reference to Exhibit 1 to the 13D..........................
(c)(2) Sale and Assignment Agreement, dated as of November 8,
1995, between The Prudential Insurance Company of America
and American Enterprises, L.L.C., incorporated by reference
to Exhibit 2 to the 13D....................................
(d) Not applicable.............................................
(e) Not applicable.............................................
(f) Not applicable.............................................
(g)(1) Complaint seeking Declaratory and Injunctive Relief filed
in the Court of Chancery in the State of Delaware on July
19, 1996...................................................
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
AT
$16.50 NET PER SHARE
AND
THE SPREAD (AS DEFINED HEREIN) PER WARRANT
BY
AMERICAN ENTERPRISES ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, EITHER (A) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS ARE INAPPLICABLE TO
THE OFFER THROUGH THE SATISFACTION OF A PROVISION OF THE RIGHTS TO THE EFFECT
THAT THE RIGHTS SHALL EXPIRE UPON THE CONSUMMATION OF AN ALL CASH TENDER OFFER
FOR ANY AND ALL SHARES WHICH RESULTS IN THE ACQUIROR BEING THE BENEFICIAL
OWNER OF 85% OF THE SHARES AND THE BOARD DETERMINING THAT THE OFFER DOCUMENTS
DISCLOSE A COMMITMENT TO COMMENCE A TENDER OFFER FOR ALL SHARES NOT ACQUIRED
IN SUCH ALL CASH TENDER OFFER OR CAUSE A MERGER FOLLOWING SUCH ALL CASH TENDER
OFFER, IN EACH CASE AT A CASH PRICE PER SHARE AT LEAST EQUAL TO THE OFFER
PRICE PER SHARE IN SUCH ALL CASH TENDER OFFER (SEE INTRODUCTION) OR (B) (I)
THERE BEING VALIDLY TENDERED A NUMBER OF SHARES AND WARRANTS WHICH, WHEN ADDED
TO THE SHARES BENEFICIALLY OWNED BY PARENT, WOULD REPRESENT AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE AND (II) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE RIGHTS ARE OTHERWISE INAPPLICABLE TO THE OFFER OR THAT THE RIGHTS HAVE
BEEN REDEEMED OR INVALIDATED. SEE SECTION 14. THE OFFER IS NOT CONDITIONED ON
THE RECEIPT OF FINANCING.
--------------
IMPORTANT
Any securityholder desiring to tender all or any portion of such holder's
Shares or Warrants should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, have such securityholder's signature thereon
guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or
deliver the Letter of Transmittal (or such facsimile) and any other required
documents to the Depositary and either deliver the Certificates for such
Shares or Warrants to the Depositary along with the Letter of Transmittal (or
facsimile) or deliver such Shares pursuant to the procedures for book-entry
transfer set forth in Section 2 or (b) request such securityholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such securityholder. Book-entry transfer procedures are not
available to holders of Warrants. A securityholder whose Shares or Warrants
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee if such securityholder desires to tender such Shares
or Warrants.
References to Shares include references to the associated Rights, unless the
context indicates otherwise. In order validly to tender Shares, a stockholder
must tender the associated Rights. Unless and until the Distribution Date of
the Rights, the tender of a Share will constitute the tender of the associated
Rights. If the Distribution Date occurs prior to the Expiration Date,
stockholders will be required to tender Rights Certificates in order validly
to tender Shares.
If a securityholder desires to tender Shares or Warrants and such
securityholder's Certificates are not immediately available, or the procedures
for book-entry transfer, if applicable, cannot be completed on a timely basis,
or time will not permit all required documents to reach the Depositary prior
to the Expiration Date, such securityholder may tender such securities by
following the procedures for guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the Dealer Manager, or to D.F. King &
Co., Inc., the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional
copies of this 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 Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
July 19, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Introduction............................................................. 1
1.Terms of the Offer................................................... 4
2.Procedures for Tendering Shares, Rights and Warrants................. 5
3.Withdrawal Rights.................................................... 8
4.Acceptance for Payment and Payment................................... 9
5.Certain Federal Income Tax Consequences.............................. 10
6.Price Range of Shares; Dividends..................................... 11
7.Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations................................... 11
8.Certain Information Concerning the Company........................... 12
9.Certain Information Concerning Parent and the Purchaser.............. 16
10.Source and Amount of Funds........................................... 17
11.Background of the Offer.............................................. 17
12.Purpose of the Offer; the Proposed Merger; Plans for the Company..... 23
13.Dividends and Distributions.......................................... 25
14.Conditions to the Offer.............................................. 26
15.Certain Legal Matters................................................ 29
16.Fees and Expenses.................................................... 31
17.Miscellaneous........................................................ 32
Schedule I--Members of the Board of Managers and Executive Officers of
Parent and Directors and Executive Officers of the Purchaser
</TABLE>
<PAGE>
To the Holders of Class A Common Stock and Warrants of
Spreckels Industries, Inc.:
American Enterprises Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of American Enterprises, L.L.C., a
Delaware limited liability company ("Parent"), hereby offers to purchase (i)
all outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Spreckels Industries, Inc., a Delaware corporation (the
"Company"), including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement"), at a price of $16.50 per Share (and associated Right) and
(ii) all outstanding warrants to purchase Shares issued by the Company (the
"Warrants") at the Spread (as defined below), in each case net to the seller
in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). References to Shares include references to the associated Rights,
unless the context indicates otherwise. In order validly to tender Shares, a
stockholder must tender the associated Rights. Unless and until the
Distribution Date (as defined below) of the Rights, the tender of a Share will
constitute the tender of the associated Rights. If the Distribution Date
occurs prior to the Expiration Date (as defined below), stockholders will be
required to tender certificates representing Rights ("Rights Certificates") in
order validly to tender Shares. THE COMPANY IS CURRENTLY DOING BUSINESS AS
YALE INTERNATIONAL, INC., ALTHOUGH ITS CORPORATE NAME WILL REMAIN SPRECKELS
INDUSTRIES, INC. PENDING STOCKHOLDER APPROVAL AT THE COMPANY'S NEXT ANNUAL
MEETING.
The Company has outstanding four classes of Warrants. Three classes are
exercisable for Shares at respective prices of $9.17, $11.67 and $15.00 per
Warrant (respectively, the "$9.17 Warrants," the "$11.67 Warrants" and the
"$15.00 Warrants"). An additional class of Warrants is not exercisable unless
and until the closing price of the Shares shall have equaled or exceeded
$17.50 per Share for 20 consecutive trading days, at which time they would be
exercisable at $1.00 per Warrant (the "$1.00 Warrants"). The "Spread" with
respect to each of the Warrants is the difference between the Offer price for
the Shares and the exercise price for each of the Warrants, which equals $7.33
per Warrant in the case of the $9.17 Warrants, $4.83 per Warrant in the case
of the $11.67 Warrants, $1.50 per Warrant in the case of the $15.00 Warrants
and $15.50 per Warrant in the case of the $1.00 Warrants. WITH RESPECT TO THE
$1.00 WARRANTS, THE OFFER IS CONDITIONED ON THE CLOSING PRICE OF THE SHARES
EQUALING OR EXCEEDING $17.50 PER SHARE FOR 20 CONSECUTIVE TRADING DAYS AND
SUCH WARRANTS THEREBY BECOMING EXERCISABLE. Each Warrant will expire at 5:00
pm on September 2, 2001.
Tendering securityholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares or Warrants by the
Purchaser pursuant to the Offer. The Purchaser will pay all charges and
expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), which is acting as Dealer Manager for the Offer (in such capacity,
the "Dealer Manager"), First Chicago Trust Company of New York, which is
acting as the Depositary (the "Depositary"), and D.F. King & Co., Inc., which
is acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Parent commits, upon consummation of the Offer, to
(i) immediately following announcement of its acceptance for payment of Shares
in the Offer, commence a cash tender offer for any and all Shares not tendered
in the Offer for at least the same cash consideration per Share paid in the
Offer or (ii) cause a merger of the Company with the Purchaser as promptly as
practicable following completion of the Offer, pursuant to which each then
outstanding Share will be converted into the right to receive at least the
same cash consideration per Share paid in the Offer (the transaction described
in clause (ii), the "Proposed Merger" and the aforesaid commitment, the
"Follow-up Transaction Commitment").
Parent intends to seek to negotiate with the Company with respect to the
acquisition of the Company. If such negotiations result in a definitive merger
agreement between the Company and Parent, certain material terms of the Offer
may change. Accordingly, such negotiations could result in, among other
things, termination of the Offer and submission of a different acquisition
proposal to the Company's stockholders for their approval.
<PAGE>
There is no mechanism whereby holders of outstanding warrants to purchase
common stock of a Delaware corporation may be compelled by operation of law to
exchange their warrants for merger consideration. Following the Proposed
Merger, it appears that, by their terms, upon exercise of a Warrant, the
holder thereof would receive net consideration equal to the Spread for such
Warrant. See Sections 11 and 12.
Parent intends to nominate a slate of directors for election at the
Company's 1996 Annual Meeting of Stockholders (the "1996 Annual Meeting"). The
nominees of Parent will, if elected at the 1996 Annual Meeting, and subject to
their fiduciary duties, be committed to take such actions (including causing
the Rights to be inapplicable to the Offer) as may be required to facilitate
prompt consummation of the Offer and the Proposed Merger. Under the Company's
bylaws dated November 11, 1995, which are the most recent bylaws on file with
the Securities and Exchange Commission (the "Commission"), Parent must submit
the names of its nominees, and certain other information, at least 60 days
prior to the 1996 Annual Meeting. The 1995 Annual Meeting of Stockholders (the
"1995 Annual Meeting") was held on November 2, 1995. The Company has not
announced the date of the 1996 Annual Meeting. Delaware law provides that the
Delaware Chancery Court may compel a corporation to hold an annual meeting if
it fails to hold one within 13 months of its last annual meeting. The
Company's bylaws require that its next annual meeting be held by February 2,
1997.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT
TO PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), AND THE RULES AND
REGULATIONS THEREUNDER.
The Offer is subject to the fulfillment of a number of conditions including,
without limitation, either (a) the Rights Expiration Condition or (b) (i) the
Minimum Condition and (ii) the Rights Condition (each as defined below):
The Rights Expiration Condition. Consummation of the Offer is conditioned
(the "Rights Expiration Condition") upon the Purchaser being satisfied, in its
sole discretion, that the Rights are inapplicable to the Offer through the
satisfaction of a provision of the Rights to the effect that the Rights shall
expire
upon the consummation of an all cash tender offer for any and all
shares of Common Stock (an "All Cash Offer") pursuant to which a
Person, together with its Affiliates and Associates, becomes the
Beneficial Owner of 85% or more of the Common Stock; provided that the
Board of Directors determines that the tender offer documents relating
to the All Cash Offer disclose a commitment by such Person to (i)
immediately following announcement of its acceptance for payment of
Common Stock in the All Cash Offer, commence a cash tender offer for
any and all shares of Common Stock not tendered in the All Cash Offer
for at least the same cash consideration per share paid in the All Cash
Offer or (ii) cause a merger of the Company with such Person (or its
Affiliate) as promptly as practicable following completion of the All
Cash Offer, pursuant to which each then outstanding share of Common
Stock will be converted into the right to receive at least the same
cash consideration per share paid in the All Cash Offer
(the above provision being sometimes referred to herein as the "Rights
Expiration Provision").
The Purchaser believes that the Offer and the Follow-up Transaction
Commitment would satisfy the Rights Expiration Provision, provided that a
sufficient number of Shares and Warrants are tendered so that Parent would be
the Beneficial Owner of 85% or more of the Shares upon the consummation of the
Offer. The Purchaser believes that the Board of Directors of the Company is
obligated by its fiduciary, legal and contractual duties to take action to
render such Rights inapplicable to the Offer. The Purchaser and Parent have
commenced litigation in the Court of Chancery in the State of Delaware
seeking, among other things, a declaratory judgment to such effect. There can
be no assurance that the Court of Chancery will rule in favor of the Purchaser
and Parent or that the Board of Directors will take such action. A more
detailed description of the litigation is contained in Section 15. A more
detailed description of the Rights is contained in Section 8.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996 (the "Company Form 10-Q"), there were 6,006,362 Shares
outstanding at May 17, 1996. Based upon the definition of Beneficial Ownership
in the Rights Agreement, Shares issuable upon exercise of options and Warrants
owned
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by the Purchaser are deemed to be outstanding for purposes of determining
satisfaction of the 85% requirement. The Company has issued (i) 900,000 $9.17
Warrants, (ii) 600,000 $11.67 Warrants, (iii) 1,050,000 $15.00 Warrants and
(iv) 300,000 $1.00 Warrants. Based on the Company's 1995 Annual Report to
Stockholders for the fiscal year ended June 30, 1995 (the "1995 Annual
Report"), options to acquire approximately 548,686 Shares were issued and
outstanding at June 30, 1995.
The Minimum Condition. In the event that the Rights Expiration Condition is
not satisfied, consummation of the Offer is conditioned (the "Minimum
Condition") upon there being validly tendered and not withdrawn prior to the
Expiration Date a number of Shares which, when added to the Shares
beneficially owned by Parent, constitutes at least a majority of the Shares
outstanding on a fully diluted basis on the date of purchase. For purposes of
this Offer, the term "Shares outstanding on a fully diluted basis" means, as
of any date, the number of Shares outstanding, together with Shares that the
Company is then required to issue pursuant to obligations outstanding at that
date under employee stock option or other benefit plans, Warrants or otherwise
(assuming all such options are then exercisable). Shares issuable upon the
exercise of Warrants shall only be included in "Shares outstanding on a fully
diluted basis" to the extent that such Warrants are exercisable.
Parent currently beneficially owns an aggregate of 1,201,260 Shares,
representing approximately 20.0% of the Shares outstanding based on the number
of Shares reported by the Company as outstanding at May 17, 1996.
The Rights Condition. In the event that the Rights Expiration Condition is
not satisfied, consummation of the Offer is conditioned (the "Rights
Condition") upon the Purchaser being satisfied, in its sole discretion, that
the Rights are otherwise inapplicable to the Offer or that the Rights have
been redeemed or invalidated.
On November 11, 1995, the Board of Directors of the Company declared a
dividend in which the Rights would be distributed at the rate of one-half
Right for each Share held. The Rights would be triggered if any person
acquired 15% or more of the Shares without the approval of the Board of
Directors of the Company. Once the Rights are triggered, each Right will
entitle the holder thereof, other than the holder of 15% or more of the
Shares, to purchase one Share at a price of $1.00. Any person holding 15% or
more of the Shares at the time of the declaration of the dividend of the
Rights was "grandfathered" for those holdings, but any subsequent purchases of
Shares would trigger the Rights. A more detailed description of the Rights is
contained in Section 8.
The Purchaser believes that the Board of Directors of the Company is
obligated by its fiduciary and legal duties to redeem such Rights. The
Purchaser and Parent have commenced litigation against the Company and its
Board of Directors in the Court of Chancery in the State of Delaware seeking,
among other things, declaratory relief that the Rights Agreement is invalid.
There can be no assurance that the Court of Chancery will rule in favor of the
Purchaser and Parent. A more detailed description of the litigation is
contained in Section 15.
Certain other conditions to consummation of the Offer are described in
Section 14. The Purchaser expressly reserves the right, in its sole
discretion, to waive any one or more of the conditions to the Offer. See
Sections 14 and 15. The Offer is not conditioned on the receipt of financing.
Section 203 of the DGCL. Section 203 of the Delaware General Corporation Law
(the "DGCL"), in general, prohibits a Delaware corporation such as the Company
from engaging in a business combination with the holder of 15% or more of its
outstanding shares for a period of three years from the date of acquisition of
such shares unless certain conditions are satisfied. In its Restated
Certificate of Incorporation, filed September 2, 1993, which is the most
recent Certificate of Incorporation on file with the Commission, the Company
elected not to be governed by Section 203 of the DGCL.
Senior Secured Notes. There is approximately $70 million outstanding
principal amount of 11 1/2% Senior Secured Notes Due 2000 (the "Notes") of the
Company. Following the consummation of the Offer, (provided that Parent was
the beneficial owner of at least 50% of the outstanding Shares) each holder of
Notes will have the right to demand that the Company repurchase the holder's
Notes at 101% (100% on and after September 1, 1998) of their principal amount,
plus accrued interest, within 90 days of the consummation of the Offer. If the
holders of the Notes were to demand payment under these provisions, and the
Company did not have adequate funds to make such payment, the Company could be
in default under the Notes (and possibly in default under other obligations
with "cross-default" provisions), which could have a material adverse effect
on the Company. Based on discussions with possible financing sources, Parent
believes that if Parent were in control of the Company adequate financing
would be available to make such payments, if necessary.
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THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares and
Warrants validly tendered prior to the Expiration Date. The term "Expiration
Date" means 12:00 midnight, New York City time, on Thursday, August 15, 1996,
unless and until the Purchaser, in its sole discretion, shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer,
as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF (1)
(A) THE RIGHTS EXPIRATION CONDITION OR (B) (I) THE MINIMUM CONDITION AND (II)
THE RIGHTS CONDITION, (2) THE EXPIRATION OR EARLIER TERMINATION OF ALL WAITING
PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT") AND (3) THE
SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14. THE OFFER IS NOT
CONDITIONED ON THE RECEIPT OF FINANCING.
The Offer for the $1.00 Warrants is conditioned on the closing price of the
Shares equaling or exceeding $17.50 per Share for 20 consecutive trading days
and such Warrants thereby becoming exercisable.
Subject to the applicable rules and regulations of the Commission, the
Purchaser reserves the right, in its sole discretion, at any time or from time
to time, and regardless of whether any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, to (a) extend the period of time during which the Offer is
open, and thereby delay acceptance for payment of and the payment for any
Shares or Warrants, by giving oral or written notice of such extension to the
Depositary and (b) waive any condition or amend the Offer in any respect by
giving oral or written notice of such waiver or amendment to the Depositary.
During any such extension, all Shares and Warrants previously tendered and not
properly withdrawn will remain subject to the Offer, subject to the right of a
tendering securityholder to withdraw such securityholder's Shares or Warrants.
See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE TO BE PAID BY THE PURCHASER FOR TENDERED SHARES OR WARRANTS, WHETHER OR
NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER OR DELAYS IN MAKING
SUCH PAYMENTS.
If by the Expiration Date any or all of the conditions to the Offer have not
been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission,
to (a) terminate the Offer and not accept for payment or pay for any Shares or
Warrants and return all tendered Shares and Warrants to tendering
securityholders, (b) waive all the unsatisfied conditions and accept for
payment and pay for all Shares and Warrants validly tendered prior to the
Expiration Date, (c) extend the Offer and, subject to the right of
securityholders to withdraw Shares and Warrants until the Expiration Date,
retain the Shares and Warrants that have been tendered during the period or
periods for which the Offer is extended or (d) amend the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its right to extend the Offer. Any
extension, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-1(d)
under the Exchange Act requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable
law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which
require that any material change in the information published, sent or given
to securityholders in connection with the Offer be promptly disseminated to
securityholders in a manner reasonably designed to inform the securityholders
of such change) and without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser currently intends to
make announcements by issuing a release to the Dow Jones News Service. For
purposes of the Offer, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
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If the Purchaser extends the Offer or if the Purchaser is delayed in its
purchase of or payment (whether before or after its acceptance for payment of
Shares or Warrants) for Shares or Warrants or is unable to pay for Shares or
Warrants pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered Shares
and Warrants on behalf of the Purchaser, and such Shares and Warrants may not
be withdrawn except to the extent tendering securityholders are entitled to
withdrawal rights as described in Section 3. However, the ability of the
Purchaser to delay the payment for Shares and Warrants that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination
to securityholders and investor response.
A request is being made to the Company pursuant to Rule 14d-5 under the
Exchange Act for the use of the Company's stockholder list, warrantholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares and Warrants. This Offer to Purchase and the related Letter
of Transmittal and other relevant materials will be mailed to record holders
of Shares and Warrants, and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the securityholder lists or, if applicable, who are listed
as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares and Warrants, by the
Purchaser following receipt of such lists or listings from the Company, or by
the Company if it so elects.
2. PROCEDURES FOR TENDERING SHARES, RIGHTS AND WARRANTS.
Valid Tender. For a securityholder validly to tender Shares and Warrants
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees, or, in the case of a book-entry transfer (if
applicable), an Agent's Message (as defined below), and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either Certificates must be received by the Depositary at one of such
addresses or such Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below (and a Book-Entry Confirmation (as defined
below) received by the Depositary), in each case prior to the Expiration Date,
or (b) the tendering securityholder must comply with the guaranteed delivery
procedures set forth below. As used herein, "Certificates" shall mean
certificates representing Shares, Warrants or Rights, as the case may be.
IN ORDER VALIDLY TO TENDER SHARES, A STOCKHOLDER MUST TENDER THE ASSOCIATED
RIGHTS. UNLESS AND UNTIL THE DISTRIBUTION DATE, THE TENDER OF SHARES WILL
CONSTITUTE THE TENDER OF THE ASSOCIATED RIGHTS. IF THE DISTRIBUTION DATE
OCCURS PRIOR TO THE EXPIRATION DATE, STOCKHOLDERS WILL BE REQUIRED TO TENDER
RIGHTS CERTIFICATES IN ORDER VALIDLY TO TENDER SHARES, UNLESS THE PURCHASER
DECLARES THAT THE RIGHTS EXPIRATION CONDITION OR THE RIGHTS CONDITION IS
SATISFIED. ACCORDINGLY, STOCKHOLDERS WHO SELL THEIR RIGHTS SEPARATELY FROM
THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS MAY NOT BE ABLE TO SATISFY
THE REQUIREMENTS OF THE OFFER FOR THE TENDER OF SHARES. STOCKHOLDERS MUST
TENDER ONE RIGHT FOR EACH TWO SHARES TENDERED. THE TENDER OF RIGHTS IS NOT
REQUIRED FOR A VALID TENDER OF WARRANTS.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility") for
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purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in any of the Book-
Entry Transfer Facilities' systems may make book-entry delivery of Shares by
causing a Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Shares may be effected
through book-entry transfer at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and any other
required documents, must, in any case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering securityholder must
comply with the guaranteed delivery procedures described below.
If the Distribution Date occurs, to the extent that the Rights become
eligible for book-entry transfer under procedures established by a particular
Book-Entry Transfer Facility, the Depositary also will make a request to
establish an account with respect to the Rights at each of the Book-Entry
Transfer Facilities, but no assurance can be given that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
book-entry transfer procedures set forth herein will also apply to Rights. If
book-entry delivery is not available and Rights Certificates have been issued,
a tendering securityholder will be required to tender Rights by means of
physical delivery to the Depositary of Rights Certificates (in which event
references in this Offer to Purchase to Book-Entry Confirmations with respect
to Rights will be inapplicable) or pursuant to the guaranteed delivery
procedures set forth below.
The confirmation of a book-entry transfer into the Depositary's account at a
Book-Entry Facility as described herein is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER WILL NOT BE AVAILABLE WITH RESPECT TO THE WARRANTS.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares and, if applicable, the Rights, that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Purchaser may enforce such agreement
against the participant.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SECURITYHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by a registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the applicable security) who has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal, or (b)
if the securities are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"). In all
other cases, all signatures on the Letter of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of
Transmittal.
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If the Certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or
Certificates not tendered or not accepted for payment are to be returned, to a
person other than the registered holder, then the tendered Certificates must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
Certificates, with the signatures guaranteed as described above. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a securityholder desires to tender Shares, Rights or
Warrants pursuant to the Offer and such securityholder's Certificates are not
immediately available or time will not permit all required documents to reach
the Depositary on or prior to the Expiration Date, or the procedure for book-
entry transfer cannot be completed on a timely basis, such Shares, Rights or
Warrants may nevertheless be tendered if all the following conditions are
satisfied:
(i)the tender is made by or through an Eligible Institution;
(ii)a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser herewith, is received
by the Depositary on or prior to the Expiration Date; and
(iii)the appropriate Certificates (or, if applicable, a Book-Entry
Confirmation) representing all tendered securities, in proper form for
transfer, together with the appropriate Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and any other documents required by the Letter of Transmittal, are received
by the Depositary within (a) in the case of Shares and Warrants, three
trading days after the date of execution of such Notice of Guaranteed
Delivery or (b) in the case of Rights, a period ending on the later of (1)
three trading days after the date of execution of such Notice of Guaranteed
Delivery or (2) three business days after the date Rights Certificates are
distributed to stockholders. A trading day is any day on which the Nasdaq
National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares and Warrants
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) Certificates or, if applicable,
a Book-Entry Confirmation, with respect to such Shares and Warrants and if the
Distribution Date has occurred, Rights Certificates, or a Book-Entry
Confirmation, if available, with respect to such Rights, (b) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message and (c) any other documents required by the
Letter of Transmittal. Accordingly, payment might not be made to all tendering
securityholders at the same time and will depend upon when Certificates are
received by the Depositary or, if applicable, when Book-Entry Confirmations,
with respect to tendered Shares (or Rights, if available) are received into
the Depositary's account at a Book-Entry Transfer Facility. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE
PURCHASER FOR TENDERED SHARES OR WARRANTS WHETHER OR NOT THE PURCHASER
EXERCISES ITS RIGHT TO EXTEND THE OFFER OR DELAYS IN MAKING SUCH PAYMENTS.
The Purchaser's acceptance for payment of Shares, Rights or Warrants validly
tendered pursuant to the Offer will constitute a binding agreement between the
tendering securityholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering securityholder irrevocably appoints designees of the
Purchaser as the securityholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution,
to the full extent of the securityholder's rights with respect to the
securities tendered by the securityholder and accepted for payment by the
Purchaser (and any and all other securities issued or issuable in respect of
such Shares, Warrants or Rights
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on or after the date of this Offer to Purchase). All such powers of attorney
and proxies shall be considered coupled with an interest in the tendered
securities. This appointment will be effective when, and only to the extent
that, the Purchaser accepts the tendered securities for payment pursuant to
the Offer. Upon such acceptance for payment, all prior powers of attorney,
proxies or consents given by the securityholder with respect to the tendered
securities will, without further action, be revoked, and no subsequent powers
of attorney, proxies or consents may be given (and, if given, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the tendered securities, be empowered to exercise all
voting and other rights of such securityholder as they in their sole
discretion may deem proper at any annual, special or adjourned meeting of the
Company's securityholders, by written consent or otherwise. The Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting and other rights of
a record and beneficial holder, including action by written consent, with
respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares, Rights or Warrants pursuant to any of the procedures
described above will be determined by the Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders of any Shares, Rights
or Warrants determined by it not to be in proper form or if the acceptance for
payment of, or payment for, such Shares, Rights or Warrants may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any defect or irregularity in any tender with
respect to Shares, Rights or Warrants of any particular securityholder,
whether or not similar defects or irregularities are waived in the case of
other securityholders. No tender of Shares, Rights or Warrants will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions thereto) will be final and binding on all
parties.
Backup Federal Income Tax Withholding. In order to avoid "backup
withholding" of federal income tax on payments of cash pursuant to the Offer,
a securityholder surrendering Shares or Warrants in the Offer must, unless an
exemption applies, provide the Depositary with such securityholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such
securityholder is not subject to backup withholding. If a securityholder does
not provide such securityholder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such securityholder and payment of cash to such
securityholder pursuant to the Offer may be subject to backup withholding of
31%. All securityholders surrendering Shares or Warrants pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Certain securityholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding, but such securityholders may be subject to other
withholding requirements. Such securityholders should consult with their own
tax advisors as to the specific tax consequences relating to cash payments.
Noncorporate foreign securityholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of securities made
pursuant to the Offer are irrevocable, provided that such securities tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration
Date and, unless theretofore accepted for payment by the Purchaser pursuant to
the Offer, may also be withdrawn at any time after September 16, 1996. A
withdrawal of Shares will also constitute a
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withdrawal of the associated Rights. RIGHTS MAY NOT BE WITHDRAWN UNLESS THE
ASSOCIATED SHARES ARE ALSO WITHDRAWN.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
securities to be withdrawn, the number of Shares, Rights or Warrants to be
withdrawn and the name of the registered holder, if different from that of the
person who tendered such Shares, Rights or Warrants. If Certificates have been
delivered or otherwise identified to the Depositary, then, prior to the
release of such Certificates, the serial numbers of the particular
Certificates evidencing the Shares, Rights or Warrants to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution, except in the case of Shares, Rights or Warrants tendered for the
account of an Eligible Institution, must also be furnished to the Depositary
as described above. If Shares or Rights have been tendered pursuant to the
procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares or Rights.
Withdrawals of Shares, Rights and Warrants may not be rescinded. Any Shares,
Rights or Warrants properly withdrawn will not be deemed to be validly
tendered for purposes of the Offer. Withdrawn securities may, however, be
retendered by following one of the procedures described in Section 2 at any
time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will purchase, by accepting for payment, and will
pay for, all Shares and Warrants validly tendered on or prior to the
Expiration Date as soon as practicable after the Expiration Date. All
questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding on all parties. See Sections 1 and 14. In addition,
subject to the applicable rules of the Commission, the Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares and Warrants in order to comply, in whole or in part,
with any applicable law, including the HSR Act. See Sections 14 and 15. Any
such delays will be effected in compliance with Rule 14e-1(c) under the
Exchange Act (relating to a bidder's obligation to pay for or return tendered
securities promptly after the termination or withdrawal of such bidder's
offer).
In all cases, payment for Shares and Warrants tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the Certificates or, if applicable, a Book-Entry
Confirmation with respect to such Shares into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in Section
2, (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
for the Shares or the Warrants, as the case may be, properly completed and
duly executed, with any required signature guarantees, or, in the case of
book-entry transfer, an Agent's Message, and (iii) any other documents
required by the Letter of Transmittal. The per Share or per Warrant
consideration paid to any holder of such security pursuant to the Offer will
be the highest per Share or per Warrant consideration, as the case may be,
paid to any other holder of such security pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) validly tendered Shares and Warrants, if, as
and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of such Shares and Warrants for payment pursuant to the
Offer. In all cases, payment for Shares and Warrants accepted for payment
pursuant to the Offer will be made by deposit
9
<PAGE>
of the purchase price therefor with the Depositary, which will act as agent
for tendering securityholders for the purpose of receiving payment from the
Purchaser and transmitting payment to such tendering securityholders. Under no
circumstances will interest on the purchase price of the Shares or Warrants be
paid by the Purchaser by reason of any extension of the Offer or any delay in
making such payment. Upon the deposit of funds with the Depositary for the
purpose of making payments to tendering securityholders, the Purchaser's
obligation to make such payment shall be satisfied and tendering
securityholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Shares and
Warrants pursuant to the Offer. If, for any reason whatsoever, acceptance for
payment of or payment for any Shares or Warrants tendered pursuant to the
Offer is delayed, or the Purchaser is unable to accept for payment or pay for
Shares or Warrants tendered pursuant to the Offer, then, without prejudice to
the Purchaser's rights set forth herein, the Depositary may, nevertheless, on
behalf of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered Shares and Warrants and such securities may not be withdrawn
except to the extent that the tendering securityholder is entitled to and duly
exercises withdrawal rights as described in Section 3. The Purchaser will pay
any stock transfer taxes incident to the transfer to it of validly tendered
Shares and Warrants, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, as well as any charges and expenses of the Depositary
and the Information Agent.
If any tendered Shares or Warrants are not accepted for payment pursuant to
the Offer for any reason, or if Certificates are submitted evidencing more
Shares or Warrants than are tendered, Certificates evidencing unpurchased or
untendered securities will be returned, without expense to the tendering
securityholder (or, in the case of Shares tendered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 2, such Shares will be credited to an account
maintained at such Book-Entry Transfer Facility), as promptly as practicable
after the expiration, termination or withdrawal of the Offer. In the event
separate Rights Certificates are issued, similar action will be taken with
respect to unpurchased and untendered Rights.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to Parent or to one or more direct or indirect
wholly owned subsidiaries of Parent, the right to purchase all or any portion
of the Shares and Rights or Warrants tendered pursuant to the Offer, but any
such transfer or assignment will not relieve the Purchaser of its obligations
under the Offer or prejudice the rights of tendering securityholders to
receive payment for Shares or Warrants validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash pursuant to the Offer (or the Proposed Merger) will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and also may be a taxable transaction
under applicable state, local or foreign tax laws. In general, a
securityholder will recognize gain or loss for federal income tax purposes
equal to the difference between the amount of cash received pursuant to the
Offer or the Proposed Merger and the aggregate tax basis in the particular
securities tendered by the securityholder and purchased pursuant to the Offer
or converted in the Proposed Merger, as the case may be. Gain or loss will be
calculated separately for each block of securities (i.e., a group of Shares,
Rights or Warrants with the same tax basis and holding period) tendered
pursuant to the Offer or converted in the Proposed Merger, as the case may be.
If Shares, Rights or Warrants are held by a securityholder as capital
assets, gain or loss recognized by such securityholder will be capital gain or
loss and will be long-term capital gain or loss if the securityholder's
holding period for the securities exceeds one year at the time of the sale (in
the case of the Offer) or at the effective time of the Proposed Merger (in the
case of the Proposed Merger). Under present law, long-term capital gains
recognized by an individual securityholder generally will be taxed at a
maximum federal tax rate of 28%.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO SHARES OR WARRANTS RECEIVED AS COMPENSATION
OR WITH RESPECT TO HOLDERS OF SECURITIES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SECURITIES IN LIGHT OF SUCH
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<PAGE>
HOLDER'S INDIVIDUAL CIRCUMSTANCES. SECURITYHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM
(INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS) OF THE OFFER AND THE PROPOSED MERGER.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares trade in the over-the-counter market and are quoted on the Nasdaq
National Market under the symbol YALE. The following table sets forth, for
each of the periods indicated, the high and low sales price per Share on the
Nasdaq National Market. All prices per Share set forth below are as reported
in published financial sources:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994
First Quarter.............................................. 10 3/4 9 1/4
Second Quarter............................................. 10 3/4 7 1/2
Third Quarter.............................................. 8 7/8 7 1/8
Fourth Quarter............................................. 10 7 7/8
1995
First Quarter.............................................. 10 1/4 8 3/8
Second Quarter............................................. 10 1/2 8 1/8
Third Quarter.............................................. 9 7/8 7 3/4
Fourth Quarter............................................. 14 3/4 9
1996
First Quarter.............................................. 15 1/2 13 1/2
Second Quarter............................................. 17 14 5/8
Third Quarter (through July 18)............................ 16 1/4 14 1/2
</TABLE>
On July 18, 1996, the last full trading day prior to the commencement of the
Offer, the reported closing sales price per Share on the Nasdaq National
Market was $15 1/2. The Warrants are not listed on any exchange or traded on
the Nasdaq National Market. As a result, no price quotations are available for
the Warrants. The Rights are currently attached to the outstanding Shares and
are not traded separately.
According to published financial sources, the Company did not declare any
cash dividends on the Shares during the periods set forth above.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
The purchase of Shares and Warrants pursuant to the Offer will reduce the
number of Shares and Warrants that might otherwise trade publicly and the
number of holders of Shares and Warrants, which could adversely affect the
liquidity and market value of the remaining Shares and Warrants held by
holders other than the Purchaser.
Depending upon the aggregate market value and per Share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the
standards of the National Association of Securities Dealers, Inc. (the "NASD")
for continued inclusion in the Nasdaq National Market, which require that an
issuer have at least 200,000 publicly held shares with a market value of $1
million held by at least 400 stockholders or 300 stockholders holding round
lots and have net tangible assets of at least $1 million, $2 million or $4
million depending on profitability levels during the issuer's four most recent
fiscal years. If these standards are not met, the Shares might nevertheless
continue to be included in the NASD's Nasdaq Stock Market with quotations
published in the Nasdaq "additional list" or in one of the "local lists."
However, if the number of holders of Shares falls below 300, or if the number
of publicly held Shares falls below 100,000, or if there are not at least two
market makers for such Shares, NASD rules provide that the Shares would no
longer be "qualified" for Nasdaq Stock Market reporting, and the Nasdaq Stock
Market would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial
owner of more than 10% of the Shares, ordinarily will not be considered as
being publicly held for this purpose. If, as a result of the purchase of
Shares pursuant to the Offer or otherwise, the Shares no longer meet the NASD
requirements for continued inclusion in any tier of the Nasdaq National Market
or in any other tier of the Nasdaq Stock Market,
11
<PAGE>
and the Shares are no longer included in any tier of the Nasdaq National
Market, the market for such Shares could be adversely affected.
In the event the Shares no longer meet the requirements of the NASD for
inclusion in any tier of the Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for Shares and
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
The Warrants are not listed on any exchange or traded on the Nasdaq National
Market.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following
the Offer it is possible that the Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
The Warrants are not "margin securities" under the regulations of the
Federal Reserve Board.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if such class is not listed on a national securities
exchange and there are fewer than 300 record holders of such Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement in connection with stockholders' meetings pursuant to Section
14(a) and the requirements of Rule 13e-3 under the Exchange Act with respect
to "going private" transactions. Furthermore, if the Purchaser acquires a
substantial number of Shares or the registration of the Shares under the
Exchange Act were to be terminated, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A under the Securities Act of 1933, as
amended, may be impaired or eliminated. If registration of the Shares under
the Exchange Act were terminated prior to the consummation of the Merger, the
Shares would no longer be "margin securities" or be eligible for listing or
Nasdaq reporting. It is the present intention of the Purchaser to seek to
cause the Company to make an application for termination of registration of
the Shares as soon as possible following the Offer if the requirements for
termination of registration are met.
The Warrants are not registered under the Exchange Act.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation and, through its subsidiaries,
produces a wide range of industrial products, including hoists, scissor lifts,
mechanical jacks, rotating joints, actuators and circuit protection devices.
Its principal business, Duff-Norton Company, Inc., has been in operation since
1883.
The Company was organized in Delaware in May 1987 by its then senior
management and Prudential-Bache Interfunding, Inc. In July 1987, the Company
acquired the Spreckels Sugar Company, Inc. ("Spreckels Sugar") and a portion
of the Industrial Products segment from Amstar Corporation in a leveraged
buyout. In December 1988 the Company purchased all of the stock of Yale
Industrial Products, Inc., a manufacturer of hoists and lifting equipment.
In October 1992, the Company commenced a case under Chapter 11 of the
Bankruptcy Code. On August 4, 1993, the Company's plan of reorganization (the
"Plan") was confirmed by the Bankruptcy Court. The Plan became effective on
September 2, 1993. The Plan provided for the cancellation of all equity
interests in the
12
<PAGE>
Company in exchange for Shares and 1,950,000 Warrants and provided for the
conversion into equity and 900,000 Warrants of two classes of subordinated
debt totalling approximately $70 million in principal amount. As part of the
Plan, the Company also issued its 11.5% Senior Secured Notes Due 2000 in
partial satisfaction of the claims of its bank creditors.
The Company's Sweetener Segment (as defined below) had been in continuous
operation since 1898 and through Spreckels Sugar, a subsidiary of the Company,
was a major producer and marketer of refined sugar products in the western
United States. On November 13, 1995, the Company announced its intention to
sell the operations of Spreckels Sugar and Limestone Products Company, Inc.,
another subsidiary of the Company (together with Spreckels Sugar, the
"Sweetener Segment"). On April 19, 1996, the Company completed the sale of all
of the issued and outstanding capital stock of the Sweetener Segment to Holly
Sugar Corporation in consideration of a payment of approximately $28.0 million
in cash.
On April 22, 1996, the Company announced a name change for the Company from
Spreckels Industries, Inc. to Yale International, Inc. The name change is
subject to stockholders' approval and the Company will ask its stockholders
for ratification at its next annual meeting.
Selected Consolidated Financial Data. Set forth below is certain selected
consolidated financial data with respect to the Company excerpted or derived
from financial information contained in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1995 (the "Company Form 10-K"), the
Company Form 10-Q and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995 (the "March 1995 Form 10-Q"). More comprehensive
financial information is included in the Company Form 10-K, the Company Form
10-Q, the March 1995 Form 10-Q and other documents filed by the Company with
the Commission. The financial information that follows is qualified in its
entirety by reference to the Company Form 10-K, the Company Form 10-Q, the
March 1995 Form 10-Q and such other documents, including the financial
statements and related notes therein. The Company Form 10-K, the Company Form
10-Q, the March 1995 Form 10-Q and such other documents should be available
for inspection and copies thereof should be obtainable from the offices of the
Commission in the manner set forth below.
SPRECKELS INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------
FISCAL YEAR ENDED ELEVEN MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1995(/1/) JUNE 30, 1995(/2/) JUNE 30, 1994
-------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales............. $ 49,209 $ 81,097 $357,052 $349,577
Net income (loss)..... 1,770 619 (2,140) 2,470
Net income (loss) per
share................ 0.26 0.10 (0.35) 0.41
Balance Sheet Data (at
the end of the period):
Total assets.......... $188,742 $307,503 $318,101 $309,213
Working Capital....... 93,903 89,228 68,068 69,013
Long-term debt........ 101,151 91,075 83,727 80,338
Total stockholders'
equity............... 17,597 75,203 72,509 72,951
</TABLE>
- --------
(/1/Income)statement data amounts for this period have been reclassified in
the Company Form 10-Q as follows to reflect the disposition of the
Company's Sweetener Segment: Net Sales--$46,648; Loss from Discontinued
Operations--$(890); Net income--$619; Loss per share from Discontinued
Operations--$(0.11); and Net income per share--$0.13 (this amount is
reported as a net loss per share of $(0.13) in the Company Form 10-Q which
appears to be a typographical error and presumably should be reported as
net income).
(/2/Balance)sheet data amounts for this period have been reclassified in the
Company Form 10-Q as follows to reflect the disposition of the Company's
Sweetener Segment: Total assets--$220,975; Working Capital--$125,345;
Long-term debt--$80,809; and Total stockholders' equity--$72,509.
Rights. On November 11, 1995, the Board of Directors of the Company declared
a dividend distribution of one-half Right for each outstanding Share to
stockholders of record at the close of business on November 24, 1995 (the
"Record Date"). Except as set forth below, each whole Right, when exercisable,
entitles the registered
13
<PAGE>
holder to purchase from the Company one Share, at a price of $45.00 per Share
(the "Purchase Price"), subject to adjustment.
The Rights are presently attached to all Certificates representing
outstanding Shares, and no separate Rights Certificates have been distributed.
The Rights will separate from the Certificates representing Shares and a
distribution date (the "Distribution Date") will occur upon the earliest of
(i) a public announcement that a Person (as defined in the Rights Agreement)
or group of affiliated or associated Persons (an "Acquiring Person") has
acquired, or obtained the right to acquire beneficial ownership of, securities
representing 15% (the "Percentage Limitation") or more of the voting power of
all outstanding voting securities of the Company or (ii) ten days (unless such
date is extended by the Board of Directors) following the commencement of (or
a public announcement of an intention to make) a tender offer or exchange
offer which would result in any Person or group of affiliated or associated
Persons becoming an Acquiring Person. The Rights Agreement provides that the
term "Acquiring Person" shall not include any Person who as of the close of
business on the later of (i) November 13, 1995 or (ii) the date as of which
such Person can demonstrate to the Company it first received notice of the
authorization of the Rights, beneficially owned securities representing the
Percentage Limitation or more of the Shares then outstanding, provided such
Person does not acquire after the Record Date beneficial ownership of
additional Shares (other than as a result of stock splits, stock dividends or
other actions affecting the stock ownership of all of the holders of the
Shares as a group or as a result of grants of options or purchases of Shares
pursuant to the Company's employee benefit plans).
Until the Distribution Date, the Rights are evidenced, with respect to any
of the Certificates outstanding as of the Record Date, by such Certificate,
together with a Summary of Rights and the Rights can be transferred with and
only with the Shares. New Certificates issued after the Record Date contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any Certificates outstanding as of the Record Date
(with or without a Summary of Rights attached) also constitutes the transfer
of the Rights associated with the Shares represented by such Certificates. As
soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Shares as of the close
of business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire or terminate on the earliest of (i) November 23, 2005, (ii)
consummation of a merger transaction with a Person or group who acquired
Shares pursuant to a Permitted Offer (as defined below), and is offering in
the merger the same price per Share and form of consideration paid in the
Permitted Offer, or (iii) redemption or exchange of the Rights by the Company
as described below.
The Purchase Price payable and the "Subscription Right Price" referred to
below, and the number of Shares issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of
the Shares, (ii) upon the grant to holders of the Shares of certain rights,
options or warrants to subscribe for Shares, certain convertible securities or
securities having the same or more favorable rights, privileges and
preferences as the Shares at less than the current market price of the Shares,
or (iii) upon the distribution to holders of the Shares of evidences of
indebtedness or assets (excluding regular quarterly cash dividends out of
earnings or retained earnings) or of subscription rights or warrants (other
than those referred to above).
In the event that a Person or group of affiliated or associated Persons
becomes the beneficial owner of securities representing the Percentage
Limitation or more of all outstanding Shares of the Company (unless pursuant
to a tender offer or exchange offer for all outstanding Shares at a price and
on terms which are determined prior to the date of the first acceptance of
payment for any of such Shares by at least a majority of the members of the
Board of Directors who are not officers of the Company and are not Acquiring
Persons or affiliates or associates thereof to be both adequate and otherwise
in the best interests of the Company and its stockholders (a "Permitted
Offer")), then proper provision shall be made so that each holder of a whole
Right will for a 60-day period (subject to extension under certain
circumstances) thereafter have the right to receive
14
<PAGE>
upon exercise one Share for each whole Right then held, at the price of $1.00
per Share, to the extent available (such right being called the "Subscription
Right" and the price referred to above to exercise the same being called the
"Subscription Right Price"), and then (after all authorized and unreserved
Shares have been issued) a common stock equivalent (such as another equity
security with at least the same economic value as the Shares), with Shares, to
the extent available, being issued prior to a common stock equivalent. In the
event that following the first date of public announcement by the Company or
an Acquiring Person that an Acquiring Person has become such (a "Stock
Acquisition Date"), the Company is involved in a merger or consolidation
(whether or not the Company is the surviving corporation), or 50% or more of
the Company's assets or earning power are sold (in one transaction or a series
of transactions), proper provision shall be made so that each holder of a
whole Right (other than such Acquiring Person) shall thereafter have the right
to receive, upon the exercise thereof at the Subscription Right Price that
number of either Shares of the Company, in the event that it is the surviving
corporation of a merger or consolidation, or shares of common stock of the
acquiring company (or, in the event there is more than one acquiring company,
the acquiring company receiving the greatest portion of the assets or earning
power transferred) which at the time of such transaction would be equal to the
result obtained by dividing (i) the product determined by multiplying the
Purchase Price per Share by the number of Shares into which a Right is then
exercisable by (ii) 50% of the current market price per Share or market price
per share of common stock of such other party (such right being called the
"Merger Right"). The holder of a Right will continue to have the Merger Right
whether or not such holder exercises the Subscription Right. Notwithstanding
the foregoing, upon the occurrence of any of the events giving rise to the
exercisability of the Merger Right or the Subscription Right, any Rights that
are or were at any time after the Distribution Date owned by an Acquiring
Person shall immediately become null and void.
With certain exceptions, no adjustments in the Purchase Price or the
Subscription Right Price will be required until cumulative adjustments require
an adjustment of at least 1% of such Purchase Price or Subscription Right
Price. No fractions of Shares will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Shares on the
last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) a Stock Acquisition Date or
(ii) the expiration of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board of Directors.
Additionally, the Company may thereafter redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price (i) if such redemption is
incidental to a merger, consolidation or sale of 50% or more of the Company's
assets or earning power but not involving an Acquiring Person or certain
related Persons or (ii) following an event giving rise to, and the expiration
of the exercise period for, the Subscription Right if and for as long as an
Acquiring Person beneficially owns securities representing less than the
Percentage Limitation of the outstanding Shares. The redemption of Rights
described in the preceding sentence shall be effective only as of such time
when the Subscription Right is not exercisable, and in any event, only after
ten business days prior notice. Upon the effective date of the redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holder of Rights will be to receive the Redemption Price.
Subject to applicable law, the Board of Directors, at its option, may at any
time after a Person becomes an Acquiring Person (but not after the acquisition
by such Person of 50% or more of the outstanding Shares), exchange all or part
of the then outstanding and exercisable Rights (except for Rights which have
become void) for Shares in the ratio of one Share per Right or, alternatively,
for substitute consideration consisting of cash, securities of the Company or
other assets (or any combination thereof).
Fractional Shares will not be issuable upon exercise of the Rights. In lieu
of fractional Shares, an adjustment in cash will be made based on the market
price of the Shares on the last trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
15
<PAGE>
On January 8, 1996, the Company amended the Rights Agreement to amend a
previous version of the Rights Expiration Provision to add a provision
requiring the Follow-up Transaction Commitment.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement. A copy of
the Rights Agreement was filed with the Commission as an Exhibit to the
Company's Registration Statement on Form 8-A dated November 17, 1995. The
Rights Agreement should be available for inspection (and copies may be
obtained) in the same manner as set forth below. A copy of an Amendment to the
Rights Agreement, dated as of January 8, 1996, and filed with the Commission
as an Exhibit to the Company's Current Report on Form 8-K, dated February 5,
1996, is similarly available for inspection.
Other Information. The Company is subject to the information filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be described in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be
available for inspection and copying at prescribed rates at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or based upon publicly
available documents and records on file with the Commission and other publicly
available information. Although neither the Purchaser nor Parent has any
knowledge that any such information is untrue, neither the Purchaser nor
Parent takes any responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events that may have
occurred or may affect the significance or accuracy of such information.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
Parent is engaged primarily in acquiring securities of the Company and in
holding, disposing of, voting or otherwise exercising all rights, powers,
privileges and other incidents of ownership or possession with respect to such
securities. The principal executive offices of Parent and the Purchaser are
located at 701 East Franklin Street, Richmond, Virginia 23219.
The Purchaser is a wholly owned subsidiary of Parent. The Purchaser was
formed as an acquisition vehicle in connection with the Offer and the Proposed
Merger and has not carried on any activities to date other than those incident
to its formation and the commencement of the Offer, and it or another wholly
owned subsidiary of Parent will be merged with and into the Company pursuant
to the Proposed Merger.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the Members of the
Board of Managers and Executive Officers of Parent and the Directors and
Executive Officers of the Purchaser are set forth in Schedule I hereto.
Parent has on hand approximately $70 million in short-term money market
instruments. A corporation wholly owned by the sole Members of Parent (see
Schedule I hereto), has on hand marketable equity securities having a current
market value, net of margin debt, in excess of $35 million. Such corporation
has no liabilities,
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other than margin debt. It anticipates that such securities would be sold on
or before July 31, 1996 and that the proceeds of such sale will be contributed
by the Members of Parent to the capital of Parent. Parent has no significant
liabilities or obligations other than margin debt associated with the Shares
it owns and those incurred in connection with the Offer.
Parent beneficially owns 1,201,260 Shares. Parent acquired 912,000 of such
Shares pursuant to a Sale and Assignment Agreement, dated as of November 8,
1995 (the "Assignment Agreement"), between the Prudential Insurance Company of
America ("Prudential") and Parent. As part of the Assignment Agreement,
Prudential assigned to Parent certain rights to have the Company register such
Shares pursuant to a Registration Rights Agreement, dated as of September 2,
1993, by and among the Company and Prudential, among others. Philip W.
Knisely, a member of the Board of Managers of Parent, owns 100 Shares.
Except as described in this Offer to Purchase, none of the Parent or the
Purchaser, or, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of Parent or the Purchaser, or, to the best knowledge of Parent
and the Purchaser, any of the persons listed on Schedule I hereto, has had,
since June 30, 1994, any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission applicable to this Offer
to Purchase. Except as set forth in this Offer to Purchase, since July 1,
1994, there have been no contacts, negotiations or transactions between Parent
or the Purchaser or any of their respective subsidiaries, or, to the best
knowledge of Parent and the Purchaser, any of the persons listed on Schedule I
hereto, and the Company or its affiliates, concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets. Except
as set forth in this Offer to Purchase, neither Parent nor the Purchaser, nor,
to the best knowledge of Parent and the Purchaser, any of the persons listed
on Schedule I hereto, beneficially owns any Shares or has effected any
transactions in the Shares during the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser and Parent to consummate
the Offer and the Proposed Merger and to pay related fees and expenses is
estimated to be approximately $105 million. The Purchaser intends to obtain
the required funds from capital contributions from Parent. Parent intends to
obtain such funds from the sale of its short-term money market instruments and
the proceeds of the sale of certain securities held by an affiliate, as set
forth in Section 9.
11. BACKGROUND OF THE OFFER.
According to the Company's Proxy Statement relating to its 1995 Annual
Meeting, in September 1995, Canyon Capital Management, L.P. ("Canyon
Capital"), certain affiliates and related parties thereof and entities over
which Canyon Capital and such affiliates and parties exercise investment
control or discretion ("Canyon Partners"), collectively beneficial owners of
less than 5% of the Shares, submitted the nominations of Joshua S. Friedman, a
founding director and officer of Canyon Partners Incorporated, one of the
affiliates included within Canyon Partners, who also holds similar positions
in the other affiliates, and two other individuals for election to the
Company's Board of Directors. The Company stated that it believed that Canyon
Partners was not entitled to pursue the election of nominees at the Company's
1995 Annual Meeting. Canyon Partners disputed the Company's position. The
parties met to resolve these questions with an interest in avoiding
potentially costly and protracted litigation. As a result of these
negotiations, the parties entered into an agreement whereby Canyon Partners
agreed to withdraw its nominations and the Company agreed to nominate Mr.
Friedman as a Class A director for election at the Company's 1995 Annual
Meeting, and Mr. Friedman was so elected. The agreement also provided that the
Company's Board of Directors would commence a search to identify an additional
candidate to serve on its Board of Directors. Such individual was to be
acceptable to a majority of the Board of Directors, including Mr. Friedman.
Once such individual was identified and agreed to serve, the Board of
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Directors would be expanded to comprise nine directors. As part of the
agreement with Canyon Capital, the Company agreed not to submit its then
existing rights plan to a stockholder vote. By its terms such rights plan
would expire unless approved by stockholders at the 1995 Annual Meeting. On
November 2, 1995, the Company's 1995 Annual Meeting was held and the rights
plan was not submitted to the stockholders and, accordingly, the rights plan
expired.
Between October 10 and November 7, 1995, Parent acquired 1,201,260 Shares in
open market and privately negotiated transactions.
On November 13, 1995, the Company announced that it had adopted the
Stockholder Rights Plan under which it thereafter issued the Rights.
On November 14, Mr. Knisely, a member of the Board of Managers of Parent,
called Bart A. Brown, Chairman of the Board of the Company, and informed him
that Parent had acquired Shares and would be filing a Schedule 13D. Mr. Brown
suggested that Mr. Knisely meet with Gary L. Tessitore, President and Chief
Executive Officer of the Company.
On November 18, 1995, Parent filed a Schedule 13D in which it disclosed that
it had acquired 1,201,260 Shares in order to obtain a substantial equity
position in the Company. Parent further disclosed that it was considering, but
had not decided whether or not to pursue, other courses of action with respect
to the Company, including: (i) the divestiture by the Company of certain of
its operations, to the extent that Parent deemed such divestiture necessary or
desirable or if such operations could be disposed of on terms deemed
acceptable to Parent; (ii) the possibility of a merger, sale of all or
substantially all of the Company's assets, a business combination or other
similar transaction between the Company and Parent or any affiliate or
subsidiary of Parent; and (iii) the taking of such actions as it deemed
appropriate to manage the business and affairs of the Company, including
seeking control of the Company through designation of some or all of the
Company's Board of Directors or otherwise. Parent also stated that from time
to time, it would evaluate its position and could determine to acquire
additional Shares in the open market, in privately negotiated transactions, by
making a tender offer or otherwise, and that Parent could contact the Company,
its representatives, other persons interested in the Company, or other
interested persons, for purposes of discussing the Company.
On November 21, 1995, Mr. Knisely and Mr. Tessitore met and generally
discussed the Company and Parent.
On December 4, 1995, the sole Members of Parent met with Mr. Tessitore. In
that meeting, Mr. Tessitore and such persons suggested reciprocal plant
visits. A few days later Mr. Tessitore called and cancelled the plant visits.
On December 19, 1995, Parent sent the following letter to the Board of the
Directors of the Company:
December 19, 1995
The Board of Directors
Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, NC 28211
Attention: Mr. Bart A. Brown and Mr. Gary L. Tessitore
Gentlemen:
At my initial meeting with Gary on November 21, 1995 and during subsequent
conversations, we stated that American Enterprises, L.L.C. was reviewing the
alternative courses of action which could be taken with respect to its
investment in Spreckels Industries, Inc. Based on our review of the publicly
available information on Spreckels, American Enterprises is now pleased to
propose a combination of our companies in a transaction
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in which your shareholders would receive $11.00 cash per share, plus the
distribution to shareholders of the net proceeds from the sale of the
Spreckels Sugar businesses. We think that this offer represents an appropriate
price based on publicly available information, but we would like to conduct a
brief, highly focused due diligence investigation in order to explore whether
a higher price could be justified.
We believe that the transaction we are proposing represents a very
attractive opportunity for your shareholders. The price we are offering for
effectively the Industrial Products businesses represents a 27% premium to the
closing price of Spreckels' common stock for the 90-day period prior to the
date of our initial investment in the Company. In addition, all shareholders
will receive the net proceeds from the sale of the associated assets and
liabilities of the Spreckels Sugar businesses. As a major shareholder, our
interests align with all shareholders in seeking to maximize the net proceeds
from the sale of Spreckels Sugar in a timely manner.
Our offer is not subject to financing, but is subject to (i) the taking of
all necessary actions to eliminate the applicability of, or to satisfy, any
anti-takeover or other defensive provisions contained in the applicable
corporate statutes or in the Company's charter, by-laws and rights agreement
and (ii) the receipt of any required regulatory approvals.
We hope you and your fellow directors will view this offer as we do--an
excellent opportunity for the shareholders of the Company to realize full
value for their shares. We trust that Spreckels' Board of Directors will give
our offer prompt and careful consideration and will not take any actions that
would adversely affect your shareholders' ability to receive the benefits of
our proposed transaction.
As you can appreciate, it is important that we hear from you as promptly as
practical with respect to our offer. Our sincere desire is to work together
with you to reach agreement on a negotiated transaction which can be presented
to your shareholders as the joint effort of both companies. We look forward to
hearing from you and to working together on this transaction.
Sincerely,
Philip W. Knisely
President
On December 22, 1995, the Company sent Parent the following letter:
December 22, 1995
Mr. Mitchell Rales
American Enterprises, L.L.C.
701 East Franklin Street
Richmond, VA 23219
Dear Mr. Rales:
The Board of Directors of Spreckels Industries, Inc. has agreed to expand
the Board and add one additional director. We have further agreed to approach
a number of our larger shareholders and others interested in the Company to
elicit their nominations for this position. It is the intention of the Board
and the Company that the new director be either a shareholder or represent a
large share position.
Director candidates should be willing to begin service immediately and
continue serving on a long-term basis. The individual selected should be
prepared to attend approximately six 1-2 days' Board meetings annually as well
as a number of Board teleconference meetings. Director compensation includes
quarterly and meeting fees, and director liability insurance is provided. By
established policy, directors are restricted from trading in Spreckels' stock
except during four one-month "trading windows" during the year.
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The Board desires to identify possible candidates during the next month. The
selection process will include telephone and in-person interviews with Company
management and a committee of, or individual Board members. Our objective is
to select a director to help us maximize growth in shareholder value. If you
are interested in possibly serving as a director of Spreckels Industries, or
know someone who would in your opinion be a good candidate, please submit such
name in writing, including a brief background on the individual's prior board
and business experience.
Please contact Donald C. Roof, Senior Vice President of Spreckels Industries
at (704) 367-4244 if you have any questions.
Sincerely,
Bart A. Brown, Jr.
Chairman of the Board
On January 8, 1996, the Company sent Parent the following letter:
January 8, 1996
Mr. Philip W. Knisely
President
American Enterprises, L.L.C.
701 East Franklin Street
Richmond, Virginia 23219
Dear Phil:
The Board of Directors of Spreckels Industries, Inc. and its advisors have
carefully reviewed and considered American Enterprises, L.L.C.'s proposal to
acquire Spreckels for $11 per share plus an unspecified cash distribution.
The Board has rejected your proposal and has concluded that entering into
merger discussions with you or providing confidential information is not in
the best interests of the Company's shareholders. In reaching this conclusion,
the Board has reiterated its view that the Company is not for sale and that
management should continue to implement its long term strategy to enhance the
value of the Company for all shareholders.
The Company will announce tomorrow that it has reached a definitive
agreement to sell its Spreckels Sugar subsidiary to Imperial-Holly
Corporation. A copy of the press release is attached.
Sincerely yours,
Gary L. Tessitore
On April 1, 1996, at an industry conference one Member of Parent spoke with
Mr. Tessitore and said that Parent was contemplating the acquisition of a
company in a business related to the Company's. They then discussed various
strategic alternatives, including alternatives which could result in an
increased equity interest in the Company by Parent.
On May 15, 1996, Bedford Falls Investors, LP ("Bedford Falls"), Metropolitan
Capital Advisors, Inc., its general partner ("Metropolitan"), and certain
related persons filed an amendment to their Schedule 13D with respect to the
Shares in which they disclosed beneficial ownership of approximately 10.3% of
the outstanding Shares and that Metropolitan was sending the following letter
to the Company:
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May 16, 1996
Mr. Gary Tessitore
Chief Executive Officer/President
Yale International, Inc.
One Morrocroft Centre
6805 Morrison Blvd.
Suite 450
Charlotte, NC 28211
Dear Gary:
Bedford Falls Investors, LP ("Bedford Falls") is today amending its SEC
Schedule 13D filing to reflect a change in the Partnership's intent with
regard to its holdings in Yale International, Inc. ("Yale"). Bedford Falls
intends to seek control of the Board of Directors of Yale at the Company's
next shareholders' meeting. This will facilitate the maximization of the value
of Yale stockholders' investment which we believe can best be effected through
the sale of the Company.
The materials handling business is increasingly being dominated by large,
well-capitalized, multinational companies. Operationally, these companies are
focusing on broadening their reach, both geographically (especially into
higher growth emerging markets) and in terms of product offerings. Their
financial strength gives them the ability to aggressively pursue acquisitions,
while retaining the flexibility in their balance sheets to withstand the
economic downturn that will one day arrive in any cyclical business. Bedford
Falls believes that this situation presents shareholders of Yale with an
interesting dichotomy. Due to the high prices currently being paid by well-
financed strategic buyers, it is highly unlikely that Yale could successfully
implement a financially advantageous growth strategy. At the same time, Yale
is well positioned to capitalize on the demand from these acquirers for
companies with strong market shares in niche product lines. In fact, based
upon discussions Bedford Falls has had with potential buyers, now that the
sugar business has been sold, we believe that there would be significant
interest in the Company from potential acquirers and therefore it is in the
best interest of Yale shareholders to seek a buyer for the Company now.
Toward that end, it is the present intention of Bedford Falls to nominate a
slate of directors for election at the next meeting of Yale shareholders. This
slate would be committed to the near-term maximization of the value of Yale
stock. In addition, at the meeting we intend to submit for shareholder
consideration a proposal to pursue the sale of the Company. Attached you will
find a copy of the letter sent today by our counsel, Joseph Mazzella, to
Michael L. Sarina, Yale's Corporate Secretary, requesting clarification of
certain Charter and By-law provisions dealing with director nominations and
shareholder proposals. We would appreciate your assistance as this
clarification will foster the shareholders of Yale having the opportunity to
decide the future direction of their Company at the next shareholders'
meeting.
Yours truly,
Jeffrey E. Schwarz
On May 16, Mr. Knisely called Mr. Tessitore and a meeting was arranged to
discuss possible responses by the Company to the Metropolitan letter,
including alternatives which might assist the Company in remaining
independent. On May 24, 1996, the Members of Parent and Mr. Knisely met with
Mr. Brown and Mr. Tessitore and discussed a number of alternatives regarding
the Company, including acquisitions or divestitures by the Company, the
acquisition of the Company by Parent or a third party or the consideration by
the Company of Parent increasing its investment in the Company, either through
market purchases or purchases of newly issued shares (for cash or in exchange
for assets) and the appointment of representatives of Parent to the Company's
Board of Directors. Mr. Brown and Mr. Tessitore said that they would consider
these alternatives. In subsequent conversations, Mr. Tessitore stated that the
Company was continuing to consider these alternatives.
According to an amendment to its Schedule 13D, filed on July 12, 1996, by
letter dated July 11, 1996, Bedford Falls gave notice to the Company of its
intention to nominate six candidates for election at the Company's next
shareholders' meeting. Such nominations were made for the purpose of electing
a majority of
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the Company's Board of Directors and with the further purpose of causing the
Company to take steps to more fully explore and consider all strategic
alternatives for maximizing shareholder value, including extraordinary
corporate transactions such as a sale or merger. Bedford Falls therein
nominated Jeffrey E. Schwarz, Robert F. Lietzo, Jr., Lawrence E. Golub, Joseph
F. Mazzella, Michael P. Fleischer, and Jonathan S. Guss. Messrs. Schwarz and
Lietzo are officers of Metropolitan. Additional nominations for candidates
may, in the future, be made by Bedford Falls or related persons. In such
Schedule 13D amendment, it was also disclosed that, by letter dated June 3,
1996, Bedford Falls submitted to the Company a proposal and supporting
statement to be considered by shareholders at the next shareholders' meeting.
The text of the proposal is as follows: "that the shareholders of Yale
International, Inc. ("Yale" or the "Company") hereby request that the Board of
Directors initiate and complete the steps necessary to achieve a sale of the
Company on terms that will maximize and realize shareholder value as promptly
as possible."
On July 19, 1996, Mr. Knisely telephoned Mr. Tessitore to inform him that
Parent was commencing the Offer and to offer to meet with him. On July 19,
1996, Parent sent the following letter to the Company:
July 19, 1996
Spreckels Industries, Inc.
One Morrocroft Centre
6805 Morrison Blvd., Suite 450
Charlotte, NC 28211
Attn: Mr. Bart A. Brown, Jr. and Mr. Gary L. Tessitore
Gentlemen:
American Enterprises, L.L.C. is today commencing a cash tender offer to
purchase all of the outstanding common shares of Spreckels Industries, Inc. at
a price of $16.50 per share and is also offering to purchase all of the
outstanding warrants. American Enterprises commits to a follow-up transaction
for the remaining shares at the offer price, as set forth in our Offer to
Purchase.
Our offer is not subject to financing, but is subject to your Stockholder
Rights Plan being inapplicable.
We believe that the transaction we are proposing represents a very
attractive opportunity for your shareholders as well as your employees,
suppliers and customers. Moreover, we believe the current market price
reflects a significant premium resulting from a number of factors, including
our own prior offer and the publicly reported positions in your securities by
a number of financially-oriented investors.
In light of the attractive terms of our offer, we request that the Company's
Board of Directors take appropriate actions so that your rights plan is
inapplicable to our offer. We expect that you will not take any other actions
that would adversely affect your shareholders' ability to receive the benefits
of our proposed transaction. It is our hope that we can proceed to complete a
transaction with a minimum of delay.
In order to increase the likelihood that our offer can be accepted by your
shareholders at the earliest possible date, we have today commenced an action
in the Delaware Chancery Court seeking, among other things, a declaration that
your Rights Plan will expire upon consummation of our offer and challenging
the advance notice provisions of your bylaws.
Our proposed price is based upon our review of publicly available
information regarding the Company. If you believe that there are values not
reflected in your public filings, we ask that information be made available to
us so that we can ensure that our offer reflects those values.
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We and our advisors are ready to meet with you and your advisors to discuss
all aspects of our offer, and to answer any questions you or they may have.
Our objective is to conclude promptly a transaction that is supported by you
and the Company's Board of Directors.
Sincerely,
Philip W. Knisely
President
12. PURPOSE OF THE OFFER; THE PROPOSED MERGER; PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. Parent commits, upon consummation of the
Offer, to (i) immediately following announcement of its acceptance for payment
of Shares in the Offer, commence a cash tender offer for any and all Shares
not tendered in the Offer for at least the same cash consideration per share
paid in the Offer or (ii) cause the Proposed Merger. The purpose of the
Proposed Merger is to acquire all Shares not purchased pursuant to the Offer
or otherwise. Pursuant to the Proposed Merger, each then outstanding Share
would be converted into the right to receive an amount in cash equal to the
price per Share paid by the Purchaser pursuant to the Offer. Although it is
the Purchaser's current intention to propose and seek to enter into a
definitive merger agreement with the Company with respect to the Proposed
Merger and to consummate the Proposed Merger as promptly as practicable, there
can be no assurance that the Proposed Merger will be consummated or, if
consummated, of the timing or terms thereof. Consummation of the Proposed
Merger will require the adoption of a resolution by the Company's Board of
Directors approving the Proposed Merger and the affirmative vote of the
holders of a majority of the outstanding Shares. Alternatively, if the
Purchaser upon consummation of the Offer becomes the beneficial owner of 90%
or more of the outstanding Shares, the Proposed Merger could be consummated
without the approval of the stockholders through a Short-Form Merger
(described below under "The Proposed Merger").
In order to increase the likelihood that the Company and the Purchaser will
enter into the Proposed Merger, Parent intends to nominate a slate of
directors for election at the Company's 1996 Annual Meeting. The nominees of
the Purchaser will, if elected at the 1996 Annual Meeting, and subject to
their fiduciary duties, be committed to take such actions (including causing
the Rights to be inapplicable to the Offer) as may be required to facilitate
prompt consummation of the Offer and the Proposed Merger. This Offer does not
constitute a solicitation of proxies for any meeting of the Company's
stockholders. Any such solicitation will be made only pursuant to proxy or
other materials complying with the requirements of Section 14(a) of the
Exchange Act and the rules and regulations thereunder.
Plans for the Company. In connection with the Offer, Parent and the
Purchaser have reviewed, and will continue to review, on the basis of publicly
available information, various possible business strategies that they might
consider in the event that the Purchaser acquires control of the Company,
whether pursuant to this Offer, the Proposed Merger or otherwise. If and to
the extent that the Purchaser acquires control of the Company or otherwise
obtains access to the books and records of the Company, Parent and the
Purchaser intend to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and consider and determine what, if any,
changes would be desirable in light of the circumstances which then exist.
Parent would consider steps to (i) expand the Company's existing revenue base,
(ii) explore strategic acquisitions, (iii) improve gross profit and operating
profit margins (including by reducing selling, general and administrative
expenses) and (iv) assess the sale of non-core assets, consisting of certain
excess land the Company owns relating to the Sweetener Segment which the
Company recently sold. At the Schroder Wertheim Industrial Manufacturing
Conference held on April 1, 1996, Mr. Tessitore was reported to have said
publicly that the Company planned to reduce its selling, general and
administrative expenses and that the Company was considering restructuring its
corporate office. Parent would
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also consider, among other things, changes in the Company's business,
corporate structure, Restated Certificate of Incorporation, bylaws,
management, dividend policy or capitalization, including, subject to the
availability of financing, the possible redemption of the Company's Notes.
There is approximately $70 million principal amount of Notes outstanding.
The Notes are callable by the Company at 100% of their principal amount, plus
accrued interest, on and after September 1, 1998. Following the consummation
of the Offer (provided that Parent was the beneficial owner of at least 50% of
the outstanding Shares), each holder of Notes will have the right to demand
that the Company repurchase the holder's Notes at 101% (100% on and after
September 1, 1998) of their principal amount, plus accrued interest. If the
holders of the Notes were to demand payment under these provisions, and the
Company did not have adequate funds to make such payment, the Company could be
in default under the Notes (and possibly in default under other obligations
with "cross-default" provisions), which could have a material adverse effect
on the Company. Based on discussions with possible financing sources, Parent
believes that if Parent were in control of the Company adequate financing
would be available to make such payments, if necessary.
Except as described in this Offer to Purchase, Parent and the Purchaser have
no present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, consolidation, reorganization, liquidation or
sale or transfer of a material amount of assets, involving the Company or any
of its subsidiaries, or any material changes in the Company's present
capitalization, dividend policy, employee benefit plans, corporate structure
or business or any material changes or reductions in the composition of its
management or personnel.
The Proposed Merger. In general, under the DGCL, a merger of the Company and
the Purchaser requires the approval of the Company's Board of Directors and
the approval by the holders of a majority of all outstanding Shares.
Accordingly, if the Purchaser acquires more than a majority of the
outstanding Shares pursuant to the Offer, the Purchaser would have the voting
power to approve the Proposed Merger without the vote of any other
stockholders and could effect the merger of the Company and the Purchaser by
so voting and by action of the Boards of Directors of the Purchaser and the
Company. This will be the case if the Minimum Condition or the Rights
Expiration Condition is satisfied.
Further, the DGCL provides that if a parent corporation owns at least 90% of
each class of stock of a subsidiary, the parent corporation can effect a
merger (a "Short-Form Merger") with that subsidiary without a stockholder
vote. Accordingly, if, as a result of the Offer or otherwise, the Purchaser
owns at least 90% of the outstanding Shares, after consummation of the Offer,
a Short-Form Merger could be effected without prior notice to, or any action
by, any other stockholder of the Company.
Parent and the Purchaser reserve the right to acquire additional Shares
following the expiration of the Offer through private purchases, market
transactions, tender or exchange offers or otherwise on terms and at prices
that may be more or less favorable than those of the Offer or, subject to any
applicable legal restrictions, to dispose of any or all Shares acquired by
Parent and the Purchaser.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Proposed Merger is consummated, stockholders of the
Company may have certain rights under the DGCL to dissent and demand appraisal
of, and payment in cash of the fair value of, their Shares. Such rights, if
the statutory procedures are complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from
the accomplishment or expectation of the merger) required to be paid in cash
to such dissenting holders for their Shares. Any such judicial determination
of the fair value of Shares could be based upon considerations other than or
in addition to the price paid in the Offer and the market value of the
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Shares, including asset values and the investment value of the Shares. The
value so determined could be more or less than the purchase price per Share
pursuant to the Offer or the consideration per Share to be paid in the merger.
In addition, several decisions by Delaware courts have held that, in certain
instances, a controlling stockholder of a corporation involved in a merger has
a fiduciary duty to the other stockholders that requires the merger to be fair
to such other stockholders. In determining whether a merger is fair to
minority stockholders, the Delaware courts have considered, among other
things, the type and amount of consideration to be received by the
stockholders and whether there were fair dealings among the parties. The
Delaware Supreme Court has indicated in recent decisions that in most cases
the remedy available in a merger that is found not to be "fair" to minority
stockholders is the right to appraisal described above or a damages remedy
based on essentially the same principles.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their appraisal rights. The preservation and
exercise of appraisal rights are conditioned on strict adherence to the
applicable provisions of the DGCL.
Business Combination Transactions. Section 203 of the DGCL prohibits
business combination transactions involving a Delaware corporation and an
"interested stockholder" (defined generally as any person that directly or
indirectly beneficially owns 15% or more of the outstanding voting stock of
the subject corporation) for three years following the date such person became
an "interested stockholder," unless certain exceptions apply, including that
prior to such date the Board of Directors of the Company approved either the
business combination or the transaction which resulted in such person being an
interested stockholder. In its Restated Certificate of Incorporation, filed
September 2, 1993, which is the most recent Certificate of Incorporation on
file with the Commission, the Company elected not to be governed by Section
203 of the DGCL.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions
and which may under certain circumstances be applicable to the Proposed
Merger. However, Rule 13e-3 would be inapplicable if (i) the Shares are
deregistered under the Exchange Act prior to the Proposed Merger or other
business combination or (ii) the Proposed Merger or other business combination
is consummated within one year after the purchase of the Shares pursuant to
the Offer and the amount paid per Share in the Proposed Merger or other
business combination is at least equal to the amount paid per Share in the
Offer. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the fairness of the proposed transaction and
the consideration offered to minority stockholders in such transaction be
filed with the Commission and disclosed to stockholders prior to the
consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
If, on or after July 16, 1996 (the "Applicable Date"), the Company should
(a) split, combine or otherwise change the Shares or its capitalization, (b)
acquire or otherwise cause a reduction in the number of outstanding Shares or
other securities or (c) issue or sell additional Shares (other than the
issuance of Shares under option or upon exercise of any Warrants prior to the
Applicable Date, in accordance with the terms of such options and Warrants as
publicly disclosed prior to the Applicable Date), shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, then, subject to the provisions of Section 14, the Purchaser, in
its sole discretion, may make such adjustments as it deems appropriate in the
Offer price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased.
If, on or after the Applicable Date, the Company should declare or pay any
cash dividend on the Shares or make any other distribution on the Shares, or
issue with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or
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options, conditional or otherwise, to acquire, any of the foregoing, which are
payable or distributable to stockholders of record on a date prior to the
transfer of the Shares purchased pursuant to the Offer to the Purchaser or its
nominee or transferee on the Company's stock transfer records, then, subject
to the provisions of Section 14, (a) the Offer price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer price or
deduct from the Offer price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other term or 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 a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), to pay
for any Shares or Warrants not theretofore accepted for payment or paid for,
and may terminate the Offer, unless (1) (a) the Rights Expiration Condition or
(b) (i) the Minimum Condition and (ii) Rights Condition shall have been
satisfied, (2) any waiting period under the HSR Act applicable to the purchase
of securities pursuant to the Offer shall have expired or been terminated and
(3) with respect to the $1.00 Warrants only, the closing price of the Shares
shall have equaled or exceeded $17.50 per Share for 20 consecutive trading
days, and such Warrants shall thereby have become exercisable. Furthermore,
notwithstanding any other term or provision of the Offer, the Purchaser will
not be required to accept for payment or, subject as aforesaid, to pay for any
securities not theretofore accepted for payment or paid for, and may terminate
or amend the Offer if, at any time on or after the Applicable Date, and before
the acceptance of such securities for payment or, subject to any applicable
rules and regulations of the Commission, the payment therefor, any of the
following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
before any court or Governmental Entity, (i)(A) challenging or seeking to,
or which is reasonably likely to, make illegal, delay or otherwise directly
or indirectly restrain or prohibit, or seeking to, or which is reasonably
likely to, impose voting, procedural, price or other requirements, in
addition to those required by Federal securities laws, in connection with,
the making of the Offer, the acceptance for payment of, or payment for,
some of or all the Shares or Warrants by the Purchaser, Parent or any other
affiliate of Parent or the consummation by the Purchaser, Parent or any
other affiliate of Parent of a merger or other similar business combination
with the Company, (B) seeking to obtain, or which is reasonably likely to
result in, material damages or (C) otherwise directly or indirectly
relating to the transactions contemplated by the Offer or any such merger
or business combination, (ii) seeking to, or which is reasonably likely to,
prohibit the ownership or operation by the Purchaser, Parent or any other
affiliate of Parent of all or any portion of the business or assets of the
Company and its subsidiaries or of the Purchaser, Parent or any other
affiliate or Parent or to compel the Purchaser, Parent or any other
affiliate of Parent to dispose of or hold separate all or any portion of
the business or assets of the Company or any of its subsidiaries or of the
Purchaser, Parent or any other affiliate of Parent or seeking to impose, or
which is reasonably likely to result in, any limitation on the ability of
the Purchaser, Parent or any other affiliate of Parent to conduct such
business or own such assets, (iii) seeking to, or which is reasonably
likely to, impose limitations on the ability of the Purchaser, Parent or
any other affiliate of Parent effectively to exercise full rights of
ownership of the Shares or Warrants, including, without limitation, the
right to vote any Shares acquired or owned by the Purchaser, Parent or any
other affiliate of Parent on all matters properly presented to the
Company's securityholders, (iv) seeking to, or
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which is reasonably likely to, require divestiture by the Purchaser, Parent
or any other affiliate of Parent of any Shares or Warrants, (v) seeking, or
which is reasonably likely to result in, any material diminution in the
benefits expected to be derived by the Purchaser, Parent or any other
affiliate of Parent as a result of the transactions contemplated by the
Offer or any merger or other similar business combination with the Company,
(vi) otherwise directly or indirectly relating to the Offer or which
otherwise, in the sole judgment of the Purchaser, might materially
adversely affect the Company or any of its subsidiaries or the Purchaser,
Parent or any other affiliate of Parent or the value of the Shares or (vii)
in the sole judgment of the Purchaser, materially adversely affecting the
business, properties, assets, liabilities, capitalization, stockholders'
equity, condition (financial or otherwise), operations, licenses or
franchises, results of operations or prospects of the Company or any of its
subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Parent or any other affiliate of Parent or the Company or
any of its subsidiaries or (ii) the Offer or any merger or other similar
business combination by the Purchaser, Parent or any other affiliate of
Parent with the Company, by any government, legislative body or court,
domestic, foreign or supranational, or Governmental Entity, other than the
routine application of the waiting period provisions of the HSR Act to the
Offer, that, in the sole judgment of the Purchaser, might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) of paragraph (a) above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of the Purchaser, is or may be
materially adverse to the Company or any of its subsidiaries, or the
Purchaser shall have become aware of any facts that, in the sole judgment
of the Purchaser, have or may have material adverse significance with
respect to either the value of the Company or any of its subsidiaries or
the value of the Shares or Warrants to the Purchaser, Parent or any other
affiliate of Parent;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad or in the market price of Shares, (iii) any change in the general
political, market, economic or financial conditions in the United States or
abroad that could, in the sole judgment of the Purchaser, have a material
adverse effect on the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries or the trading in, or value of, the
Shares, (iv) any material change in United States currency exchange rates
or any other currency exchange rates or a suspension of, or limitation on,
the markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that, in the
sole judgment of the Purchaser, might affect, the extension of credit by
banks or other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, material
acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split, combined
or otherwise changed, or authorized or proposed a split, combination or
other change of, the Shares or the Warrants or its capitalization, (ii)
acquired or otherwise caused a reduction in the number of, or authorized or
proposed the acquisition or other reduction in the number of, outstanding
Shares or other securities, (iii) issued or sold, or authorized or proposed
the issuance, distribution or sale of, additional Shares (other than the
issuance of Shares pursuant to options or Warrants outstanding prior to the
Applicable Date in accordance with the terms of such options or Warrants as
publicly disclosed prior to the Applicable Date), shares of any other class
of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options,
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conditional or otherwise, to acquire, any of the foregoing, (iv) declared
or paid, or proposed to declare or pay any dividend or other distribution,
whether payable in cash, securities or other property, on or with respect
to any Shares, (v) altered or proposed to alter any material term of any
outstanding security, (vi) incurred any debt other than in the ordinary
course of business or any debt containing burdensome covenants, (vii)
authorized, recommended, proposed or entered into an agreement with respect
to any merger, consolidation, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment or any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that in the sole judgment
of the Purchaser could adversely affect either the value of the Company or
any of its subsidiaries or the value of the Shares or Warrants to the
Purchaser, Parent or any other affiliate of Parent, (ix) entered into any
employment, severance or similar agreement, arrangement or plan with or for
the benefit of any of its employees other than in the ordinary course of
business or entered into or amended any agreements, arrangements or plans
so as to provide for increased or accelerated benefits to the employees as
a result of or in connection with the transactions contemplated by the
Offer, (x) except as may be required by law, taken any action to terminate
or amend any employee benefit plan (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended) of the Company
or any of its subsidiaries, or the Purchaser shall have become aware of any
such action that was not disclosed in publicly available filings prior to
the Applicable Date, (xi) amended, or authorized or proposed any amendment
to, its certificate of incorporation or by-laws, or the Purchaser shall
become aware that the Company or any of its subsidiaries shall have
proposed or adopted any such amendment that was not disclosed in publicly
available filings prior to the Applicable Date or (xii) otherwise acted out
of the ordinary course of business, consistent with past practice;
(f) a tender or exchange offer for any Shares or Warrants shall have been
made or publicly proposed to be made by any other person (including the
Company or any of its subsidiaries or affiliates), or it shall have been
publicly disclosed or the Purchaser shall have otherwise learned that (i)
any person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or a Schedule 13G on file with
the Commission prior to the Applicable Date, (ii) any such person, entity
or group that prior to the Applicable Date, had filed such a Schedule with
the Commission has acquired or proposes to acquire, through the acquisition
of stock, the formation of a group or otherwise, beneficial ownership of 1%
or more of any class or series of capital stock of the Company (including
the Shares), or shall have been granted or have acquired any right, option
or warrant (including the Warrants), conditional or otherwise, to acquire
beneficial ownership of 1% or more of any class or series of capital stock
of the Company (including the Shares), (iii) any person or group shall have
entered into a definitive agreement or an agreement in principle or made a
proposal with respect to a tender offer or exchange offer or a merger,
consolidation or other business combination with or involving the Company
or (iv) any person shall have filed a Notification and Report Form under
the HSR Act (or amended a prior filing to increase the applicable filing
threshold set forth therein) or made a public announcement reflecting an
intent to acquire the Company or any assets or subsidiaries of the Company;
(g) the Purchaser shall become aware (i) that any contractual right of
the Company or any of its subsidiaries shall be impaired or otherwise
adversely affected or that any amount of indebtedness of the Company or any
of its subsidiaries shall become accelerated or otherwise become due or
become subject to acceleration prior to its stated due date, in any case
with or without notice or the lapse of time or both as a result of or in
connection with the transactions contemplated by the Offer or the Proposed
Merger or any other business combination involving the Company, which, in
the aggregate, would be material, (ii) of any covenant, term or condition
in any of the Company's or any of its subsidiaries' instruments or
agreements
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that has or may have, in the aggregate, a material adverse effect on (x)
the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
management, key personnel, licenses, franchises, results of operations or
prospects of the Company or any of its subsidiaries (including, but not
limited to, any event of default that may result from the consummation of
the Offer, the acquisition of control of the Company or any of its
subsidiaries or the Proposed Merger or any other business combination
involving the Company), (y) the value of the Shares or the Warrants in the
hands of Parent, the Purchaser or any of their respective affiliates or (z)
the consummation by Parent, the Purchaser or any of their respective
affiliates of the Offer and the Proposed Merger or any other business
combination involving the Company or (iii) that any report, document or
instrument of the Company or any of its subsidiaries filed with the
Commission contained, when filed, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading or that the Company or any of
its subsidiaries shall have failed to file any such report, document or
instrument;
(h) any approval, permit, authorization, favorable review of consent or
any Governmental Entity (including those described or referred to in
Section 15) shall not have been obtained on terms satisfactory to the
Purchaser in its sole discretion; or
(i) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser,
Parent or any other affiliate of Parent shall have entered into a
definitive agreement or announced an agreement in principle with the
Company providing for a merger or other business combination with the
Company or the purchase of stock or assets of the Company;
which, in the sole judgment of the Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser,
Parent or any other affiliate of Parent) giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser in whole
or in part at any time and from time to time in its sole discretion. The
failure by the Purchaser at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances will not be deemed a waiver
with respect to any other facts and circumstances and each such right will be
deemed an ongoing right that may be asserted at any time and from time to
time. Any determination by the Purchaser concerning the events described in
this Section 14 will be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on a review of
publicly available information filed by the Company with the Commission and
other publicly available information concerning the Company, neither Parent
nor the Purchaser is aware of any license or regulatory permit that appears to
be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by the
Purchaser pursuant to the Offer or the Proposed Merger or, except as set forth
below, of any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares or Warrants by the Purchaser pursuant to
the Offer or the Proposed Merger. Should any such approval or other action be
required, the Purchaser currently contemplates that it will be sought. While
the Purchaser does not currently intend to delay the acceptance for payment of
Shares or Warrants tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the Company's
business or that certain parts of the Company's business might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken. The Purchaser's obligation under the Offer to accept
for payment and pay for Shares or Warrants is subject to certain conditions.
See Section 14.
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State Takeover Statutes. A number of states have adopted "takeover" statutes
that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of
business in such states.
In 1982, in Edgar v. MITE Corporation, the Supreme Court of the United
States invalidated on constitutional grounds the Illinois Business Takeover
Act, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State
of Indiana may, as a matter of corporate law, and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without prior approval of the remaining stockholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there. Subsequently, a number of federal courts ruled that
various state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes.
To the extent that certain provisions of these statutes purport to apply to
the Offer, the Purchaser believes that there are reasonable bases for
contesting such statutes. If any person should seek to apply any state
takeover statute, the Purchaser would take such action as then appears
desirable, which action may include challenging the validity or applicability
of any such statute in appropriate court proceedings. If it is asserted that
one or more takeover statutes applies to the Offer and the Proposed Merger,
and it is not determined by an appropriate court that such statute or statutes
do not apply or are invalid as applied to the Offer and the Proposed Merger,
the Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to purchase or pay for Shares or Warrants tendered pursuant to the
Offer, or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for payment or pay for Shares or
Warrants tendered. See Section 14.
Antitrust. The Offer and the Proposed Merger are subject to the HSR Act,
which provides that certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission ("FTC") and certain waiting period requirements have been
satisfied. On July 19, 1996, the sole holders of equity interests in Parent
(the "HSR Filers") filed a Notification and Report Form with respect to the
Offer (the "HSR Filing").
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares or Warrants under the Offer may not be consummated until the expiration
of a 15-calendar day waiting period following the filing by the HSR Filers.
Accordingly, as such filing was made on July 19, 1996, the waiting period with
respect to the Offer will expire at 11:59 p.m., New York City time, on August
3, 1996, unless the HSR Filers receive a request for additional information or
documentary material, or the Antitrust Division and the FTC terminate the
waiting period prior thereto. If, within such 15-day waiting period, either
the Antitrust Division or the FTC requests additional information or material
from the HSR Filers concerning the Offer, the waiting period will be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by the HSR Filers with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of the HSR Filers. The
Purchaser will not accept for payment Shares or Warrants tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
If the transaction to which the HSR Filing relates is abandoned prior to the
expiration of the 15-day waiting period or any extension thereof, then the
Proposed Merger may not be consummated until 30 calendar days after receipt by
the Antitrust Division and the FTC of the Notification and Report Forms of
both the HSR Filers and
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the Company unless the 30-day period is earlier terminated by the Antitrust
Division and the FTC. Within such 30-day period, the Antitrust Division or the
FTC may request additional information or documentary materials from the HSR
Filers or the Company. The acquisition of Shares or Warrants pursuant to the
Proposed Merger may not be consummated until 20 days after such requests are
substantially complied with by both the HSR Filers and the Company.
Thereafter, the waiting periods may be extended only by court order or with
the consent of the HSR Filers and the Company.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of
Shares or Warrants pursuant to the Offer and the Proposed Merger. At any time
before or after the Purchaser's acquisition of Shares or Warrants, the
Antitrust Division or the FTC could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, including seeking
to enjoin the acquisition of Shares or Warrants pursuant to the Offer and the
Proposed Merger or otherwise or seeking divestiture of Shares or Warrants
acquired by the Purchaser or divestiture of substantial assets of Parent or
its subsidiaries. Private parties and state attorneys general may also bring
legal action under the antitrust laws under certain circumstances. Based upon
an examination of publicly available information relating to the businesses in
which the HSR Filers and the Company are engaged, Parent and the Purchaser
believe that the acquisition of Shares and Warrants by the Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares or Warrants by the
Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 14 for certain conditions to the Offer,
including conditions with respect to certain governmental actions.
Litigation. The Purchaser and Parent have commenced litigation against the
Company and its Board of Directors in the Court of Chancery in the State of
Delaware seeking expedited declaratory and injunctive relief in order (1) to
permit the securityholders of the Company to accept the Offer and (2) to allow
Parent to conduct a proxy contest to replace the Board of Directors with the
nominees of Parent (the "Litigation").
In the Litigation, the Purchaser and Parent request, among other things,
that the Court of Chancery issue an order (a) declaring that the Offer, the
Proposed Merger and the Follow-up Transaction Commitment satisfy the Rights
Expiration Condition; (b) preliminarily and permanently enjoining the Company,
the Board of Directors and certain others from amending the Rights Agreement
in order to make consummation of the Offer or the Proposed Merger more
difficult; (c) declaring that use of Sections 2.4 (which provides for 10 to 60
days notice by the Company of stockholders meetings) and 2.8 (which requires
that stockholders submit director nominations not less than 60 days prior to
stockholders meetings) of the Company's bylaws to frustrate Parent's ability
to nominate candidates for the Board of Directors is invalid and enjoining
such use; and (d) declaring that the Rights Agreement is invalid. There can be
no assurance that the Court of Chancery will rule in favor of the Purchaser
and Parent.
16. FEES AND EXPENSES.
Merrill Lynch is acting as the Dealer Manager in connection with the Offer
and is serving as exclusive financial advisor to the Purchaser and Parent with
respect to Parent's proposed acquisition of the Company. Parent has agreed,
pursuant to an engagement letter dated December 22, 1995 (the "Engagement
Letter"), to pay Merrill Lynch for its services (i) a fee of $100,000 payable
upon the commencement of the Offer (the "Initial Fee") and (ii) a transaction
fee of $750,000 (the "Transaction Fee") payable upon the closing of an
Acquisition Transaction (as defined in the Engagement Letter). The Initial Fee
will be credited against the Transaction Fee. In addition, Parent has agreed
to reimburse Merrill Lynch for its reasonable out-of-pocket expenses,
including, without limitation, reasonable fees and disbursements of its
counsel. Parent also has agreed to indemnify Merrill Lynch and certain
affiliated persons against certain liabilities and expenses in connection with
its services, including, without limitation, certain liabilities under the
federal securities laws. Merrill Lynch may from time to time in the future
render various investment banking services to Parent and its affiliates, for
which it is expected it would be paid customary fees.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact
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holders of Shares or Warrants by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers, commercial banks, trust
companies and other nominees to forward the materials relating to the Offer to
beneficial owners. The Information Agent and the Depositary each will receive
reasonable and customary compensation from the Purchaser for their services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified by the Purchaser against certain liabilities and expenses in
connection therewith, including, without limitation, certain liabilities under
the federal securities laws. Neither the Information Agent nor the Depositary
has been retained to make solicitations or recommendations in connection with
the Offer.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker or dealer or other person for soliciting
tenders of Shares or Warrants pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies and other nominees will, upon request, be
reimbursed by the Purchaser for reasonable expenses incurred by them in
forwarding the offering materials to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares or Warrants in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. Neither the
Purchaser nor Parent is aware of any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser or Parent becomes aware of any
state law that would limit the class of offerees in the Offer, the Purchaser
will amend the Offer and, depending on the timing of such amendment, if any,
will extend the Offer to provide adequate dissemination of such information to
such holders of Shares or Warrants prior to the expiration of the Offer. In
any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained in the manner set forth in Section 8 with respect to the Company
(except that such material will not be available at the regional offices of
the Commission).
AMERICAN ENTERPRISES ACQUISITION
CORP.
July 19, 1996
32
<PAGE>
SCHEDULE I
MEMBERS OF THE BOARD OF MANAGERS AND EXECUTIVE OFFICERS OF PARENT AND
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
Parent. Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years of each member of the Board of Managers
and executive officer of Parent. Except as otherwise noted, the business
address of each such person is 701 East Franklin Street, Richmond, VA 23219,
and each such person is a United States citizen. In addition, except as
otherwise noted, each member of the Board of Managers and executive officer of
Parent has been employed in his present principal occupation listed below
during the last five years.
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
Philip W. Knisely.............. Mr. Knisely is a Member of the Board of
Managers and President of Parent, and has
held those positions since 1995. Since 1995,
he has also been President of Constellation
Capital Partners, L.L.C., a private equity
firm. From 1988 to 1995, he was President of
AMF Industries, a privately held diversified
manufacturing company.
Steven M. Rales................
1250 24th Street, N.W. Mr. Rales is a Member of the Board of
Washington, D.C. 20037 Managers and Member of Parent and has held
those positions since 1995. He is also
Chairman of the Board of Danaher
Corporation, a manufacturer of tools and
process/environmental controls products, and
has held that position since 1984. Mr. Rales
is also a General Partner of Equity Group
Holdings, a general partnership located in
Washington, D.C., with interests in
manufacturing companies, media operations,
and publicly traded securities, and has been
since 1979. Mr. Rales is also a founder and
has been Chairman of Colfax Communications,
Inc., a radio broadcasting company, since
1991. He is also a founder of Wabash
National Corporation, the largest domestic
manufacturer of truck trailers and bimodal
vehicles, and was its Chairman of the Board
of Directors until 1994.
Mitchell P. Rales..............
1250 24th Street, N.W.
Washington, D.C. 20037
Mr. Rales is a Member of the Board of
Managers and Member of Parent and has held
those positions since 1995. He is also
Chairman of the Executive Committee of
Danaher Corporation and has held that
position since 1990. He is also a General
Partner of Equity Group Holdings and has
been since 1979. Mr. Rales is also a founder
and has been a Director of Colfax
Communications, Inc., since 1991. He is also
a founder of Wabash National Corporation and
was a Director until 1994.
Joseph O. Bunting III.......... Mr. Bunting is Vice President and Secretary
of Parent and has held those positions since
1995. He has also been Controller of Equity
Group Holdings since 1987 and a Vice
President of Colfax Communications, Inc.
since 1992.
Michael G. Ryan................ Mr. Ryan is Vice President and Treasurer of
Parent and has held those positions since
1995. He has been Chief Financial Officer of
Equity Group Holdings since 1985.
<PAGE>
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
John A. Young.................. Mr. Young is Vice President, Assistant
Secretary and Assistant Treasurer of Parent
and has held those positions since 1995.
Since 1995, he has also been Vice President
of Constellation Capital Partners, L.L.C.
From 1991 to 1995, he was Director of
Corporate Development of AMF Industries.
John A. Young..................
Purchaser. The name and position with the Purchaser of each director and
executive officer of the Purchaser are set forth below. The business address,
present principal occupation or employment, five-year employment history and
citizenship of each such person is set forth above.
<TABLE>
<CAPTION>
NAME POSITION WITH THE PURCHASER
- ---- ---------------------------
<S> <C>
Philip W. Knisely................... President and Director
Steven M. Rales..................... Chairman of the Board of Directors and Director
Mitchell P. Rales................... Director
Joseph O. Bunting III............... Vice President and Secretary
Michael G. Ryan..................... Vice President and Treasurer
John A. Young....................... Vice President, Assistant Secretary and Assistant Treasurer
</TABLE>
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Certificates and any
other required documents should be sent or delivered by each securityholder of
the Company or such securityholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Delivery:
P.O. Box 2569
Suite 4660 (201) 222-4720 or (201) 14 Wall Street
Jersey City, New Jersey 222-4721 Eighth Floor
07303-2569 (for Eligible Institutions only) Suite 4680-SPR
New York, New York
10005
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses or telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 628-8509 (Toll-Free)
or
(212) 269-5550 (Call Collect)
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-4565 (Call Collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 19, 1996
BY
AMERICAN ENTERPRISES ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER IS
EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Delivery:
P.O. Box 2569 14 Wall Street
Suite 4660 Eighth Floor
Jersey City, New Jersey Suite 4680-SPR
07303-2569 New York, New York 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by securityholders either if
certificates evidencing Shares (as defined below) or Warrants (as defined
below) are to be forwarded herewith or if delivery of Shares is to be made by
book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in
Section 2 of the Offer to Purchase (as defined below). Delivery of documents
to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary. Book-entry transfer will not be available with respect to the
Warrants. As used herein, "Certificates" shall mean certificates representing
Shares, Warrants or Rights (as defined below), as the case may be.
Securityholders whose Certificates are not immediately available or who
cannot deliver their Certificates and all other documents required hereby to
the Depositary prior to the Expiration Date (as defined in Section l of the
Offer to Purchase) or who cannot complete the procedure for delivery by book-
entry transfer, if applicable, on a timely basis and who wish to tender their
Shares or Warrants must do so pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. See Instruction 2.
<PAGE>
In order validly to tender Shares, a stockholder must tender the associated
Rights. Unless and until the Distribution Date (as defined in Section 8 of the
Offer to Purchase) of the Rights, the tender of Shares will constitute the
tender of the associated Rights. If the Distribution Date occurs prior to the
Expiration Date, stockholders will be required to tender certificates
representing Rights (the "Rights Certificates") in order validly to tender
Shares, unless the Purchaser declares that the Rights Expiration Condition (as
defined in the Introduction to the Offer to Purchase) or the Rights Condition
(as defined in the Introduction to the Offer to Purchase) is satisfied.
Accordingly, stockholders who sell their Rights separately from their Shares
and do not otherwise acquire Rights may not be able to satisfy the
requirements of the Offer (as defined below) for the tender of Shares. The
tender of Rights is not required for a valid tender of Warrants. Stockholders
must tender one Right for each two Shares tendered.
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution _________________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [_] DTC [_] PDTC
Account Number __________________ Transaction Code Number _____________________
[_]CHECK HERE IF SHARES OR WARRANTS ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY:
Name(s) of Registered Holder(s)
_________________________________________________
Window Ticket No. (if any)
_____________________________________________________
Date of Execution of Notice of Guaranteed Delivery
______________________________________
Name of Institution which Guaranteed Delivery
________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL
IN, IF BLANK,
EXACTLY AS
NAME(S)
APPEAR(S) ON CERTIFICATE(S) AND SHARE(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES EVIDENCED SHARES
NUMBER(S)* BY CERTIFICATE(S)* TENDERED**
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL SHARES
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
2
<PAGE>
DESCRIPTION OF WARRANTS TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL
IN, IF BLANK,
EXACTLY AS
NAME(S)
APPEAR(S) ON CERTIFICATE(S) AND WARRANT(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
CERTIFICATE EXERCISE PRICE WARRANTS EVIDENCED WARRANTS
NUMBER(S) OF WARRANT(S) BY CERTIFICATE(S) TENDERED*
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL WARRANTS
</TABLE>
- -------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Warrants
evidenced by each Certificate delivered to the Depositary are being
tendered hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to American Enterprises Acquisition Corp., a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
American Enterprises, L.L.C., a Delaware limited liability company ("Parent"),
(i) the above described shares of Class A Common Stock, par value $0.01 per
share (the "Shares"), of Spreckels Industries, Inc., a Delaware corporation
(the "Company"), including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement"), at the price of $16.50 per Share (and associated Right),
or (ii) the above described warrants to purchase Shares issued by the Company
(the "Warrants") at the Spread (as defined below) in either case 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 July 19, 1996 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of
its affiliates, the right to purchase all or any portion of the Shares or
Warrants tendered pursuant to the Offer.
References to Shares include references to associated Rights, unless the
context indicates otherwise. In order validly to tender Shares, a stockholder
must tender the associated Rights. Unless and until the Distribution Date (as
defined in Section 8 of the Offer to Purchase) of the Rights, the tender of a
Share will constitute the tender of the associated Rights. If the Distribution
Date occurs prior to the Expiration Date, stockholders will be required to
tender certificates representing Rights (the "Rights Certificates") in order
validly to tender Shares.
The Company has outstanding four classes of Warrants. Three classes are
exercisable for Shares at respective prices of $9.17, $11.67 and $15.00 per
Warrant (respectively, the "$9.17 Warrants," the "$11.67 Warrants," and the
"$15.00 Warrants"). An additional class of Warrants is not exercisable unless
and until the closing price of the Shares shall have equaled or exceeded
$17.50 per Share for 20 consecutive trading days, at which time they would be
exercisable at $1.00 per Warrant (the "$1.00 Warrants"). The "Spread" with
respect to each of the Warrants is the difference between the Offer price for
the Shares and the exercise price for each of the Warrants, which equals $7.33
per Warrant in the case of the $9.17 Warrants, $4.83 per Warrant in the case
of the $11.67 Warrants, $1.50 per Warrant in the case of the $15.00 Warrants
and $15.50 per Warrant in the case of the $1.00 Warrants. WITH RESPECT TO THE
$1.00 WARRANTS, THE OFFER IS CONDITIONED ON THE CLOSING PRICE OF THE SHARES
EQUALING OR EXCEEDING $17.50 PER SHARE FOR 20 CONSECUTIVE TRADING DAYS AND
SUCH WARRANTS THEREBY BECOMING EXERCISABLE.
3
<PAGE>
Subject to, and effective upon, acceptance for payment of the Shares or
Warrants tendered herewith in accordance with the terms of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Purchaser all right, title and
interest in and to all the Shares or Warrants that are being tendered hereby
and all dividends, distributions (including, without limitation, distributions
of additional Shares, Warrants, Rights or Rights Certificates) and rights
declared, paid or distributed in respect of such Shares or Warrants on or
after July 16, 1996 (collectively, "Distributions"), and irrevocably appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares or Warrants and all Distributions,
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver Certificates and
all Distributions, or transfer ownership of such Shares and all Distributions
on the account books maintained by a Book-Entry Transfer Facility, together,
in either case, with all accompanying evidences of transfer and authenticity,
to or upon the order of the Purchaser, (ii) present such Shares or Warrants
and all Distributions for transfer on the books of the Company and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares or Warrants and all Distributions, all in accordance with the
terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Philip W. Knisely and John A. Young of the Purchaser as proxies of
the undersigned, each with full power of substitution, to the full extent of
the undersigned's rights with respect to the Shares or Warrants tendered by
the undersigned and accepted for payment by the Purchaser (and any and all
Distributions). All such proxies shall be considered coupled with an interest
in the tendered Shares or Warrants. This appointment will be effective if,
when, and only to the extent that, the Purchaser accepts such Shares or
Warrants for payment pursuant to the Offer. Upon such acceptance for payment,
all prior proxies given by the undersigned with respect to such Shares or
Warrants (and such other Shares, Warrants and securities) will, without
further action, be revoked, and no subsequent proxies may be given nor any
subsequent written consent executed by the undersigned (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of the Purchaser named above will, with respect to the Shares,
Warrants and other securities for which the appointment is effective, be
empowered to exercise all voting and other rights of the undersigned as they
in their sole discretion may deem proper at any annual or special meeting of
the stockholders of the Company or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise, and the Purchaser
reserves the right to require that, in order for Shares, Warrants or other
securities to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares or Warrants, the Purchaser must be able
to exercise full voting rights with respect to such Shares, Warrants or other
securities.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares or
Warrants tendered hereby and all Distributions, and that when such Shares or
Warrants are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto and to all Distributions, free
and clear of all liens, restrictions, charges and encumbrances, and that none
of such Shares, Warrants and Distributions will be subject to any adverse
claim. The undersigned, upon request, shall execute and deliver all additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares or
Warrants tendered hereby and all Distributions. In addition, the undersigned
shall remit and transfer promptly to the Depositary for the account of the
Purchaser all Distributions in respect of the Shares or Warrants tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, the Purchaser
shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares or
Warrants tendered hereby or deduct from such purchase price, the amount or
value of such Distribution as determined by the Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Offer to Purchase, this tender
is irrevocable.
The undersigned understands that tenders of Shares or Warrants pursuant to
any one of the procedures described in Section 2 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer. The Purchaser's acceptance of such Shares
or Warrants for payment will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer, including, without limitation, the undersigned's representation and
warranty that the undersigned owns the Shares or Warrants being tendered.
4
<PAGE>
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares or
Warrants purchased, and return all Certificates evidencing Shares or Warrants
not purchased or not tendered, in the name(s) of the registered holder(s)
appearing above under "Description of Shares Tendered" or "Description of
Warrants Tendered." Similarly, unless otherwise indicated in the box entitled
"Special Delivery Instructions," please mail the check for the purchase price
of all Shares or Warrants purchased and all Certificates evidencing Shares or
Warrants not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered" or "Description of Warrants Tendered."
In the event that the boxes entitled "Special Payment Instructions" and
"Special Delivery Instructions" are both completed, please issue the check for
the purchase price of all Shares or Warrants purchased and return all
Certificates evidencing Shares or Warrants not purchased or not tendered in
the name(s) of, and mail such check and Certificates to, the person(s) so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares or
Warrants from the name of the registered holder(s) (or in the case of
Warrants, the holder(s)) thereof if the Purchaser does not purchase any of the
Shares or Warrants tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares or Warrants purchased or Shares or Warrants purchased or
Certificates evidencing Shares or Certificates evidencing Shares or
Warrants not tendered or not pur- Warrants not tendered or not pur-
chased are to be issued in the chased are to be mailed to some-
name of someone other than the one other than the undersigned,
undersigned. or to the undersigned at an ad-
dress other than that shown under
either "Description of Shares
Tendered" or "Description of War-
rants Tendered."
Issue [_] Check [_] Certificate(s)
to:
Name: ____________________________
(PRINT) Mail [_] Check [_] Certificate(s)
Address: _________________________ to:
__________________________________ Name: ____________________________
(ZIP CODE) (PRINT)
__________________________________ Address: _________________________
TAXPAYER IDENTIFICATION OR SOCIAL __________________________________
SECURITY NUMBER (ZIP CODE)
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
5
<PAGE>
IMPORTANT
SECURITYHOLDERS: SIGN HERE
(Also Please Complete Substitute Form W-9 Included Herein)
X: ________________________________________________________________________
X: ________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: _____________ , 1996
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Certificates or on a security position listing or by a person(s)
authorized to become the registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please
provide the following information. See Instruction 5.)
Name(s): __________________________________________________________________
---------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title): ____________________________________________________
Address: __________________________________________________________________
---------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone No.: ______________________________________________
Taxpayer Identification or Social Security No.: ___________________________
(See Substitute Form W-9 Included Herein)
GUARANTEE OF SIGNATURE(S)
(If Required--See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or by a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"), unless (i) this Letter of Transmittal is signed
by the registered holder(s) (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of applicable security) of the
Shares or Warrants tendered hereby and such holder(s) has (have) completed
neither the box entitled "Special Payment Instructions" nor the box entitled
"Special Delivery Instructions" on the reverse hereof or (ii) such Shares or
Warrants are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Certificates are to be forwarded herewith
or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 2 of the Offer to Purchase. Certificates
evidencing all physically tendered Shares or Warrants, or a confirmation of a
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the reverse hereof
prior to the Expiration Date (as defined in Section l of the Offer to
Purchase). If Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery. Securityholders whose Certificates are not
immediately available, who cannot deliver their Certificates and all other
required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer, if
applicable, on a timely basis may tender their Shares or Warrants pursuant to
the guaranteed delivery procedure described in Section 2 of the Offer to
Purchase. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Purchaser, must be received by the Depositary prior to the Expiration Date;
and (iii) the Certificates evidencing all physically delivered Shares or
Warrants in proper form for transfer by delivery, or a confirmation of a book-
entry transfer, if applicable, into the Depositary's account at a Book-Entry
Transfer Facility of all Shares delivered by book-entry transfer, in each case
together with a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by
the Depositary within (x) in the case of Shares and Warrants, three trading
days after the date of execution of such Notice of Guaranteed Delivery or (y)
in the case of Rights, a period ending on the later of (1) three trading days
after the date of execution of such Notice of Guaranteed Delivery or (2) three
business days after the date Rights Certificates are distributed to
stockholders, all as described in Section 2 of the Offer to Purchase. A
trading day is any day on which the Nasdaq National Market is open for
business.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SECURITYHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY. BOOK ENTRY TRANSFER WILL NOT BE AVAILABLE WITH RESPECT
TO THE WARRANTS.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Warrants will be purchased. By execution of this Letter
of Transmittal (or a facsimile hereof), all tendering securityholders waive
any right to receive any notice of the acceptance of their Shares or Warrants
for payment.
7
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under either "Description
of Shares Tendered" or "Description of Warrants Tendered" is inadequate, the
Certificate numbers, the number of Shares or Warrants evidenced by such
Certificates and the number of Shares or Warrants tendered should be listed on
a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares or Warrants evidenced by any
Certificate delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares or Warrants which are to be tendered in the boxes
entitled "Number of Shares Tendered" or "Number of Warrants Tendered." In such
cases, new Certificate(s) evidencing the remainder of the Shares or Warrants
that were evidenced by the Certificates delivered to the Depositary herewith
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Delivery Instructions" on the
reverse hereof, as soon as practicable after the expiration or termination of
the Offer. All Shares or Warrants evidenced by Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
or Warrants tendered hereby, the signature(s) must correspond with the name(s)
as written on the face of the Certificates evidencing such Shares or Warrants
without alteration, enlargement or any other change whatsoever.
If any Share or Warrant tendered hereby is owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares or Warrants tendered hereby are registered in the names
of different holders, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares or Warrants tendered hereby, no endorsements of Certificates or
separate stock powers are required, unless payment is to be made to, or
Certificates evidencing Shares or Warrants not tendered or not purchased are
to be issued in the name of, a person other than the registered holder(s), in
which case, the Certificate(s) evidencing the Shares or Warrants tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on
such Certificate(s). Signatures on such Certificate(s) and stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares or Warrants tendered hereby, the
Certificate(s) evidencing the Shares or Warrants tendered hereby must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such
Certificate(s). Signatures on such Certificate(s) and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares or Warrants to it or its order pursuant to the Offer.
If, however, payment of the purchase price of any Shares or Warrants purchased
is to be made to, or Certificate(s) evidencing Shares or Warrants not tendered
or not purchased are to be issued in the name of, a person other than the
registered holder(s), the amount of any stock transfer taxes (whether imposed
on the registered holder(s), such other person or otherwise) payable on
account of the transfer to such other person will be deducted from the
purchase price of such Shares or Warrants purchased, unless evidence
satisfactory to the Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this
8
<PAGE>
Instruction 6, it will not be necessary for transfer tax stamps to be affixed
to the Certificates evidencing the Shares or Warrants tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares or Warrants tendered hereby is to be issued, or
Certificate(s) evidencing Shares or Warrants not tendered or not purchased are
to be issued, in the name of a person other than the person(s) signing this
Letter of Transmittal or if such check or any such Certificate is to be sent
to someone other than the person(s) signing this Letter of Transmittal or to
the person(s) signing this Letter of Transmittal but at an address other than
that shown in the boxes entitled "Description of Shares Tendered" or
"Description of Warrants Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information
Agent or from brokers, dealers, commercial banks or trust companies.
10. SUBSTITUTE FORM W-9. Each tendering securityholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN")
on the Substitute Form W-9 which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, that such number is correct
and that such securityholder is not subject to backup withholding of federal
income tax. If a tendering securityholder has been notified by the Internal
Revenue Service that such securityholder is subject to backup withholding,
such securityholder must cross out item (2) of the Certification box of the
Substitute Form W-9, unless such securityholder has since been notified by the
Internal Revenue Service that such securityholder is no longer subject to
backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the tendering securityholder to 31% federal income tax
withholding on the payment of the purchase price of all Shares or Warrants
purchased from such shareholder. If the tendering securityholder has not been
issued a TIN and has applied for one or intends to apply for one in the near
future, such securityholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part l and the Depositary
is not provided with a TIN within 60 days, the Depositary will withhold 31% on
all payments of the purchase price to such securityholder until a TIN is
provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES
AND CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN SECTION 1 OF THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a securityholder whose tendered Shares or
Warrants are accepted for payment is required by law to provide the Depositary
(as payer) with such securityholder's correct TIN on Substitute Form W-9
below. If such securityholder is an individual, the TIN is such
securityholder's social security number. If the Depositary is not provided
with the correct TIN, the securityholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made
to such securityholder with respect to Shares or Warrants purchased pursuant
to the Offer may be subject to backup withholding of 31%.
9
<PAGE>
Certain securityholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the securityholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a securityholder
with respect to Shares or Warrants purchased pursuant to the Offer, the
securityholder is required to notify the Depositary of such securityholder's
correct TIN by completing the form below certifying (a) that the TIN provided
on Substitute Form W-9 is correct (or that such securityholder is awaiting a
TIN), and (b) that (i) such securityholder is exempt from backup withholding,
(ii) such securityholder has not been notified by the Internal Revenue Service
that such securityholder is subject to backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified such securityholder that such securityholder is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The securityholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares or
Warrants tendered hereby. If the Shares or Warrants are in more than one name
or are not in the name of the actual owner, consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering securityholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future, the securityholder should write "Applied For" in
the space provided for the TIN in Part I, and sign and date the Substitute
Form W-9. If "Applied For" is written in Part I and the Depositary is not
provided with a TIN within 60 days, the Depositary will withhold 31% of all
payments of the purchase price to such securityholder until a TIN is provided
to the Depositary.
10
<PAGE>
ALL TENDERING SECURITYHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------
PART I--Taxpayer
SUBSTITUTE Identification Number-- -------------------------
FORM W-9 For all accounts, enter Social Security Number
DEPARTMENT OF taxpayer identification
THE TREASURY number in the box at
INTERNAL right. (For most
REVENUE SERVICE individuals, this is your
social security number.
If you do not have a
number, see Obtaining a
Number in the enclosed
Guidelines.) Certify by
signing and dating below.
Note: If the account is
in more than one name,
see the chart in the
enclosed Guidelines to
determine which number to
give the payer.
OR ______________________
Employer Identification
Number
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
(If awaiting TIN write
"Applied For")
--------------------------------------------------------------
PART II--For Payees Exempt From Backup Withholding, see
the enclosed Guidelines and complete as instructed
therein.
CERTIFICATION--Under penalties of perjury, I certify
that:
(l) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for
a number to be issued to me), and
(2) I am not subject to backup withholding because (a)
I am exempt from backup withholding, (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2)
above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject
to backup withholding you received another notification
from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see in-
structions in the enclosed Guidelines.)
-------------------------------------------------------------
SIGNATURE ______________________ DATE _____, 1996
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 628-8509 (Toll-free)
or
(212) 269-5550 (Call Collect)
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-4565 (Call Collect)
July 19, 1996
11
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
TO
AMERICAN ENTERPRISES ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
----------------
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates
evidencing shares of Class A Common Stock, par value $0.01 per share (the
"Shares") of Spreckels Industries, Inc., a Delaware corporation (the
"Company") including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement") or the warrants to purchase Shares issued by the Company
(the "Warrants") are not immediately available, (ii) time will not permit all
required documents to reach First Chicago Trust Company of New York, as
Depositary (the "Depositary"), prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase (as defined below)) or (iii) the procedure
for book-entry transfer, if applicable, cannot be completed on a timely basis.
This Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary. See Section 2 of
the Offer to Purchase. References to Shares include references to the
associated Rights, unless the context indicates otherwise. As used herein,
"Certificates" shall mean certificates representing Shares, Warrants or
Rights, as the case may be.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Delivery:
P.O. Box 2569 (201) 222-4720 14 Wall Street
Suite 4660 or Eighth Floor
Jersey City, New Jersey (201) 222-4721 Suite 4680-SPR
07303-2569 (for Eligible New York, New York 10005
Institutions only)
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
- -------------------------------------------------------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to American Enterprises Acquisition Corp., a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
American Enterprises, L.L.C., a Delaware limited liability company ("Parent"),
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated July 19, 1996 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares or Warrants specified below pursuant to the guaranteed
delivery procedures described in Section 2 of the Offer to Purchase.
Number of Shares Tendered: __________ Name(s) of Registered Holder(s):
Number of $9.17 Warrants Tendered: __ -------------------------------------
Number of $11.67 Warrants Tendered: _ -------------------------------------
Number of $15.00 Warrants Tendered: _ PLEASE PRINT
Number of $1.00 Warrants Tendered: __ Address(es):
Certificate Nos. (if available): ____ -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
ZIP CODE
Check ONE box if Shares will be Daytime Area Code and Tel. No.:
tendered by book- entry transfer: -------------------------------------
[_] The Depository Trust Company Signature(s):
-------------------------------------
[_] Philadelphia Depository Trust -------------------------------------
Company
Account Number:
- -------------------------------------
Dated: _______________________ , 1996
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing
of the Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program hereby (a) represents that the tender of Shares or Warrants effected
hereby complies with Rule 14e-4 of the Securities Exchange Act of 1934 and (b)
guarantees delivery to the Depositary, at one of its addresses set forth
above, of Certificates evidencing the Shares or Warrants tendered hereby in
proper form for transfer, or confirmation of book-entry transfer of such
Shares into the Depositary's accounts at The Depository Trust Company or the
Philadelphia Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within (x) in the case of Shares and
Warrants, three trading days after the date of execution of such Notice of
Guaranteed Delivery or (y) in the case of Rights, a period ending on the later
of (1) three trading days after the date of execution of such Notice of
Guaranteed Delivery or (2) three business days after the date Rights
Certificates are distributed to stockholders, all as described in Section 2 of
the Offer to Purchase. A trading day is any day on which the Nasdaq National
Market is open for business.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in financial loss to such Eligible Institution.
- ------------------------------------- -------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- ------------------------------------- -------------------------------------
ADDRESS NAME
- ------------------------------------- -------------------------------------
- ------------------------------------- TITLE
AREA CODE AND TEL. NO. -------------------------------------
DATE
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
AT
$16.50 NET PER SHARE
AND
THE SPREAD (AS DEFINED HEREIN) PER WARRANT
BY
AMERICAN ENTERPRISES ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER IS EXTENDED.
July 19, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by American Enterprises Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of American
Enterprises, L.L.C., a Delaware limited liability company ("Parent"), to act
as Dealer Manager in connection with the Purchaser's offer to purchase (i) all
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Spreckels Industries, Inc., a Delaware corporation (the
"Company"), including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement"), at a price of $16.50 per Share (and associated Right) and
(ii) all outstanding warrants to purchase Shares issued by the Company (the
"Warrants") at the Spread (as defined below), in each case, net to the seller
in cash, without interest thereon, and subject to the conditions set forth in
the Offer to Purchase, dated July 19, 1996 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer") enclosed herewith. As used herein,
"Certificates" shall mean certificates representing Shares, Warrants or
Rights, as the case may be.
References to Shares include references to the associated Rights, unless the
context indicates otherwise. In order validly to tender Shares, a stockholder
must tender the associated Rights. Unless and until the Distribution Date (as
defined in Section 8 of the Offer to Purchase) of the Rights, the tender of a
Share will constitute the
<PAGE>
tender of the associated Rights. If the Distribution Date occurs prior to the
Expiration Date, stockholders will be required to tender Rights Certificates
in order validly to tender Shares.
The Company has outstanding four classes of Warrants. Three classes are
exercisable for Shares at respective prices of $9.17, $11.67 and $15.00 per
Warrant (respectively, the "$9.17 Warrants," the "$11.67 Warrants" and the
"$15.00 Warrants"). An additional class of Warrants is not exercisable unless
and until the closing price of the Shares shall have equaled or exceeded
$17.50 per Share for 20 consecutive trading days, at which time they would be
exercisable at $1.00 per Warrant (the "$1.00 Warrants"). The "Spread" with
respect to each of the Warrants is the difference between the Offer price for
the Shares and the exercise price for each of the Warrants, which equals $7.33
per Warrant in the case of the $9.17 Warrants, $4.83 per Warrant in the case
of the $11.67 Warrants, $1.50 per Warrant in the case of the $15.00 Warrants
and $15.50 per Warrant in the case of the $1.00 Warrants. WITH RESPECT TO THE
$1.00 WARRANTS, THE OFFER IS CONDITIONED ON THE CLOSING PRICE OF THE SHARES
EQUALING OR EXCEEDING $17.50 PER SHARE FOR 20 CONSECUTIVE TRADING DAYS AND
SUCH WARRANTS THEREBY BECOMING EXERCISABLE. THE WARRANTS ARE NOT LISTED ON ANY
EXCHANGE OR TRADED ON THE NASDAQ NATIONAL MARKET.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, EITHER (A) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS ARE INAPPLICABLE TO
THE OFFER THROUGH THE SATISFACTION OF A PROVISION OF THE RIGHTS TO THE EFFECT
THAT THE RIGHTS SHALL EXPIRE UPON THE CONSUMMATION OF AN ALL CASH TENDER OFFER
FOR ANY AND ALL SHARES WHICH RESULTS IN THE ACQUIROR BEING THE BENEFICIAL
OWNER OF 85% OF THE SHARES AND THE BOARD DETERMINING THAT THE OFFER DOCUMENTS
DISCLOSE A COMMITMENT TO COMMENCE A TENDER OFFER FOR ALL SHARES NOT ACQUIRED
IN SUCH ALL CASH TENDER OFFER OR CAUSE A MERGER FOLLOWING SUCH ALL CASH TENDER
OFFER, IN EACH CASE AT A CASH PRICE PER SHARE AT LEAST EQUAL TO THE OFFER
PRICE PER SHARE IN SUCH ALL CASH TENDER OFFER (SEE THE INTRODUCTION TO THE
OFFER TO PURCHASE) OR (B) (I) THERE BEING VALIDLY TENDERED A NUMBER OF SHARES
AND WARRANTS WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT,
WOULD REPRESENT AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE AND (II) THE PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS ARE OTHERWISE INAPPLICABLE TO THE
OFFER OR THAT THE RIGHTS HAVE BEEN REDEEMED OR INVALIDATED. SEE SECTION 14 OF
THE OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF
FINANCING.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares or Warrants registered in your name or in the
name of your nominee.
For your information and for forwarding to your clients for whom you hold
Shares or Warrants registered in your name or in the name of your nominee, or
who hold Shares or Warrants registered in their own names, we are enclosing
the following documents:
1. The Offer to Purchase, dated July 19, 1996;
2. The Letter of Transmittal to be used by holders of Shares or Warrants
in accepting the Offer and tendering Shares or Warrants;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
the Certificates are not immediately available or time will not permit all
required documents to reach the Depositary (as defined in the Introduction
to the Offer to Purchase) prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) or the procedure for book-entry
transfer, if applicable, cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares or Warrants registered in your name or in the name of your nominees,
with space provided for obtaining such clients' instructions with regard to
the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
2
<PAGE>
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will purchase, by accepting for payment, and will
pay for the Shares or Warrants validly tendered prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) promptly after the
Expiration Date. For purposes of the Offer, the Purchaser will be deemed to
have accepted for payment, and thereby purchased, tendered Shares or Warrants
as, if and when the Purchaser gives oral or written notice to the Depositary
of the Purchaser's acceptance of such Shares or Warrants for payment pursuant
to the Offer. In all cases, payment for Shares or Warrants purchased pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the Certificates, or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase) and (iii) any other documents required by the Letter of
Transmittal. Book- entry transfer will not be available with respect to the
Warrants.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager, the Information Agent and
the Depositary as described in Section 16 of the Offer to Purchase) in
connection with the solicitation of tenders of Shares or Warrants pursuant to
the Offer. The Purchaser will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding the
enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares or Warrants except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER
IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and Certificates evidencing the tendered Shares or Warrants should
be delivered, or such Shares should be tendered by book-entry transfer all in
accordance with the Instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If a securityholder desires to tender Shares or Warrants and such
securityholder's Certificates are not immediately available, or the procedures
for book-entry transfer, if applicable, cannot be complied with on a timely
basis, or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, such securityholder may tender such securities
by following the procedures for guaranteed delivery set forth in Section 2 of
the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent, or Merrill Lynch, Pierce, Fenner
& Smith Incorporated, the Dealer Manager, at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling D.F.
King & Co., Inc., the Information Agent, toll-free at (800) 628-8509 or
collect at (212) 269-5550, or from brokers, dealers, commercial banks or trust
companies.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
3
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF
ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT
OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER
OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
4
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
AT
$16.50 NET PER SHARE
AND
THE SPREAD (AS DEFINED HEREIN) PER WARRANT,
BY
AMERICAN ENTERPRISES ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER IS EXTENDED.
July 19, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated July 19, 1996
(the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by American Enterprises Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of American Enterprises,
L.L.C., a Delaware limited liability company ("Parent"), to purchase (i) all
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Spreckels Industries, Inc., a Delaware corporation (the
"Company"), including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent, as amended as of January 8, 1996 (the
"Rights Agreement"), at a price of $16.50 per Share (and associated Right),
and (ii) all outstanding warrants to purchase Shares issued by the Company
(the "Warrants") at the Spread (as defined below), in each case, net to the
seller in cash, without interest thereon, and subject to the conditions set
forth in the Offer to Purchase. As used herein, "Certificates" shall mean
certificates representing Shares, Warrants or Rights, as the case may be.
References to Shares include references to the associated Rights, unless the
context indicates otherwise. In order validly to tender Shares, a stockholder
must tender the associated Rights. Unless and until the Distribution Date (as
defined in Section 8 of the Offer to Purchase) of the Rights, the tender of a
Share will constitute the
<PAGE>
tender of the associated Rights. If the Distribution Date occurs prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase),
stockholders will be required to tender Rights Certificates in order validly
to tender Shares.
The Company has outstanding four classes of Warrants. Three classes are
exercisable for Shares at respective prices of $9.17, $11.67 and $15.00 per
Warrant (respectively, the "$9.17 Warrants," the "$11.67 Warrants" and the
"$15.00 Warrants"). An additional class of Warrants is not exercisable unless
and until the closing price of the Shares shall have equaled or exceeded
$17.50 per Share for 20 consecutive trading days, at which time they would be
exercisable at $1.00 per Warrant (the "$1.00 Warrants"). The "Spread" with
respect to each of the Warrants is the difference between the Offer price for
the Shares and the exercise price for each of the Warrants, which equals $7.33
per Warrant in the case of the $9.17 Warrants, $4.83 per Warrant in the case
of the $11.67 Warrants, $1.50 per Warrant in the case of the $15.00 Warrants
and $15.50 per Warrant in the case of the $1.00 Warrants. WITH RESPECT TO THE
$1.00 WARRANTS, THE OFFER IS CONDITIONED ON THE CLOSING PRICE OF THE SHARES
EQUALING OR EXCEEDING $17.50 PER SHARE FOR 20 CONSECUTIVE TRADING DAYS AND
SUCH WARRANTS THEREBY BECOMING EXERCISABLE. THE WARRANTS ARE NOT LISTED ON ANY
EXCHANGE OR TRADED ON THE NASDAQ NATIONAL MARKET.
Securityholders whose Certificates are not immediately available, or who
cannot complete the procedures for book-entry transfer, if applicable, on a
timely basis, or who cannot deliver all required documents to the Depositary
prior to the Expiration Date, and who wish to tender their Shares or Warrants
must do so pursuant to the guaranteed delivery procedure described in Section
2 of the Offer to Purchase. See Instruction 2 of the Letter of Transmittal.
Delivery of documents to a Book-Entry Transfer Facility (as defined in Section
2 of the Offer to Purchase) in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary. Book-
entry transfer will not be available with respect to the Warrants.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES OR
WARRANTS HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE
THE HOLDER OF RECORD OF SHARES OR WARRANTS HELD BY US FOR YOUR ACCOUNT. A
TENDER OF SUCH SHARES OR WARRANTS CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES OR WARRANTS HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares or Warrants held by us for your account, upon
the terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $16.50 per Share, net to the seller in cash,
without interest thereon.
2. The tender price is $7.33 per $9.17 Warrant, net to the seller in
cash, without interest thereon.
3. The tender price is $4.83 per $11.67 Warrant, net to the seller in
cash, without interest thereon.
4. The tender price is $1.50 per $15.00 Warrant, net to the seller in
cash, without interest thereon.
5. The tender price is $15.50 per $1.00 Warrant, net to the seller in
cash, without interest thereon. The Offer for the $1.00 Warrants is
conditioned on the closing price of the Shares equaling or exceeding $17.50
per Share for 20 consecutive trading days and such Warrants thereby
becoming exercisable.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, August 15, 1996, unless the Offer is extended.
7. The Offer is being made for all outstanding Shares and Warrants.
8. The Offer is conditioned on, among other things, either (a) the
Purchaser being satisfied, in its sole discretion, that the Rights are
inapplicable to the Offer through the satisfaction of a provision of the
Rights to the effect that the Rights shall expire upon the consummation of
an all cash tender offer for any and all Shares which results in the
acquiror being the Beneficial Owner of 85% of the Shares and the Board
determining that the offer documents disclose a commitment to commence a
tender offer for all Shares not
2
<PAGE>
acquired in such all cash tender offer or cause a merger following such all
cash tender offer, in each case at a cash price per Share at least equal to
the offer price per Share in such all cash tender offer (see the
Introduction to the Offer to Purchase) or (b) (i) there being validly
tendered a number of Shares and Warrants which, when added to the Shares
beneficially owned by Parent, would represent at least a majority of the
Shares outstanding on a fully diluted basis on the date of purchase and
(ii) the Purchaser being satisfied, in its sole discretion, that the Rights
are otherwise inapplicable to the Offer or that the Rights have been
redeemed or invalidated. See Section 14 of the Offer to Purchase.
9. The Offer is not conditioned on the receipt of financing.
Tendering securityholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares or Warrants by the
Purchaser pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares or Warrants in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the securities, blue sky or other laws of such jurisdiction. Neither the
Purchaser nor Parent is aware of any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser or Parent becomes aware of any
state law that would limit the class of offerees in the Offer, the Purchaser
will amend the Offer and, depending on the timing of such amendment, if any,
will extend the Offer to provide adequate dissemination of such information to
such holders of Shares or Warrants prior to the expiration of the Offer. In
any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares or Warrants, please
so instruct us by completing, executing and returning to us the instruction
form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Shares or
Warrants, all such Shares or Warrants will be tendered unless otherwise
specified on the instruction form contained in this letter. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on
your behalf prior to the expiration of the Offer.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated July 19, 1996 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"), in connection with the Offer by American Enterprises
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of American Enterprises, L.L.C., a Delaware limited liability
company ("Parent"), to purchase (i) all outstanding shares of Class A Common
Stock, par value $0.01 per share (the "Shares"), of Spreckels Industries,
Inc., a Delaware corporation (the "Company"), including the common stock
purchase rights (the "Rights") associated therewith and issued pursuant to the
Rights Agreement, dated as of November 11, 1995, between the Company and
Chemical Mellon Shareholder Services, L.L.C., as Rights Agent, as amended as
of January 8, 1996 (the "Rights Agreement"), at a price of $16.50 per Share
(and associated Right) and (ii) all outstanding warrants to purchase Shares
issued by the Company (the "Warrants") at the Spread (as defined in the
Introduction to the Offer to Purchase), in each case, net to the seller in
cash, without interest thereon.
References to Shares include references to the associated Rights, unless the
context indicates otherwise. In order validly to tender Shares, a stockholder
must tender the associated Rights. Unless and until the Distribution Date (as
defined in Section 8 of the Offer to Purchase) of the Rights, the tender of a
Share will constitute the tender of the associated Rights. If the Distribution
Date occurs prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), stockholders will be required to tender Rights Certificates in
order validly to tender Shares.
This will instruct you to tender to the Purchaser the number of Shares or
Warrants indicated below (or, if no number is indicated below, all Shares or
Warrants) held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
Number of Shares Tendered:* _________ SIGN HERE
Number of $9.17 Warrants Tendered:* _ -------------------------------------
Number of $11.67 Warrants -------------------------------------
Tendered:* __________________________ Signature(s)
Number of $15.00 Warrants -------------------------------------
Tendered:* __________________________ -------------------------------------
Number of $1.00 Warrants Tendered:* _ Please type or print name(s)
Certificate Nos. (if available): ____ -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- Please type or print address(es)
-------------------------------------
Check ONE box if Shares will be Area Code and Telephone Number
tendered by book- entry transfer: -------------------------------------
Taxpayer Identification or Social
[_] The Depository Trust Company Security Number(s)
[_] Philadelphia Depository Trust Company
Account Number: _____________________
Dated: _______________________ , 1996
* Unless otherwise indicated, it will be assumed that all Shares or Warrants
held by us for your account are to be tendered.
4
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- ------------------------------------- -------------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals/1/
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person/1/
4. Custodian account of a The minor/2/
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor/1/
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person/3/
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee/1/
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner/1/
valid trust under State
law
8. Sole proprietorship The owner/4/
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
----
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)/5/
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
----
</TABLE>
/1/List first and circle the name of the person whose number you furnish.
/2/Circle the minor's name and furnish the minor's social security number.
/3/Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
/4/Show the name of the owner.
/5/List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your num-
ber, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT 99(a)(7)
AMERICAN ENTERPRISES, L.L.C.
701 East Franklin Street
Richmond, Virginia 23219
Telephone (804)649-8800
Telecopier (804)783-8173
FOR IMMEDIATE RELEASE
CONTACT: John Young
Vice President
(804)649-8801
AMERICAN ENTERPRISES ANNOUNCES TENDER OFFER TO ACQUIRE
SPRECKELS INDUSTRIES, INC. FOR $16.50 PER SHARE
Richmond, Va., July 19, 1996 -- American Enterprises, L.L.C. announced today
that its wholly-owned subsidiary, American Enterprises Acquisition Corp.,
commenced a cash tender offer for all of the outstanding Spreckels Industries,
Inc. (NASDAQ:YALE) common shares at a price of $16.50 per share and all
outstanding warrants at the spread between $16.50 and the exercise price of the
warrants. Upon completion of the tender offer, American Enterprises commits to a
follow-up tender offer or merger at the same price per share paid in the offer.
American Enterprises stated that Philip W. Knisely, its President and Chief
Executive Officer, has sent the attached letter to Bart A. Brown, Jr.,
Spreckels' Chairman, and Gary L. Tessitore, Spreckels' President and Chief
Executive Officer.
The offer is conditioned on, among other things, that either Spreckels'
Common Stock Purchase Rights are inapplicable to the offer through the
satisfaction of certain provisions of the Rights (which generally require the
offerer to beneficially own 85% of the shares and commit to do a follow-up
transaction at the offer price), or, the acquisition of a majority of Spreckels
shares on a fully diluted basis, including shares presently owned by American
Enterprises, and that the Rights are otherwise inapplicable to the offer or have
been redeemed or invalidated. Spreckels has four classes of warrants with
exercise prices of $1.00, $9.17, $11.67 and $15.00 per warrant. The offer for
the $1.00 warrants is conditioned on the common stock price trading above $17.50
for 20 consecutive trading days and such warrants thereby becoming
exercisable. The offer is not conditioned on the receipt of financing.
American Enterprises also announced that in order to increase the likelihood
that Spreckels shareholders can accept the offer at the earliest possible date,
it has commenced legal action in Delaware Chancery Court, seeking among other
things, a declaration that the Rights Plan will expire upon consummation of
its offer and challenging the advance notice provisions of Spreckels' Bylaws.
There are approximately 6.0 million Spreckels Industries primary shares
outstanding. American Enterprises currently owns 1,201,260 Spreckels shares, or
approximately 20% of the primary shares outstanding.
<PAGE>
The offer and withdrawal rights will expire at 12:00 midnight, New York City
time, on Thursday, August 15, 1996, unless extended. The terms and conditions
of the offer are set forth in tender offer materials to be filed today with the
Securities and Exchange Commission and to be mailed promptly to Spreckels'
shareholders.
Merrill, Lynch, Pierce, Fenner & Smith Incorporated is acting as dealer
manager for the offer and D.F. King & Co., Inc. is acting as information agent.
Spreckels Industries, Inc., manufactures and distributes a diversified line of
material handling and industrial component products, including chain and wire
hoists, actuators, scissor-lifts and rotating unions. Principal brand names are
Yale, Duff-Norton, Coffing, Little Mule and American Lifts. Spreckels
Industries recently announced that it is changing its name to Yale
International, Inc. and is currently doing business under that name.
American Enterprises is an affiliate of Constellation Capital Partners, LLC,
a private equity firm.
# # #
<PAGE>
AMERICAN ENTERPRISES, L.L.C.
701 East Franklin Street
Richmond, Virginia 23219
Telephone (804)649-8800
Telecopier (804)783-8173
July 19, 1996
Spreckels Industries, Inc.
One Morrocroft Centre
6805 Morrison Blvd., Suite 450
Charlotte, NC 28211
Attention: Mr. Bart A. Brown, Jr. and Mr. Gary L. Tessitore
Gentlemen:
American Enterprises, L.L.C. is today commencing a cash tender offer to
purchase all of the outstanding common shares of Spreckels Industries, Inc. at a
price of $16.50 per share and is also offering to purchase all of the
outstanding warrants. American Enterprises commits to a follow up transaction
for the remaining shares at the offer price, as set forth in our Offer to
Purchase.
Our offer is not subject to financing, but is subject to your Stockholder
Rights Plan being inapplicable.
We believe that the transaction we are proposing represents a very attractive
opportunity for your shareholders as well as your employees, suppliers and
customers. Moreover, we believe that the current market price reflects a
significant premium resulting from a number of factors, including our own prior
offer and the publicly reported positions in your securities by a number of
financially-oriented investors.
In light of the attractive terms of our offer, we request that the Company's
Board of Directors take appropriate actions so that your rights plan is
inapplicable to our offer. We expect that you will not take any other actions
that would adversely affect your shareholders' ability to receive the benefits
of our proposed transaction. It is our hope that we can proceed to complete a
transaction with a minimum of delay.
In order to increase the likelihood that our offer can be accepted by your
shareholders at the earliest possible date, we have today commenced an action in
Delaware Chancery Court seeking among other things, a declaration that your
Rights Plan will expire upon consummation of our offer and challenging the
advance notice provisions of your bylaws.
Our proposed price is based upon our review of publicly available information
regarding the Company. If you believe that there are values not reflected in
your public filings, we ask that information be made available to us so that we
can ensure that our offer reflects those values.
<PAGE>
Spreckels Industries, Inc.
July 19, 1996
Page 2
We and our advisors are ready to meet with you and your advisors to discuss
all aspects of our offer, and to answer any questions you or they may have. Our
objective is to conclude promptly a transaction that is supported by you and the
Company's Board of Directors.
Sincerely,
Philip W. Knisely
President
<PAGE>
EXHIBIT 99.(a)(8)
================================================================================
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares or Warrants. The Offer is made solely by the Offer to Purchase
dated July 19, 1996 and the related Letter of Transmittal, and is being made to
all holders of Shares and Warrants. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares or Warrants in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares or Warrants in such jurisdiction. In those jurisdictions
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
American Enterprises Acquisition Corp. by Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Dealer Manager") or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK RIGHTS)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE
SHARES OF CLASS A COMMON STOCK
OF
SPRECKELS INDUSTRIES, INC.
AT
$16.50 NET PER SHARE
AND THE SPREAD (AS DEFINED HEREIN)
PER WARRANT
BY
AMERICAN ENTERPRISES
ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN ENTERPRISES, L.L.C.
American Enterprises Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of American Enterprises, L.L.C., a
Delaware limited liability company ("Parent"), is offering to purchase (i) all
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Spreckels Industries, Inc., a Delaware corporation (the
"Company"), including the common stock purchase rights (the "Rights") associated
therewith and issued pursuant to the Rights Agreement, dated as of November 11,
1995, between the Company and Chemical Mellon Shareholder Services, L.L.C., as
Rights Agent, as amended as of January 8, 1996 (the "Rights Agreement"), at a
price of $16.50 per Share (and associated Right), and (ii) all outstanding
warrants to purchase Shares issued by the Company (the "Warrants") at the Spread
(as defined below), in each case, net to the seller in cash, without interest
thereon, and upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated July 19, 1996 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer").
---------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 15, 1996, UNLESS THE OFFER IS EXTENDED.
---------------------------------------------------------------------------
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, EITHER (a) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS ARE INAPPLICABLE TO THE
OFFER THROUGH THE SATISFACTION OF A PROVISION OF THE RIGHTS TO THE EFFECT THAT
THE RIGHTS SHALL EXPIRE UPON THE CONSUMMATION OF AN ALL CASH TENDER OFFER FOR
ANY AND ALL SHARES WHICH RESULTS IN THE ACQUIROR BEING THE BENEFICIAL OWNER OF
85% OF THE SHARES AND THE BOARD DETERMINING THAT THE OFFER DOCUMENTS DISCLOSE A
COMMITMENT TO COMMENCE A TENDER OFFER FOR ALL SHARES NOT ACQUIRED IN SUCH ALL
CASH TENDER OFFER OR CAUSE A MERGER FOLLOWING SUCH ALL CASH TENDER OFFER, IN
EACH CASE AT A CASH PRICE PER SHARE AT LEAST EQUAL TO THE OFFER PRICE PER SHARE
IN SUCH ALL CASH TENDER OFFER (SEE INTRODUCTION TO THE OFFER TO PURCHASE) OR (b)
(i) THERE BEING VALIDLY TENDERED A NUMBER OF SHARES AND WARRANTS WHICH, WHEN
ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT, WOULD REPRESENT AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE AND (ii) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE RIGHTS ARE INAPPLICABLE TO THE OFFER OR THAT THE RIGHTS HAVE BEEN REDEEMED
OR INVALIDATED. SEE SECTION 14 OF THE OFFER TO PURCHASE. THE OFFER IS NOT
CONDITIONED ON THE RECEIPT OF FINANCING.
References to Shares include references to the associated Rights, unless
the context indicates otherwise. In order validly to tender Shares, a
stockholder must tender the associated Rights. Unless and until the Distribution
Date (as defined in Section 8 of the Offer to Purchase) of the Rights, the
tender of a Share will constitute the tender of the associated Rights. If the
Distribution Date occurs prior to the Expiration Date (as defined below),
stockholders will be required to tender certificates evidencing Rights in order
validly to tender Shares. As used herein, "Certificates" shall mean certificates
representing Shares, Warrants or Rights, as the case may be.
The Company has outstanding four classes of Warrants. Three classes are
exercisable for Shares at respective prices of $9.17, $11.67 and $15.00 per
Warrant (respectively, the "$9.17 Warrants," the "$11.67 Warrants" and the
"$15.00 Warrants"). An additional class of Warrants is not exercisable unless
and until the Shares shall trade at a price greater than $17.50 per Share for 20
consecutive trading days, at which time they would be exercisable at $1.00 per
Warrant (the "$1.00 Warrants"). The "Spread" with respect to each of the
Warrants is the difference between the Offer price for the Shares and the
exercise price for each of the Warrants, which equals $7.33 per Warrant in the
case of the $9.17 Warrants, $4.83 per Warrant in the case of the $11.67
Warrants, $1.50 per Warrant in the case of the $15.00 Warrants and $15.50 per
Warrant in the case of the $1.00 Warrants. With respect to the $1.00 Warrants,
the Offer is conditioned on the Shares trading at a price greater than $17.50
per Share for 20 consecutive trading days and such Warrants thereby becoming
exercisable. Each Warrant will expire at 5:00 pm on September 2, 2001.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Parent commits, upon consummation of the Offer, to (a)
immediately following announcement of its acceptance for payment of Shares in
the Offer, commence a cash tender offer for any and all Shares not tendered in
the Offer for at least the same cash consideration per Share paid in the Offer
or (b) cause a merger of the Company with the Purchaser as promptly as
practicable following the consummation of the Offer, pursuant to which each then
outstanding Share will be converted into the right to receive at least the same
cash consideration per Share paid in the Offer. See the Introduction and Section
14 of the Offer to Purchase.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares or Warrants validly tendered and not
properly withdrawn if, as and when the Purchaser gives oral or written notice to
First Chicago Trust Company of New York (the "Depositary") of the Purchaser's
acceptance of such Shares or Warrants for payment pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares or
Warrants accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering securityholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to validly tendering securityholders.
Under no circumstances will interest on the purchase price for Shares or
Warrants be paid by the Purchaser, regardless of any delays in making such
payments. In all cases, payment for Shares or Warrants tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) the Certificates, or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in Section 2 of the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (b) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in Section 2 of the Offer to Purchase) and (c) any other documents
required by the Letter of Transmittal. Book-entry transfer will not be available
with respect to the Warrants.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time to extend for any reason the period of time during
which the Offer is open, including the occurrence of any condition specified in
Section 14 of the Offer to Purchase, by giving oral or written notice of such
extension to the Depositary. During any such extension, all Shares and Warrants
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering securityholder to withdraw his Shares or Warrants.
Any such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date of the Offer.
Tenders of Shares or Warrants made pursuant to the Offer are irrevocable
except that such Shares or Warrants may be withdrawn at any time prior to 12:00
midnight, New York City time, on Thursday, August 15, 1996, (or, if the
Purchaser shall have extended the period of time for which the Offer is open,
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire) (the "Expiration Date") and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after September 16, 1996. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any such notice of withdrawal must specify the name of
the person who tendered the Shares or Warrants to be withdrawn, the number of
Shares or Warrants to be withdrawn and the name of the registered holder of such
Shares or Warrants, if different from that of the person who tendered such
Shares or Warrants. If Certificates evidencing Shares or Warrants to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such Certificates, the serial numbers shown on
such Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 2 of the Offer to Purchase), unless such Shares or Warrants
have been tendered for the account of an Eligible Institution. If Shares have
been tendered pursuant to the procedure for book-entry transfer as set forth in
Section 2 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, whose determination will be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934 (the
"Exchange Act"), is contained in the Offer to Purchase and is incorporated
herein by reference.
A request is being made to the Company pursuant to Rule 14d-5 under the
Exchange Act for the use of the Company's stockholder list, warrantholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares and Warrants and communicating with securityholders in
connection with the Offer. The Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to record
holders of Shares and Warrants whose names appear on the Company's
securityholder lists and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the securityholder lists or, if applicable, who are listed
as participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares and Warrants by the Purchaser
following receipt of such lists or listings from the Company, or by the Company
if it so elects.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
The Company is currently doing business as Yale International, Inc.,
although its corporate name will remain Spreckels Industries, Inc. pending
stockholder approval at the Company's next annual meeting.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers as
set forth below. The Purchaser will not pay any fees or commissions to any
broker or dealer or to any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares and Warrants pursuant to the
Offer. Additional copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be obtained from the Information Agent or
from brokers, dealers, commercial banks and trust companies, and will be
furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 628-8509 (Toll-Free)
or
(212) 269-5550 (Call Collect)
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-4565 (Call Collect)
July 19, 1996
================================================================================
<PAGE>
EXHIBIT 99.(g)(1)
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM]
July 19, 1996
HAND DELIVERED
--------------
The Honorable Richard C. Kiger
Master in Chancery
Court of Chancery
Daniel L. Herrmann Courthouse
1020 King Street
Wilmington, DE 19801
Re: American Enterprises, L.L.C., et al.
v. Spreckels Industries, Inc., et al.,
(Del. Ch.)
--------------------------------------
Dear Master Kiger:
We represent Plaintiffs American Enterprises, L.L.C. and American
Enterprises Acquisition Corp. ("Plaintiffs") in the above-captioned action
filed today. Plaintiffs are seeking expedited declaratory and injunctive
relief in order (1) to permit the shareholders of Spreckels Industries, Inc.
("Spreckels") to accept Plaintiffs' all cash tender offer for Spreckels
stock that was announced today and (2) to allow American Enterprises, L.L.C.
to conduct a proxy contest to replace the current directors with its own
nominees.
We want to schedule a meeting with the Court on Wednesday, if that
is convenient to the Court, to discuss preliminary matters, including
scheduling.
Prior to meeting with the Court, we will attempt to speak with
counsel for Spreckels, if we can determine who represents Spreckels in this
matter. If we are able to consult with Spreckels' counsel in advance of the
meeting, we will be in a better position to know to what extent we need the
Court's assistance in resolving preliminary matters. We expect that
Spreckels will not take defensive actions to compromise further our ability
to consummate the offer before we have had the opportunity to meet with the
Court.
<PAGE>
The Honorable Richard C. Kiger
Page Two
July 19, 1996
Please let us know if the proposed date for a meeting is
convenient or an alternative date that better suits the Court's schedule. I
can be reached at 651-3120 if the Court wishes to discuss any aspect of the
case.
Respectfully,
Marc B. Tucker
Enclosure
cc: Register in Chancery (by hand)
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - -x
AMERICAN ENTERPRISES, L.L.C., a
Delaware limited liability corporation,
and AMERICAN ENTERPRISES,
ACQUISITION CORP.,
C.A. No. ______
Plaintiffs,
v.
SPRECKELS INDUSTRIES, INC., a
Delaware corporation, BART A.
BROWN, JR., JOSHUA S. FRIEDMAN,
STEWART M. KASEN, F. KENNETH
IVERSON, WILLIAM J. NIGHTINGALE,
GEORGE A. POOLE, JR., S. DONLEY
RITCHEY, GARY L. TESSITORE and
STEVEN VAN DYKE,
Defendants.
- - - - - - - - - - - - - - - - - -x
COMPLAINT
---------
As and for their complaint herein, Plaintiffs American Enterprises,
L.L.C. and American Enterprises Acquisition Corp. ("Plaintiffs"), by their
attorneys, allege, upon knowledge as to themselves and their acts, and upon
information and belief as to all other matters, as follows:
PRELIMINARY STATEMENT
---------------------
1. Plaintiffs have made a noncoercive, nondiscriminatory, all-cash,
all-shares tender offer for the stock of Spreckels Industries, Inc. ("Spreckels"
or the "Company") and have committed to acquire all remaining shares not
tendered into
<PAGE>
the offer for at least the same cash consideration as in the tender offer (the
"Offer"). A provision in Spreckels' rights plan exempts all-cash, all-shares
tender offers in which the acquiror becomes the beneficial owner of 85% or more
of Spreckels' common stock so long as the offer contains a commitment to
purchase the remaining stock in a back-end transaction for at least the same
cash consideration as paid on the front end (the "Expiration Provision"). The
Offer satisfies the requirements of the Expiration Provision.
2. Past conduct of the defendants, however, suggests that they may
invoke a literal, but unworkable and unreasonable, interpretation of the
Expiration Provision or take other improper action to frustrate consummation of
the Offer. Expedited declaratory and injunctive relief is warranted to prevent
any such improper action.
3. Last year the defendants had a rights plan in effect that had to
be approved by the shareholders of Spreckels at the annual meeting scheduled for
November 2, 1995. The defendants also faced the threat of a proxy contest by an
investor group who opposed the rights plan to elect three directors to the
Board. In September 1995, because the defendants knew shareholder opposition
would defeat the rights plan and in order to avert a proxy contest, the
defendants agreed, among other things, that they would not submit the rights
plan to the shareholders for their approval, which caused the rights plan to
expire. The defendants announced the agreement in their October 4, 1995 proxy
2
<PAGE>
statement. The defendants, thus, promised to forgo a rights plan, and
plaintiffs relied on that promise in purchasing a substantial portion of its
shares of Spreckels.
4. Nevertheless, on November 11, 1995, just days after that purchase,
the defendants implemented a new and more onerous rights plan that did not
require shareholder approval. Because defendants were bound not to reinstate a
rights plan, because defendants breached their fiduciary duties by circumventing
the requirement to submit the rights plan to a shareholder vote and because the
defendants failed to exercise due care in adopting the rights plan currently in
effect, the rights plan should be declared invalid.
5. Alternatively, the defendants should not be permitted to invoke an
unintended and unreasonable interpretation of the rights plan to frustrate
Plaintiffs' ability to satisfy the requirements of the Expiration Provision.
The defendants also should not be permitted to amend the rights plan currently
in effect. It was amended just months ago in response to a previous offer by
American Enterprises, L.L.C. to merge with Spreckels, and, thus, fully
addressed, in the defendants judgment, any supposed "threat" posed by that
offer. Inasmuch as the current offer is superior to the previous offer in every
respect, any effort further to amend the rights plan to frustrate Plaintiffs'
ability to consummate the offer would constitute a disproportionate response and
violate the defendants' fiduciary duties.
3
<PAGE>
6. Plaintiffs also have announced their intention to wage a proxy
contest to replace the current directors with their own nominees. Spreckels'
by-laws, however, make it impossible for a shareholder who wishes to nominate
candidates for the Board to be certain that it has satisfied the 60-day advance
notice provision for nominating candidates. The defendants have previously used
these by-laws to frustrate the ability of shareholders to wage proxy contests.
Such use of these by-laws is contrary to Delaware law and should not be
permitted.
THE PARTIES
-----------
7. Plaintiff American Enterprises, L.L.C. ("American Enterprises") is
a Delaware limited liability corporation with its principal executive offices at
701 East Franklin Street, Suite 1300, Richmond, Virginia 23219. American
Enterprises is the beneficial owner of 1,201,260 shares of Spreckels common
stock, representing approximately 20.0% of all Spreckels shares outstanding.
Plaintiff American Enterprises Acquisition Corp. is a Delaware corporation and a
wholly-owned subsidiary of American Enterprises and is the proposed purchaser in
connection with the Offer.
8. Defendant Spreckels is a Delaware corporation with its principal
executive offices at 6805 Morrison Boulevard, Suite 450, Charlotte, North
Carolina 28211. Spreckels manufactures and distributes material handling and
industrial component products, including chain and wire rope hoists, actuators,
scissor-lifts and rotating unions. As of May 17, 1996 Spreckels had 6,006,362
4
<PAGE>
Class A common shares outstanding, which are listed and traded on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
9. Defendants Bart A. Brown, Jr., Joshua S. Friedman, Stewart M.
Kasen, F. Kenneth Iverson, William J. Nightingale, George A. Poole, Jr., S.
Donley Ritchey, Gary L. Tessitore and Steven Van Dyke are members of the Board
of Directors of Spreckels (the "Board"). As such, they owe the highest
fiduciary duties of care and loyalty to the Spreckels shareholders.
10. Defendant Brown is also Chairman of the Board and served as its
Chief Executive Officer from July 14, 1994 to May 15, 1995.
11. Defendant Tessitore is also the President and Chief Executive
Officer of Spreckels.
12. Approximately 85% of Spreckels' shares (based on 6,006,362 shares
outstanding), or 65% of Spreckels' shares, on a fully diluted basis, were held
by highly sophisticated investors, including large institutional investors and
wealthy private investors.
FACTUAL BACKGROUND
------------------
A. Spreckels Agrees To Let The Old Rights Plan Expire Rather
Than Submit It For Shareholder Approval.
---------------------------------------------------------
13. On July 7, 1995, the Board adopted a shareholder rights plan that
had to be approved by Spreckels' shareholders at the 1995 Annual Meeting of
Spreckels shareholders (the "Old Rights Plan.")
5
<PAGE>
14. The Old Rights Plan contained "flip-in" and "flip-over"
provisions and a 24 percent "trigger." The rights terminated, however, if one
of the following events occurred: (i) redemption of the rights by Spreckels;
(ii) the consummation of an offer for all outstanding shares for the same
consideration per share; or (iii) the consummation of a merger approved by the
Board.
15. As the Annual Meeting approached, the defendants realized that
shareholder opposition would defeat the Old Rights Plan.
16. The defendants also faced another problem. In September, 1995
Canyon Capital Management, L.P. and certain related parties ("Canyon Partners"),
collectively beneficial owners of approximately 4.46% of the common stock, one
of the many shareholders that opposed the Old Rights Plan, announced its
intention to wage a proxy fight and nominate Joshua S. Friedman and two other
individuals for election to the Company's Board. The Company claimed that
Canyon Partners did not satisfy the requirements of the advance notice by-law
and was not entitled to pursue the election of nominees at the Company's Annual
Meeting. Canyon Partners disagreed.
17. In order to resolve this dispute and because the Old Rights Plan
was expected to be rejected by the shareholders, the parties entered into an
agreement, which was intended to benefit all of the Company's shareholders,
whereby (a) Canyon Partners agreed to withdraw their director nominations, (b)
the
6
<PAGE>
Company agreed to nominate Mr. Friedman as a director for election at the 1995
Annual Meeting, (c) the Board would search for an additional candidate to serve
on the Board, who would be acceptable to a majority of the Board, including Mr.
Friedman (the Board would then be expanded to include nine directors), and (d)
the Company agreed to let the Old Rights Plan to the shareholders for a vote
(the "Agreement").
18. On October 4, 1995, the Company filed its proxy statement for the
upcoming annual meeting, describing the Agreement and stating as follows:
The Company also agreed not to submit its stockholder rights plan, adopted
in July 1995, to the stockholders for approval at the annual meeting. As a
result, all rights thereunder will automatically terminate and the rights
agreement will expire.
19. The Old Rights Plan, thus, expired, and a proxy contest that
threatened the defendants' control was averted. The defendants, thus, promised
shareholders not to reinstate a rights plan for some reasonable period of time.
B. American Enterprises Purchases Stock In Reliance
On the Defendants' Decision To Forgo A Rights Plan.
---------------------------------------------------
20. In the fall of 1995, Prudential Investment ("Prudential"), then
the largest shareholder of Spreckels, decided to sell its interest in Spreckels.
21. Plaintiff American Enterprises initially purchased a block of
81,460 shares from Prudential on October 10, 1995.
22. John P. Mullman, then a director of Spreckels who was
Prudential's representative on the Board, resigned his post
7
<PAGE>
as a director on October 18, 1995, thus advising the Board that Prudential
intended to sell its remaining block of shares.
23. On November 7, 1995, based on the Company's decision to let the
Old Rights Plan expire and promise to forego reinstatement of a rights plan,
American Enterprises purchased all of the remaining Prudential shares, making
American Enterprises the owner of approximately 20% of the issued and
outstanding shares of Spreckels.
C. Spreckels Adopts The New Rights Plan.
-------------------------------------
24. On November 11, 1995, only nine days after the Old Rights Plan
expired, the Board adopted a new but more onerous shareholder rights plan (the
"New Rights Plan"). The New Rights Plan differed from the Old Rights Plan in
two material respects: the New Rights Plan has a 15% instead of a 24% trigger
and does not require shareholder approval.
25. On November 13, 1995, the Company announced the adoption of the
New Rights Plan but did not explain the reasons for their about-face and breach
of promise with respect to implementing a rights plan. Inasmuch as the
defendants were not even aware yet of American Enterprises purchases of Company
stock, the "threat" to which the Company was responding must have been the
threat associated with Prudential's decision to sell its substantial holdings,
which could be purchased by an acquisitive company. That "threat," however,
already existed when the defendants caused the Old Rights Plan to expire on
November 2, 1995.
8
<PAGE>
26. The Board's adoption of the New Rights Plan was not only a breach
of promise and inequitable manipulation of the corporate machinery but also
amounted to a breach of the duty of care. The defendants acted precipitously,
and they failed to consider the following, among other things, in adopting the
New Rights Plan: (a) the effect the New Rights Plan would have on shareholders'
ability to wage proxy contests; (b) whether the adoption of the New Rights Plan
violated the Agreement and the rights of the Company's shareholders; and (c) the
implications of the Board's failure to announce its intention to adopt the New
Rights Plan when it caused the Old Rights Plan to expire.
D. Events Leading Up To The Offer.
-------------------------------
27. On November 14, Philip Knisely, a member of the Board of Managers
of American Enterprises, called Mr. Brown, Chairman of the Board of the Company,
and informed him that American Enterprises had acquired 1,201,260 shares and
would be filing a Schedule 13D. Mr. Brown suggested that Mr. Knisely meet with
Mr. Tessitore, President and Chief Executive Officer of the Company.
28. On November 18, 1995, American Enterprises filed a Schedule 13D
in which it disclosed that it had acquired 1,201,260 shares of Spreckels and was
considering, but had not decided whether to pursue, various courses of action,
including proposing a merger between the Company and American Enterprises or
seeking control of the Company's Board of Directors.
9
<PAGE>
29. On December 4, 1995, members of American Enterprises met with Mr.
Tessitore. In that meeting, Mr. Tessitore suggested that representatives of
American Enterprises visit the Company's plants, and Mr. Tessitore was asked to
have representatives of the Company visit plants of companies they control. A
few days later Mr. Tessitore cancelled the plant visits.
30. On December 19, 1995, American Enterprises sent a letter to the
defendants proposing a combination of American Enterprises and Spreckels.
31. On January 8, 1996, the Company sent American Enterprises a
letter rejecting the proposal and stating that it was not for sale.
E. The Amendment To The New Rights Agreement.
------------------------------------------
32. On January 8, 1996 -- the same day that the Company rejected
Plaintiffs' merger proposal -- the Board amended the New Rights Plan (the "New
Rights Plan as Amended"). Pursuant to the amendment, the new share purchase
rights expire if (a) an entity acquires 85% of the Company's stock and (b) the
Board determines that the acquiring entity has committed to acquiring all the
shares not tendered into the first tender offer in a second tender offer or a
business combination of at least the same cash consideration (the "Expiration
Provision").
33. Specifically, the Expiration Provision states that all rights
thereunder:
shall expire upon the consummation of an all cash tender offer for any and
all shares of Common Stock (an "All Cash Offer") pursuant to which a
Person, together with its Affiliates and Associates, becomes the Benefi-
10
<PAGE>
cial Owner of 85% or more of the Common Stock; provided that the Board of
Directors determines that the tender offer documents relating to the All
Cash Offer disclose a commitment by such Person to (i) immediately
following announcement of its acceptance for payment of Common Stock in the
All Cash Offer, commence a cash tender offer for any and all shares of
Common Stock not tendered in the All Cash Offer for at least the same cash
consideration per share paid in the All Cash Offer or (ii) cause a merger
of the Company with such Person (or its Affiliate) as promptly as
practicable following completion of the All Cash Offer, pursuant to which
each then outstanding share of Common Stock will be converted into the
right to receive at least the same cash consideration per share paid in the
All Cash Offer.
34. The New Rights Plan as Amended constituted the Board's response
to the supposed "threat" posed by Plaintiffs' merger proposal of December 19,
1995.
F. Plaintiffs' Current Offer.
--------------------------
35. On July 19, 1996, Mr. Knisely telephoned Mr. Tessitore to inform
him that American Enterprises was commencing the Offer and to request a meeting
with him. The same day, American Enterprises sent a letter to the Company that
stated that it was commencing a cash tender offer to purchase all outstanding
common shares of the Company at a price of $16.50 per share and would acquire
all nontendered shares, if the Offer succeeded, by a second tender offer or by
merger for at least the same cash consideration as paid in the front-end tender
offer, thus satisfying the Expiration Provision of the New Rights Plan (the
"Offer.")
36. The letter also informed the Company about the filing of this
lawsuit.
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37. The Offer will require, among other things, the defendants'
redemption of the New Rights Plan as Amended or a declaration that the New
Rights Plan as Amended be deemed to be invalid or inapplicable to the Offer.
38. In order to satisfy the Expiration Provision, Plaintiffs have
committed either to make a tender offer for the untendered shares or to effect a
merger for at least the same cash consideration as paid in the original tender
offer:
(i) immediately following announcement of its acceptance for payment of
Shares in the Offer, commence a cash tender offer for any and all Shares
not tendered in the Offer for at least the same cash consideration per
share paid in the Offer or (ii) cause a merger of the Company with the
Purchaser as promptly as practicable following completion of the Offer,
pursuant to which each then outstanding Share will be converted into the
right to receive at least the same cash consideration per Share paid in the
Offer (the transaction described in clause (ii), the "Proposed Merger" and
the aforesaid commitment, the "Follow-up Transaction Commitment").
39. The Offer satisfies the requirements of the Expiration Provision.
G. The By-laws Impede The Nomination Process
-----------------------------------------
40. Plaintiffs also have announced their intention to wage a proxy
contest to replace the current members of the Board with their own nominees.
41. The Company's by-laws filed with its Form 10-Q for the period
ended March 31, 1996 (the "By-laws"), however, make it impossible for a
shareholder who wishes to nominate candidates for the Board as shareholders to
be certain that it has satisfied the 60-day advance notice provision.
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42. Section 2.4 of the By-laws requires that written notice of
shareholders' meetings shall be given to each shareholder not less than ten (10)
nor more than sixty (60) days prior to the meeting. But, section 2.8 (the
"Advance Notice By-law") requires that shareholders submit director nominations
not less than sixty (60) days prior to the shareholders meeting.
43. Thus, as a practical matter, the Board is required to provide
notice of a shareholders' meeting after the deadline for director nominations
has passed and, thus, impairs the right of shareholders to nominate candidates
for the Board of Directors. A reasonable notification period that gives
stockholders notice of an annual meeting sufficiently in advance of the 60-day
advance notice deadline for submitting nominations is required for persons to be
able to submit nominations.
44. The defendants previously have used the "Catch 22" feature of the
Advance Notice By-law to prevent shareholders from nominating directors. In
September 1995, Canyon Partners submitted the nominations of three persons to
the Board. The Company claimed that Canyon Partners was not entitled to pursue
the election of the nominees at the Company's Annual Meeting because it did not
satisfy the provisions of the Advance Notice By-law for director nominations.
45. Other shareholders are also concerned about the defendants' use
of the By-laws to frustrate their ability to propose candidates for the Board.
On May 16, 1996, Bedford Falls Investors, L.P. ("Bedford Falls"), a shareholder
of the Company,
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advised the Company of its intention to submit a list of nominees for election
as the majority of the Company's Board of Directors at the next shareholders
meeting. In that letter, Bedford Falls wrote, "As evidenced by disagreements
between the Company and another shareholder in 1995, there is some uncertainty
regarding the requirements and deadlines of the Company's Certificate of
Incorporation and By-laws as respecting the submission of director nominations."
Noting the burdensome aspects of the By-laws, Bedford Falls requested
clarification of the procedures for director nominations.
46. Plaintiffs are not aware of any response by the defendants to
Bedford Falls' request for clarification.
47. On July 12, 1996, Bedford Falls proposed a slate of nominees for
election to the Board.
Count I
-------
(Declaratory Judgment Regarding Satisfaction of the
Expiration Provision)
48. Plaintiffs repeat and realleges each allegation set forth in
paragraph 1 through 50 hereof.
49. A literal but unworkable interpretation of the Expiration
Provision could frustrate consummation of the Offer. Such an interpretation
would suggest that the 85% minimum requirement in the Expiration Provision is
inconsistent with an "any and all offer" that also is a requirement of the
Expiration Provision and, thus, the Offer cannot satisfy both requirements.
Past conduct of the defendants suggests that they may invoke just
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such a "Catch-22" interpretation of the Expiration Provision in order to
frustrate consummation of the Offer.
50. Plaintiffs are entitled to a declaration that the Offer satisfies
the Expiration Provision.
Count II
--------
(Injunction Preventing Defendants
From Amending The New Rights Plan As
Amended To Frustrate The Offer)
51. Plaintiffs repeat and reallege each allegation set forth in
paragraphs 1 through 50 hereof.
52. The Offer poses no threat to Spreckels' corporate policy and
effectiveness that is not addressed fully by the New Rights Plan as Amended.
Indeed, the current offer is superior to the one in response to which the New
Rights Plan was amended.
53. Plaintiffs are entitled to an injunction prohibiting the Board
from modifying the New Rights Plan as Amended to frustrate further consummation
of the Offer.
54. Plaintiffs have no adequate remedy at law.
Count III
---------
(Declaratory Judgment And Injunction
Preventing Misuse Of By-law Provisions)
55. Plaintiffs repeat and reallege each allegation set forth in
paragraphs 1 through 54 hereof.
56. Sections 2.4 and 2.8 of the By-laws together are unworkable and
impair Plaintiffs' ability to nominate directors. Moreover, the defendants
already have demonstrated that they will use these By-laws to frustrate
shareholders' ability to wage a proxy contest.
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57. Plaintiffs are entitled to a declaration that such use of the By-
laws is invalid under Delaware law and an injunction preventing such misuse.
Count IV
--------
(Breach of the Duty of Care in
Adopting the New Rights Plan)
58. Plaintiffs repeat and reallege each allegation set forth in
paragraphs 1 through 57 hereof.
59. The director defendants, as fiduciaries, owe Plaintiffs the
highest duty of care.
60. Defendants breached their duty of care in precipitously adopting
the New Rights Plan without adequately considering, among other things, the
implications of the Agreement, the detrimental reliance by the investing public
on the defendants representation that they would forego a rights plan and the
effect of the New Rights Plan as Amended on shareholders' ability to exercise
their voting franchise.
61. Plaintiffs are entitled to a declaration that the New Rights
Plan as Amended is invalid.
Count VI
--------
(Estoppel)
62. Plaintiffs repeat and reallege each allegation set forth in
paragraphs 1 through 61 hereof.
63. On October 4 and November 2, 1995, defendants represented to the
shareholders of Spreckels, including Plaintiffs, that they would forego a rights
plan.
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64. Based on that representation, Plaintiffs purchased a substantial
portion of shares.
65. On November 13, 1995, defendants reinstated a rights plan.
66. Plaintiffs are entitled to a declaration that defendants are
estopped from applying the New Rights Plan as Amended to the Offer.
Count V
-------
(Breach of Contract)
67. Plaintiffs repeat and reallege each allegation set forth in
paragraph 1 through 66 hereof.
68. The Agreement precluded the defendants from reinstating a rights
plan. Plaintiffs and all other Spreckels shareholders are intended third party
beneficiaries of the Agreement. Plaintiffs, thus, have the right to enforce the
Agreement.
69. By adopting the New Rights Plan as Amended, the Board violated
the Agreement.
70. Plaintiffs are entitled to a declaratory judgment that the New
Rights Plan as Amended is invalid as applied to the Offer.
Count VII
---------
(Inequitable Manipulation Of Corporate Machinery)
71. Plaintiffs repeat and reallege each allegation set forth in
paragraphs 1 through 70 hereof.
72. Defendants caused the Old Rights Plan to terminate instead of
submitting it to the shareholders for their approval.
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73. Eleven days later, the defendants adopted a more onerous rights
plan that did not require shareholder approval.
74. Defendants circumvention of a shareholder vote constituted an
inequitable manipulation of corporate machinery and a breach of fiduciary duty.
75. Plaintiffs, therefore, are entitled to a declaration that the New
Rights Plan as Amended is invalid.
WHEREFORE, Plaintiffs respectfully request this Court to enter an Order:
(a) declaring that the Offer satisfies the Expiration Provision in
the New Rights Plan as Amended;
(b) preliminarily and permanently enjoining defendants, their
employees, agents and all persons acting on their behalf or in concert with them
from amending the New Rights Plan as Amended in a manner that makes consummation
of the Offer more difficult;
(c) declaring that use of By-law Sections 2.4 and 2.8 to frustrate
Plaintiffs' ability to nominate candidates for the Board is invalid and
enjoining such use; and
(d) declaring that the New Rights Plan as amended is invalid;
(e) awarding Plaintiffs their costs and
disbursements in this action, including reasonable attorney's fees; and
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(f) granting Plaintiffs such other and further relief as the Court
deems just and proper.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
By:________________________________
Marc B. Tucker
Karen L. Valihura
Curtis S. Alva
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Plaintiff
OF COUNSEL
Robert E. Zimet
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022
DATED: July 19, 1996
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